NATURAL GAS SUPPLY ASSOCIATION

CONTACT: Charlotte LeGates

PHONE: 202/326-9316

FAX: 202/326-9334

E-MAIL: clegates@ngsa.org

Union Pacific's Niemiec Discusses Environmental and Economic Consequences of Mandated Renewables Use with Regulators

Also Addresses Open Access, Potential Affiliate Abuse

Washington, DC--Speaking on behalf of the Natural Gas Supply Association, Donald W. Niemiec, President, Union Pacific Fuels, Inc., and Vice President, Marketing, Union Pacific Resources Co., yesterday cautioned state and federal policymakers that mandated use of renewable energy could cause "unintended, damaging consequences" to both the economy and the environment.

Niemiec, speaking at the Department of Energy / National Association of Regulatory Utility Commissioners (DoE/NARUC) conference in California, pointed out that "even improved new generation renewable capacity is, on average, twice as expensive as new capacity from the most economical fossil fuel alternative, and triple the costs of surplus electricity."

Niemiec also noted that, "since most renewable technologies rely on intermittent energy sources to generate electricity, extensive back-up generating capacity is needed to assure reliability and consistent power deliverability. Further, many prime sites for renewable electric generation are located far from population centers, this leads to high transmission costs for already expensive generation."

Niemiec also asked the policymakers to consider the environmental problems in connection with renewables. "Hydropower has lost favor with environmentalists because of the damage it has done to river habitats and freshwater fish populations," he said, while "solar power, at least when relied on for central-station or grid electricity generation, is not environmentally benign on a total-cycle basis."

"Geothermal has turned out to be 'depletable, with limited capacity and falling output," Niemiec continued, while "biomass and municipal waste electric generators produce more conventional pollutants . . . than gas-fired and even some coal-fired units.'"

Niemiec said that a better way to use renewables: voluntary "green pricing" programs that "allow consumers to vote with their dollars" and "decide for themselves if particular renewable technologies are worth the cost."

Addressing other electricity restructuring issues , Niemiec suggested that policymakers "seize this opportunity to build a competitive market that will be positive for consumers.

"True competition, where efficiency is rewarded and inefficiency is penalized, can offer a myriad of benefits to all consumers," he said, "ranging from lower prices and cleaner air to more diverse service plans and more responsive and reliable service."

Citing the value of "state policies to ensure that all gas consumers have freedom to choose their supplier," he encouraged parallel adoption of open access policies in electricity as well.

Niemiec also alerted regulators to the need to prevent "affiliate abuse," an anti-competitive relationship between regulated and non-regulated divisions of a company in which the two share information or make plans using methods not open to unaffiliated competitors. "Utilities and their unregulated affiliates must be completely separated, physically and operationally," Niemiec said, while calling on public utility commissions to "craft and enforce strict codes of conduct" to further ensure a successful move to competition.

Copies of Niemiec's speech are available on this website by clicking here, or from the NGSA receptionist (202/326-9300).

This page was last updated September 25, 1997.