Unfortunately, this feeling of security is premature. While the electricity crisis in the West has abated for now, and the Northeast has recovered from the largest blackout in the nationýs history, the crisis has by no means subsided. Although adequate generation capacity currently exists to meet much of the nationýs short-term electric needs, lingering regulatory and market uncertainty have stifled investments in necessary energy infrastructure, including generation facilities. New power shortages in the next several years are thus a likely prospect.

This outlook on the power market is further bolstered by studies within the last year indicating that current natural gas supplies will be unable to fulfill future demand. North America is experiencing a production decline while demand continues to grow. An additional byproduct of this situation is that wellhead gas prices have not only become more volatile, they have almost tripled during the past decade.

In testimony last summer to the House Energy and Commerce Committee, Federal Reserve Chairman Alan Greenspan said:"Todayýs tight natural gas markets have been a long time in coming, and futures prices suggest that we are not apt to return to earlier periods of relative abundance and low prices anytime soon."

Chairman Greenspanýs comments, coupled with recent record prices, finally have people focusing on the fact that our nation is running short of natural gas. Solving the problem requires adjustments to our attitudes on importing natural gas and revamping of our domestic transmission systems, which are critical to distributing these new gas supplies.

We must use our limited resources carefully, and rethink our strategy on foreign supplies. Developing new domestic supplies, from the Rocky Mountains, shale, biogas and synthetic sources is paramount to meeting our growing demand over the next decade. But this will not be enough. A regulatory structure must provide adequate certainty and incentives to support financing, issuance of regulatory approvals and construction of importation facilities.

Regulators must adopt policies that govern interconnections between natural gas utilities and new and diverse sources of natural gas that are made for economic, as opposed to purely physical reliability purposes, among other things. It must also support additions to pipeline transmission systems.

The Future: LNG

Here enters LNG.What is being touted by many as the main solution to our nation's energy challenges, liquefied natural gas is one of many new sources that must be considered as we look at the future of the North American energy market.

LNG has several unique properties that make it attractive: First, LNG represents our most viable long-term solution for supply at reasonable prices. Second, every country with stranded gas supplies would like to have a share of the North American marketplace, the largest gas market in the world. Third, unlike many other parties and interests whose wants are reflected in our nationýs stalled energy legislation, the LNG industry is not asking for loan guarantees, floor prices or subsidies. We are willing to take our chances and make our bets in the marketplace.We are very encouraged by the recent FERC action that does not require cost-based regulation for new on-shore LNG facilities. This is certainly a step in the right direction.

However, we must consider that major new LNG supplies are unlikely to reach North America until 2007, when several new receipt terminals are expected to be operational, including two by Sempra Energy. The National Petroleum Council projects that LNG imports could grow to become 10 percent to 15 percent of the U.S. natural gas supply by 2020ýas opposed to about 2 percent currently. So while LNG is commanding a lot of attention, itýs important to emphasize that market success, particularly as we await the arrival of LNG, depends on securing a diverse set of supply sources. Diversifying our supply base will create heightened competitive pressure on natural gas prices, and also protect us from threats of shortages, regulatory delay or weather-induced demand and price spikes.

This is important. Expedited siting and federal regulation that would streamline the permitting and development process is critical. Another welcome development would involve the updating of existing gas interchangeability standards. There are still policy challenges confronting the importation of LNG that we must address.

We are charting a new course in the energy history of our nation. Let us resolve to never again play catch up with our nation's energy demands and make customers guess whether there will be light when they flip the switch.

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