By David Kligman
In a panel discussion held today (Aug. 27) in conjunction with the Republican National Convention in Tampa, Fla., PG&E’s Melissa Lavinson reiterated the utility’s call to action to upgrade the nation’s aging electric and gas pipeline infrastructure.
The good news, said Lavinson, PG&E’s vice president of federal affairs, is that the type of needed improvements will lead to jobs for the country. PG&E alone is investing $5 billion a year over the next three years, creating as many as 40,000 jobs throughout California.
“When you really think about it we are the foundation for creating that new energy economy,” said Lavinson during a discussion of the “Future Energy Economy” sponsored by the Washington Post.
[Tony Earley, PG&E Corp. CEO, chairman and president, was scheduled to represent PG&E on the panel but was unable to attend due to weather-related travel difficulties. He is scheduled to take part in a similar session on Sept. 5 at the Democratic National Convention in Charlotte.]
‘Safer, more reliable’ gas system
Moderator Mary Jordan, a Washington Post editor, asked Lavinson to clarify the type of investment PG&E is making in its infrastructure.
“We’re making our natural gas system safer, more reliable and really bringing it into the 21st century,” Lavinson responded. “It means doing lots of testing. It means replacing pipe. It means making it a much more robust system. On the electric side, it means really moving toward a smart grid format and making our energy system more dynamic and able to react more to what our consumers want and need.”
Lavinson was joined on the panel by David Holt, president of the nonprofit Consumer Energy Alliance, and Karen Harbert, president and CEO of the U.S. Chamber of Commerce’s Institute for 21st Century Energy.
Natural gas was one of the issues discussed during the 45-minute session. Harbert said, unlike five years ago, the United States has an abundance of natural gas, a huge opportunity. She said much of the public isn’t aware of this surplus.
“We have been pleading energy poverty for a long time,” Harbert said. “When I was at the Department of Energy I spent a lot of time traveling to places you’ll never go on vacation, trying to talk to them about selling us natural gas and worrying about getting the import infrastructure. Now today we’re looking at the prospect of exporting natural gas.”
As an example of how energy policies are changing, Harbert pointed to Canada, which has lowered its tax rate and streamlined its permitting process when it comes to natural gas exports.
“They’re going to utilize their natural resources as a way to elevate their competitiveness,” Harbert said. “We’re not doing that. And why not?”
A diverse fuel mix is crucial
The discussion then turned to renewable energy. Jordan asked the panelists how traditional energy sources will transition to renewables.
“Demand is going to continue to grow,” Holt said. “All of the above has got to be the solution. When you’re developing a wind farm, you have to have co-generation. You have to have natural gas or nuclear or something as a backup power for when the wind is not blowing.”
Lavinson agreed that a “diverse fuel mix” is important even as natural gas prices remain low. She pointed to PG&E’s target to have a third of its power come from renewables by 2020.
“The thing that’s going to provide predictability and long-term price stability for consumers is to have that diverse fuel mix,” she said. “And that diverse fuel mix is the best hedge we have against future price volatility.
“But we need to make sure we have the policies in place today that allow us to cost effectively build these resources out, do it as quickly as possible and balance the economic and environmental challenges.”
When it came to the issue of the environment, the panelists said it’s not an either-or proposition and that there’s a way to balance energy and environmental needs. Harbert argued that regulations for energy companies are outdated and don’t take into account modern technologies.
Lavinson noted PG&E’s hydro system, which includes 68 powerhouses and provides nearly 4,000 megawatts of safe, reliable and carbon-free energy. She said the utility’s re-licensing, while an involved process, is a good example of that type of effective balance.
“I think there are examples out there that exist today,” Lavinson said. “So we just need to see how we can expand them to other infrastructure development aspects.”
Stopping the dividend tax hike
Lavinson also called out current tax rates on dividend income, which are set to expire on Dec. 31. That would ultimately impact customers, she said.
“In our industry, if the dividend tax rate goes up it increases the cost of capital for us,” she said. “And if it increases our cost of capital, either we’re going to have to pass that cost on to consumers or we’re going to have to invest less.”
At the end of the forum, Jordan asked the panelists to briefly name one thing they would do if they could brighten America’s energy future. They all agreed that it would involve simplifying the permitting process for energy producers.
“Wow,” Jordan said. “Consensus. Something we don’t always see.”
Responded Harbert: “That’s because we’re not in Washington.”
Email David Kligman at David.Kligman@pge.com.