Spitzer: Energy markets navigating tensions guided by earlier success

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By Peter Gardett

Managing Editor, AOL Energy

 

Efforts to build new transmission and expand natural gas production in the U.S. have been a qualified success because of "studious" efforts to craft the right price signals and break down traditional monopolies on power generation and sales, a former state and federal energy commissioner says.

There has been more transmission built "in the last ten years than in the previous ten," former Federal Energy Regulatory Commissioner Marc Spitzer told AOL Energy in a recent discussion about his priorities as he reenters the private sector. Spitzer is currently a partner in the Electric Power Group at law firm Steptoe & Johnson, following his original indication he would leave FERC last summer and a final voluntary departure from the Commission in mid-December.

The difficulty of being a regulator in the energy business lies in creating a "healthy tension" between regulators and the regulated community as a way of achieving a proper balance, Spitzer said. FERC is widely regarded as a bipartisan, almost academic, institution in a polarized Washington, DC. FERC has come under fire from some quarters during the tenure of Chairman Jon Wellinghoff for market design and case rulings critics have said favor renewable energy and incumbent generators.

For more on the controversy surrounding some aspects of Wellinghoff's chairmanship, read more here on AOL Energy.

"To benefit ratepayers all fuel options should be considered and allowed to compete," Spitzer said. Quoting Thomas Jefferson on states as the laboratories of democracy, he said that choices by states on renewable generation sources need to be respected.

FERC's success in boosting the prospects of natural gas and transmission projects through its individual decisions and its more over-arching rulemakings, the most recently prominent of which is FERC Order 1000, is representative of "a pretty studioU.S. effort by both industry and regulators to increase [investment in] electric transmission and natural gas infrastructure," Spitzer said.

Read a guide to FERC Order 1000 here.

Asked about perceptions that U.S. energy infrastructure remains under pressure despite the additions of the past decade, Spitzer says that the sector's record is a success story, if an incomplete one. Much of the impact on infrastructure spending in the past few years has been linked to the difficulty the US economy has had emerging from the recession triggered by the financial crisis of 2008, Spitzer said.

Managing the tricky and continually-evolving relationship between state and national bodies remains a core part of FERC's task, Spitzer said, and the extension of the commission's successes in infrastructure and natural gas to smart grid rollouts relies on navigating competing interests once again.

"There are aspects of smart grid that are both wholesale and retail," Spitzer said. While "smart meters that make the distribution system more efficient also make the bulk grid more efficient, to get full value means coordination between the states and FERC."

Read an interview with the head of NARUC, the group that represents state regulators in Washington, DC, on AOL Energy here.

"How do you handle the costs when the load share ratio that utilities traditionally rely on doesn't match up with the benefits?" Spitzer asked.

As he builds on his experience as a state regulator, a private sector executive and a federal commissioner in his new role as a Washington lawyer, Spitzer continues to seek the healthiest balance for the long term in addressing the issues that take center stage in national infrastructure and energy debates.

 

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