The utility’s role is changing, and regulation must change along with it – to spur innovation and respond to evolving customer needs. Modernizing the industry will require a dynamic approach.
Energy Reform: A Legislative Washout?
Congress is shifting U.S. energy policies toward green alternatives. Is the new direction temporary or permanent?
do their work,” says Randall Swisher, executive director of the American Wind Energy Association (AWEA). “Paying for a renewable energy future with some existing oil incentives probably makes a lot of sense.”
Additionally, the idea of reclaiming Republican giveaways to oil companies has become a central plank in the Democratic Party’s platform. In a press release timed to coincide with Congressional floor debates in June, the Democratic National Committee (DNC) accused Republicans of allowing “our nation’s energy policy to be guided by special-interest cronies,” and excoriated Republican lawmakers for clinging to the “same old failed policies” that support petroleum companies.
Such strident rhetoric explains, at least in part, the political momentum away from petroleum and toward renewables and conservation. “It is perhaps a reflection of the Democratic party’s anger against Big Oil,” says Jim Liles, a regulatory adviser with Milbank, Tweed, Hadley & McCloy in Washington, D.C., and formerly an economic and regulatory analyst for FERC. “That may be a short-term effect, but the bigger question is what energy sources we’ll use in the future, especially if we have to look at this greenhouse-gas problem.”
Indeed, growing environmental concerns, and specifically well-orchestrated PR campaigns, have accelerated the pendulum now swinging against fossil fuels—not only petroleum, but also coal. For example, earlier this year a national advertising campaign featuring somber-looking models with soot-blackened faces proclaimed, “Face It: Coal Is Filthy.” The campaign sparked controversy when the identity of its sponsor—gas company Chesapeake Energy—was revealed, but not before ad placements in popular Capitol Hill publications helped to put coal on the blacklist with oil, and push green policies further into the legislative spotlight.
As a result, the chief accomplishment of the current energy legislation may be to set the stage for bigger policy shifts in the future—namely, carbon constraints.
“This bill is very important to create a bridge and strike a better balance,” says Michael Zimmer, a partner with Thompson Hine in Washington, D.C. “It will emphasize efficiency, increase the focus on renewables, and lay the groundwork for more advanced-stage renewable energy, carbon sequestration, and nuclear energy. That’s the market ordering I see happening. Least-cost strategies will evolve once climate legislation is enacted, and least emissions ultimately will become least cost.”
Even if explicitly anti-fossil attitudes diminish somewhat with the ebb-and-flow of politics, the trend toward green policies seems to be gaining bipartisan support. With public sentiment growing in favor of greenhouse-gas (GHG) constraints and energy independence, conservation and renewable energy have become standard talking points for politicians in both parties.
“All candidates are talking about renewables, energy efficiency, and dependence on foreign oil,” says Toni Johnson, a New York staff writer for CFR.org, the Web site of the Council on Foreign Relations. “Energy efficiency in particular is seen as a cheap fix. It’s less complicated politically than other topics, and it’s an easy way to look good on energy.”
This political talk, however, seems unlikely to translate into major policy action before the Bush administration leaves office. The most obvious case in point is climate change—the 500-pound gorilla of energy policy.