Elizabeth Moler Elizabeth Moler, chair
of the Federal Energy Regulatory Commission and World Cogeneration's 1994
Executive of the Year, seems quite at home in the tumultuous times sweeping
the energy industry.
Moler earned a rare distinction among top level
government appointees, having been nominated to serve at FERC by three
different presidents-Reagan, Bush and Clinton.
"I feel like I spent a whole career sort
of preparing for the job, in that I walked in with a familiarity, to a
more or less extent, with all the industries we regulate. ... I feel I
was very lucky to have the preparation I had," Moler said in an exclusive
interview with World Cogeneration.
She could hardly have picked a more significant
era to be involved with the energy industry, Moler acknowledges. There
have been-particularly on the gas side-just major, major changes in the
six years I've been here. And as I look toward the next five years, which
I now have the luxury of doing, I can see momentous changes in the electric
industry as well. Its just absolutely clear its coming.
The electric industry is entering the transition.
Its a transition that is being wrought by changes in technology and changes
in basic economics.
While some observers suggest utilities and power
producers simply need to work harder to keep their customers, Miler believes
the stranded cost issue is more complex than that.
"I think the issue in the electric utility industry
is a lot more complex than that, though. They have rate-based assets that
were built, and approved by regulators, in an era when the electricity
new capacity was a whole lot more expensive than it is now. They also
have deferred costs for pensions and other programs and for demand side
management, for example, that are regulatory assets, but they're not actually
recovered. ... And environmental compliance costs. They're putting scrubbers
or doing things for the Clean Air Act that make the product from those
existing generators even more expensive. So how do you pay for those?
Who should be responsible for those costs?
"I personally believe that figuring out
a sensible transition plan that does not threaten the financial viability
of the industry is one of the most daunting challenges we face.
Open access to the power grid is an important
issue for Moler. Before the Energy Policy Act came about the commission-over
my objections, by the way-had denied access for cogenerators and other
QFs, under a lot of our merger conditions. We've reversed that. We are
very aggressively pursuing an open access, wholesale and bulk power market
where all generating sources will have access.
Some members of Congress have expressed concern
about the states aggressive moves toward retail wheeling and whether they
actually have the authority to do so. Moler believes the law is ambiguous.
It says that they can use any authority they
may have. ... Under the scheme of things the states will have to figure
out if they want to do that. We have been told very clearly, unequivocally
in the Energy Policy Act that we're not going to mess around with it.
Were not. If they do retail wheeling, the rates for those transactions
for the transmission are jurisdictional to the commission. And we have
said so. ... So they'd authorize retail wheeling and then lose the jurisdiction.
One of the provisions of the Energy Policy Act
gave FERC the authority to require utilities to wheel to others even if
they do not want to, but the commission has not had to exercise that authority
very often, Moler noted.