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2007 CEO Forum: Greenhouse Gauntlet

Tackling climate change is a monumental challenge. Power-company CEOs discuss long-range plans for a climate-friendly energy economy.

Fortnightly Magazine - June 2007

our entire native-load growth from 2010 through 2015 with energy efficiency. It’s not just something on the margin. It’s a real resource.

We can’t do it through 2050; the low-hanging fruit will be picked by 2020. But we look at it as a bridge to get us to the point where carbon capture and storage is commercially available, and nuclear plants are being built.

In the process of doing that, we’ll be adding real value for our customers and a stimulating environment for our employees. We’re not talking about the old utility system, but the system of the future, with more two-way communications and dispatchable load. In this way, GHG regulation could be the impetus for us to do some things that are in the long-term best interests of the company.

Steve Holliday, National Grid: What GHG regulation has meant in the past and will mean in the future is a quite broad canvas.

It is an opportunity for our business, without any question. But we absolutely have to turn this industry on its head so we are motivated and incentivized for helping society conserve more energy and consume less. This is quite an unusual paradigm; most businesses make money by selling more of a product, and we have people thinking about a rate design that earns money and increases profitability by reducing sales volume.

We need to take a leading role and we are doing so progressively on both sides of the Atlantic, in helping regulators and consumers think through the process of moving from a world that is greedy about consuming energy to one that is careful about it. But people have to allow companies to earn money by reducing energy demand. When you start to apply that, you will motivate companies to work on the technology, and you’ll get the second- and third-generation technologies developed.

Nobody wants to waste energy, but the challenge is marrying together energy efficiency and reliability. In the UK we are replacing old infrastructure, and there are parallels in certain areas of the United States. We all want reliable energy supplies but we also need to replace infrastructure for future requirements, not past requirements. We are looking at smart metering, with trials to begin shortly in the United States.

David Crane, NRG Energy: If we do things correctly, this is a big growth opportunity for the power industry. Certain people are racing to build power plants and get grandfathered under a carbon regime. I don’t think that’s going to happen. I don’t want to get paid for putting carbon into the atmosphere, but I’d be happy to get paid for taking it out.

It should put us in a net-positive situation. We are trying to invest in technology and carbon remediation generally. We not only will use this technology at our plants, but we also will participate in commercializing the technology itself. The person who comes up with the right widget will do very well in the free market. GHG regulation is an opportunity for entrepreneurs.

James Rogers, Duke Energy: We make money by investing