While the lack of a coherent national energy policy is nothing new for the US, Standard & Poor’s ratings service says in a new report that Washington’s current inability to definitively establish long-lasting energy policies and regulations distinguishes today’s situation from earlier eras. I quote:
Making resource decisions and committing a utility’s balance sheet to support those decisions has never been more complicated or littered with more potential pitfalls, and diminishing credit quality is a result.
Clear policy direction and consistent application by all branches of government of the various policies, ideally with maximum flexibility and abundant time for implementation, would benefit utility bondholders by promoting credit stability.
John Rowe, chairman and chief executive of Exelon, the power producer, spoke about this issue in a recent speech when he said US energy policy has been driven by a mess of mandates and power subsidies for nuclear, cleaner coal, gas, wind solar and other renewables – a constant urge to pick winners and losers. In his words:
Congress needs to slow down. We are already doing enough to give all of these things a chance.
On top of that, he said, states must stop intervening in energy markets. Illinois and New Jersey, for example, have considered or enacted legislation that will bring uneconomic generation into the market in the name of jobs.
Using “energy policy” as a tool to create jobs, win votes or pay down the deficit (as Congress is now considering) seems short-sighted and surely not the best way to ensure a long-lasting stable supply of affordable energy.
S&P notes energy companies are now paying for the lack of an energy policy, but surely it is only a matter of time before the public will be forced to pay its share in terms of limited supplies and rising prices.