College of Law Center for Energy and Sustainable Development

James Van Nostrand
May 17, 2013

CERES, Natural Resources Defense Council
May 2013

Benchmarking Air Emissions of the 100 Largest Electric Power Producers in the United States

Despite an increase in overall electricity generation, the nation’s largest power producers cut emissions of major air pollutants in 2011, according to a new report from CERES and Natural Resources Defense Council. According to the report, the increase in the use of natural gas (due to low prices) and the adoption of renewable energy resulted in reduced emissions of nitrogen oxide (NOX), sulfur dioxide (SO2) and carbon dioxide (CO2) in 2011. CO2 emissions have dropped steadily since 2007. Although CO2 emissions have increased by 20 percent since 19990, emissions have gone down by 7 percent between 2008 and 2011.

The report is based on data from the Energy Information Administration and the EPA, and focuses on the top 100 power producers, which accounted for 86 percent of the electricity produced in the United States in 2011. AEP, which serves West Virginia through its Appalachian Power subsidiary, is the second largest electricity producer in the country, and the largest CO2 source. FirstEnergy, which serves portions of West Virginia through its Mon Power and Potomac Edison subsidiaries, is the fourth largest emitter of CO2 in the country.

The report also broke down CO2 emissions by state and found that states with a larger coal share generally had the highest CO2 emission rates. For example, Wyoming, which has an 86 percent coal share, and Kentucky, which has a 93 percent share, had the highest CO2 emission rates. West Virginia, with its 96 percent reliance on coal-fired generation, had the third highest CO2 emissions rate, and the tenth highest level of total CO2 emissions. Texas had the highest total CO2 emissions. The report observes that “[o]ne of the challenges in developing a policy to regulate power plant CO2 emissions will be to design an approach that recognizes the wide variability in the carbon intensity of the electric generating fleet.”

James Van Nostrand
May 5, 2013

Charleston Gazette
March 30, 2013

Sales of Coal Power Plants Raise Concerns
Ken Ward

As reported by Ken Ward in the Charleston Gazette, a number of questions are being raised about FirstEnergy’s proposal to transfer ownership of 80% of the Harrison coal plant to Mon Power. The Harrison coal plant is a huge, 1984-megawatt (MW) facility built in the early 1970s in Haywood, West Virginia. Mon Power currently owns 20% of the plant, and the remaining 80% is owned by an unregulated FirstEnergy affiliate, Allegheny Energy Supply Company. Due to coal plant closings, Mon Power is purportedly 938 MW short of capacity, and is proposing to acquire the 1576 MW installed capacity in Harrison that it does not already own. (As part of the deal, Mon Power is proposing to sell 100 MW of capacity in its Pleasants Power Station to AE Supply, for a net capacity addition of 1476 MW.) Approval of the proposed deal is currently pending before the West Virginia Public Service Commission (PSC).

From this author’s analysis of the application to the PSC, the proposed deal is a bad one for Mon Power ratepayers (and the author is one such ratepayer), and should be rejected by the PSC. Perhaps the terms of the deal can be rehabilitated through conditions that the PSC could attach to its approval. As currently proposed, however, the application is sorely deficient, and fails to meet the “public interest” standard necessary for its approval. The deficiencies include the following:

The Proposed transaction would give Mon Power more capacity than it needs, thereby precluding any role for energy efficiency, natural gas-fired generation, or wholesale market purchases. As noted above, Mon Power claims to be 938 MW short of capacity in 2013, and the transaction would add 1476 MW of new capacity (1576 MW from Harrison, less 100 MW of Pleasant being sold). Thus, Mon Power’s capacity needs will be much more than filled by additional coal plant capacity. Given the excess capacity situation that would be created, there will be a strong disincentive for FirstEnergy to promote energy efficiency (which would simply exacerbate the excess capacity position). Moreover, there will be no room in Mon Power’s resource strategy for the possibility of including some natural gas-fired generation in its portfolio of resources. Finally, there will be no room in Mon Power’s resource strategy for wholesale market purchases, which are substantially cheaper than the Harrison plant acquisition. PJM wholesale prices are down 29% over the past year, due largely to cheap natural gas-fired generation, and wholesale prices are likely to remain relatively low for the foreseeable future. By filling its entire capacity needs (and then some) with the Harrison plant purchase, Mon Power will be precluded from pursuing other, cheaper options, such as energy efficiency, natural gas-fired generation, and purchases from the wholesale market. The Center for Energy and Sustainable Development has prepared a Discussion Paper on Integrated Resource Planning that highlights the reasons for a diversified portfolio mix, including natural gas-fired generation, renewable energy resources, and energy efficiency.

