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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.

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critical policy issues for on site generators

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 problem1
Energy – This Country’s Biggest Policy Problem

Because energy is where economy, geology and ecology collide.

policy areas
Policy Areas
  • Natural Gas
  • Power Generation
  • Clear Skies
  • Electricity
  • Electrical Transmission
natural gas policy
Natural Gas Policy
  • Natural Gas is the Fuel of Choice
natural gas policy1
Natural Gas Policy
  • Natural Gas is the Fuel of Choice
  • Exploration for Natural Gas is Bad
natural gas policy2
Natural Gas Policy
  • Natural Gas is the Fuel of Choice
  • 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 policy3
Natural Gas Policy
  • Natural Gas is the Fuel of Choice
  • Exploration for Natural Gas is Bad
  • Lack of Oversight of Natural Gas Markets
natural gas policy4
Natural Gas Policy
  • Natural Gas is the Fuel of Choice
  • Exploration for Natural Gas is Bad
  • 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 policy5
Natural Gas Policy
  • Natural Gas is the Fuel of Choice
  • Exploration for Natural Gas is Bad
  • Lack of Oversight of Natural Gas Markets
  • Approval of Oil/Gas Mega-Mergers
natural gas policy6
Natural Gas Policy
  • Natural Gas is the Fuel of Choice
  • Exploration for Natural Gas is Bad
  • Lack of Oversight of Natural Gas Markets
  • 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 policy7
Natural Gas Policy
  • Natural Gas is the Fuel of Choice
  • Exploration for Natural Gas is Bad
  • Lack of Oversight of Natural Gas Markets
  • Approval of Oil/Gas Mega-Mergers
  • Lack of Federal Regulatory Authority
natural gas policy8
Natural Gas Policy
  • Natural Gas is the Fuel of Choice
  • Exploration for Natural Gas is Bad
  • Lack of Oversight of Natural Gas Markets
  • Approval of Oil/Gas Mega-Mergers
  • Lack of Federal Regulatory Authority
        • Reporting Injections
natural gas policy9
Natural Gas Policy
  • Natural Gas is the Fuel of Choice
  • Exploration for Natural Gas is Bad
  • Lack of Oversight of Natural Gas Markets
  • Approval of Oil/Gas Mega-Mergers
  • Lack of Federal Regulatory Authority
        • Reporting Injections

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

natural gas policy10
Natural Gas Policy
  • Natural Gas is the Fuel of Choice
  • Exploration for Natural Gas is Bad
  • Lack of Oversight of Natural Gas Markets
  • Approval of Oil/Gas Mega-Mergers
  • Lack of Federal Regulatory Authority
        • Reporting Injections
        • Reporting Transactions for Price Formation
        • Ordering Construction
          • Storage
          • Pipelines
power generation
Power Generation
  • Crime to Burn Natural Gas in Non-CHP Power Generation
power generation1
Power Generation
  • Crime to Burn Natural Gas in Non-CHP 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 generation2
Power Generation
  • Crime to Burn Natural Gas in Non-CHP Power Generation
  • Burn Coal
power generation3
Power Generation
  • Crime to Burn Natural Gas in Non-CHP Power Generation
  • Burn Coal
        • Illinois alone has more coal that Saudi Arabia and Kuwait combined have oil
        • Developed technologies can burn coal cleanly
power generation4
Power Generation
  • Crime to Burn Natural Gas in Non-CHP Power Generation
  • Burn Coal
  • Burn Nuclear Fuels
power generation5
Power Generation
  • Crime to Burn Natural Gas in Non-CHP Power Generation
  • Burn Coal
  • Burn Nuclear Fuels
  • Spend Federal Funds on Developing and Commercializing Technologies rather than picking winners and losers in energy
power generation6
Power Generation
  • Crime to Burn Natural Gas in Non-CHP Power Generation
  • Burn Coal
  • Burn Nuclear Fuels
  • Spend Federal Funds on Developing and Commercializing Technologies rather than picking winners and losers in energy
        • No Renewable Portfolio Standard
clear skies
Clear Skies
  • New Source Review Reform
clear skies1
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 skies2
Clear Skies
  • New Source Review Reform
  • Greenhouse Gas Issues
clear skies3
Clear Skies
  • New Source Review Reform
  • 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 skies4
Clear Skies
  • New Source Review Reform
  • Greenhouse Gas Issues
  • Greenhouse Gas Emission Credits for CHP
clear skies5
Clear Skies
  • New Source Review Reform
  • Greenhouse Gas Issues
  • 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
Electricity
  • PURPA Repeal
electricity1
Electricity
  • PURPA Repeal
  • PUHCA Repeal
electricity2
Electricity
  • PURPA Repeal
  • PUHCA Repeal
  • FERC authority to enforce NERC operating rules
electricity3
Electricity
  • PURPA Repeal
  • PUHCA Repeal
  • FERC authority to enforce NERC operating rules
  • Net Metering Issues
electricity4
Electricity
  • PURPA Repeal
  • PUHCA Repeal
  • FERC authority to enforce NERC operating rules
  • Net Metering Issues
        • California ISO OATT
        • Illinois MISO may yield different result due to “regional differences”
electrical transmission1
Electrical Transmission
  • 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
electrical transmission2
Electrical Transmission
  • FERC Authority
  • Regional Transmission Organization (RTO) / Standard Market Design Issues
electrical transmission3
Electrical Transmission
  • FERC Authority
  • Regional Transmission Organization (RTO) / Standard Market Design Issues
  • Standardized CHP Interconnection Issues
electrical transmission4
Electrical Transmission
  • FERC Authority
  • Regional Transmission Organization (RTO) / Standard Market Design Issues
  • Standardized CHP Interconnection Issues
  • Federal Authority for Transmission Design
electrical transmission5
Electrical Transmission
  • FERC Authority
  • Regional Transmission Organization (RTO) / Standard Market Design Issues
  • Standardized CHP Interconnection Issues
  • 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
electrical transmission6
Electrical Transmission
  • FERC Authority
  • Regional Transmission Organization (RTO) / Standard Market Design Issues
  • Standardized CHP Interconnection Issues
  • Federal Authority for Transmission Design
  • Distributed Generation v Transmission Upgrade Issues
electrical transmission7
Electrical Transmission
  • FERC Authority
  • Regional Transmission Organization (RTO) / Standard Market Design Issues
  • Standardized CHP Interconnection Issues
  • Federal Authority for Transmission Design
  • Distributed Generation v Transmission Upgrade Issues
        • USCHPA proposal for distributed generation instead of transmission upgrade
electrical transmission8
Electrical Transmission
  • FERC Authority
  • Regional Transmission Organization (RTO) / Standard Market Design Issues
  • Standardized CHP Interconnection Issues
  • Federal Authority for Transmission Design
  • Distributed Generation v Transmission Upgrade Issues
  • August 14, 2003 Issues
what can i do1
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