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EEI Opposes Restrictions on Utility Access to Natural Gas, Mandate on Efficient Dispatch

The Edison Electric Institute (EEI), which represents investor-owned utilities, opposes any effort by Congress to limit utility access to natural gas for electric generation, dictate what fuel should be used to produce electricity or federally mandate the efficient dispatch of generation plants, EEI President Tom Kuhn told a Senate panel last Tuesday.

Past efforts by Congress in the 1970s to ration fuel supplies and restrict fuel uses by the utility industry "adversely distorted energy markets" and impacted energy customers, he said during a Senate Energy and Natural Resources Committee hearing that explored the energy outlook for the upcoming winter heating season.

Several lawmakers suggested that cutting back power generation's consumption of natural gas this winter would mitigate the severe gas supply and price situation, caused in large part by the twin hurricanes along the Gulf Coast this summer. The Energy Information Administration (EIA) said more than 98% of the generation capacity that was brought online in the past decade uses natural gas to produce electricity.

Responding to suggestions that power generators switch from high-priced natural gas to other fuels in the short term, Kuhn said that electric power plants "[are] subject to economic, engineering and environmental realities and constraints" that would make this less than feasible. For instance, he noted that power plants that are built to use natural gas or oil cannot burn coal directly.

"That said, there is some limited potential to reduce natural gas use by power plants...However, these opportunities tend to be plant-specific," Kuhn told the committee, which is chaired by Sen. Pete Domenici (R-NM).

Sen. Jeff Bingaman of New Mexico, the ranking Democrat on the panel, favored the efficient dispatch of power generation facilities for conserving natural gas this heating season. EIA Director Guy Caruso estimated that about 20-30 Bcf of gas could be saved this winter through the use of more efficient generation facilities.

"We do have very serious concerns that that could cause an [increase in] electricity prices to consumers as well as interfere with the efficient operation of our electric system," Kuhn said. He noted that efficient dispatch should not be confused with economic dispatch. "Often the most efficient power plants are not the most economic power plants," he noted.

"I think it's important that Congress not get into the business of interfering with the regional transmission organizations and [what the] states do on generation dispatch because it can have major unintended consequences for the consumers and operation of the system."

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