FirstEnergy completely ignores energy efficiency as an alternative, even for a portion of the needed capacity. FirstEnergy’s “Resource Plan” states that “demand side resource options are not a viable solution capable of meeting Mon Power’s obligations . . . [as they] do not address energy shortfalls as significant as the shortfall faced by Mon Power.” [Resource Plan, p. 56] Admittedly, energy efficiency programs cannot be ramped up quickly enough to make up a [claimed] capacity deficit of 938 MW. But energy efficiency, at 3-4¢/kWh, is substantially less than the 7.4¢/kWh that FirstEnergy is proposing to charge Mon Power customers for Harrison’s output. FirstEnergy needs to start treating energy efficiency as a resource, alongside supply-side options; this is a good proceeding to illustrate the comparative advantages of investments in energy efficiency versus buying an over-priced 40+ year-old coal plant. FirstEnergy has virtually no energy efficiency program offerings for its West Virginia customers, to help them manage their energy costs. First Energy’s energy efficiency programs in West Virginia were established to save 0.5% in 5 years, which is lower than the level being achieved in 40 other states. As far as actual results, FirstEnergy didn’t even reach 0.1% savings in the first year. The Center for Energy and Sustainable Development has prepared a Discussion Paper on Energy Efficiency that makes the case for increased investments in energy efficiency in West Virginia, and by FirstEnergy in particular.

The price for the Harrison plant acquisition is inflated far above what utility regulators ever would allow, by reference to generally accepted ratemaking principles. The net book value of the plant, based on “original cost depreciated” (the basis for ratemaking under the FERC Uniform System of Accounts, and followed by virtually every PUC in the country), is $574 million [$1.24 billion less $667.3 million in accumulated depreciation]. FirstEnergy is proposing to include an “acquisition adjustment” of $589.6 million that would more than double the acquisition cost of the plant for West Virginia ratepayers, to $1.163 billion. This “acquisition adjustment” is purportedly based upon “a purchase accounting fair value measurement component . . . related to the completion of the FirstEnergy/Allegheny merger in February 2011.” [Wise Testimony, p. 7] FirstEnergy claims that without PSC approval to include the unamortized portion of the acquisition adjustment in rate based until it is fully amortized, “Mon Power will not proceed with the transaction.” [Wise Testimony, p. 7] As a regulatory attorney for 22 years in the Pacific Northwest who has handled the regulatory approvals for 7 different merger deals in front of 6 different PUCs in the West, this author can represent that these “fair value adjustments,” also known as “goodwill” adjustments, are NEVER recovered from utility ratepayers. Regulatory ratemaking principles simply do not allow it; rates are based on original cost depreciated of rate base assets, not some “fair market value adjustment” based on some utility deciding to overpay to acquire another utility. There is no basis for ratepayers being burdened with FirstEnergy’s foolish decision to overpay to acquire Allegheny. Most regulatory approvals of mergers, and all 7 of the deals in which this author was involved, impose conditions precluding the utility from ever seeking to recover such acquisition adjustments in rates. While this author has not personally reviewed the order approving the FirstEnergy/Allegheny merger, it is my understanding that FirstEnergy agreed to such a condition in connection with receiving regulatory approval of the merger.

