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<title>September 2003: "Summer Reruns"</title>
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<p align="left"><font face="Arial"><strong><small>About The Author:<br>
<br>
</small></strong><span lang="X-NONE" style="color: black"><font size="2">
ROGER FELDMAN, Co-Chair of Andrews Kurth LLP Climate Change and Carbon
Markets Group has practiced law related to the finance of environmental and
energy projects and companies for 40 years. In particular, he has analyzed
and executed a wide variety and substantial value of project financings. He
chairs the American Bar Association’s Committee on Carbon Trading and
Finance, serves on the Board of the American Council for Renewable Energy,
and has been a senior official in the Federal Energy Administration. He is
a graduate of Brown University, Yale Law School and Harvard Business School.</font></span></font></p>
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<img src="../images/feldman.gif" alt="Washington Viewpoint by Roger Feldman" border="0" width="375" height="75"><p><b><u><br>
September 2003</u></b></p>
<p align="center"><font size="6">"Summer Reruns"</font></p>
<p><strong>by Roger Feldman -- Bingham, Dana L.L.P.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine
Magazine: 2</em>003/09/26)<br>
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<span style="font-family: Arial">Many serious energy policy issues loom over
our country, as this is written in the high summer of ’03. Gas prices are
rising. IPPs are still crumbling. Threats of power shortages loom up,
despite the well-advertised capacity glut. (Who knows, there might even be a
blackout of the whole Northeast-Midwest quadrant!) Iraqi oil is not flowing
and, more fundamentally, the consequences of America’s Mid-East
overdependence vividly streaks every aspect of U.S. foreign policy.</span></p>
<p class="MsoNormal" style="text-autospace: none">
<span style="font-family: Arial">Fortunately, innovations in government –
both at the Federal and state levels – suggest novel effective approaches to
energy issues that can resolve these and other thorny issues. I call them
the “4Rs”: reruns, recalls, retrade and repo.</span></p>
<p class="MsoNormal" style="text-autospace: none">
<span style="font-family: Arial"><b>Reruns<br>
</b>First, of course, we have the U.S. Senate’s own approach to energy
policy: pass last year’s bill, even though it came from a body controlled by
the other party, and promise to effect changes in the committee mark-up.
Tired of trying to deal with conflicting views? Let everybody declare
victory. Those who cannot learn from the past will not only relive it, but
will re-legislate it and take pains to justify it. (Maybe, just maybe,
something in last year’s bill may fit this year’s catastrophes.)</span></p>
<p class="MsoNormal" style="text-autospace: none">
<span style="font-family: Arial">TV, of course, discovered re-runs years
ago; environmentalists discovered recycling; but Washington bureaucrats
have failed to take into account the extent to which old policies, white
papers, and even (though far less often) future projections can be reused.
Consider, “Natural Gas Crises” (circa 1975), Project Independence (circa
1973), nuclear power revitalization (circus maximus). Indeed, not all
statistical studies need to be scrapped. Old ones pejoratively labeled
“outdated” – like those on automobile fuel consumption, air emissions and
utilities – can be reissued with snappy new titles, like “I SUV Oil,” “Coal
Busters,” “Rate-based Regulation: Key to Cost Control” (per-haps even,
“Closing the Grid funding Gap”). Thus shall the recycled old give strength
to the perilous new?</span></p>
<p class="MsoNormal" style="text-autospace: none">
<span style="font-family: Arial"><b>Recalls<br>
</b>But if all else fails, there is a superficially opposite strategy to
reruns that may serve the day better. It comes to us from the cutting edge
state from which all trends flow: California. Recall – totally is the way to
allow the public to think it is ruling without dealing with any problems
whatsoever. The technique may have special application in the energy area.
