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West to Become More Natural Gas Dependent, PSE Executive Says

In the absence of a real comprehensive national energy policy, and with important policy decisions in California and British Columbia limiting options, the West will become even more dependent on natural gas in the next 10 years, according to Eric Markell, senior vice president at Puget Sound Energy (PSE). He thinks the region has no other choice.

"I think the Northwest and West Coast will become more dependent on natural gas," said Markell, speaking Friday at the Law Seminars International conference, "Buying and Selling Electric Power in the West" in Seattle. "What are the other choices?

"Does anyone really believe that conventional, pulverized coal-fired generation is going to come rushing to market? What governors are going to stand up and say, 'Bring it on'? What CEO or mayor is going to do that?

"Who is going to run out in front of the bus and say, 'I'm going to be first'? IGCC (integrated gasification combined cycle) plants have a lot of unanswered technical issues, so at the end of the day you have CO-2 [carbon dioxide] and no place to put it. There is no commercial infrastructure for handling the sequestration of CO-2. This is the reality we face."

Markell said he hears a lot of talk about clean coal but he doesn't see it happening on a commercial basis in the next few years.

California's state energy policy position against importing added coal-fired generation, along with its global climate change policy impact the Northwest, too, Markell said.

Similarly, British Columbia to the north, he said, is a net importer of energy on an annual basis -- like California -- and it is unlikely the social welfare minded provincial government is likely to allow the export of added wind, hydro, or coal-fired generation that is proposed, but still not built.

"Is the provincial government in British Columbia going to really let precious renewable wind resources and hydro projects send supplies south?" Markell said, adding that the same government would have to okay massive new transmission lines to send the power to California and other parts of the U.S. West.

"What happens up north should be paid attention to; it is a very big deal," he said.

Contributing to the problem, Markell said, is the lack of a real, coherent federal energy policy that gives "clear, executable rules" on air emissions.

Instead of a real federal energy policy, Markell called the 2005 Energy Policy Act "a hodge-podge of production incentives" that he deemed "pretty frustrating for any utility executive dealing with what Washington, DC, has served up in the last six to eight years."

The reality is that the West is a "fully integrated energy market," but in the absence of sound national policies, states like Montana and California are developing their own policies that impact the western market. "It is an extremely frustrating way to go about trying to assemble a sensible power portfolio."

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