Natural Gas

The U.S. Energy Information Administration issued a report last week detailing the 13,500 megawatts (MW) of electric utility capacity added in 2013.  According to the report, the total capacity added is down roughly 50% from 2012.  Natural gas and solar were the top industries generating additional capacity at just over 50% and 22% respectively. 

State and federal policymakers in the past could be confident that America’s energy demands would increase every year. Now the future isn’t as clear.  Barbara Tyran, director of Washington, D.C., and state relations with the Electric Power Research Institute (EPRI), said the Great Recession, a greater use of locally produced power, a growing interest in energy efficiency and the unprecedented increase in the natural gas supply have turned once staid assumptions about the future of energy on their head. Tyran was one of the featured speakers at a CSG policy academy about natural gas development last week and noted that all three branches of the federal government are currently engaged in shaping energy and environmental outcomes that will impact the future electricity and natural gas sectors. 

Pennsylvania Governor Tom Corbett announced that counties and local municipalities would receive $204 million from impact fees generated by shale drilling as a result of the passage of Act 13 last February. According to the release, $25.5 million will be directed to state agencies with safety and regulatory oversight authority over the natural gas industry, $104 million be disbursed directly to localities, and $72 million will be set aside for competitive grants for infrastructure and recreational improvement projects.

Chapter 9 of the 2012 Book of the States contains the following articles and tables:

Book of the States 2012

Chapter 9: Selected State Policies and Programs

Articles:

  1. Elections, Greater Federal Grant Scrutiny and Ongoing Disasters Continue to Test Management System
  2. ...

As the process of hydraulic fracturing becomes more prevalent, several municipal governments are using their local zoning power to restrict or prohibit resource exploration. Many of these new local ordinances conflict with state permitting authority; however, some state statutes may be ambiguous when it comes to regulating oil and natural gas exploration.

Natural gas futures prices inched north of $2.30 per 1,000 cubic feet for the first time in several days, but it underscores the pessimism by some utility companies in the economics of building new nuclear, alterative energy, and new coal power plants. The Energy Information Administration (EIA) reported late last week that coal's share of power generation fell below 40 percent for the first time since 1978 during November and December of 2011. According to an article in today's Wall Street Journal, NRG's CEO David Crane observed, "It's killed off new coal and now it's killing off new nuclear."

States have a significant role to play in regulating the safety of the nation's enormous pipeline network. Policymakers at the state level should be aware that additional federal scrutiny of damage prevention programs is likely to increase from congressional directives and increasing safety expectations from the general public. 
 

According to press accounts, the Pennsylvania Senate may vote as early as this morning on a compromise proposal to direct upwards of $211 million a year in impact fees to local counties and communities from natural gas drilling in the Marcellus Shale. 

According to a recent article in the Pittsburgh Post-Gazette, Governor Tom Corbett and top legislative leaders have been meeting to develop and finalize details on a new “impact fee” that will be assessed on drilling operations. The crux of the negotiations will be over determining which agency will collect the fees and what role local governments may play in regulating the industry’s activities. 

Natural gas futures fell to their lowest levels in over two years on January 11th. The implications for factories, homeowners, and manufacturers are incredibly significant. And according to an instructive article in yesterday's Wall Street Journal, prices are expected to stay low for the immediate future as hydraulic fracturing and a generally mild winter has created a glut in natural gas supplies. 

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