Critical Policy Issues for On-Site Generators An End-User’s Viewpoint Al Musur Chairman,...

Critical Policy Issues for On-Site Generators

An End-User’s Viewpoint

Al Musur Chairman, Industrial Energy Consumers of America

Energy – This Country’s Biggest Policy Problem

Energy – This Country’s Biggest Policy Problem

Because energy is where economy, geology and ecology collide.

Policy Areas

• Natural Gas

• Power Generation

• Clear Skies

• Electricity

• Electrical Transmission

Natural Gas Policy

• Natural Gas is the Fuel of Choice

Natural Gas Policy


• Exploration for Natural Gas is Bad

Natural Gas Policy


• Exploration for Natural Gas is Bad– That Causes Price Increases

– No CHP Projects with 5¢ electricity being displaced by $5 Natural Gas

– 70% of Known Reserves on Unavailable Federal Lands

– Prohibitions on

• Lateral Drilling

• Coal Bed Fractionation

– 2800 Drilling Applications Back-logged at DOI

Natural Gas Policy



• Lack of Oversight of Natural Gas Markets

Natural Gas Policy



• Lack of Oversight of Natural Gas Markets– Commodity Futures Trading Commission (CFTC)

– Lost Oversight of Natural Gas & Electricity Trading

– No Standard for Determining Undue Market Influence

Natural Gas Policy




• Approval of Oil/Gas Mega-Mergers

Natural Gas Policy




• Approval of Oil/Gas Mega-Mergers– Eg. BP – Amoco

– Loss of Investment Capital

– Midsize Companies Purchasing Assets v. Exploring

– Small Exploration Companies Quitting the Business

Natural Gas Policy





• Lack of Federal Regulatory Authority

Natural Gas Policy





• Lack of Federal Regulatory Authority– Reporting Injections

Natural Gas Policy






Full Storage = 3.2 TCFInadequate Storage = 2.8 TCFDelta 0.4 TCF < 2% of Annual Demand

Natural Gas Policy






– Reporting Transactions for Price Formation

– Ordering Construction

• Storage

• Pipelines

Power Generation

• Crime to Burn Natural Gas in Non-CHP Power Generation

Power Generation


– Natural Gas is the only fuel available to most industry and is also a feedstock

– Natural Gas is growing as the fuel of choice for residential use

– For this there is no substitute

– Utility generators can burn everything from garbage to nuclear fuel

Power Generation


• Burn Coal

Power Generation


• Burn Coal– Illinois alone has more coal that Saudi Arabia and Kuwait

combined have oil

– Developed technologies can burn coal cleanly

Power Generation


• Burn Coal

• Burn Nuclear Fuels

Power Generation


• Burn Coal


• Spend Federal Funds on Developing and Commercializing Technologies rather than picking winners and losers in energy

Power Generation


• Burn Coal


• Spend Federal Funds on Developing and Commercializing Technologies rather than picking winners and losers in energy

– No Renewable Portfolio Standard

Clear Skies

• New Source Review Reform

Clear Skies

• New Source Review Reform– Trade new CO2, NOx, Hg standards for NSR changes

– Utilities trying to include CHP in Clear Skies NSR Reform

– CHP projects should be exempt or there should be an output efficiency standard for inclusion

Clear Skies


• Greenhouse Gas Issues

Clear Skies


• Greenhouse Gas Issues– Energy Policy focused on GHG intensity

– Clear Skies called for the DOE to revamp the 1605(b) Greenhouse Gas Registry to reward absolute reductions of Greenhouse Gasses

– First step to the establishment of a Greenhouse Gas Emission Trading Program in the U.S.

Clear Skies



• Greenhouse Gas Emission Credits for CHP

Clear Skies



• Greenhouse Gas Emission Credits for CHP– Industrial installs a CHP facility for steam and electric

generation

– Gross Greenhouse Gas emissions for site go up

– Net Greenhouse Gas emissions go down netting out the reduction at the utility stack for displaced generation

– Utilities are claiming that the emission reduction at their stack is their reduction regardless how achieved

– Utility view is generally accepted among White House staff

Electricity

• PURPA Repeal

Electricity

• PURPA Repeal

• PUHCA Repeal

Electricity

• PURPA Repeal

• PUHCA Repeal

• FERC authority to enforce NERC operating rules

Electricity

• PURPA Repeal

• PUHCA Repeal


• Net Metering Issues

Electricity

• PURPA Repeal

• PUHCA Repeal


• Net Metering Issues– California ISO OATT

– Illinois MISO may yield different result due to “regional differences”

Electrical Transmission

• FERC Authority


• FERC Authority– Utilities have learned at the State level: if one doesn’t like

what a commission decides, have the Legislature fix it.

– Push on the part of Utilities to limit FERC’s authority:

• Operating rules

• RTO formation

• Siting Authority

• Utilities stirring up State Commissions & Governors to push States rights issues


• FERC Authority

• Regional Transmission Organization (RTO) / Standard Market Design Issues


• FERC Authority


• Standardized CHP Interconnection Issues


• FERC Authority



• Federal Authority for Transmission Design


• FERC Authority



• Federal Authority for Transmission Design– No current authority to order transmission interconnection

construction

– No centralized siting authority

– Suggestion – socialize the cost of upgrading the transmission system


• FERC Authority




• Distributed Generation v Transmission Upgrade Issues


• FERC Authority





– USCHPA proposal for distributed generation instead of transmission upgrade


• FERC Authority





• August 14, 2003 Issues

What Can I Do?

What Can I Do?

• Become conversant with all of the issues

• Resist the urge to pursue only your narrow interests

• Join with other consumer groups to achieve enough mass to be effective

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Critical Policy Issues for On-Site Generators An End-User’s Viewpoint Al Musur Chairman,...

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