Another National Energy Policy
The National Energy Policy Development Group (NEPD) submitted its report to President Bush today (May 17, 2001) evidencing the belated but growing awareness of the important role of energy in our economy. It contains numerous recommendations (about 100) to, among other things, improve the relationship between supply and demand (through both supply side and demand side measures), improve our energy delivery infrastructure and encourage useful and much needed coordination between state and federal agencies. The report is an important document and it is focused on a subject important to our nation and Ohio's energy intensive economy.
Some of the steps taken by President Bush to address our energy price and supply dysfunction may attract less attention than the issuance of this report but they may be better indicators of his intention to act in the public interest. For example, his appointments of Pat Wood, chairman of the Texas Public Utility Commission, and Nora Brownell of the Pennsylvania Public Utility Commission to fill vacancies at the Federal Energy Regulatory Commission (FERC) will bring much needed talent into play at the federal level. Both of these experienced individuals should be confirmed quickly since they appear to have bipartisan support in the U.S. Senate. Thankfully, filling these vacancies was not dependant upon the development of a federal vacancy filling policy.
Good energy policy, good reports and good appointments to FERC, however, do not necessarily equate to good results in the real energy world. Our more significant problems stem from our inability to implement policies in a timely fashion. In many respects, the NEPD report is a collection of information that is readily available from other sources accompanied by Recommended action steps that would fall into the "old business" category on the agenda. Our inability to make progress is encumbered not so much by a lack of policy as it is by our inability to follow the doctor's orders. Thus, the measure of significance that will ultimately be attached to the report is dependant upon what we do on the working end not what we may be saying on the talking end. In this context, we need to make sure that those folks who see advantage in delaying performance do not use the policy orientation of the report to invite more meetings, more discussion and more inaction.
There are reasons to be concerned about our ability to start walking the energy talk. The report itself notes the existing electricity transmission constraints that may affect future power delivery in the Great Lakes region and the Midwest price and power supply problems in prior years. FERC's past performance on matters affecting energy reliability and prices offers so much room for improvement that placing trust in this critical regulatory agency has been riskier than eating beef in the U.K. The existing pattern of FERC's performance indicates we may not be able to do anything even if we do a great job identifying problems, remedies and responsible policy. Repeating this pattern means the problems will get worse as energy demand increases and our legacy systems crumble under both physical and political stress.
Here in Ohio we are getting reports from the Office of Consumers' Counsel and the Public Utilities Commission of Ohio saying that Ohio will not see power supply problems this summer. It is true that we have seen some improvements in the available generating capacity largely because Ohio's restructuring legislation and its implementation streamlined the process for adding new generating capacity in Ohio. Nevertheless, this improvement still leaves large pockets of doubt because we have been unable to make progress on reforming the delivery system and market structure so that the new supply can be efficiently used to meet demand in real time. Reforming the delivery system and market structure depends on Ohio doing more and, you guessed it, FERC getting off dead center.
Let's hope that they put a time limit on the policy debate and we can get on with the implementation of a comprehensive energy policy through coordinated action by state and federal government. Our future depends on it!
McNees, Wallace & Nurick
(614) 719-2840 (voice) (614) 469-4653 (fax)
Email Sam Randazzo (e-mail)