The numbers for the transaction defy common sense, apart from what generally accepted ratemaking principles or the Uniform System of Accounts require. The value of the 20% of the Harrison plant already owned by Mon Power on its books is $319/kW, while the proposed purchase price for the remaining 80% is $767/kW. This price disparity is inexplicable, given that there is nothing physically different in the four-fifths of the plant not owned by Mon Power versus the one fifth of the plant that Mon Power already owns. Are the electrons coming from the Allegheny Energy Supply side of the plant really worth 2½ times the value of the electrons from the Mon Power side of the plant? Try explaining that to the average FirstEnergy ratepayer in West Virginia.

The price for the Harrison plant acquisition is substantially overstated and does not reflect the current value of the plant. Recent, comparable coal plant transactions provide some guidance on what used coal plants are selling for these days. It is interesting that FirstEnergy claims an upward $589.6 million adjustment to the price of Harrison based on “accounting fair value” at the time of the FirstEnergy/Allegheny merger, yet does not want to consider what the Harrison plant’s fair market value might be today. Such an “accounting fair value” adjustment would go in the other direction, as Harrison is currently worth far less than the price being sought by FirstEnergy from Mon Power ratepayers. Based on recent transactions, even the original cost depreciated figure of $574 million is substantially higher than market value, and a bad deal for Mon Power customers.

• In a transaction announced in March 2013, Dynegy is acquiring 4561 MW of super-critical coal capacity from Ameren for $825 million, or a cost per kW of $180.88

• In a transaction announced in March 2013, Energy Capital Partners is acquiring 2868 MW of super-critical coal capacity and 1424 of natural gas-fired capacity from Dominion for $650 million, or a cost per kW of $130

• In a transaction announced in August 2012, Riverstone Holdings is acquiring 2265 MW of super-critical coal capacity from Exelon for $400 million, or a cost per kW of $176.60

Under FirstEnergy’s proposed transaction price of $1.163 billion, the cost per kW is $785.91, or almost 5 times higher than the average per kW price from recent transactions. Even using original cost depreciated for Harrison of $574 million, the cost per kW would be $388, or almost 2½ times higher than the average per kW price from recent transactions. The market value of Harrison, based on the average price from the above recent transactions ($171.45 per kW) is $253 million.

FirstEnergy’s “resource plan” fails to consider and properly evaluate the various alternatives. FirstEnergy included a “resource plan” in its filing, which attempted to justify the purchase of the Harrison plant as an outcome preferred to other “alternatives” purportedly analyzed in the document. Market purchases, or relying on power purchases from the wholesale market, was the primary alternative identified in the “resource plan.” But the wholesale price projections used in FirstEnergy’s “resource plan,” and upon which FirstEnergy rejected market purchases as an alternative, are based upon outdated, inaccurately high—about 30% too high—projections of Henry Hub natural gas market prices. On this point, compare Figure 16 on page 21 of the “resource plan” with recent natural gas price forecasts from the Energy Information Administration and the difference in obvious. The effect? The “analysis” substantially overstates the cost of the “alternative,” which makes the Harrison plant transaction look relatively cheaper by comparison.

Moreover, the “analysis” in the “resource plan” fails utterly to evaluate the risks associated with exclusive reliance on coal-fired generation. If the Harrison plant transaction is approved, it would preclude any diversification in Mon Power’s energy supply portfolio, which would be virtually 100% coal-fired. Mon Power would be dependent on two 40-plus year old coal plants (Harrison and Ft. Martin) for 90% of its internal generation. That lack of diversification very likely puts the ratepayers at risk for significant cost increases when replacement capacity is needed for those plants. The “resource plan” also does not analyze the risk to ratepayers from coal price volatility, even though they will be extremely exposed if this transfer goes through.

The transaction appears to be an integral part of FirstEnergy’s financial restructuring. Why should West Virginia ratepayers be expected to bail out FirstEnergy’s management for bad resource acquisition decisions? FirstEnergy’s baseload capacity factor was 64% in 2012, down from 84% in 2008. Low natural gas prices are clearly hurting FirstEnergy’s competitive generation segment. FirstEnergy is also targeting substantial debt paydown this year in its competitive generation segment ($1.4 billion), which appears to be a major driver of the Harrison plant transaction. In addition to selling off Harrison, it has announced plans to sell off some pumped hydro units and possibly additional assets.

