New survey reveals common purpose for energy commissioners

New York, NY, June 4, 2008 — Capgemini released the results from an opinion survey of state energy regulators across the country. The survey was conducted with the support of the National Association of Regulatory Utility Commissioners (NARUC) in an effort to develop a comprehensive national energy perspective.

According to the survey results, the majority of commissioners recognize the key role the energy industry is expected to play in reducing carbon emissions; however, their overwhelming concern is the need to increase generation capacity. In addition, 93 percent of respondents anticipate federal climate legislation and have determined that most new base load generation decisions ahead of this carbon legislation are risky. Reacting ahead of legislation could possibly affect the overall cost of new coal generation, emphasizing an uncertain future for coal without clean coal technologies.

“As this study makes clear, the uncertainty surrounding our nation’s energy policy is doing more harm than good,” said Marsha Smith, president of NARUC and Idaho commissioner. “Our members understand how this uncertainty is impacting energy supply and costs borne by ratepayers.”

Survey respondents also ranked, from a national and state perspective, the top five energy priorities facing the industry which included generation capacity, reducing Greenhouse Gas (GHG) emissions, transmission capacity, energy efficiency and generation fuel cost with generation capacity being the number one priority from both perspectives.

While the opinions of the commissioners vary on exactly which base load generation fuel is most desirable long term, a combined 68 percent of those surveyed indicated that nuclear and clean coal are the best base load fuel choices for new generation, while only 9 percent preferred natural gas, in part because of its lower carbon output and shorter construction cycle.

“Given the anticipated impact of legislation on generation fuel options, not having proper guidelines in place continues to hamper regulatory clarity in the interim, creating a gap between viable long-term solutions and what regulators can approve while they wait for Congress to act,” said Roy Ellis, regulatory relations leader at Capgemini. “The common issues identified in the NARUC survey signal a continuing short-term preference for natural gas as a base load fuel and a rapid move to expand conservation and energy efficiency to slow growth in demand.”

Most commissioners agreed they would like to see more renewable energy, more conservation and more energy efficiency, but they do not consider these steps as definitive alternatives to base load. While energy efficiency and conservation — the negawatt, as it is referred to by members of the energy industry — were seen as part of an overall strategy to reduce GHG emissions, renewable energy, nuclear energy and clean coal were ranked among the top five solutions in reducing carbon emissions.

The survey findings also reinforced the important role electricity plays in the U.S. economy and regulatory concern over the impact of rising prices. There is a growing consensus among regulators that energy prices will rise, due in large part to the transition from cheap coal as a fuel to cleaner, but more expensive alternatives including nuclear, clean coal, natural gas, and renewable energy.

In fact, 69 percent of respondents support time-of-use or dynamic pricing for all customer classes, which will expose the ratepayers to the true cost of their energy consumption decisions, while creating the technical infrastructure necessary to distribute those costs across a wider segment of society.

Members of NARUC recognize that collective voices are needed in order to guide national policy. Eighty-six percent of respondents would support greater national and regional coordination between NARUC members, suggesting members recognize how critical a consensus is on national energy policy.

The survey was conducted between December 4, 2007 and February 15, 2008 and achieved an 83 percent national participation rate that included 41 states and the District of Columbia. The survey questions were compiled with input from the NARUC executive staff and commissioners from five different states.

To download the full study results please visit: www.us.capgemini.com/naruc.

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