Regulatory Issues the Focus at Center for Public Utilities Conference

For the last two days I have been attending a conference in Santa Fe, N.M., sponsored by the New Mexico State University Center for Public Utilities. It is an annual conference focused on current regulatory and legislative policy issues that are impacting the electric utility industry. There has a been a lot of discussion on infrastructure investments by utilities and how they are being evaluated by regulators at the state level; harmonization and synergies between the electric, gas and water utility sectors; and projections about which technologies will be driving the future utility.

Throughout the series of panel discussions there was consensus around six objectives that continue to drive grid modernization efforts: 1) creating a more reliable electric grid; 2) increasing efficiency of power production and delivery; 3) keeping costs down; 4) empowering consumers to make more informed choices about their power usage; 5) enhancing grid security; and 6) reducing environmental impacts of power production and consumption. These objectives tend to ebb and flow in terms of what can be achieved from a statutory and regulatory perspective, both federally and at the state levels, and there are a number of challenges that are created when specific objectives conflict with each other.

On the first day, Former U.S. Senator Jeff Bingaman, the former United States Senator from New Mexico who served from 1983 to 2013, gave the keynote address. I found Bingaman’s comment that the EPA is likely to drive the energy infrastructure agenda in the next decade to be particularly of interest. While discouraging, Bingaman candidly stated that the likelihood of federal legislation on any major piece of energy policy is unlikely over the next two years given the other pressing matters that face the current Congress. However, he shared that federal policymaking within the energy sector is currently concentrated in three core areas:

Greenhouse gas emissions / global warming: The interest is in seeking a market-based solution that would include an economy-wide cap & trade system. In the absence of federal legislation, the EPA will continue to take the lead in developing regulatory standards under the Clean Air Act.

Cyber security threats: While there is little debate about the threat to electric grid, the prospects for passing federal legislation on cyber security are slim. There has been controversy around expanding FERC’s authority to monitor cyber security, but it’s likely that NIST protocols will remain the guiding regulatory policy in the near term.

Nuclear waste: The focus is on finding a consensus-based approach for the storage and disposal of energy waste. Interestingly, Bingaman thought that this issue stands the greatest chance of finding federal legislative activity in the current session.

I asked Bingaman for his thoughts on the success of the 2009 ARRA stimulus grants resulting in measurable grid modernization improvements. His response was that it’s a bit too early to conclude the level of success of the stimulus grants as performance metrics on the programs of specific recipients are still being reviewed. It’s unlikely that another series of federal grants for the energy industry would be developed given ongoing concerns about the U.S. deficit account.

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