There is much to celebrate in the Energy Policy Act of 2005, but what will federal regulators do?
Richard Stavros is Fortnightly's Executive Editor.
It has been a most anti-climactic affair. After so many years of disappointments over failure to pass comprehensive energy legislation, many in Washington and in the utility industry had all but given up on Congress.
But sure enough, when we least expected it, the politicians finally were able to pull a multi-billion white rabbit out of their hat—enacting a comprehensive national energy law (Energy Policy Act of 2005, or EPAct) that will usher in extraordinary changes in the industry.
However, just how the new law really will affect the industry is the question of the hour, with many provisions of the law left to the interpretation of regulators.
That's why many utility CEOs and financial experts are urging caution. Instead of throwing lavish parties to celebrate legislation that promotes billions in direct investment in energy infrastructure, they are waiting. Waiting to see what the Federal Energy Regulatory Commission (FERC) does with its new, unprecedented authority over the industry. And waiting to see how state regulators react to the expanded federal authority. "The market is still the driving factor behind transactions and investment decisions. The Energy Act removes some obstacles that have stood in the way of economically sound transactions. … Regulators still could interpret the new law in a manner which inhibits its usefulness," concludes a report written by the law firm of LeBoeuf, Lamb, Greene & MacRae.