U.S. power CEOs seek policy answers from Congress

FORT LAUDERDALE, Florida, Nov 2 (Reuters) - U.S. utility executives said on Monday they want Congress to set the rules on carbon regulation and to give more authority to Federal Energy Regulatory Commision to help site high-voltage transmission lines that cross state lines.

The uncertainty of how far and how fast carbon dioxide emissions must be curtailed and the difficulty in permitting new power lines were cited as pressing policy issues hindering the industry, a panel of executives agreed at the Edison Electric Institute financial conference.

If Congress cannot agree on how to address carbon regulation and allows the Environmental Protection Agency to move ahead to formulate emission rules, the effort will dissolve into years of contentious legal wrangling, said Peter Darbee, chief executive of PG&E Corp (PGN.N).

"The right result is legislation which will produce the certainty we need to make 40-year investments," Darbee said.

Giving the FERC clear authority to site new interstate power lines is needed integrate all types of renewable power resources, such as wind and solar, which states are requiring utilities to add to the generation mix to address climate change concerns, added Mike Morris, head of American Electric Power Co (AEP.N).

Currently, the FERC has limited authority to settle transmission disputes when state regulators cannot agree. Much of the abundant wind and solar power resources in the United States are located hundreds of miles from cities where electricity is consumed, meaning new power pathways will be needed.

"Without a robust transmission grid, it's impossible to get to that level" of renewables states seek, Morris said. AEP is pursuing a number of large-scale grid projects to move thousands of megawatts of electricity across the nation.

While U.S. power demand shrank in 2008 as industrial customers cut shifts or shut, lower demand is cyclical and temporary, not permanent, said Larry Makovich, senior power adviser of IHS Cambridge Energy Research Associates.

"This slowdown is cyclical, not structural," Makovich said. "We'll have a bump in demand that will surprise people."

A number of utilities have reported that industrial power appeared to stabilize in the third quarter. Some said demand started to pick up, but remained at reduced levels seen in the fourth quarter of 2008.

However, Makovich said it will take a couple of years for power demand to rebound to levels seen in late 2007. (Reporting by Eileen O'Grady; Editing by Marguerita Choy)