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NEM Meets With Larry Kudlow, Trump Administration Officials On Energy Policy

NEM Supports Administration's New Executive Order On Energy Infrastructure

April 15, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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Members of the National Energy Marketers Association (NEM) last week met with Lawrence Kudlow, Director of the White House National Economic Council and President Trump's chief economic advisor, and a team of administration officials to discuss energy issues

NEM and its CEO members met with the administration officials to recommend the expansion of restructured natural gas and electric markets across the country. The meeting came as NEM convened its 22nd Annual National Energy Restructuring Conference in Washington, DC

"Competition will always beat utility monopolies in delivering innovation, supporting a high-tech digital infrastructure, and has been proven to reduce costs to consumers," said Craig Goodman, President of NEM, and former Director of Oil, Economic and Energy Tax Policy, in the Reagan and Bush Administrations.

NEM and its CEO Advisory Committee explained that retail energy competition was introduced twenty years ago in many states. NEM said that, in just the period from 2008 to 2017, $340 billion in savings was realized in states with restructured electric markets versus those states that to-date have retained the utility monopoly model.

Retail competition as implemented in the Texas electric market and Georgia natural gas market, wherein the utility has exited the competitive commodity merchant function, has delivered superior benefits to consumers, supported the development of innovative products, including a boom in renewable resources in Texas, and allowed the utilities to focus their resources on securing their energy delivery infrastructure, NEM said

NEM noted that, in other restructured states, the utilities have been allowed to operate in competitive commodity markets and this has caused significant market distortions and diluted the benefits realized by consumers. Artificial utility monopoly restrictions on providing consumers and third-party suppliers with access to consumers’ own energy use data was also identified as a significant barrier to energy product innovation, NEM said

It was recommended by NEM and its CEO Advisory Committee that:

• Utility monopolies should not be allowed to participate in competitive commodity markets;

• Competitive retail suppliers, using at-risk capital, should be relied upon to provide competitive energy commodity and energy-related products, services, information and technologies; and

• Utility monopolies should focus their ratepayer-funded resources on upgrading and maintaining a digital energy delivery infrastructure.

NEM said that, in response, Director Kudlow favorably noted that this is a "deregulation Administration." Director Kudlow then previewed the provisions of the Executive Orders on "Promoting Energy Infrastructure and Economic Growth" and "Issuance of Permits with Respect to Facilities and Land Transportation Crossings at the International Boundaries of the United States" that were issued the following day.

"NEM supports the Administration’s actions to promote the upgrade of our energy infrastructure, which is critical to supporting national economic growth and prosperity, protecting against cyber attacks, and integrating new distributed energy resources. Retail energy competition can facilitate these goals by permitting utilities to focus on the core monopoly function of maintaining energy delivery infrastructure, and in turn, allowing competitive retail suppliers to provide all manner of energy commodity and related products and services to consumers. NEM looks forward to future opportunities to work with the Administration to advance its goals," said Goodman.

NEM expressed support for the executive order entitled, "Promoting Energy Infrastructure and Economic Growth" (text here), as Goodman, stated, "Several of the actions contained in the Executive Order are completely in line with some of the recommendations we made to the administration, such as the development of new energy infrastructure, which we believe can help the U.S. meet the challenges of global competition."

"This Executive Order can pave the way to allowing utilities to focus on building an infrastructure that can serve the demands of the grid in the coming years rather than compete for a commodity," added Goodman. "Meanwhile, energy suppliers and the private sector - who are better equipped to operate in a changing and competitive landscape - can make investments to deliver a commodity to consumers."

Among other things, the executive order requires that, within 180 days of the date of this order, the Secretary of Transportation, in consultation with the Secretary of Energy, shall submit a report to the President, through the Assistant to the President for Economic Policy, regarding the economic and other effects caused by the inability to transport sufficient quantities of natural gas and other domestic energy resources to the States in New England and, as the Secretary of Transportation deems appropriate, to States in other regions of the Nation. This report shall assess whether, and to what extent, State, local, tribal, or territorial actions have contributed to such effects.

NEM said there are at least 7 points in the Executive Order that NEM believes would allow for fairness and competitiveness in Energy Markets, including:

• It is the policy of the United States to promote private investment in the Nation’s energy infrastructure... -- "That’s what we have all been advocating for the last 20 years," Goodman said

• Increased regulatory certainty regarding the development of new energy infrastructure -- "Energy Suppliers have been looking for this as well," Goodman said

• Support for American ingenuity, the free market, and capitalism. -- "This is NEM’s sentiment in a nutshell. I can’t imagine anyone in this room would argue with that. The Retail Energy industry has demonstrated its ingenuity," Goodman said

• Effective stewardship of America’s natural resources -- "When dollars go in the right place this is allowed to happen," Goodman said

"The next logical step to implement this Executive Order is for us to deliver the commodity, and for the infrastructure, instead of investing tens of millions of dollars in the commodity, to put that money back into infrastructure," concluded Goodman. "I have to thank this administration for taking this step so quickly."

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