American Gas: First, let me start by congratulating you on being named president of NARUC for 2017. I know it is a huge honor for you, and one that you regard as a highlight of your career thus far. You are taking the gavel at one of the most interesting times in history. Might you give us your thoughts on how the recent presidential and congressional elections impact, or otherwise shape, your thinking for how to approach your year as NARUC president and what you would like to accomplish doing your tenure?
Robert Powelson: I think it’s fair to say that predicting what would happen during this election cycle was like trying to predict the stock market. However, when you step back and gauge the pre- and post-election voter sentiment, you will find one common thread: Voters are fed up with paralytic government. They want a responsive government that is not overly intrusive and that does not add more complexity to their everyday lives.
So, as it relates to my NARUC presidency, I am all about infrastructure, because well-maintained and resilient utility infrastructure is critical for a strong economy. State utility commissions are at the epicenter of ensuring that utility infrastructure is safe and reliable. State commissions are also uniquely positioned to provide the proper signals to encourage infrastructure development at the generation, transmission and distribution levels.
The tragic events in San Bruno, Allentown and Manhattan (just to name a few) remind us how important it is to modernize and replace aging natural gas pipes, although we cannot forget the other parts of the infrastructure equation, which are the nation’s aging electric grid and drinking water systems. In light of this, one of my key priorities for the coming year will be a broader conversation around modern utility infrastructure investment. President Trump’s $1 trillion infrastructure plan will drive that conversation because, as a NARUC community, we want the members of Congress to understand that intermodal infrastructure investment is critical. I also plan to tee up a national conversation between NARUC and groups like the U.S. Chamber, the Advanced Energy Economy, American Gas Association, Edison Electric Institute, National Association of Manufacturers and organized labor to push this agenda with the new Congress.
AG: We have heard a lot of discussion in Washington about what may or may not happen to the Clean Power Plan, whether or not Congress will be more proactive, whether certain agencies will pursue a different course of action with respect to key policies, etc. How does NARUC navigate all of this?
RP: The Clean Power Plan as we know it is DOA. I’m not trying to be a partisan in saying that, but the U.S. Supreme Court sent a loud and clear message in issuing the stay of the CPP. The turbulence the CPP created within the states was another example of the disconnect between the Environmental Protection Agency and the NARUC member states on this subject. NARUC’s role going forward on this issue will be one of a convener of state views. NARUC also aims to continue its cooperative working relationship with the EPA and other key federal stakeholders. However, there is a lot of fatigue associated with how the EPA rolled out and presented the CPP to the states. Some argue that between the CPP and the EPA’s WOTUS (waters of the United States) rulemaking, there were a lot of missteps by the EPA in adopting the rules without proper input from the states. The courts agreed with the states and pushed back as well.
AG: You set out a succinct theme for your year as president, putting things in three essential buckets: infrastructure, investment and innovation. I’d like to explore each of these key areas with you—with a focus on natural gas primarily, but with an interest in your take on all sectors of the industry. Let’s start with infrastructure. What is your take on the current state of the nation’s energy infrastructure? What do you see as the most pressing issues, and how would you like to see them addressed?
RP: Make no bones about it—it is my goal to ensure that, nationally, we have an adult conversation about the need for critical investment in energy infrastructure. Coming from a diverse energy production state, I have a great appreciation for how the natural gas industry can transform a state’s economic competitiveness. The Commonwealth of Pennsylvania is the second-largest natural gas production state in the nation. We are seeing a modern-day economic renaissance taking place in Pennsylvania thanks to the Marcellus Shale. Between cheap wholesale power prices and stable gas supplies, there are a lot of incentives attracting new manufacturing firms to Pennsylvania. However, this is not just a Pennsylvania story. It will soon be the story of the U.S. economy going forward, and every utility consumer will benefit from it.
I have tasked the NARUC Committee on Gas to adopt a proactive 2017 agenda that will showcase the importance of natural gas infrastructure, as well as the best practices around pipeline safety and siting. The driver behind all of this has to be safety. In my view, pipeline safety is unequivocally the No. 1 priority and must also be the No. 1 priority for the natural gas transmission and distribution industry over the next century.
NARUC will also push hard with the Trump administration to transform the current posture within the Pipeline and Hazardous Materials Safety Administration. There seems to be a growing concern that PHMSA is not aligned with the states when it comes to pipeline safety training and funding. During the past six years, the PHMSA director has failed to directly respond to the NARUC membership on this issue, so there is a sense of optimism that with a new administration there will be some sea changes taking place at PHMSA.
