Policy Forum Series: Reha - The Role of Natural Gas in Minnesota's Energy Future
-
Upload
environmental-initiative -
Category
Technology
-
view
620 -
download
1
Transcript of Policy Forum Series: Reha - The Role of Natural Gas in Minnesota's Energy Future
![Page 1: Policy Forum Series: Reha - The Role of Natural Gas in Minnesota's Energy Future](https://reader034.fdocuments.in/reader034/viewer/2022052619/555bd645d8b42ae4478b5362/html5/thumbnails/1.jpg)
The Role of Natural Gas
in Minnesota’s Energy Future by
Phyllis A. Reha, Commissioner Minnesota Public Utilities Commission
Environmental Initiative Policy Conference Concordia University, September 21, 2012
![Page 2: Policy Forum Series: Reha - The Role of Natural Gas in Minnesota's Energy Future](https://reader034.fdocuments.in/reader034/viewer/2022052619/555bd645d8b42ae4478b5362/html5/thumbnails/2.jpg)
At the Cross Roads • One cannot avoid risk by avoiding decisions.
• The future is uncertain, so decisions about the future will always involve uncertainty.
• Electric utilities must spend very large amounts on long-lasting systems under both political and economic uncertainty.
• Regulators must help ensure wise investments that address uncertainty and mitigate risks.
![Page 3: Policy Forum Series: Reha - The Role of Natural Gas in Minnesota's Energy Future](https://reader034.fdocuments.in/reader034/viewer/2022052619/555bd645d8b42ae4478b5362/html5/thumbnails/3.jpg)
Present Energy Prices (US-‐Energy Information Administration)
Energy Source Minnesota Price U.S. Avg. Price Period
Natural Gas: City Gate $3.21/thousand cu ft $4.32/thousand cu ft May-12 Natural Gas: Residential $9.26/thousand cu ft $12.19/thousand cu ft May-12
Coal Delivered to Electric Power Sector $ 2.01 /million Btu $ 2.41 /million Btu May-12
Electricity Minnesota U.S. Avg. Period
Residential 11.31 cents/kWh 11.97 cents/kWh May-12 Commercial 8.58 cents/kWh 10.02 cents/kWh May-12 Industrial 6.23 cents/kWh 6.57 cents/kWh May-12
![Page 4: Policy Forum Series: Reha - The Role of Natural Gas in Minnesota's Energy Future](https://reader034.fdocuments.in/reader034/viewer/2022052619/555bd645d8b42ae4478b5362/html5/thumbnails/4.jpg)
Minnesota Home Heating (US-‐Energy Information Administration)
Home Heating Source Share of Households U.S. Avg. Period
Natural Gas 68 % 51.2 % 2000
Fuel Oil 6 % 9.0 % 2000
Electricity 12 % 30.3 % 2000
Liquefied Petroleum Gases 10 % 6.5 % 2000
Other/None 4 % 1.8 % 2000
![Page 5: Policy Forum Series: Reha - The Role of Natural Gas in Minnesota's Energy Future](https://reader034.fdocuments.in/reader034/viewer/2022052619/555bd645d8b42ae4478b5362/html5/thumbnails/5.jpg)
Minnesota Electricity Generation (US-‐Energy Information Administration)
Minnesota Share of U.S. Period
Total Net Electricity Generation 3,872 thousand MWh 1.1 % May-12
Petroleum-Fired 6 thousand MWh 0.6 % May-12
Natural Gas-Fired 786 thousand MWh 0.7 % May-12
Coal-Fired 1,243 thousand MWh 1.1 % May-12
Nuclear 824 thousand MWh 1.3 % May-12
Hydroelectric 113 thousand MWh 0.4 % May-12
Other Renewables 873 thousand MWh 4.6 % May-12
![Page 6: Policy Forum Series: Reha - The Role of Natural Gas in Minnesota's Energy Future](https://reader034.fdocuments.in/reader034/viewer/2022052619/555bd645d8b42ae4478b5362/html5/thumbnails/6.jpg)
Public Utilities Commission • Protects and promotes the public interest in safe, adequate, and
reliable utility services at fair, reasonable rates.
