Event Recap

On the heels of the Trump administration’s call for massive infrastructure spending, three experienced leaders in government and industry offered their takes on the future of energy infrastructure last week at a packed Saeih Hall.

Jon Wellinghoff, a former FERC chairman, Ed Krapels, CEO of transmission developer Anbaric and Allen Fore, a VP at pipeline operator Kinder Morgan, discussed the opportunities and challenges facing development of U.S. energy infrastructure and how policymakers and markets can overcome barriers to development. The panel was moderated by Steve Cicala, assistant professor at the Harris School of Public Policy.

To set the stage, Terence Donnelly, the Executive Vice President and Chief Operating Officer of ComEd, gave his views as the day-to-day manager of a utility that covers more than 4 million customers across northern Illinois. Donnelly underscored a key development in the energy landscape that is disrupting the traditional business model for many utilities and infrastructure developers.

“People want their energy consumption to be as simple as ordering a car on Uber or picking a movie on Netflix,” Donnelly said. “Incumbent energy companies need to adapt because energy consumerism will advance, and big tech and entrepreneurs will solve problems energy consumers perhaps haven’t even yet imagined.”

Donnelly hit on a significant, ongoing development in the energy delivery industry that shaped the panel’s discussion: The conflict between distributed energy-the ability for consumers to plug into a local microgrid or generate their own electricity via solar panels on their roof-and the traditional model of consumers receiving power from a centralized utility.

When given a choice between the two, Wellinghoff said, “People will opt for [distributed energy] because people do want control and choice with their energy.”

As the longest serving FERC chairman, from 2009-2013, Wellinghoff reviewed countless interstate transmission and natural gas project proposals. Without a FERC permit, a project can’t move forward. But that’s far from the only level of approval developers need, Fore explained.

“Dynamics have really changed over the last several years, since Keystone,” Fore said, referring to a pipeline that would transport oil from tar sands in Alberta, Canada. “Whoever thought a pipeline would be part of a national political debate?”

The Keystone XL project was ultimately rejected in 2015 by the Obama administration, which cited climate change as its main reasoning (It has since been reapproved by President Trump). Local and state opposition at points along the proposed pipeline route helped derail development, illustrating the risk companies like Fore’s, which manages more than 85,000 miles of natural gas and product pipeline, face in betting on large interstate infrastructure projects.

The same local forces can disrupt transmission proposals. Krapels and Fore both referenced the issue of NIMBY (“Not in My Back Yard”), which seemingly has reached a fever pitch across the United States in recent years. In fact, they referenced a new acronym now: BANANA — Build Absolutely Nothing Anywhere Near Anything.

“We can continue to grow infrastructure, provided we have a regulatory framework that is consistent and reliable,” Fore said. “When states are changing regulations during the game, that can potentially be fatal to projects.”

Unlike Fore, however, Krapels’ company has more leeway with projects. Anbaric is an independent, non-utility transmission company, so while its projects require FERC approval, Anbaric can be more selective about where it chooses to develop. And the state-by-state approach to renewable energy development has been a boon to Anbaric.

Krapels noted that states see renewable energy projects as opportunities for local economic development, leading to projects that emphasize state and local benefits and that reflect renewable policy aspirations.

“For New England and New York, importing energy from ‘abroad’ is simply not politically popular or feasible,” he said. “New York would rather develop offshore wind than import wind from the Midwest. For me right now, the Midwest play is great for wind, but it is not going to go more than one or two states over.”

Wellinghoff noted that though New York’s offshore wind generation may cost more than if the state had financed a transmission line to import cheap wind power from the Midwest, the cost difference is narrowing as technology improves efficiency.

President Trump’s infrastructure proposal also calls for streamlining the federal infrastructure review process, something pipeline developers and clean energy transmission companies alike could support.

“I would welcome a two-year rather than a six-year process,” Krapels said. “I’m all for it. It’s a good thing.”

Regardless of what happens to Trump’s infrastructure plan, all three panelists consistently said regulatory certainty is key to meeting future energy demands. The U.S. hasn’t passed major federal energy legislation since 2005.

“We have no comprehensive energy policy in the U.S.,” Wellinghoff said. “‘All of the above’ is a slogan, not a policy. Obama used it, Trump uses it, but it’s not a policy … It would go a long way to reducing risk for building infrastructure. We have to put a policy in place.”

Registration

Though often overlooked, long-distance pipelines and power lines are critical components of the U.S. energy system, bringing fuel and electricity from the places they are produced to demand centers, where they power our lives. Today, there are more than 1.5 million miles of natural gas pipelines in the United States and 600,000 miles of transmission system power lines. As important as this system is for producers and consumers alike, it often faces substantial challenges. Several recent pipeline projects have been delayed or interrupted due to local opposition. This has led to some unexpected consequences, including the import of Russian LNG into the U.S. Northeast. Unlike the largely national natural gas system, the U.S. power system consists of three separate grids with multiple system operators, and state regulators have substantial authority over project approvals. Because of the complexities of this system, just 32 high-voltage, interstate transmission power lines have been built since 2000, totaling only 3,000 miles. In 2017, numerous interstate transmission projects were cancelled due to a combination of market forces and barriers imposed by states through which new lines would pass. Addressing these barriers could reduce energy costs and accelerate clean energy development in the United States. New, long-distance power transmission that brings solar and wind power from the most productive parts of the country to demand centers could dramatically reduce the costs of renewable electricity. What is the path forward? Join EPIC for a conversation with Jon Wellinghoff, former Chairman of the Federal Energy Regulatory Commission; Ed Krapels, CEO of transmission developer Anbaric; and Allen Fore, Vice President of Public Affairs at pipeline operator Kinder Morgan, on the lessons learned by industry and regulators over the past several years and the future of U.S. energy infrastructure. The event will be moderated by Steve Cicala, an assistant professor at the Harris School of Public Policy, with welcome remarks from ComEd Executive Vice President and Chief Operating Officer Terence R. Donnelly. Not in Chicago? Watch Live Online: epic.uchicago.edu/live Contacts Bethel Haile: bhaile@uchicago.edu
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