The transaction, if approved, should reflect terms that are fair to West Virginia ratepayers, and that accommodate some resource diversity for Mon Power. The transaction, as currently proposed, is a bad deal for Mon Power customers. Mon Power would be substantially overpaying for a 40-year old coal plant that is in excess of its capacity needs, and the acquisition would preclude Mon Power from pursuing cheaper alternatives, such as natural gas-fired generation, wholesale market purchases, and energy efficiency. There is some sentiment, of course, for Mon Power “stepping up” to acquire this plant, given that most of the coal burned at the plant is from the nearby Robinson Run #95 mine, owned by Consol Energy. The argument is that failure to “do this deal” would jeopardize the plant’s future operation, and the mining jobs that are directly associated with the plant’s fuel supply.

These arguments miss the point, however, with respect to the impact on Mon Power ratepayers. The transaction, as currently proposed, is nothing but a financial bail-out for FirstEnergy’s shareholders. The plant will not cease operating if Mon Power does not do this deal. No coal miners will lose their jobs if Mon Power does not do this deal. Rather, FirstEnergy will be subject to the wholesale power marketplace, and will be forced to sell the output at competitively determined prices rather than the inflated price – 7.4 cents/kWh – FirstEnergy is proposing in this transaction. The transaction as currently proposed puts the consequences of FirstEnergy’s imprudent resource acquisition decisions on the backs of the Mon Power ratepayers, and that is an unjust and unreasonable outcome. FirstEnergy’s shareholders, not Mon Power ratepayers, should bear the consequences if the Harrison Plant output must be sold into the wholesale power markets at prices that fail to capture the profit margin that FirstEnergy’s unregulated affiliate deems necessary. The Public Service Commission needs to step up on this one and make a decision that is in the best long-term interests of Mon Power customers, and that properly places the impact of the Harrison Plant’s apparent uneconomic competitiveness on the backs of the FirstEnergy shareholders, where the risk belongs.

If the Commission decides that Mon Power should expand its ownership of the Harrison Plant beyond its current 20% share, that acquisition should be (1) scaled down in price to reflect no more than the current market value of the plant, and (2) scaled down in size to correspond with Mon Power’s current capacity needs, while leaving some room for cheaper alternatives such as natural gas-fired generation, wholesale market purchases, and energy efficiency. The best solution would be to require Mon Power to issue a Request for Proposals, to really test the market for the alternatives that currently exist to meet Mon Power’s existing capacity needs. The RFP process would allow FirstEnergy to offer a portion of the Harrison Plant on terms that need to be competitive with other market-based alternatives, and FirstEnergy’s shareholders would bear the consequences of any shortfall between covering the Harrison plant costs and the competitively derived price. And by scaling down the magnitude of the acquisition to something more closely corresponding to Mon Power’s claimed capacity needs – about 900 MW – rather than the 1476 MW proposed in the transaction, Mon Power would have the flexibility to pursue cheaper alternatives that are in the best long-term interests of its customers, such as natural gas-fired generation, wholesale market purchases, and energy efficiency.

James Van Nostrand
November 7, 2012

New York Times Dot Earth Blog
November 5, 2012

How Natural Gas Kept Some Spots Bright and Warm as Sandy Blasted New York City
Andrew C. Revkin

My former colleague at Pace University, Andrew Revkin of New York Times Dot Earth fame, wrote an excellent post praising the role of natural gas in keeping the lights on in some parts of New York City in the aftermath of Hurricane Sandy. The well-kept secret, and one that deserves more attention, is the use of natural gas-fired combined heat and power (CHP) facilities to generate electricity and heat. New York University, for example, was able to go into “island mode,” and thereby maintain essential services on its Washington Square campus as the electric grid around it went dark. NYU had the foresight to install a grid of its own – referred to as a “micro grid” – which allows it to rely on natural gas-fired cogeneration facilities to provide a large portion of its electricity supply. More important, the heat that is produced in generating electricity, which is simply released into the atmosphere in typical large electric generating plants, is captured and used to heat and cool NYU’s buildings. Hence, the name combined heat and power, or recycled energy.

