Straight Talk About Our Energy Future
Electric cooperatives, the electric utility industry and consumers — all of us — are facing a significant challenge in the next decade. Rising demand for power has virtually exhausted the surplus electric generation built in the late 1970s and early 1980s. In fact, the U.S. Department of Energy forecasts that economic growth will drive a 26 percent increase in demand from 2007 to 2030. In addition, any solution must include consideration for the environment and new climate change policy goals.
To get where we need to be, we’ll have to be creative and draw on many resources. Renewable energy has to be developed and added to the grid, now. Increased efficiency must be achieved on both sides of the meter and new low-emissions power plants have to be built and brought on-line.
Each of these options has tradeoffs and will cost money. So we’ve got to stay engaged, focused and ready to make smart choices. There’s no silver bullet to solving our energy challenges. That’s why we need to balance traditional and renewable fuels, as well as increase energy efficiency.
Until now, however, debate over our energy future has not included those who ultimately will be asked to pay for changes in energy policy. Consumer interests must be considered as Congress debates policy proposals. As consumer-owned organizations, electric co-ops are speaking out on behalf of electric consumers, and co-op members have a responsibility and an obligation to take part in the current debate.
That is why the “Our Energy, Our Future” program was developed. It’s a national grassroots campaign that aims to start a dialogue between our elected officials and electricity consumers like you.
The www.ourenergy.coop site makes it easy for you to speak directly to elected officials.
How will we supply the power we need to grow the economy while at the same time curbing emissions of greenhouse gases, such as carbon dioxide, blamed for contributing to climate change?
Facts on capacity
The Energy Information Administration (EIA) projects electricity needs will grow nationally .9 percent a year from 2007 through 2030, for a 23 percent increase.
Meeting the increased demand will require a total of 252 gigawatts of new capacity, unless extraordinary efficiency measures are adopted.
Out of 15 regions covered in the North American Electric Reliability Commission’s 2008 Long-Term Reliability Assessment (LTRA), seven are expected to dip below recommended capacity margins in the next five years.
According to the LTRA, nearly 25,000 MW of coal generation is still slated for construction in the next 10 years; however, the recent trend of cancellation and deferral of coal-fired plants casts doubt on many of these projects.
Will we have the technology we need to supply adequate power in a carbon-constrained world?
With technology now available, electric utilities have four options for baseload power generation: coal, gas, nuclear and, in some regions, large-scale hydroelectric. Most renewable resources such as wind or solar provide intermittent power unsuitable for baseload power generation. Generation using alternative sources that are not intermittent, such as landfill gas, are at this point not on a scale to replace traditional fossil fuels; the largest extant landfill plant provides 8 MW.
Facts on the current state of technology
A study by the Massachusetts Institute of Technology acknowledges that commercially viable carbon-capture and sequestration technology is years away; the most optimistic projection is 2020.
Investments in energy research and development (R&D) declined precipitously. While investment in research and development is roughly 3 percent of gross domestic product, it has been roughly one-tenth that in the energy sector. By contrast, R&D investments in the medical and biotechnology field are roughly 15 percent of sales. As a nation we need to invest more in innovative energy solutions.
In the last five years, utility bills have risen 30 percent. Across the nation and especially in the Midwest, consumers will be paying more for electricity. The rising cost of fuel combined with the rising cost of building new generation mean that electric rates will increase even if we do nothing to address climate change.
Times are hard for many Americans. The downturn in the economy will increase the numbers of Americans who cannot afford to pay their electric bills. The great achievement of Franklin Roosevelt’s rural electrification program – affordable electricity for all Americans – is at risk.
The energy proposals being debated in Congress all entail further increasing the cost of what has become a necessity in American life: reliable electricity.
Facts on cost:
• The price of coal – the fuel for over half of America’s power plants – has doubled since last year while the cost of liquid natural gas has soared by as much as 50 percent.
• The typical household in America spends about $1,400 per year on electricity, or more than 2 percent of median annual income and for lower income households it represents over 8 percent of income.
• Under the proposed carbon cap and trade scheme, which would auction carbon emission allowances on the market, the average Illinois electric co-op member using 1,000 kWh a month will see a $10.81 increase a month if the cost of CO2 is $10 a metric ton and $108.09 if the market reaches a $100 price per ton.
The EPA has already started the process of regulating CO2
Spurred by the U.S. Supreme Court 2007 decision that EPA has the authority under the Clean Air Act to regulate CO2, the agency has begun to take action. In April, EPA proposed an “endangerment finding” that, when finalized, will open the door to EPA regulations. Unfortunately, the Clean Air Act is not well suited to addressing global climate change. It was developed primarily to address local and regional air quality issues, not global scale issues. Further, the framework established by the act would create a confusing and complicated regulatory system that would lead to what Rep. John Dingell called “a glorious mess.”
Proposals will impact electric cooperatives
Well-crafted legislation is a better solution than EPA regulation. While Congress must decide numerous details in developing legislation to reduce CO2 emissions, several key issues deserve particular attention:
• Stringency and timing of caps – this has the biggest impact on the program’s cost and will determine the public’s willingness to sustain the policy over time.
• Allocating carbon emission allowances to keep the program affordable, or auctioning them to the highest bidder to raise revenue.
• Whether to allow Wall Street speculators to drive up emission allowance prices, thereby setting electricity prices for all electricity consumers.
• Inclusion of an “economic safety valve” to protect against energy price spikes and allow for prudent planning and robust economic growth.
• Scope of the program (covering the entire economy or only specific sectors).
• Whether to allow use of agricultural and other “offsets.”
• How to promote advanced technology research, development
• How to address other countries’ emissions that make up more than 75 percent of worldwide emissions.
In 1932, President Franklin Roosevelt declared that electricity was a necessity, not a luxury. He committed to making it available and affordable to all Americans. We must not turn back on that commitment from over 70 years ago.