Grid reliability, LNG top FERC's budg et priorities

Platts T&D - 02/10/2004

Bolstering the reliability of the U.S. power transmission system and handling applications for new liquefied natural gas facilities are among the priorities outlined by the Federal Energy Regulatory Commission in its fiscal year 2005 budget request submitted to Congress last Monday.

The introduction to the $210-million request also highlighted FERC's ongoing efforts to improve wholesale energy market oversight, infrastructure, and "confidence."

FERC said that while it hopes Congress will approve legislation establishing mandatory electric reliability rules, the agency cautioned that it "cannot wait to move forward on reliability issues" and reiterated its "goal is to set up a viable mechanism for reliability standards by next summer." To do so, the commission and industry are discussing how to improve standards, audits, training, and enforcement.

That work already was boosted by $5-million Congress added to the agency's budget in FY-2004 and the 30 additional staffers to be assigned to it in a new division within the Office of Markets, Tariffs and Rates. "The commission expects to act on several reliability initiatives in the coming months, both to get ready for the summer peak period and to help ensure that necessary improvements to the grid are built in a timely fashion," it said. To that end, FERC requested roughly the same amount in 2005 to meet its reliability needs.

Reliability concerns in the wake of last August's blackout were cited by the Dept. of Energy, whose Office of Electric Transmission and Distribution submitted a FY-05 budget request for $91-million, 12.5% above the current-year level to support the agency's initiative to expand and modernize the transmission and distribution system.

In its budget request, FERC also highlighted the "growing need for natural gas" and pointed to LNG as "another way" to meet demand. FERC noted that it has recently received a spate of applications for building LNG import facilities.

Overall, DOE submitted a $24.3-billion budget request, the highest in the agency's history and about 4% over the current year. Of that amount, roughly $2.5-billion has been earmarked for energy programs, with the balance going toward DOE's other missions -- defense, science and the environment. The FY-05 energy budget, which is about equal to the current year, includes investments to "expand the nation's energy supply, access and address the nation's energy infrastructure vulnerabilities, and develop energy assurance policies" that are consistent with the Bush administration's energy policy, Secretary Spencer Abraham told reporters.

Abraham said Bush's Hydrogen Fuel Initiative is at the forefront of the new budget, and would receive $228-million, including $173-million from the department's Office of Energy Efficiency and Renewable Energy.

Energy efficiency and renewable energy activities constitute the largest portion of DOE's energy budget, Abraham said. "However, the nation's long-term energy solution will not come from a single energy source, but from a broad portfolio of energy supply options. "Fossil energy is an essential component," Abraham said. The budget invests $447-million in research and development for advanced coal-fired power technologies, of which $287-million (a 60% increase from FY-2004) is for Bush's Clean Coal Power Initiative.