Discussions on natural gas, the value of renewables and energy subsidies at the National Association of Regulatory Utility Commissioners (NARUC) summer committee meetings prepared U.S. utility regulators for decisions they will be making on controversial state energy policy issues that could make or break renewables in the days to come.
In a session on hydraulic fracturing (fracking), the controversial method being used by the oil and gas industry to develop unconventional shale deposit reserves, QEP Resources CEO Charles Stanley talked about how long and safely fracking has been used and U.S. Department of Energy Deputy Assistant Secretary for Oil and Gas Christopher Smith noted that immense new U.S. natural gas supplies have caused “a tectonic shift in the way we think about energy.”
In another session, General Electric (GE) Capital’s Steven Taub told regulators GE’s $20 billion portfolio includes an $8 billion commitment to renewables and added “renewable energy is one of the main places where the money is going.” Renewables’ price competitiveness is only part of the story right now, Taub said, adding “One of the things you learn in Corporate Finance 101 is portfolio theory: Having assets in your portfolio that deliver a steady return can improve the overall risk-return of the whole portfolio.”
Over the first fifteen years of their subsidies’ durations, DBL Investors Managing Partner Nancy Pfund told regulators in an energy subsidy debate, the nuclear industry got ten times (about $3.3 billion per year) the subsidies (in 2010 dollars) and the oil and gas industry got five times (about $1.8 billion per year) the subsidies that renewables got (just under half a billion).
“Washington spin” and “misinformation and disinformation” was how American Petroleum Institute Chief Economist John Felmy characterized Pfund’s descriptions of his industry’s subsidies. Carnegie Mellon University Department of Engineering and Public Policy’s M. Granger Morgan cautioned regulators that energy subsidy approvals must “address how a subsidy will be turned off once it is no longer needed.”
“A new study,” Pfund noted, “shows the ITC, when you look at it over the life of the credit, by creating solar power purchase agreements and leases, provides a 10 percent return to the federal government, [which] blows apart the notion that this is welfare at the taxpayer’s expense,” Pfund said. “Quite the opposite -- it’s a revenue generator.”