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Sen. Murkowski Addresses NARUC at Winter Meeting

WASHINGTON, D.C. – U.S. Sen. Lisa Murkowski, R-Alaska, today gave the following remarks at the National Association of Regulatory Utility Commissioners’ (NARUC) winter meeting:

“Good morning and thank you for the opportunity to initiate your Capitol Hill Update.  It is a pleasure to be with such a large group of distinguished public officials and industry leaders – and an honor to be your ‘lead-off batter’ this morning.  I am grateful to Commissioner David Wright for the invitation and for his leadership as your President this year.  Commissioner Wright has testified before our Committee, and I appreciate the effort he makes to share his knowledge and experience with the nation. 

“Your association has now been a major contributor to the development of energy policy for almost 125 years.  We count on you to present your views in the federal arena, as you have always done, with vigor and precision.  Regulatory Commissioners have a solemn duty to balance the interests and needs of customers and investors according to the rule of law.  It is appropriate that your organization has the scales of justice on its seal.

“Without principled and judicious regulation, maintaining and prudently expanding critical energy infrastructure would be impossible. Your responsibilities, always weighty, are now more challenging than ever.  Today you must navigate a weak economy, and a host of new and ever more demanding environmental regulations.  And as if that weren’t enough, you have an additional task.  Like all of us in public life with responsibility for energy policy, you must find ways to reasonably balance our nation’s energy needs with our environmental concerns – and the sometimes very real conflicts that emerge from the laws and policies governing each of those areas.

“We all want and need responsible environmental laws.  Coming from Alaska, a state with unparalleled beauty and awesome natural features, strong environmental values are in my bones.  At the same time, the last several years alone have illustrated why we need reliable and affordable energy.  The need for a better balance between energy and the environment is referred to so often it almost seems trite, but that does not change the fact that today we are too far from getting that balance right.  Too often, the scales are shifted away from energy concerns.  Too often, environmental regulation trumps energy production – even if both are eminently possible.  That is a genuine detriment to our economy and hard-working Americans – and ultimately, it does little to protect the environment, either.

“Today, I would like to spend a few minutes on energy policy generally and on the balance between environmental regulation and the reliability of electric supply. Over the last 10 months or so, I have spent more time on that balance than I had planned.  Based on what I have learned so far, I intend to continue my efforts, and would ask for your help.

“I understand you have just heard from Dan Yergin.  A review of Mr. Yergin’s latest book, The Quest, appeared not long ago in the New York Times calling him ‘America’s most influential energy pundit.’  The Times review also had this to say:  ‘When it comes to assessing the world’s energy future, Mr. Yergin is a Churchillian. He argues that we should consider all possible energy sources, the way Winston Churchill considered oil when he spoke to the British Parliament in 1913. ‘On no one quality, on no one process, on no one country, on no one route, and on no one field must we be dependent,’ Churchill said. ‘Safety and security in oil lie in variety and variety alone.’

“Now I am not a pundit, but I do believe, as attributed to Mr. Yergin and according to what Churchill is reported to have said almost 100 years ago, that ‘safety and security in energy [do] lie in variety and variety alone.’ As policymakers, I believe we should strive to make energy more abundant, affordable, clean, diverse, and domestic.   Our nation is blessed with tremendous domestic resources – from hydropower to shale gas – just waiting to be harnessed for the good of our economy and our security.

“In his recent State of the Union address, President Obama echoed what I, along with many of my colleagues, have been saying for several years now: ‘This country needs an all-out, all-of-the-above strategy that develops every available source of American energy.’  I look forward to working with the President and with colleagues on both sides of the aisle not only to develop that strategy but also to ensure that, at a minimum, federal laws and regulations do not threaten or prevent the development of energy with the attributes I just mentioned.  

“There is a significant role for you in this effort.  We need you to make good decisions that rest on tested evidence and reflect careful and fair processes. Resist the temptation to legislate yourselves, but do speak your mind on striking the energy/environmental balance. 

