While the building of new energy infrastructure is a priority for the nation, misinformation about potential projects is slowing down the siting process dramatically and making it much more contentious, Dominion Resources Inc. Chairman, President and CEO Thomas Farrell said recently.
Recent projections show that over the next couple of decades, more than $30 billion needs to be spent annually on new natural gas pipelines, compressor stations, storage and other facilities, Farrell said during the Mid-Atlantic Conference of Regulatory Utility Commissioners’ 20th Annual Education Conference in Williamsburg, Va. He also stressed that a large amount of capital will be needed for building new electric transmission facilities.
Policy and market forces alike are driving those capital needs, Farrell added, citing the shale gas revolution, the U.S. EPA’s pending carbon rule, and a shift by electric generators to burning more gas and less coal. For instance, he noted that his company recently had to shut down a coal-fired plant because it was not meeting certain emissions requirements and build a transmission line to deliver replacement power into that part of the state.
“There’s going to be more and more and more of this,” Farrell insisted. The problem, he said, is that social media is accelerating the flow of misinformation about needed proposed projects. “In the hands of those who oppose the energy infrastructure, social media gone viral can erode industry credibility and make our job to communicate the facts much harder,” Farrell said.
Farrell experienced firsthand the power of social media when Dominion’s Cove Point LNG export project came under heavy fire by activists, who also protested the project in person at FERC by repeatedly disrupting that agency’s meetings.
The executive acknowledged that the power industry has not always been “on the cutting edge” with respect to using social media tools, but added, “we’re going to have to learn how to do it and we’re going to have to learn how to respond.”
Farrell said that ability to respond has become even more important with the emergence of a new coalition of opponents. He noted that opponents of new projects in the past tended to be mostly people who did not want a project to involve the use of their property. This new coalition, however, includes these people teaming up with environmental groups that want no fossil fuel use at all, as well as Tea Party conservatives who oppose government intrusion on principle, Farrell said.
“When you put those … together, that’s a very interesting coalition” that may grow even more over the next five years, he predicted.
At the same time, Farrell said, the use of fracking has transformed the U.S. into an energy superpower. While the country has long been considered by some to be the “Saudi Arabia of coal,” he said the shale gas revolution has helped make it a major player once again in world energy production. But that status stems not from the country’s fossil fuel production alone, he insisted, citing the construction of new nuclear plants in the U.S. for the first time in more than a generation, as well as the development of new solar, wind and other renewable resources. With regard to solar, Farrell said that while much of the media has focused on distributed solar generation such as that installed on rooftops, utility scale solar technology has been transformative for the power industry.
“Transitioning from more than three decades of public policy centered on energy scarcity to energy abundance is a very good problem to have,” but it is a problem nonetheless, Farrell said.
To make that transition successful, he said five goals must be set. The first is to construct needed new gas infrastructure, and the second is to comply with environmental regulations. “Wishing away regulation we might differ with is not an option,” he insisted. “We may have different views of specific components … [of a rule], but we will comply with them.”
Farrell said the third goal is to maintain a diverse fuel mix. The fourth is to avoid “magical thinking” in the public policy arena “that disregards the laws of physics, the limits of technology, and the realities of human nature in pursuit of ideological goals,” Farrell said. “Ideology is not an energy policy.”
The final goal cited by Farrell is the need to avoid “regulatory paralysis” caused by contradictory orders that threaten to stall progress and disrupt the industry’s ability to deliver reliable service to its customers. Farrell specifically noted that his company has been trying for six years so far to obtain permits to build facilities needed to replace the power produced by a coal-fired plant that was retired due to emissions requirements.
The executive acknowledged, however, that FERC and its staff have been “really good” at handling pipeline permit applications, even though the agency’s actions have become increasingly controversial due to social media. “They take a lot of grief at FERC for doing their job,” Farrell stated.
FERC Chairman Norman Bay earlier in the conference had suggested that one way to avoid some of the delays in siting infrastructure would be to create energy corridors. Farrell said the idea is a good one, but working out the details may be a bit complicated given the federal and state jurisdictional issues involved.
Farrell stressed that the issues confronting the energy industry are highly complex, and that no one “silver bullet” capable of solving all the problems reliably and inexpensively exists. Thus, he said “more hard work on energy policy” is needed and less attention should be paid to “sound bites coming from the fringes on either side.”
Finally, Farrell agreed with the assertion that the cheapest form of energy is that which is not used. However, he said getting customers to take advantage of energy efficiency and demand-side management programs has proven to be difficult.
“We can’t make them do it,” Farrell stressed. For instance, he noted that after temperatures recently started to rise in his utility’s region, customers almost immediately began complaining that they were having trouble getting off a demand-side management program that allowed the utility to control their air conditioning.
Driving that point home, Robert Beard, president and CEO of UGI Utilities Inc., reported that his company did extensive focus group work on the factors that motivate people to participate in energy conservation programs and found that “people we thought through their discussion would be very idealistic were not.”
“We were very, very surprised that at the end of every focus group that it came down to dollars and cents,” Beard said.