The last time the Federal Energy Regulatory Commission (FERC) penetrated the public consciousness of most Californians was during the great electricity deregulation debacle of 2000 and 2001. As the crisis spiked and electricity prices shot sky-high, California's governor, Gray Davis, begged FERC to impose price caps. But while Vice President Cheney scoffed, the chairman of the commission, Pat Wood, who had been hand-picked for the job by Enron's CEO, Ken Lay, did nothing. Wood had been appointed with a mandate to deregulate electricity markets everywhere, and interfering with Enron's profits in California was not part of his job description.
UPDATE: FERC's press secretary, Mary Driscoll, corrected my account. Pat Wood was not appointed until after price caps were belatedly instituted. See here for more details.
Enron's implosion and the exposure of its role in manipulating California's electricity rates effectively gutted efforts at further electricity market deregulation. It's all just a bad memory now, eight years later. But FERC is set, once again, to be a big player in California, as the interests of its new chairman, Jon Wellinghoff, dovetail exquisitely with stimulus plan spending priorities and the state's effort to regulate greenhouse gas emissions from automobiles.
Fortune editor Todd Woody noted in his Green Wombat blog two weeks ago that the biggest chunk of renewable energy spending in the stimulus plan is allocated to modernizing the electricity grid -- some $11 billion. That's going to be a job that falls directly under the regulatory purview of Wellinghoff, and as Woody wrote yesterday, by all indications that means good things for the renewable energy industry.
At a Nov. 18 briefing on Capitol Hill, Wellinghoff showed that he's been thinking extensively about how to upgrade the grid to connect renewable energy produced in remote areas to population centers on the coasts. "In the whole Midwest of this country there are virtually no high- voltage transmission lines," he said, displaying Google's proposal to wean the U.S. from fossil fuels by 2030. "If you overlay where the wind is, all the wind is in the middle of this country -- all those areas where we do not have sufficient transmission. Hopefully we can get the structure to put renewables on the grid and improve the grid to make it a smart system that can ultimately deliver these resources in an efficient way."
But that's not all. Wellinghoff is also interested in modernizing the grid so it works more effectively with electric cars -- an industry about to get a huge boost once California's strict laws regulating emissions go into effect.
Federal Energy Regulatory Commission Chairman Jon Wellinghoff said Monday regulators and the automobile industry must integrate electric vehicles into the national power grid....
With cars often used only a small fraction of a 24-hour day, battery-operated vehicles could be paid for services to make the national grid more efficient, as part of an artificially intelligent transmission system...
Batteries in plug-in vehicles could help in an essential part of managing a grid called balancing, the second-by-second matching of power supply with demand...
Wellinghoff said the FERC could create rate structures that could help to encourage the plug-in market, paying car owners for services such as balancing and helping to solve intermittancy challenges that arise with some renewable energies such as wind and solar. When the sun isn't shining and the wind blowing, a vast multitude of batteries in cars stored in sleeping owners' garages could help provide supply.
From the perspective of renewable energy advocates, the panorama emerging in just the first week of the Obama presidency is remarkable. California is given the long-awaited green light to move ahead with regulations that will give a clear incentive to the world's automakers to invest in plug-in hybrids and electric cars. The stimulus plan provides funding for modernizing the electricity grid so as to make better use of renewable energy. And a man is put in charge of the Federal Energy Regulatory Commission who has made encouraging the rollout of renewable energy his life work and who believes that the electricity grid should be reshaped so as to better work with plug-in hybrids and electric cars.
What do we get next week?
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