02
Jan
Opportunities for business and the legal profession have arisen from
MINNEAPOLIS - As a jury weighs the evidence against one-time Enron utility magnates Ken Lay and Jeff Skilling, war continues in the Persian Gulf, and gas prices float in the $3 per gallon range, the subject of energy is never really off the radar.
Many opportunities for business and the legal profession have arisen from increased competition in the energy industry. Federal energy policy has encouraged industry growth, particularly in renewable energy. For example, Congress used a carrot and stick approach with the Energy Policy Act of 2005, including streamlined regulations and incentives, including tax credits, intended to move the energy industry forward.
Natural gas, coal, wind, ethanol and nuclear energy all have constituencies and offer opportunities. Other stakeholders include financial institutions, railroads, property owners and farmers.
As the industry has opened up, the number of energy lawyers became inadequate and clients were running into conflicts of interest, according to Minneapolis attorney James J. Bertrand. There were more clients than lawyers, which is always a good thing, he said with a laugh.
The energy practice niche has grown as nontraditional energy technologies have developed. In addition to the traditional sources of legal conundrum arising from coal and oil procurement, use and transportation, issues now flow out of hot areas such as harvesting corn fields for ethanol and the channeling of wind for power.
The boom in Minnesota’s energy industry is illustrated by an upswing in construction of power plants, Bertrand observed. Few plants have been built since the 1970s and 1980s and now the Minnesota Public Utilities Commission is dealing with requests for new plants, he said. There are several projects now pending before the PUC and more expected in the future, he said, adding that there are similar opportunities in other states as well.
A perfect storm
Minneapolis attorney John Drawz agreed that the energy law field is at a growth point. We’re due for new plants - that’s an understatement. If you haven’t built anything of substance for years you have to get to it. These things go in cycles and we’re sort of at the beginning of a cycle, he said.
While there is a robust debate going on about how much energy is needed and what kind, one projection is that Minnesota will need a 2,500 megawatt increase in its power supply by 2015, said Minneapolis attorney Ann Siha.
The forces that are working now are unprecedented. We want our energy supplies secure and that provides an opportunity for rural development including biomass power. There’s an increasing emphasis on renewable power and also a need for traditional services. Underlying all that is the increased cost of energy that makes competition possible so there are more clients who want to invest. There’s a lot going on right now, Siha said.
Various interests are represented in getting the power plants and other energy projects moving, said Bertrand. They include financial institutions, industry, environmental interests, independent power producers, utility companies and the state. Lawyers are involved in the bidding process and the ultimate development of the projects.
Nukes are back
After the projects are up and running comes an administrative practice before the Federal Energy Regulatory Commission. The energy regulatory approval processes include state and federal energy and environmental authorities and is one of the most complex regulatory processes that exists, often involving several states, Siha said.
Bertrand said that his FERC practice has been very robust and driven by a variety of factors. Corporate scandals, including Enron, have put pressure on FERC to act as a watchdog. The bankruptcies of major energy companies have put a lot of pressure on FERC to balance the interests of energy companies and the interests of ratepayers. The energy blackout of 2003 put a significant amount of pressure on FERC to have a better system for reliability and learn from that experience, he added.
And then there’s the gorilla in the living room of any energy debate - nuclear power. Nuclear is coming back, said Bertrand.
Drawz agreed that we are in the ascendancy of nuclear power, although he added
that Minnesota has two nuclear power plants and a third is unlikely. In fact, the Legislature would have to amend the law to allow the construction of another nuclear plant, Bertrand observed.
Corn - the new power plant
Other energy issues that will likely require the attention of the legal profession include rail capacity for transporting coal, natural gas pipelines, ethanol and wind energy. Ethanol encompasses all the development issues including land use and transportation, said Bertrand. It’s a true development practice, he said.