First, however, we must extirpate its original usage in this Administration,
as in </span></p>
<p class="MsoNormal" style="text-autospace: none">
<span style="font-family: Arial">"Mr. Cheney, who was at the energy strategy
summit you chaired?” “I don’t recall.”</span></p>
<p class="MsoNormal" style="text-autospace: none">
<span style="font-family: Arial">Having done that, we can turn to how the
California model can be laser-targeted to energy policy. Recall
deregulation: focus the Terminator on national security needs and appease
the ex-Exterminator from Texas by proving that energy policy has not gone
soft. Vote yes or no for your current Energy Team. Then vote for anybody at
all to replace it. Surely for the public at-large, no one could be grayer
than Gray Davis, except perhaps the current energy brain trust. “What
Wood/Abraham have done” has not yet become a policy benchmark in the world
of uncertain energy policy to assure the perpetuation of the
Administration’s program.</span></p>
<p class="MsoNormal" style="text-autospace: none">
<span style="font-family: Arial">So who will the write-ins be? Beside the
losing California write-in candidates, we might see Ken Lay, the author of
CERA’s forward cost projections, S. David Freeman, Amory Lovins and various
other scholars of the medium. The hydrogen crowd will back General Clark;
the nuclear crowd the shades of Admiral Rickover. (There might even be a
write-in for the author of “NERC’s Last Look.”) There are skeptics who might
suggest that this would not place a strong enough hand at the tiller of
energy policy. How can a single person possibly know when and where disaster
may befall our energy economy, and where we should apply our scarce
resources to avert it?</span></p>
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<span style="font-family: Arial"><b>Retrade</b> Fortunately, the folks at
DoD’s DARPA, until recently under Admiral Poindexter’s guidance, have
discovered an approach to that issue of which systems planners would be
proud. Set up an exchange where people can bet what will go wrong next:
where follow-the-money, smart (or in-the-know) people know what to put their
bets on. Modeled on the wisdom gained from the sadly aborted experiment of a
Terrorism Exchange, the new Blackout Exchange will provide opportunities
for informed speculators to bet on when the grid will next go down, where,
and for how long. With this information, system operators should be better
able to assist national security (or make small change on the side by
“shorting” the market). It may be linked as well to financial trading market
forecast systems.</span></p>
<p class="MsoNormal" style="text-autospace: none">
<span style="font-family: Arial"><b>Repo<br>
</b>Rerun, recall, and retrade: three blind mice in search of an energy
policy. They might not, by themselves, solve the looming energy (and grid)
problems. There may be some who feel that these will not solve the issues at
hand and seek to leave town, or boycott proceedings.</span></p>
<p class="MsoNormal" style="text-autospace: none">
<span style="font-family: Arial">For them, there is yet another governmental
innovation – “Repo” – recently tried out in Texas, where they sent the Texas
Rangers (the cops, not the president’s old ball team) to capture legislators
fleeing a gerrymander steamroller; and in Washington, D.C. itself, where the
Capitol Police were sent after legislators boycotting a legislative
blitzkrieg. (Gives “reliability standard” a new meaning.) What energy law
needs is a little more “law and order” enforcement.</span></p>
<p class="MsoNormal" style="text-autospace: none">
<span style="font-family: Arial">In the coming months, we look forward to an
energy bill really suited to our national problems, and to renewed civility
in government. Reruns (along with the other Rs) are for summer. Just in
case, however, we have a very large battery with us in our insulated cave to
run our DVD.</span></p>
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text-align:left"><font face="Arial" size="2">
<span lang="X-NONE" style="color: black">ROGER FELDMAN, Co-Chair of Andrews
Kurth LLP Climate Change and Carbon Markets Group has practiced law related
to the finance of environmental and energy projects and companies for 40
years. In particular, he has analyzed and executed a wide variety and
substantial value of project financings. He chairs the American Bar
Association’s Committee on Carbon Trading and Finance, serves on the Board
of the American Council for Renewable Energy, and has been a senior official
in the Federal Energy Administration. He is a graduate of Brown University,
Yale Law School and Harvard Business School.</span></font></p>
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