Winehole23
11-16-2012, 03:43 AM
America’s vast new surplus of natural gas could lead to great prosperity and a cleaner environment. But if we don’t fix our decrepit, blackout -prone electric grid, we could wind up sitting in the dark.
By Jeffrey Leonard
Our supply of natural gas currently outstrips demand and will continue to in the immediate future. While the best long-term outcome for the country is to maximize the amount of gas available to natural gas power plants for electricity generation, the natural gas industry is at the moment looking for ways to expand into new markets—perhaps analogous to the aluminum industry’s invention of the need for aluminum siding on brick houses in the 1950s. Congress and the administration should be wary of proposals to subsidize potentially large diversions of natural gas to stimulate demand. For example, a bipartisan bill Congress considered this year would provide billions of dollars in tax credits to boost deployment of natural gas-powered cars and trucks, and to subsidize a program to build out natural gas fueling infrastructure across the nation. While there is a place for feet and certain heavy-duty trucking vehicles powered by compressed natural gas, the relative inefficiency of natural gas engines—and the federal government’s long history of failed energy boondoggles—would argue against making natural gas the government-backed fuel of choice for passenger vehicles.
The important point is this: the opportunity for the electricity industry to lock in maximum amounts of long-term gas supply at a time of low prices is like the opportunity for American consumers to refinance their thirty-year mortgages when interest rates are low. Policymakers should favor this outcome, because it will benefit American electricity consumers with lower prices for decades to come.
Policymakers should also make sure that our existing regulatory apparatus is updated to reflect the growing interdependence of the natural gas and electricity industries. Currently, the Federal Energy Regulatory Commission (FERC) regulates both industries separately. Congress should direct FERC to develop a long-term integrated resource plan for the two industries together. The plan should be updated every five years and include a twenty-year outlook for supply and regulatory issues, to ensure that no natural gas supply shocks disrupt the American bulk electricity system due to a lack of foresight. FERC must be empowered, for instance, to ensure that both the gas and electricity industries take precautions to prevent short-term pipeline service interruptions resulting from severe storms, terrorist attacks, or other events. With an increasing dependence on natural gas for electricity, such pipeline disruptions could mean blackouts and power shortages for an entire region for days on end.
This brings us to the second, and much more menacing, precondition for capturing the full potential benefits of the current natural gas supply boom: we must fix our decrepit, vulnerable, and long-neglected electrical grid. Today, the average substation transformer in the U.S. is forty-two years old—two years older than its expected life span. A recent Department of Energy report warned that 70 percent of the largest high-voltage power transformers—each weighing up to 800,000 pounds—are more than twenty-five years old, and subject to an increased risk of failure. As of now, replacing one of these enormous transformers, should it be attacked, or simply break down, can take twenty months or longer. Even without any major attacks or breakages, most of the equipment on the grid is already so antiquated that roughly 500,000 Americans lose electricity for at least two hours every single day.
http://www.washingtonmonthly.com/magazine/november_december_2012/features/how_we_could_blow_the_energy_b041072.php?page=2
By Jeffrey Leonard
Our supply of natural gas currently outstrips demand and will continue to in the immediate future. While the best long-term outcome for the country is to maximize the amount of gas available to natural gas power plants for electricity generation, the natural gas industry is at the moment looking for ways to expand into new markets—perhaps analogous to the aluminum industry’s invention of the need for aluminum siding on brick houses in the 1950s. Congress and the administration should be wary of proposals to subsidize potentially large diversions of natural gas to stimulate demand. For example, a bipartisan bill Congress considered this year would provide billions of dollars in tax credits to boost deployment of natural gas-powered cars and trucks, and to subsidize a program to build out natural gas fueling infrastructure across the nation. While there is a place for feet and certain heavy-duty trucking vehicles powered by compressed natural gas, the relative inefficiency of natural gas engines—and the federal government’s long history of failed energy boondoggles—would argue against making natural gas the government-backed fuel of choice for passenger vehicles.
The important point is this: the opportunity for the electricity industry to lock in maximum amounts of long-term gas supply at a time of low prices is like the opportunity for American consumers to refinance their thirty-year mortgages when interest rates are low. Policymakers should favor this outcome, because it will benefit American electricity consumers with lower prices for decades to come.
Policymakers should also make sure that our existing regulatory apparatus is updated to reflect the growing interdependence of the natural gas and electricity industries. Currently, the Federal Energy Regulatory Commission (FERC) regulates both industries separately. Congress should direct FERC to develop a long-term integrated resource plan for the two industries together. The plan should be updated every five years and include a twenty-year outlook for supply and regulatory issues, to ensure that no natural gas supply shocks disrupt the American bulk electricity system due to a lack of foresight. FERC must be empowered, for instance, to ensure that both the gas and electricity industries take precautions to prevent short-term pipeline service interruptions resulting from severe storms, terrorist attacks, or other events. With an increasing dependence on natural gas for electricity, such pipeline disruptions could mean blackouts and power shortages for an entire region for days on end.
This brings us to the second, and much more menacing, precondition for capturing the full potential benefits of the current natural gas supply boom: we must fix our decrepit, vulnerable, and long-neglected electrical grid. Today, the average substation transformer in the U.S. is forty-two years old—two years older than its expected life span. A recent Department of Energy report warned that 70 percent of the largest high-voltage power transformers—each weighing up to 800,000 pounds—are more than twenty-five years old, and subject to an increased risk of failure. As of now, replacing one of these enormous transformers, should it be attacked, or simply break down, can take twenty months or longer. Even without any major attacks or breakages, most of the equipment on the grid is already so antiquated that roughly 500,000 Americans lose electricity for at least two hours every single day.
http://www.washingtonmonthly.com/magazine/november_december_2012/features/how_we_could_blow_the_energy_b041072.php?page=2