Two other former colleagues from my days at Pace Law School, Tom Bourgeois (Deputy Director of the Pace Energy and Climate Center) and Bill Pentland (a frequent contributor to Forbes.com) make the case for CHP in Revkin’s blog post. According to Pentland,

Today’s electric grid was not designed to survive strong winds, storm surges, falling trees and flying debris and seems ludicrously inadequate for the demands of America’s increasingly digital and connected economy. The costs of hardening the electric grid will be vast. One widely cited study by the Brattle Group estimated that the electric utility industry will need to invest a $1.5 trillion to $2.0 trillion in infrastructure upgrades by 2030.

Despite spending epic sums of money on the so-called “smart grid,” the electric power grid seems as stupid as it was before spending billions in federal stimulus dollars.

Why throw good money after bad if we have a compelling alternative? And make no mistake about it, we have a compelling alternative to the conventional electric grid. It is commonly called the North American natural gas infrastructure.

Bourgeois, for his part, is a lifelong CHP advocate, and co-directs the DOE-funded Northeast Clean Energy Application Center, which is charged with promoting CHP and district energy throughout the Northeast. Here is the vision of the future electricity system articulated by Bourgeois:

We need a new vision of the electric generation, transmission and distribution system rather than one that moves electricity generated at remote locations, arriving at the point of end use . . . with a loss of 67 percent of otherwise valuable thermal energy. We need some pilots of operating micro-grids and district systems with combined heat and power that ought to represent the energy system of the future. Go beyond thinking of individual building efficiency to zero-energy blocks or neighborhoods. A vision of optimally creating a suite of resources, efficiency, photovoltaics, clean distributed generation, demand response, storage, all managed in synch with the larger transmission and distribution system.

The 67 percent figure to which Bourgeois refers is the energy efficiency of a typical large, central electric generating station, which reflects the discharge of the “waste” heat into the atmosphere instead of capturing it and using it to heat and cool buildings, as CHP systems do, thereby allowing them to achieve efficiencies that reduce the loss to less than 30 percent.

One can hardly disagree with Revkin’s conclusion: “[G]iven the role natural gas played in keeping the lights on in otherwise darkened parts of the city after this storm, it’s clear that this resource can play an important part in building a robust, resilient and flexible electricity and energy grid for the city and region.” This solution has even greater relevance in West Virginia, where we have an interest in stimulating demand for natural gas as a means of stabilizing natural gas prices, which in turn will allow the Marcellus shale resource to be tapped for the benefit of West Virginians. Policymakers in West Virginia should be pursuing measures that encourage the development of CHP facilities in the State. Large industrial facilities, for example, are prime targets for CHP installations. In addition to consuming large quantities of natural gas – which helps the “demand” side of the natural gas market in this State – the electricity produced by CHP facilities can provide some insulation from the inevitable electricity price increases that electric ratepayers in the State will continue to pay for the foreseeable future as a consequence of previous decisions by investor-owned utilities (AEP and First Energy) to rely almost exclusively on coal for electricity generation. We need our manufacturing and heavy industry to be competitive, and natural gas-fired CHP can play a huge role in that. And this is all in addition to the undisputed reliability and efficiency benefits of CHP noted by Messrs. Revkin, Bourgeois and Pentland.

James Van Nostrand
November 7, 2012

On Friday, November 2, Associate Professor Jamie Van Nostrand led a group of students on a trip to Washington, D.C. to visit the Federal Energy Regulatory Commission (FERC). As part of Professor Van Nostrand’s Siting and Permitting of Energy Facilities class, the students analyzed three particular types of energy projects over which FERC has jurisdiction: natural gas pipelines, electric transmission lines, and hydroelectric facilities. Professor Van Nostrand arranged for his class to spend part of the day at FERC talking with senior FERC staffers who work in these areas. Nils Nichols, a WVU Law alum, made the arrangements for the trip.