• Provides independent, consistent, professional , and comprehensive oversight and regulation of utility service providers.
• Balances private and public interests affected in each docket so decisions are “consistent with the public interest” including – protecting the environment, – ensuring universal access to utility services, – reliability of utility services, – Promoting competitive markets and other public policy goals
directed by lawmakers.
![Page 7: Policy Forum Series: Reha - The Role of Natural Gas in Minnesota's Energy Future](https://reader034.fdocuments.in/reader034/viewer/2022052619/555bd645d8b42ae4478b5362/html5/thumbnails/7.jpg)
Next Generation Energy Act (Laws of Minnesota, 2007, Ch.136, Art.1, Sec. 2, Subd.2)
Energy Policy Goals. It is the energy policy of the state of Minnesota that:
1. The per capita use of fossil fuel as an energy input be reduced by 15 percent by the year 2015, through increased reliance on energy efficiency and renewable energy alternatives; and
2. 25 percent of the total energy used in the state be derived from renewable energy resources by the year 2025.
![Page 8: Policy Forum Series: Reha - The Role of Natural Gas in Minnesota's Energy Future](https://reader034.fdocuments.in/reader034/viewer/2022052619/555bd645d8b42ae4478b5362/html5/thumbnails/8.jpg)
Next Generation Energy Act
Utility Energy Savings Goals – 1.5% annual savings goal for all utilities* – Adjustable to 1% by commissioner – Supply side projects up to 0.5%**
• Electric utility infrastructure improvements • Waste heat to electricity generation
* Small municipal gas utilities with sales of ≤ 1 billion CF exempted from CIP. Interim savings goal of 0.75% for 2010-2012 for natural gas utilities per 2009 legislation. 1% savings goal in subsequent years.
** Gas utilities may count biomethane purchases per 2009 legislation.
![Page 9: Policy Forum Series: Reha - The Role of Natural Gas in Minnesota's Energy Future](https://reader034.fdocuments.in/reader034/viewer/2022052619/555bd645d8b42ae4478b5362/html5/thumbnails/9.jpg)
Integrated Resource Plans (IRP) (Stat. 216B.2422; Rule 7843.0100-‐0600)
• Examines a utility’s customer needs and the resources needed to meet them for next 15 years
• Develops a least cost plan, including environmental costs, to ensure that adequate resources are available in a cost-effective manner
![Page 10: Policy Forum Series: Reha - The Role of Natural Gas in Minnesota's Energy Future](https://reader034.fdocuments.in/reader034/viewer/2022052619/555bd645d8b42ae4478b5362/html5/thumbnails/10.jpg)
Integrated Resource Plans (IRP) (Stat. 216B.2422; Rule 7843.0100-‐0600)
• Considers cost-effectiveness of using both demand side and supply side resources to meet future needs
• Ensures the utility complies with all applicable laws in planning for future generation.
