Will a Clean Energy Standard help provide more certainty for utilities? During today's OnPoint, Tony Clark, president of National Association of Regulatory Utility Commissioners and Chairman of the North Dakota Public Service Commission, discusses the regulatory and legislative uncertainties facing utilities and state regulators. He also explains how U.S. EPA can provide stakeholders with more flexibility and clarity on regulations.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Tony Clark, president of the National Association of Regulatory Utility Commissioners. Tony is also the chairman of the North Dakota Public Service. Tony, thanks for being on the show.
Tony Clark: You bet, good to be here.
Monica Trauzzi: Tony, in a recent editorial House Energy and Commerce Committee Chairman Fred Upton explained why he isn't sold on a clean energy standard and he said, "The inclusion of nuclear gas and coal is an empty promise so long as other regulations preclude these sources from being utilized." Can a clean energy standard be an effective policy tool for providing more certainty for utilities and regulators?
Tony Clark: Well, you know, from a strictly NARUC perspective of course, the association hasn't taken a position on whether there should be or shouldn't be a clean energy standard. Rather, what we're really focusing in on is trying to ensure that as Chairman Upton and others on Capitol Hill make decisions about what they want to do, that they have the best information that they possibly can have from their own states. The impacts that something like a clean energy standard has is very, very state specific. So if you are from a place like North Dakota where there's vast wind resources, you might look at a clean energy standard one way and think that it could be written very well and it would be great. If you're from a place like the Southeast that doesn't have the same sorts of resources that North Dakota house for wind, you might look at a clean energy standard as something very different. So, what we always stress to members of Congress and those that we deal with on Capitol Hill is it's very important to be closely in touch with your own state, to be closely in touch with your own state utilities and regulatory commissions so that you can understand exactly what different proposals are going to mean if they're written into law at a federal level.
Monica Trauzzi: And that kind of begs the question, can a plan be put in place that's a federal plan that's fair to all or most of the states if each state has its own specific issues around the clean energy standard?
Tony Clark: Right. Well, and that's why I say, as an institution, NARUC isn't able to come to one mind with regard to a clean energy standard because, just like Congress, NARUC has lots of different constituent parts. So it's really a matter of ensuring that those who are making the decisions about these things know how it's going to apply in their own state. At state commissions we have a lot of experience working with these types of things because more than half or about half the states have some sort of renewable portfolio standard, goal, a clean energy standard, something like that. So as state commissioners, we've been working with it for some time and we're happy to help assist those in Washington as they debate these issues.
Monica Trauzzi: NARUC recently held its winter meetings and a major focus was the potential for reliability issues stemming from all the regulations that will be coming online in the short term. How concerned are you that we may see price spikes or some kind of reliability problems?
Tony Clark: Well, it's one of the issues that NARUC commissioners took up very seriously the past few days here in Washington. In fact, we passed a resolution just today that dealt with this issue in particular. And, basically, while we said we're not taking a stand on the merits or lack thereof of the EPA regulations themselves, what we hope the EPA will do and the message that we're going to be carrying as utility commissioners is that there should be a focus on a number of things. And what we really care about are issues that relate directly to consumers. So it's things like what kind of flexibility is embedded in the regulations so that the lights stay on? Reliability is a top concern for every utility commissioner across the country. We want to ensure that as these are implemented there's appropriate timelines so that industry can respond. Some of the types of things that need to happen may need to be staged in a certain way and so flexibility, with regard to timelines and realistic timelines, are very important. And then, of course, however they're implemented, it's very important that it be done with an eye towards cost because ultimately consumers have to pay for some very expensive upgrades and updating of the electric infrastructure. And so we're going to be focusing in as well and asking that as these federal regulations are rolled out, that they seek ways to minimize cost to end-use consumers.
Monica Trauzzi: Has EPA effectively been engaging stakeholders in your industry to ensure that there are no disruptions? I mean is there an active dialogue happening right now?