In the picture: Anne Marie Hirschberger, Energy Analyst, FERC; Tyler Reseter, Travis Brannon, Joshua Cottle, Matthew Chase, Jeffrey Blair, James Van Nostrand, Ed Amos (all WVU Law); Nils Nichols, Director, Division of Pipeline Regulation, FERC Office of Energy Market Regulation.

The FERC staffers who briefed the class were: Nils Nichols: Director, Division of Pipeline Regulation, Office of Energy Market Regulation; Jacqueline (Susie) Holmes, Associate General Counsel, Energy Projects, Office of the General Counsel; Merrill Hathaway, Office of General Counsel, Energy Projects; and Anne Marie Hirschberger, Energy Analyst, Office of Energy Market Regulation.

“It’s great to take advantage of Morgantown’s proximity to Washington, D.C.,” according to Professor Van Nostrand. “And it also helps that we had a WVU Law alum, Nils Nichols, in a senior position at FERC who could make arrangements for our students to meet with FERC staffers who work in the areas that we studied in our class. I think it was very instructive for our students to meet the people who actually make the decisions, and to understand how a regulatory agency oversees the energy industry.”

According to Van Nostrand, his Energy Regulation, Markets and the Environment class will make a similar trip to Charleston, WV in mid-November to meet with Commissioners and senior staff at the West Virginia Public Service Commission.

James Van Nostrand
July 26, 2012

NY Times
July 21, 2012

There’s Still Hope for the Planet
David Leonhardt

The United States is now enduring its warmest year on record, and the 13 warmest years for the entire planet have all occurred since 1998, according to data that stretches back to 1880. Atlanta has recorded its hottest day in history this year. Dallas endured 40 straight days above 100 degrees last July and August — and this year so far has been even hotter than last year. As David Leonhardt acknowledges in this column, “[n]o one day’s weather can be tied to global warming, of course, but more than a decade’s worth of changing weather surely can be.” Although the country is moving further away from doing something about climate change through legislation at the federal level, the nation’s energy supply is nonetheless becoming de-carbonized. Low natural gas prices, as a result of the new supplies that can cost-effectively be extracted through hydraulic fracturing and horizontal drilling, have stimulated rapid growth in gas-fired electricity generation, to the point where natural gas-fired generation is virtually tied with coal-fired generation in recent months.

Leonhardt observes in this column that “[g]overnments have played a crucial role in financing many of the most important technological inventions of the past century,” including hydraulic fracturing, nuclear and hydropower, all of which have combined to reduce the carbon emissions associated with America’s electricity supply. Leonhardt makes the case for increasing the federal support for clean energy. At the recent peak, in 2009, all federal spending on clean energy — including money for research and subsidies for households and businesses — amounted to $44 billion. This year, Washington will spend about $16 billion. The scheduled expiration of the production tax credit for wind would help reduce the total to $14 billion next year. According to Leonhardt, the sums for clean-energy research that many scientists and economists support are not huge. A politically diverse group of experts recently set a target of $25 billion a year in federal spending on research and development (some of which could come from phasing out ineffective programs).

U.S. Energy Information Administration

Monthly coal- and natural gas-fired generation equal for first time in April 2012

Recently published electric power data show that, for the first time since the U.S. Energy Information Administration (EIA) began collecting the data, generation from natural gas-fired plants in April 2012 was virtually equal to generation from coal-fired plants, with each fuel providing 32% of total generation. Preliminary data for April show net electric generation from natural gas was 95.9 million megawatthours, only slightly below generation from coal, at 96.0 million megawatthours. The EIA report notes that there are strong seasonal trends in the overall demand for electric power. In April, demand was low due to the mild spring weather. Also in April, natural gas prices as delivered to power plants were at a ten-year low. EIA predicts that with warmer summer weather and increased electric demand for air conditioning, demand will increase, requiring increased output from both coal- and natural gas-fired generators.

