AUSenergy News Update 05/05/2015
May 5, 2015

In today’s AUSenergy News Update: Failures in transmission planning and how to fix them, Supreme Court to hear FERC Order 745 case over demand response, and Natural gas futures drop.

3 serious failures in transmission planning and how to fix them

Summary: With increasing policy pressure driving a transition in the U.S. generation mix toward renewables, natural gas, and efficiency strategies, the need for new transmission is becoming increasingly clear. What is less clear is whether decision-makers will choose to make the investments.

AUS Comment: This article argues the case for thorough planning behind the building of transmission, advocating looking at multiple scenarios at what might possible occur in the future. And that the cost for planning and building transmission is huge – but the cost for not building it might be bigger. However, we would urge planners to think more about creating local energy sources that would negate the need for high-cost, long distance transmission lines. We don’t see that scenario as part of the thought-out equation…

Supreme Court to hear FERC Order 745 case over demand response rules

Summary: The Supreme Court will review the DC Circuit Court’s May 2014 decision to strike down Order 745, which gives FERC jurisdiction to regulate demand response in wholesale energy markets.

AUS Comment: The Supreme Court decision is the final confrontation between traditional generators and demand response. The case revolves around demand response in the wholesale energy market; with traditional generators arguing that demand response should be an issue for the retail market not the wholesale market, thereby taking it out of the scope of FERC’s jurisdiction. AUS looks at this as the traditional market just trying to win-back some of their market share; trying to make it less economically appealing by paying less to demand response participants. Really? Is it better to build a new multi-million dollar power plant, than rely on the energy efficiencies of demand response? We don’t think so.

Natural gas futures drop from 5-week high on mild weather outlook

Summary: U.S. natural gas prices fell from the previous session’s five-week high on Monday, as forecasts for mild weather across the U.S. in the week ahead dampened near-term demand expectations for the fuel.

AUS Comment: The lower price for natural gas is to be expected as mild spring temperatures moved in across the U.S. bringing limited demand for gas in either heating or cooling.

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