National Capital Area Chapter of the U.S. Association for Energy Economics

NCAC Featured Member

 

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Featured Member

October 2014

 


Michael L. Telson
Vice President Energy and Advanced Concepts, General Atomics


Affiliation and years of experience in energy and/or environment:

Since 2010 I have been working in government relations for the General Atomics Company of San Diego. But I have been involved with energy, economics and environment issues since 1970 when I took MIT Economics Professor Morris A. Adelman's energy economics course as a graduate student. It was quite a revelation to me when I realized that how we should think about resource supplies is as much, if not more, a function of economics rather than geology. I came to understand that it is simply a fact that all we know about a given resource is always a function of the technology available at any given time, the luck society has had exploring for that resource, plus the economics of further exploring and developing that resource.


Before that, I had started my Ph.D. thesis on the economics of alternative reliability levels for electric generation systems, in large part, because I thought that essentially no work had been done in the field since the 1930's, and I sensed that the underlying reality had changed sufficiently that there were many interesting issues to be explored. My thesis committee included faculty from the electrical engineering department along with others from the Sloan School of Management.


After I earned my Ph.D. in 1973, I won a new fellowship from the American Association for the Advancement of Science (AAAS) to work in the US Congress for a year, where I joined the US Senate Energy Committee. It was a momentous energy year because the Arab Oil Embargo began only 6 weeks after I arrived in DC. The following Congress was nearly as interesting, so I decided to stay to learn a bit about the House of Representatives, and was hired by the new US House Budget Committee to do its energy work.


After President Carter decided to make energy legislation his first important legislative initiative, Speaker Tip O'Neill (D-MA) created the ad hoc Committee on Energy to enact broad energy legislation responding to Carter's initiative. I was asked to staff the Chairman of that committee, Cong. Thomas Ludlow "Lud" Ashley of Toledo, Ohio. It was a fascinating assignment - the issues were analytically interesting, the politics extremely complicated, and the personalities fascinating. I had never had to deal with such an assortment of issues and people, and had to learn the art of compromise while doing your best to adhere to principle.


I worked for the House Budget Committee for 20 years, adding the responsibility for reviewing NASA programs, and oversight of the overall Federal R&D Budget. In 1995 I joined the US Department of Energy, where I had the privilege of working for Under Secretary Charles Curtis, for whom I staffed budget, science and certain energy policy issues. In 1997 I was nominated by President Clinton, and confirmed by the US Senate, to serve as the CFO for the Department of Energy. I served Secretaries Federico Pena and Bill Richardson, and stayed on to serve Secretary Spencer Abraham in the Bush Administration. After retiring from federal service, I later joined the University of California, in its DC office, to serve as its energy and science advisor with oversight of its National Laboratories - Los Alamos, Livermore and Berkeley.


I have been very fortunate in my career to work for very interesting, intelligent and capable people, while handling extremely complex issues that put me in a position to contribute to public policy.


Any particular achievement/interest in energy/environment you would like to mention?


In 1973, when I joined the congressional staff, non-market criteria (which were the legacy of legislation from the 1930's and economy-wide price controls imposed in 1971), were used to allocate natural gas, oil and electricity supplies; I would like to think I contributed to forming the consensus that markets needed to be at the center of those processes. I also contributed to building the U.S. Strategic Petroleum Reserve, and to obtaining funding for important DOE programs, among them many of those in the DOE Office of Science.


In your opinion, what are important issues facing the energy industry nowadays?


It is most important to understand that there are many energy industries, not one "energy industry." Their work is complicated by the fact that all of them are heavily, and I would say unavoidably, affected by public policies designed to accomplish many, often conflicting, objectives. The challenges faced by electric utilities in a mostly deregulated world are quite different than those faced by the oil and gas industry. In turn, oil companies (refiners also have different interests than upstream companies) face challenges that are quite different than those faced by gas production or distribution companies. To me, one of the more important issues facing the electric industry, is what public policies are necessary to ensure that it remains sufficiently reliable, i.e., who pays (and why should they pay) for the surplus capacity needed to keep it reliable.


The oil and gas industry needs to learn how to do business in an age of relative abundance, rather than scarcity, while governments learn new, and hopefully productive and efficient ways to address their legitimate environmental and national security concerns.


How long have you been a member of NCAC? Any particular NCAC memory you would like to share with us?


I served as the General Chairman of the first annual conference of the IAEE in June of 1979 that was held in Washington, D.C. and joined the NCAC at that time. I later served on the NCAC Council for a number of years. My most vivid memory was when I arranged for an old friend, John Treat, to speak to the NCAC in 1981, just after he arranged for the NYMEX, which he was President of, to trade oil futures contracts. Interestingly, most people believed these contracts would fail because OPEC nations would never allow these contracts to diminish any of their pricing power. But, economic realities have a way of asserting themselves, and the rest is history. In my experience, NCAC and the IAEE are at their best when they bring these kinds of cutting-edge ideas into the light. In the early days of the NCAC and the IAEE there were many opportunities to question long-held nostrums such as the then-accepted "facts" that the U.S. was "running out" of oil and natural gas. I hope the IAEE continues to keep its edge, while serving as an objective forum where academics, government and industry can continue to discuss and elucidate these issues.