Tony Clark: Well, there's a very active dialogue and I do commend the EPA for that. Over the term that I've been president of NARUC, they have been very proactive in seeking out state utility commissioners and trying to dialogue with us. Now, of course, the proof is always in the pudding. I mean this is just the very beginning part of this process. It's important that we have dialogue, but it's important too that whatever comes out of that dialogue is taken to heart and implemented in such a way so that there isn't a -- they do seek ways to minimize the cost and keep the lights on and things like that. But, yeah, I mean they've been at our conferences and they've been on the phone and they've been actively engaging us, and so we do appreciate that level of engagement. And it's important, again, because so many of these things are so localized, they're so regionalized. It really is a state-by-state sort of issue and on any one of these rules that we could talk about, they may affect some states, but not affect others and they're going to affect them in different ways.
Monica Trauzzi: How will congressional efforts to stop EPA from regulating greenhouse gas emissions impact state regulators?
Tony Clark: Hard to tell. It could be something that has a dramatic impact on state regulators. It could be something that doesn't have as much of an impact and it might depend on which specific rules they decide to take up and may be able to block for some period of time. So it's really-it's hard to tell. One of the things that we've gotten I won't say comfortable with, but at least used to as state commissioners is you're dealing with a certain level of uncertainty. And for some years we've talked about ways to remove uncertainty. I'm starting to come to the conclusion that we may just have to deal with the fact that we're going to have uncertainty in this space and, as regulators, we just need to make the best decision that we possibly can given the information that's in front of us at this time.
Monica Trauzzi: So, would some kind of pause on emissions regulation be a good or bad thing?
Tony Clark: Well, NARUC, as an organization, hasn't taken a position on that. But what I will say is it will have an impact. The decisions that we are making today, as either industry or as the regulators who are looking over industry's shoulders, are decisions that literally are assets that are going to be with us for the next 20 or 40 years. So, again, it's a matter of attempting to make the best decision that you have available at that time. If there is a delay, then it might change the equation on each one of those dockets. But if there's not, we still have cases in front of us that each of us in our own states have statutory guidelines and have to make decisions on.
Monica Trauzzi: How can FERC make things clearer for your industry for regulators when it comes to its priorities on renewables and smart grid?
Tony Clark: Sure. Well, with regard to FERC, just like state commissions, often times they have statutory limitations on what they're able to do and what they're not able to do. With regard to the electricity space, there are some things that states are designated to do. There are some states that FERC is designated to do. I will compliment FERC quite a bit because they have done a very good job of interacting with state regulators. We've had a very strong relationship with the FERC over the years, NARUC state commissioners and the FERC, in working closely together. The systems that we work with are integrated systems. Although FERC takes the lead on most transmission issues and states take the lead on most distribution and generation issues, they're very closely aligned, and so it's important that we continue to have that level of dialogue.
Monica Trauzzi: Transportation Secretary Ray LaHood recently spoke of convening a meeting with NARUC to discuss pipeline safety. Talk a bit about the current state of the nation's pipeline infrastructure and whether it would be able to handle any kind of uptick in the amount of natural gas we're producing and trying to transport around the nation.
Tony Clark: Right, safety and reliability are absolutely at the top of everyone's agenda and a special utility commissioners. We have a great concern and want to ensure that our infrastructure, those gas and oil pipelines, are as safe as they can possibly be. So it's something that we have a-we'll be focusing a lot of attention on. We're pleased to work with Secretary LaHood and we share his concern. With regard to the build-out of gas pipelines, in America we've actually done a very good job, in relation to the rest of the world, in building out the gas infrastructure. In fact, we're probably the world leader in showing how it can be built out. Now, if we're talking about bringing on significant new natural gas resources, which is what it sounds like we're talking about, clearly, there's going to need to be more infrastructure that's brought into the market. We've dealt a lot with that in North Dakota where we happen to be a large oil and gas producing state, but it's happening elsewhere around the country. The key is that as that network is developed, as those pipelines are put into the ground, safety has to be the top priority of every operator, every excavator, everyone who's out there putting that infrastructure in the ground. And it's important that state utility commissions, DOT, FMSA, that we have the resources that we need to ensure that that safety is being done. We have urged that DOT authorize at the full 80 percent federal matching grant level that's allowed in the law, their reimbursement of state costs so that we can put those boots on the ground, those inspectors who will ensure that this gets done safely.
Monica Trauzzi: OK, we'll end it there. Thank you for coming on the show.
Tony Clark: Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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