FERC Nominees Split on the Need for LNG in U.S. Gas Portfolio

The two FERC nominees agreed on most energy issues during their first appearance before the Senate energy panel Thursday, except on whether the U.S. should look to foreign countries now for its natural gas supplies.

"We need to do the most efficient things in this country first. So one of the most efficient things would be sources of gas supply in Alaska rather than to take LNG [liquefied natural gas] from Qatar," said nominee Jon Wellinghoff, a partner with the law firm of Beckley Singleton in Colorado, during a brief confirmation hearing before the Senate Energy and Natural Resources Committee.

"We may have to someday take LNG, but let's do the most efficient things first," he noted. In addition to Alaska gas, Wellinghoff cited the advances in technologies that "are going to reduce our energy loads in this country tremendously in the next 10 to 15 years," as well as the increasing emphasis on renewable energy sources.

But nominee Phillip D. Moeller, executive director of the Washington office for Alliant Energy Corp., told the Senate panel that foreign LNG sources should not be overlooked. "I think that demand is such that we need to frankly look at all sources...I think everything has to be on the table," he said, although he conceded domestic gas sources from Alaska would be "naturally more secure" than imported LNG supply.

Both candidates assured committee members, particularly Sen. Lisa Murkowski (R-AK), that they would work to bring about a natural gas pipeline from Alaska's North Slope to the Lower 48 states. "I can't image anything more critical for this country," Wellinghoff said, adding that Alaska "seems to be the most promising" gas supply source in the nation.

Moeller and Wellinghoff also agreed that the Federal Energy Regulatory Commission should do more to monitor speculative activity in the two prime markets that it regulates -- natural gas and electricity. "I think transparency in these markets is essential. To the extent we can get more data out and have that available not only for the public but for FERC to review and analyze, it will help FERC to stop speculation."

Under questioning by Sen. Ron Wyden (D-OR), the two men said FERC should release evidence of manipulation by Enron Corp. executives in the West Coast markets in 2000-2001, provided it does not jeopardize ongoing investigations. "As much as can be legally released should be," Moeller said, but he noted the Department of Justice has restricted much of the information from being divulged because of other investigations.

If confirmed by the full Senate Moeller, believed to be the first FERC nominee from the Pacific Northwest region, said the memory of the 2000-2001 energy crisis on the West Coast "will always stay with me and guide me" at the Commission.

While stressing the importance of mandatory reliability standards for the electric grid, Moeller said he believed it was important to give "deference" to different regions on this issue, particularly in the West where generation sources are located far from load centers. He further stressed the need for FERC to "continuously" monitor for inappropriate cross-subsidization, rather than follow it on a "snapshot basis."

"You may need more than strict structural rules" to prevent cross-subsidization, said Wellinghoff. "[You] may need to fully audit."

On the issue of power contracts, the two candidates said they believe FERC needs to maintain its ability to revisit contracts in the event they are not just and reasonable. "I think that what needs to be followed is [the] overall law that rates need to be just and reasonable," said Wellinghoff.

He also noted that "competitive regional markets are essential" to driving down electric rates, and pledged to work on this issue at the Commission. In addition, he said the development of solar and wind power sources has "the ability to drive down prices." These renewable sources "have to have equal access to the market. That's one of the things I want to look at FERC."

Moeller, a Republican, has been named for a five-year term at FERC expiring June 30, 2010. He would fill the Republican seat vacated by former Chairman Pat Wood in July 2005 (see Daily GPI, March 9). Wellinghoff, a Democrat, has been tapped for the remainder of a term expiring on June 30, 2008. He would fill the seat of former Commissioner William Massey who departed the agency in December 2003.

Moeller has been involved in energy policy for more than 20 years. This included a stint as senior legislative assistant to former Sen. Slade Gorton (R-WA), beginning in 1997. Wellinghoff has served in the public and private energy-related sectors for more than 30 years. He worked at the Nevada Public Utilities Commission in the early 1980s, and then was appointed the state's first consumer advocate. Wellinghoff has been an attorney and energy consultant since leaving that post.

Copyright 2006 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.


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