With all of the turmoil surrounding the electric utility industry, it's not surprising that much of the Murkowski draft legislation deals with electric power issues.

It's been almost three decades since the Oil Embargo of 1973, and we still face the same question. Can we, or will we, develop a national energy policy that addresses economic development and environmental impact?

Some two and one half years ago, the United States Energy Association (USEA) published a report, the 11th Annual Assessment of United States Energy Policy, calling for the creation of a national energy strategy. Nothing happened.

This year, the USEA has published more policy recommendations in a document titled, Toward a National Energy Strategy, which updates the 1998 report.

After a record-cold winter and the resulting consumer reaction to rising energy prices, could it be that the critical energy shortages that caused rolling blackouts in California and the possibility of a duplicate situation elsewhere had a beneficial effect? It seems these converging calamities have made a diverse group of public and private interests — including policy makers from the president and the Congress on down — aware of the clear need for a national energy policy that allows all energy providers to more effectively meet the ever-growing energy demands of American families and businesses.

In fact, recent reports coming out of Washington D.C. indicate Congress and the Bush administration are inching toward a comprehensive national energy policy. Over at George W's house, Vice President Dick Cheney is heading up a cabinet task force that is busily drafting up an energy policy program. Up on Capitol Hill, Senator Frank Murkowski, R-Ala., the long-tenured energy and natural resources chairman is rumbling around with legislation geared toward reducing U.S. dependency on imported oil from the current levels of 56% to less than 50% by 2011.

It's worth a look at the USEA and Murkowski policy recommendations. Let's first examine some of the principles behind the USEA's document:

  1. An energy policy must meet several challenges, including overly burdensome environmental regulations that prevent access to new energy resources, the adverse national security implications of rising oil imports, an energy delivery infrastructure that's aging and increasingly overwhelmed by growing demand, a regulatory process that is often unfair and counterproductive, and a lack of foresight in developing new, more efficient energy technologies and alternative energy sources.

  2. The nation should encourage energy supply expansion with policies that fully recognize no single source can meet our growing energy needs.

  3. Current policies should be amended to allow environmentally sound access to domestic resources, to reduce dependence on foreign oil, and to ensure American consumers can obtain energy at reasonable, affordable prices.

  4. Tax reform should be enacted to spur capital investment in reliable, affordable, and environmentally effective energy technologies and supporting infrastructure.

  5. Governmental policies should promote energy efficiency.

  6. Provide free, competitive markets regarding pricing, technology deployment, energy efficiency, and selection of fuels and energy suppliers.

  7. Increase funding for the low-income home energy assistance and weatherization programs.

  8. Promote U.S. leadership in energy development, services, and technology on a global basis.

  9. Eliminate tax provisions that diminish the international competitiveness of U.S. multinational energy companies by exposing them to double taxation and restrictive anti-deferral rules.

  10. U.S. foreign policy and development assistance should increase reliable, affordable, and market-based energy supplies for developing countries and countries in economic transition in a way that opens markets to U.S. goods and services, creates cooperative partnerships between the U.S. and overseas energy firms, and enhances international economic and political security.

  11. The U.S. should foster more open political, legal, and institutional structures in developing and reforming countries that facilitate energy trade and investment.

  12. Federal policy makers should avoid unilateral trade and economic sanctions that exclude U.S. companies from markets in which foreign-based firms are free to invest.

  13. Investment in energy technology, research, and development should focus on sources that can realistically meet U.S. energy needs over the next 20 to 30 years.

  14. Government-sponsored education programs should emphasize the importance of energy infrastructure and resources as essential for continued economic security and development.

  15. Government programs intended to advance environmental technologies should measure environmental performance and be available to any energy sources that achieve environmental goals rather than favoring selective fuels or technologies.

  16. The safe and efficient movement of energy goods and services requires significant improvement of the U.S. transportation infrastructure.

  17. Rule making should promote regulatory predictability to stabilize investment decisions.

  18. Comprehensive electric utility restructuring should promote efficient competition by encouraging flexible approaches to electricity markets and new investment in transmission and generation.

Murkowski Steps Up

With all of the turmoil surrounding the electric utility industry, it's not surprising that much of the Murkowski draft legislation deals with electric power issues. In reviewing the Murkowski document, we believe it sets down some sound fundamental principles that can be adopted, passed and enacted. For starters, the bill proposes the following:

  • The creation of an industry-run organization overseen by the Federal Energy Regulatory Commission (FERC) that sets enforceable rules for the interstate transmission grid.

  • Repeal of the Public Utility Regulatory Policies Act that requires utilities to purchase power at full avoided cost while not affecting existing power-purchase arrangements.

  • A measure allowing electric utilities to diversify without running afoul of the Public Utility Holding Act restrictions.

  • That actions to continue or expand operation of emission-free electricity sources should be recognized under the state implementation plan as control measures providing access to existing and future economic incentive programs that prevent and control air emissions.

  • An amendment to the Federal Power Act that changes the process used by the FERC to issue licenses and license renewals for hydroelectric facilities. The amendment includes a new section requiring federal agency participants to consider and document economic impacts when setting conditions for licensing or license renewals.

  • Confirmation of the FERC's lead role in environmental reviews of hydroelectric projects and limitations on environmental reviews conducted by consulting agencies.

  • A 10% tax credit for expenses incurred by coal-fired plants for installing emission-control systems for one or more air pollutants.

  • A tax credit of $0.0034 cents/kw-hr for electricity production from coal-fired power plants that have converted from conventional to clean-coal technology.

  • Continued funding of the Nuclear Energy Research Initiative program (at $60 million) for existing projects as well as new awards that reduce barriers to the expanded use of nuclear energy.

  • The Interior Department and the Army Corps of Engineers will study all dams and impoundments for additional hydroelectric production and report to Congress within six months.

  • Federal agencies must inform the Energy Secretary before taking any action that could adversely impact the supply or distribution of energy.

Whatever the outcome, an energy policy initiative will have an impact on power quality engineers and managers, as well as the jobs and functions you perform. I'd like to hear from you about your reaction to the USEA recommendations, the Murkowski bill, and a national energy policy. Give me or any staff member at Power Quality Assurance Magazine a call with your suggestions about energy and power quality issues that are on your mind. I'll send them up to the Department of Energy, and we'll see if we can get some action on your concerns that have been swept under the carpet for too long.

Barry LeCerf, Publisher: Utility, Technology & Business Group blecerf@intertec.com www.powerquality.com