AG: Now let’s dive into investment. What specific types of investments do you think should be made? Can you expound on the specific roles you think the federal government, state government and industry should play? Also, you mentioned within your inaugural speech that NARUC will be at the center of driving the future of regulation. What do you see the regulatory landscape shaping up to look like in the future? Are there any specific reforms you think are needed or else are on the horizon?
RP: By the year 2030, annual requirements for spending on electricity, roads, rail, telecommunications and water will average 3.5 percent of global gross domestic product. In the electric sector alone in the United States, we are looking at $3 trillion in spending requirements over the next decade. In the water sector, that number is upwards of $1 trillion by 2035. Our competitors (like China and India) are spending almost 10 percent of their GDP on infrastructure improvements, while the United States lags behind at less than 2 percent currently.
Let’s face it: For the past 30 years, the United States hasn’t had a coherent national energy policy, let alone a broad-based strategy for how to invest in infrastructure. I think we would all agree that no modern nation has ever achieved economic prosperity or a high quality of life without adequate investment in infrastructure. It is clear that encouraging sound financial investment in our nation’s utility infrastructure is an important issue and one that NARUC should be engaged in. In fact, I like the conversation taking place now within NARUC about updating the Public Utility Regulatory Policies Act and looking at ways for state commissions to incorporate ratemaking tools that stimulate infrastructure investment. This is why I’m so bullish about NARUC leading this conversation with policymakers back home in the member states as well as in our nation’s capital.
AG: With respect to innovation, you noted that there are several new game-changers. What are they? Research and development obviously play a significant part in technological developments. Any perspectives on where you would like the focus of R&D to be in the future?
RP: A cornerstone of my NARUC presidency will be to focus on innovation and what opportunities it can bring to the utility industry. Today’s utility customers do not just want to turn on their lights and pay their monthly utility bill as they have done in the past. With the advent of smartphones, smart thermostats and smart meters, customers today have the ability like never before to be involved in their energy usage, pricing and sources of generation. Now is the time for utilities and state commissions to start thinking outside the box and provide new and innovative ways to engage customers and improve the utility experience. This includes increased data analytics through smart meters and devices, cloud-based software and energy storage. I look forward to encouraging a conversation between the utilities and state commissions at the upcoming NARUC meetings on the innovation theme. Over the next year, NARUC will focus on bringing the thought leaders in technology to NARUC and showcasing some of the newest technologies in the utility realm. Examples include battery storage technology, oxide fuel cells and new combined heat and power initiatives, just to name a few.
AG: You have spoken passionately about workforce development issues, specifically in regard to hiring veterans. Could you tell us a little bit about your vision?
RP: When I talk about “investment” as part of my NARUC theme, I am not only referring to sound financial investments in our nation’s utility infrastructure, as I discussed earlier, but I am also talking about in an investment in the people who make things happen at our utilities. That’s why, as part of my NARUC presidency, I would like to develop a broader discussion around the need for more workforce development coordination across all parts of the utility sector.
Our nation’s utility workforce is aging. We need to make sure utilities are prepared for this changing of the guard and that the new generation is ready to take on the challenges of the future. I believe there are many ways to get at this issue, one of which is to encourage utilities to partner with and hire our nation’s veterans. That is why I have launched a NARUC Task Force on Veterans’ Affairs to examine best practices for hiring veterans in utility work and for partnering with community colleges to produce qualified candidates. I believe this is a partnership that has the potential to benefit everyone.
Investing in people—investing in the brain trust that will carry us forward into the next generation—is an essential investment that cannot be overlooked. And rather than being reactionary on this, I want NARUC to be proactive in helping utilities address their aging-workforce issue.
AG: Some people might not be aware that you are a former college golf coach. In thinking about that, it occurred to me that golf is a game of precision, power, finesse and balance. Might you share your thoughts on how you think your coaching and golf skills might come in handy?
RP: Great question! Yes, golf is a game of precision, power, finesse and balance. However, golf is also a game of integrity and solid course management. As the president of NARUC, I’m hopeful over the next year that we will keep the ball in the short grass, avoid the water hazards and make a few clutch putts. If we do that together, NARUC will have a banner year and maybe win a few championships along the way.
