Critical Policy Issues for On-Site Generators An End-User’s Viewpoint Al Musur Chairman, Industrial Energy Consumers of America
Dec 15, 2015
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
Because energy is where economy, geology and ecology collide.
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 Policy
• Natural Gas is the Fuel of Choice
• Exploration for Natural Gas is Bad
• Lack of Oversight of Natural Gas Markets
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 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 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 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 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 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 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
• 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 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 Generation
• Crime to Burn Natural Gas in Non-CHP Power Generation
• Burn Coal
• Burn Nuclear Fuels
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 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
• 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
• 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 Skies
• New Source Review Reform
• Greenhouse Gas Issues
• Greenhouse Gas Emission Credits for CHP
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
• PURPA Repeal
• PUHCA Repeal
• FERC authority to enforce NERC operating rules
• Net Metering Issues
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 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 Transmission
• FERC Authority
• Regional Transmission Organization (RTO) / Standard Market Design Issues
Electrical Transmission
• FERC Authority
• Regional Transmission Organization (RTO) / Standard Market Design Issues
• Standardized CHP Interconnection Issues
Electrical Transmission
• FERC Authority
• Regional Transmission Organization (RTO) / Standard Market Design Issues
• Standardized CHP Interconnection Issues
• Federal Authority for Transmission Design
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 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 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 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