• Provides a public forum for stakeholders and the Commission to be informed and to have input into the plan
![Page 11: Policy Forum Series: Reha - The Role of Natural Gas in Minnesota's Energy Future](https://reader034.fdocuments.in/reader034/viewer/2022052619/555bd645d8b42ae4478b5362/html5/thumbnails/11.jpg)
Challenges Today
• Estimating natural gas supply, demand and price relationships in future markets
• Internalizing environmental “externalities”
• Valuing energy efficiency and DSM
• Valuing renewable energy
![Page 12: Policy Forum Series: Reha - The Role of Natural Gas in Minnesota's Energy Future](https://reader034.fdocuments.in/reader034/viewer/2022052619/555bd645d8b42ae4478b5362/html5/thumbnails/12.jpg)
Uncertain Natural Gas Market • Natural supplies are presently growing as
domestic shale gas is developed
• Fracturing the rock around these wells (“fracing”) may require additional costs to safely produce the gas
• Demand for natural gas is expected to grow as the overall economy improves
• Prudent planning cannot assume an endless supply of cheap natural gas
![Page 13: Policy Forum Series: Reha - The Role of Natural Gas in Minnesota's Energy Future](https://reader034.fdocuments.in/reader034/viewer/2022052619/555bd645d8b42ae4478b5362/html5/thumbnails/13.jpg)
Projected Prices Depend on Shale Gas Resource Economics (US-‐EIA, Annual Energy Outlook 2012)
![Page 14: Policy Forum Series: Reha - The Role of Natural Gas in Minnesota's Energy Future](https://reader034.fdocuments.in/reader034/viewer/2022052619/555bd645d8b42ae4478b5362/html5/thumbnails/14.jpg)
Uncertain Environmental Costs
• US-EPA initiatives -- Mercury and Air Toxics Standards (MATS) -- Cross State Air Pollution Rule (CSAPR) -- Carbon Pollution Standard for New Power Plants
• “Beyond Gas” campaign by Sierra Club and others raising concerns over natural gas development and continuing CO2 emissions.
![Page 15: Policy Forum Series: Reha - The Role of Natural Gas in Minnesota's Energy Future](https://reader034.fdocuments.in/reader034/viewer/2022052619/555bd645d8b42ae4478b5362/html5/thumbnails/15.jpg)
Valuing DSM/Efficiency • Benefits
-- Saves money -- Energy independence and security -- Improves system reliability -- Reduces peak demand, water use by power plants, GHG
emissions and other pollution detrimental to public health • Barriers
-- Need for timely, useful consumer information that can be acted on to save money and/or reduce energy use
-- Need to develop community culture -- Process of uncoupling utility rewards from maximizing
energy sales
![Page 16: Policy Forum Series: Reha - The Role of Natural Gas in Minnesota's Energy Future](https://reader034.fdocuments.in/reader034/viewer/2022052619/555bd645d8b42ae4478b5362/html5/thumbnails/16.jpg)
NGA Paper: Enhancing State Energy Efficiency by April 23, 2012 Better Informing and Motivating Consumers Table 1: Average Cost of Energy 3
Resource Average or
Levelized Cost (cents/kWh)
Energy Efficiency 2.5 – 4.3 Natural Gas (conventional combined cycle) 6.6
Coal (conventional) 9.5 Onshore Wind 9.7 Nuclear 11.4 Solar Photovoltaic 21.1 Offshore Wind 24.3
3 Energy efficiency costs: Friedrich et al 2009 and Cooper and Wood 2012. Levelized electricity costs: US Energy Information Administration, Annual Energy Outlook 2011 (Washington, DC: EIA, December 2010). http://www.eia.gov/oiaf/aeo/electricity_generation.htmlhttp://www.eia.gov/oiaf/aeo/electricity_generation.html
![Page 17: Policy Forum Series: Reha - The Role of Natural Gas in Minnesota's Energy Future](https://reader034.fdocuments.in/reader034/viewer/2022052619/555bd645d8b42ae4478b5362/html5/thumbnails/17.jpg)
Looking Forward
• A robust portfolio of both demand-side and supply-side options will reduce the eventual environmental costs of global warming and shale-gas fracturing.
• Minnesota’s Integrated Resource Planning process gives stakeholders the opportunity to be informed about, and to influence, these choices.
![Page 18: Policy Forum Series: Reha - The Role of Natural Gas in Minnesota's Energy Future](https://reader034.fdocuments.in/reader034/viewer/2022052619/555bd645d8b42ae4478b5362/html5/thumbnails/18.jpg)
Thank You !
• Phyllis A. Reha Minnesota Public Utilities Commission
121 7th Place East St. Paul, MN 55101 [email protected] 651-201-2240