NY Times
July 1, 2012

Taking One for the Country
Thomas L. Friedman

Thomas Friedman’s recent column in the New York Times focused on Chief Justice John Roberts “taking one for the country” in his decision to support the constitutionality of the Affordable Care Act. Friedman described the Roberts decision as “inspired by a simple noble leadership impulse at a critical juncture in our history — to preserve the legitimacy and integrity of the Supreme Court as being above politics.” Friedman’s column went on to observe that with leadership exemplified by the statesmanlike approach of Chief Justice Roberts, “America today is poised for a great renewal,” and he makes a couple of undisputable statements about energy policy refers to help make his case:

• “Our newfound natural gas bounty can give us long-term access to cheap, cleaner energy and, combined with advances in robotics and software, is already bringing blue-collar manufacturing back to America.”
• “If we can just get a few big things right today — . . . a plan on energy that allows us to tap all these new sources in environmentally safe ways — no one could touch us as a country.”

Whether you agree with Friedman on climate change issues (or with Chief Justice Roberts’s decision on Obamacare), it is hard to argue with Friedman’s vision for the energy future of the United States.

NY Times
June 10, 2012

America’s New Energy Reality
Daniel Yergin

Daniel Yergin, the author of several excellent books on U.S. energy policy, wrote this interesting Op-Ed piece in Sunday’s New York Times about the revival in oil and gas production in the United States. In 2011, the U.S. achieved the largest increase in oil production of any country outside of OPEC. Thanks to the ability to extract oil from shale, North Dakota, with its Bakken Shale play, overtook California as the nation’s third largest oil-producing state. Yergin points out that with production increasing and oil demand declining in the U.S., we are “on the way to becoming ‘energy less dependent’,” with the goal of energy independence still elusive.

Apart from the analysis of energy security and balance of payments associated with energy independence, the “other story” concerns the broader impacts on the economy. According to President Obama’s 2012 State of the Union address, shale gas development created 600,000 new jobs as of 2010, spread widely across the nation. Just as important, the low energy costs resulting from the abundant supplies of natural gas have stimulated a revival of manufacturing in the U.S., particularly in the area of petrochemical companies, and increased the competitiveness of American industry.

Yergin’s conclusion pretty much captures it, and includes a nod to renewable energy and energy efficiency, as well as the need to minimize the environmental impacts of developing oil and gas resources:

“America’s new story for energy is still unfolding. It includes the continuing development and expansion of renewables and increased energy efficiency, both of which will be essential to our future energy mix. But what is striking is this great revival in oil and gas production in the United States, with wide impacts on jobs, economic development and the competitiveness of American industry. This new reality requires a new way of thinking and talking about America’s improving energy position and how to facilitate this growth in an environmentally sound way — recognizing the considerable benefits this will bring in an era of economic uncertainty.”

With the addition of Professor Josh Fershee to the faculty at WVU College of Law in the fall of 2012, the curriculum of energy law courses will be expanded next year with the addition of six new courses. Professor Fershee, currently an Associate Professor at the University of North Dakota School of Law, has taught energy courses at UND for the past five years. The members of the faculty specializing in energy law include Professor James Van Nostrand, Professor Fershee, Dean John Fisher, Visiting Professor Barton Cowan, and Adjunct Professor Nate Bowles. The energy curriculum will expand further in the 2013-2014 academic year, as the law school completes its building addition and the Center for Energy and Sustainable Development moves into its new space.

The six new courses to be offered during the 2012-2013 academic year are:

• Energy Law and Practice. (3 Hours, J. Fershee, Spring 2013) This course considers energy law issues in context and as part of the larger practice of law. The course first considers energy issues across the traditional law school curriculum, including Torts, Property, Criminal Law, Constitutional Law, Civil Procedure, Business Associations, and Administrative Law. The course then provides practical exposure to key legal and regulatory issues related to how energy is produced, distributed, and consumed, and the legal, economical, and environmental differences and similarities between energy sources.

