The global financial crisis is affecting FERC-related projects and programs, but how deeply it may impact the sector in 2009 is still unknown, said Commissioner Philip Moeller last week. He added that the impact on renewables is already pronounced.
The global credit crisis fallout has been "shocking," Moeller told a West Coast audience Friday. New renewable financing has "dried up completely," and it is not clear whether various power transmission upgrade projects can avoid being touched, Moeller said. Moeller gave a keynote address in Seattle at the Law Seminar International's conference on "Buying and Selling Electric Power in the West."
"We have already seen impact on the production tax credit (PTC) for wind projects, which are only good if you're making a profit, so that in itself has had an impact, and we're seeing the cost of financing for renewable projects shooting up by a thousand basis points in some instances, and what I heard on Wall Street a few weeks ago is that in other cases, financing has just completely dried up," said Moeller.
"What we're seeing is that even well-established pipelines that were getting capital in the five-and-a-half to six percent range six months ago have seen those costs shoot up by 300 basis points. So I am going to be very curious as how this will impact transmission." The Federal Energy Regulatory Commission (FERC) held a half-day workshop earlier this month "and the experts from Wall Street said things may soften up a little in the next couple of months, but right now things are really tight and there is just too much uncertainty out there."
Moeller said most of the projects that FERC has acted on are already under construction, but for those that haven't broken ground there are starting to be some delays, including projects pushed back because of lower natural gas demand.
For the coming year, with the change of leadership at FERC, Moeller said he is looking to power transmission as something that can be dealt with mostly on a bipartisan basis as the emphasis for global climate change mitigation, renewables and a push for a smarter, more reliable grid get more exposure in Congress and within the Obama administration.
The commissioner, a Republican, advised, however, that he expected to see a new tone at FERC after President-elect takes office Tuesday. It is then expected that FERC Commissioner Suedeen Kelly, a Democrat, or Jon Wellinghoff, an Independent, will take over as chairman. Current Republican Chairman Joseph Kelliher has said he is stepping down, but not out. Since Kelliher plans to remain on the Commission, it would still have a 3-2 Republican majority, Moeller noted. The power to set the agenda will pass to the new chairman, but lack of a majority could undermine the chair's leadership.
While transmission was at the top of his list of issues FERC will focus on in 2009, Moeller also spent time detailing a half-dozen others: (a) integration of renewables into the grid; (b) improving overall grid reliability; (c) implementation of FERC's expanded enforcement powers; (d) addressing climate change/greenhouse gas emissions; (e) implementing the California Independent System Operator's market redesign; and (f) demand response/energy efficiency and conservation.
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