Former U.S. Energy Sec’y tells Platts Energy Week U.S. lags on energy planning
Washington - June 12, 2010
Also power operators discuss nation’s heat wave and how Northeast is coping
Former U.S. Energy Secretary Spencer Abraham said Sunday the United States risks falling behind other countries in planning for its future energy needs unless it decides soon on a balanced approach to energy supplies. [Watch a video of this week's program.]
In an interview on the Sunday morning all-energy television program, Platts Energy Week, Abraham also said the Obama administration has shown "a lack of decisiveness" in handling the BP oil spill in the Gulf of Mexico.
The remarks by Abraham, who was energy secretary for four years under former President George W. Bush, came as Congress prepared to return from an Independence Day recess with decisions to make on legislation addressing the oil spill, climate change and various energy supply options.
"I see the rest of the world's demand for energy skyrocketing. And I see actions being taken across the planet in terms of building new nuclear plants and renewable sources," Abraham said. "And you see other countries across the world moving quickly to grab oil resources and natural gas resources.
"Meanwhile, here at home, we continue to debate and debate and debate energy policy," he said. "We can't seem to make up our mind. I think we're in some peril if we don’t act decisively soon."
In a new book on U.S. energy policy called "Lights Out," Abraham calls for the United States to meet most of its electricity needs by 2030 through three options: nuclear power; renewable energy and energy efficiency; and natural gas and clean-coal technology with carbon capture. To promote construction of nuclear plants, Abraham's book calls for the federal government to pay half the cost of building the facilities.
"My view is the biggest impediment to building new nuclear plants is the fear among investors that these plants will get started but never finished," he said on Sunday’s program. "If the government's a partner, it will happen."
Abraham said the government could likely sell its share of nuclear plants at a profit once they are operating.
"There are a lot of people who would be happy to buy half an operating nuclear plant," he said. "They're just not willing to invest in a plant that's in the process of being constructed for fear it will never be finished."
Regarding the BP oil spill, Abraham said the Obama administration was wrong to implement a moratorium on Gulf of Mexico drilling during an investigation into the disaster. Federal courts have ordered the administration to drop the ban.
"I don't think you can take a single incident and argue an entire industry needs to be shut down," Abraham said.
He also said the administration's has been uncertain in responding to the spill.
"I don't think they can quite figure out how much they want to own," he said. "And I think they know if they take too many steps forward, they will appear to own a lot of it. And I don't think they have confidence that anybody has a solution. So, they move in fits and starts, and I think that shows a lack of decisiveness that probably hasn't helped them."
Also on Platts Energy Week, regulatory authorities, who oversee the nation’s power industry, said demand response is helping New York cope with high temperatures. With the East Coast in the grip of a heat wave, demand response helped save the day in New York, allowing the region to avoid setting a power demand record, the director of Federal Energy Regulatory Commission’s (FERC) Office of Electric Reliability said Sunday.
"The New York area came within 500 mega watts of reaching its all-time peak, and there were no problems," Joseph McClelland told program host Bill Loveless. "One of the big heroes of the day was demand response," he said. "Folks were asked to cut back on usage" and as a result, electricity demand decreased by about 450 MW. According to the New York Independent System Operator, the state hit a record peak of 33,939 MW in August 2006.
"Looking forward, it looks like everything is working well, but one never knows, there could be equipment failures, there could be problems," McClelland said. "Grid planning anticipates such problems and strives to overcome it."
The North American Electric Reliability Corporation (NERC) is "quite pleased with the way the grid responded," said Mark Lauby, director of reliability assessments and performance analysis. "As soon as we got the word out, people responded."
The recession has also helped keep overall demand lower than it otherwise would have been. This leaves grid operators a little more wiggle room, Lauby said.
Asked how consumers would be impacted by the high price of electricity at peak demand times, McClelland pointed out that residential customers have a fixed rate regulated by the state public service commission, "so as the temperature varies and the fluctuations occur, the overall price doesn't change.
"Customers that purchase energy on the wholesale market, however, would see price fluctuations according to the weather but that's usually" accounted for in budgeting each year, he said.
As for whether the region could suffer another blackout like it did in 2003, McClelland and Lauby seemed optimistic that progress had been made to reduce that likelihood.
"I can't sit here and say we're never ever going to have a severe blackout," Lauby said, "but I think the industry has done a great deal since that time."
The task force that was put together to identify the root causes of the blackout recommended making the NERC reliability standards mandatory and enforceable, McClelland explained. "The Energy Policy Act of 2005 picked up on that recommendation and conveyed authority" to FERC to certify an independent electric reliability organization.
The commission certified NERC as the Electric Reliability Organization in 2006. "NERC's job is to propose the standards for the commission to review," the commission reviews the standards and upon approval they become mandatory and enforceable to the users, owners and operators of the bulk power system, he said.
Not only does NERC watch to make sure people comply with the reliability standards, but "we also do a very comprehensive review of the plans and preparations the industry makes" for the summer and winter ahead to be sure "we're comfortable with the preparations," Lauby said.
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