• Permitting and Siting of Energy Facilities. (3 Hours, Van Nostrand, Fall 2012) This course focuses on regulatory approvals to develop energy facilities, including all forms of electricity generation (thermal power plants, solar, wind, geothermal, hydro), energy resource production (coal, natural gas), and energy distribution (pipelines and transmission lines); principles of eminent domain.

• The Energy Business: Law & Strategy. (3 Hours, J. Fershee, Fall 2012) This course examines the systematic use of law and regulation for strategic purposes in the energy industry. This course studies the use of law as a business strategy across markets and reviews the evolution of energy law from a business perspective. The course also considers how energy law has and can be used to pursue (and oppose) the goals of those doing business in the energy sector.

• Renewable Energy and Other Alternative Fuels. (3 Hours, J. Fershee, Spring 2013) This course focuses on the energy industry of the future, with a particular emphasis on the convergence of energy and environmental issues. The course includes renewable energy (solar, wind, hydro, geothermal, biofuels); “clean” energy sources (nuclear, coal and natural gas with carbon capture and sequestration); energy efficiency; demand response and smart grid technologies; renewable portfolio standards; and climate change and carbon markets.

• The Science and Technology of Energy. (3 Hours, Van Nostrand, Spring 2013) Lawyers practicing in the energy industry will be expected to have a basic knowledge of the science and technology of the industry, and this course is designed to provide that background information, along with the associated legal issues. This course focuses on the scientific principles and technology associated with the extraction of energy resources; generation, transmission and distribution of electricity; and emerging energy technologies (e.g., hydraulic fracturing, biofuels, solar, energy storage, carbon capture and sequestration) as well as more traditional energy sources (hydro, nuclear, fossil fuels).

• Nuclear Law and Policy. (3 Hours, Cowan, Spring 2013) This course examines the nuclear power industry in the United States, including the Atomic Energy Act, the regulatory practices and policies of the Nuclear Regulatory Commission, and a survey of recent developments in the industry. The course will also discuss the role of nuclear energy in the context of climate change.
  The six new courses are in addition to the law school’s existing curriculum of four energy courses that will be offered during the 2012-2013 academic year:

• Energy Law Survey [formerly Energy Law]. (3 Hours, Cowan, Fall 2012) This is an introductory energy law course that provides an overview of the law and regulatory policies that govern and affect the energy industry. The course includes a review of the various energy sources, economic regulation of the energy industry, and briefly examines alternative and renewable energy sources.

• Energy Regulation, Markets and the Environment [formerly Energy Regulation and the Environment]. (3 Hours, Van Nostrand, Fall 2012) This course examines the economics of the energy industry, and includes principles of cost of service regulation for regulated energy companies as well as alternative regulatory approaches to setting energy prices. The course will also include an examination of market-based approaches to energy and environmental issues, including emissions trading and renewable energy credits.

• Sem: Issues in Energy Law. (2 Hours, Fisher, Spring 2013) This seminar provides an understanding of a variety of issues regarding energy law and policy, both past and present, in the United States. A research paper on an energy law issue is required.

• Coal, Oil and Gas Law. (3 Hours, Bowles, Fall 2012) Nature of ownership of subsurface minerals; methods of transferring ownership thereof, partition among co-owners, analysis of leasehold estates, and rights and duties thereunder, coal mining rights and privileges.

New York Times
January 23, 2011

Chesapeake to Cut Number of Gas Rigs
Clifford Krauss

Chesapeake Energy announced on January 23 that it is reducing production of natural gas in response to falling natural gas prices. As stated in this NY Times article, natural gas prices have been steadily falling over the last two years because of a glut stemming from the rapidly increasing production in shale fields like the Haynesville in Louisiana, the Barnett in Texas and the Marcellus in Pennsylvania and West Virginia. And warmer-than-normal weather this winter has also cut normal seasonal demand significantly, putting further downward pressure on natural gas prices. According to the NY Times, Chesapeake’s announcement showed that the oil industry “does not know what to do with all the gas it is able to produce in shale fields, which were considered almost useless until a decade ago when new production techniques, including horizontal drilling and hydraulic fracturing, were first employed in a major way.”