by Richard T. Stuebi
The Federal government is a mighty bureaucracy, so it’s impossible to keep track of all the parts. Still, few areas are as unknown by the general public as the Federal Energy Regulatory Commission (FERC).
The FERC (it’s always referrred to as “The FERC”) is responsible for interstate regulation of energy markets, which in practice means the transmission or transportation of electricity and natural gas. As a result, the FERC is going to be a key player in all Smart Grid developments, which in turn will be a key driver of a variety of new energy technologies — renewable energy, energy storage, advanced meters, and so on.
President Obama recently appointed Jon Wellinghoff to be Chairman of the Commission. Wellinghoff is a long-time proponent of environmental protection, so it’s no surprise that he’s rapidly making moves to promote renewable energy and energy efficiency. For instance, Wellinghoff recently announced the formation of the Office of Energy Policy and Innovation, to be effective today. (Innovation in a Federal agency? Hmmmmm.)
Wellinghoff has already demonstrated the gall to radically challenge conventional wisdom — which is always a risky and courageous thing to do in the electricity sector. In late April, as noted in the New York Times, Wellinghoff told reporters following a United States Energy Association forum that baseload generation options may not be necessary in the future, thereby undercutting one of the key selling-points for the construction or continued operation of nuclear and coal-fired powerplants.
Quoting Wellinghoff: “I think baseload capacity is going to become an anachronism…People talk about ‘Oh, we need baseload.’ It’s like people saying we need more computing power, we need mainframes. We don’t need mainframes; we have distributed computing.”
Of course, Wellinghoff’s seductive vision depends on a major and costly overhaul of the national power grid, which seems light-years away to me. In his seminal New York Times editorial last November, Al Gore projected the cost of a Smart Grid at $400 billion — whereas the American Recovery and Reinvestment Act of 2009 (a.k.a., Stimulus Bill) allocates a seemingly large but comparatively paltry $4.5 billion to Smart Grid projects.
To get over the formidable humps we face in Washington, we’re going to need leaders who are willing to rattle the china on the dinner table. In Wellinghoff, it looks like we have one. His comments no doubt have a lot of people in the energy sector muttering, “What the FERC?”
Richard T. Stuebi is the Fellow of Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc. Later in 2009, he will also become a Managing Director of Early Stage Partners.