Washington (Platts)--20Feb2008

The challenge of addressing climate change lays bare a "complete fiction"
that energy and environmental policies are not intertwined, a senior
federal regulator said Wednesday.

The notion that there are "two separate universes" -- one for energy
policymakers and another for environmental policymakers -- may be "a tenable
fiction in most areas, but it utterly fails, utterly collapses if you look at
climate change," US Federal Energy Regulatory Commission Chairman Joseph
Kelliher told the National Electricity Delivery Forum in Washington Wednesday.

Citing the need to balance energy and environmental policy as part of the
climate change equation, Kelliher said some solutions that provide "good
outcomes from a climate change point of view may be sound energy policy."

Other solutions may be acceptable energy policy, but some "will be
profoundly unwise or reckless energy policy," he said. "We could meet the
climate change challenge, but in a way that is reckless energy policy and
really incurs tremendous costs for electricity consumers."

The US likely needs "lower demand levels and higher prices for
electricity if we are going to meet the climate challenge" than it would need
to meet only challenges to supply security, Kelliher said. "I think we should
accept that," he added. "That is a reality."

--Craig Cano, craig_cano@platts.com