Washington Energy Report
April 24, 2009
On Wednesday, FERC Chairman Jon Wellinghoff addressed a number of ongoing energy issues during a U.S. Energy Association forum, including his belief that renewable energy and demand-side management could significantly mitigate and perhaps eliminate the need for traditional baseload power plants. Additionally, Chairman Wellinghoff discussed the Commission’s ability to regulate carbon credit markets.
In terms of baseload demands, Chairman Wellinghoff stated that U.S. renewable resources, coupled with efficiency measures, could eventually lessen the nation’s dependence on coal and nuclear power plants to the point where new plants may no longer be needed. Chairman Wellinghoff cited hundreds of gigawatts that could be developed from wind energy in the Midwest, solar power resources in the Southwest, and hydrokinetic and biomass energy elsewhere in the U.S. Chairman Wellinghoff also stated that he wants more demand-side management developed so energy efficiency increases while utilities can still make profits.
However, before any of these developments can become a reality, Chairman Wellinghoff noted that developing a smart grid within the next three to five years is crucial. Only a smart grid operating on a system with wide interconnections can help level load responses so that problems with unsteady wind power are addressed. In the meantime, Chairman Wellinghoff predicted that natural gas will continue in its current role in generating electricity during a transition period that may last more than 30 years.
Chairman Wellinghoff also took the opportunity to state that the Commission has the expertise and resources to regulate “physical” carbon credit markets if a cap-and-trade program is eventually established. However, Chairman Wellinghoff stopped short of saying the Commission should also regulate carbon derivatives because it may require the Commission to more than double its current staff. As such, Chairman Wellinghoff admitted that there may be a preference to have one agency regulate all carbon markets.