“A ‘case in point’ is the reliability of electric supply.  Today, as always, the challenge is to enable our electric supply to be as reliable, safe, and secure as possible.  A healthy, abundant supply of electricity is absolutely necessary – as critical to public welfare and the economy as blood is for the body.  Electricity must also remain affordable, of course.  And here, balanced laws and regulations can make all the difference.  

“As you know, it is very difficult to move legislation in the Senate these days.    I wish the Senate would focus more of its attention on what is possible – to borrow a phrase from baseball, we could accept a couple of “singles” in the place of a ‘home run.’   But a lack of legislation does not mean that those of us in Congress will not be busy throughout the rest of 2012.  Given the impact of executive branch regulations, oversight is increasingly requiring our attention.

“In recent months, our oversight work has persuaded me that EPA is not sufficiently taking electric reliability into account as it imposes a string of new rules regulating emissions from power plants. This has led me to start work on a bill that would equip the Federal Power Act with a ‘safety valve’ to make sure energy and environmental considerations are at equilibrium. 

“Before explaining that concept, I think it’s worth exploring how we came to this point.  More than a year ago, Commissioner Phil Moeller of the Federal Energy Regulatory Commission formally raised the question about the information EPA would get from FERC and the process in place to ensure that EPA would take electric reliability into account as it developed a series of environmental rules. As Commissioner Moeller has put it, ‘I am fuel neutral, but not reliability neutral.’  I share that view, and commend him for his leadership on this issue.

“Last spring, I became increasingly worried that sufficient attention was not being paid to electric reliability, so I began what became a lengthy correspondence with FERC and EPA that ultimately led to a full day of the Commission’s technical conference on reliability in November.  Some of your colleagues were among the witnesses who helped develop a significant record of evidence.  I also understand that just last week FERC issued a staff White Paper for comment that proposes how FERC might ‘advise [EPA] on requests for extension of time to comply’ with one of EPA’s recently-issued major rules – the so-called ‘MATS’ or ‘Utility MACT’ Rule.  And today, you are launching with FERC your ‘forum to explore reliability issues stemming from new and pending environmental rules for the power sector.’ I commend you for that and ask you to insist upon an ongoing process for getting evidence into the public record so that environmental rules can be written without putting electric reliability unduly at risk. 

“According to a series of analyses from a number of entities, including the North American Electric Reliability Corporation or NERC, EPA’s rules will lead to significant retirements of electric generating capacity.  The timing of retrofits also remains a problem. 

“I must pause here to commend NERC for the professional and balanced way it has consistently met its responsibility to assess thoughtfully and accurately the potential impact of EPA rules on reliability.  Under difficult circumstances, NERC has demonstrated by its analysis the value of its independence from market participants – and, frankly, even from policymakers. I am also grateful for the work of that relatively small set of women and men in the community of what I call “electric reliability professionals.”

“As NERC and others have projected, because of the EPA rules we are beginning  to see announcements of plant retirements with potential reliability impacts. On January 26, for example, one major owner of electric generating units announced that it would retire almost 3 gigawatts of electric capacity because of a single EPA rule – the MATS Rule.  Incidentally, those retirements by just one company constitute more than 50 percent of the retirements that EPA estimated would result nationwide from that single rule alone.  Of course there are many more major rules that are close to being issued – that will only add to those numbers.

  “My concerns about the reliability of our electric grid have led me to begin to prepare legislation that would add a ‘safety valve’ to the Federal Power Act. As I envision it, a true safety valve must have two core features. First, it must ultimately ensure that federal regulations do not threaten electric reliability.  It must also encourage EPA, as it develops its rules, to take into account thoughtful input from independent electric reliability professionals.

“Striking the right energy/environmental balance is crucial for our national welfare, but if we work together, we can make progress on both.  So let’s work together.  Let’s get it right.  Thank you again for your time this morning.”

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