Below are a few letters we received on topics that appeared in the past few weeks. They capture the essence of how many readers say they feel.
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Wind Credit Blown Off Course - July 14, 2008
In Your July 17, 2008 edition of "Letters from Readers" you published not one, but two letters that attacked wind power on a couple fronts, using myths and inaccurate information to paint wind power with the broad brush that anti-wind critics frequently use to criticize a technology that they do not understand.
Wind power is going to play an increasingly important role in the way our nation generates electricity - it was the second-largest form of new electric generation added in 2007, adding 35% of all new generation in the U.S. last year. As a clean energy source, using a domestic resource, wind power is adding benefits not only in terms of growing clean energy production and reducing emissions from fossil-fuel power plants as a result, but it is also generating jobs and manufacturing growth at a time when the economy definitely needs some bright spots.
One of the letters criticized the production tax credit as if somehow that were the only subsidy in the electric power industry - nothing could be farther from the truth. The federal production tax credit puts the wind industry on a level playing field with other subsidies built in to the tax code permanently for other technologies. And the EIA study he quotes has serious flaws in how it characterizes subsidies for all generating technologies.
Click here for more information.
The other letter fell into the trap (intentionally ?) of trying to cast wind power as a baseload generating technology and then criticizing it from a capacity standpoint. The bottom line is that wind power, as a variable output generating technology, is not suitable as a baseload generating technology, not does the wind industry try to portray wind power in that role. Wind power is best viewed and understood as an energy resource, not as a capacity resource. When viewed in this context, wind power can be better understood and the cost competitive of wind power today, compared to any other form of new electric generation, can be easily seen. The fictitious numbers presented by Mr. Stacy in his letter only serve to confuse and distract the real needs in this country from a diverse portfolio of new electric generation, of which wind power is becoming a mainstream, cost-competitive, and important source of new generation to meet our countries' energy needs.
For readers interested in objective analysis and insights into the potential for future growth of wind power in this country, a balanced and well-research source of such information can be found in the recent U.S. DOE report on "20% Wind Energy by 2030" - which addresses both the benefits and challenges of wind power in an objective manner, which the two previous letters did not attempt to do in the least. This report can be accessed at: www.20percentwind.org
Jeffrey E. Anthony
American Wind Energy Association
It is important for your readers to keep in mind that Congress put an expiration date on the wind power production tax credit for the express purpose of making it less effective.
Investment of any kind requires long-term certainty. Investment that depends upon Congressional action is a lot less certain than investment that depends upon Congressional inaction.
It is actually a pretty clever setup. With an expiration date, a member of Congress can grandstand about having repeatedly voted in favor of wind power, all the while slowing wind development to the benefit of campaign contributors from elsewhere in the power sector.
Members of Congress who are serious about wind power will work toward a production tax credit with no expiration date.
Michael Sultan
India's Plight - July 18, 2008
What you read and hear is not true. India is massively poverty stricken country where millions survive on less than a dollar a day. It may require energy for those that are rich but the poor require two loaves of bread at the time of meal.
Indians have used solar energy for as long as it has been there. There is massive corruption in its energy sector with 50% energy being stolen at all levels. Irrespective of high-fi talks from air-conditioned rooms, etc., the fact remains that its expenditure on simply cleaning the streets of its cities is often simply eaten away by the officers and very little percolates to actual work. Fake muster rolls of workers, fake use of machines and theft of things like diesel from vehicles are all common occurrences. Its cities stink of garbage and filth. This produces far more carbon than Power plants.
Bush need not argue about our problems -- we are not at all contaminating because of power plants. Our fashionable set of officialdom which want clapping from the west and from people like Bush make such non-actionable action plans on every type of energy. We hardly have energy at the moment. The whole of India does not receive energy for more than 16 hours per day!
Our energy consumption per capita is lowest in the world and our leaders do daydreaming about the super power India! That is why I believe Bush takes notice of us.
My advice: do not worry about us -- we are used to living in darkness. As I go to sleep and temperature here in the night would be around 35C there will be power cut from 12 PM to 4 PM! Can you sleep like this day in and day out?
There is little hope for countries such as India. Except that they are very fond of daydreaming and talking grandoise!
Alok Misra
The forty-year-old reactors (found at this site) were of U. S. design. In the years following their construction, India has built Canadian designed reactors and now has two Russian designed reactors being built at Kudamkulam. I am sure the French, Russian, or Chinese would be happy to sell them reactors if their deal with the US fell through as it looks like it has.
Mary Wegner
Hopefully, the jury is still out on India's energy direction. Having recently spoken about wave energy at the Cogen 2008 conference, Nagpur, and then meeting with the head of India Power Finance Corporation (a government undertaking), New Delhi, I concluded mixed messages are concurrent just as they generally are on a worldwide basis. India does have a Minister of New and Renewable Energy, some healthy internal dialogue is evident, although the other forces seem much stronger. Their top floor view seemed more clear than from my last Delhi visit of a decade ago. It was largely due to use of natural gas propelled auto rickshaws. On the other hand, mouth-kerchiefed scooterists still weave and bob to the front of red lighted traffic and the usual plumes emanate upon the green as they again fall to the back of traffic flow.
The conference featured presentations geared toward "energy to common man", including modified bicycle electrical generators, chaff cutters, and other decentralized energy conversion tools- long considered but little used. Is it just lip service? At the WIREC Washington International Renewable Energy Conference, India pledged to add at least 48 MW of renewable energy over the next five years- a drop in the bucket. Coal India Limited is pushing ahead with exclusive use of coal in new power plants with little consideration for problematic sequestration. The name really must be reversed to Limited India Coal and accordant steps are needed for implementing substantial renewable resources among which are solar, wind, and wave (near South and West regions). Nuclear aspirations are still dubiously tied to a very long hestory (gender neutral expression) of neighborly animosity. India's greatest resource is its peoples' intelligence and we must all cooperate in worldwide energy use decisions before taking seats in respective musical chairs of the next, lasting energy implementation scenarios.
Foerd Ames
World Leaders Endorse Nuclear Power - July 23, 2008
This is all well and good, but I wonder which of these countries are going to volunteer to dispose of the waste. I say that we just ship our nuclear waste to Japan, since their officials seem to be in support of nuclear energy.
I lived on a farm 50 miles away from the 3 Mile Island incident, when that happened. The following year, all of the crops on the farm came up deformed. So, while no direct deaths were caused (I suspect the health of some people were harmed as a result of this meltdown), we know that it was not contained.
The facility should have been condemned immediately by government officials, since it compromised the health of the public.
Sean Reilly
For the United States I have just 4 questions:
1. What does one do with the spent fuel rods?
2. How does one protect the containment structure against terrorist attack?
3. From where will we purchase the fuel?
4. Does anyone really know (within a factor of two or three times) any estimate how much nuclear facilities will cost?
Questions 1 and 2 have no answers at the moment.
Question 3 has some options in countries in Africa and Australia and perhaps Canada.
Concerning number 4, the prices quoted from earlier prices included tremendous subsidies. Does anyone doubt that now those costs will not be escalated by a factor of 4 or 5?
With all due respect to world leaders, there are areas of the world where a nuclear portfolio would fit in very nicely, but in the United States we have other, less expensive and safer options. One option is coal gasification!
Joe Langenberg
I just loved your article; it states what some of us have said for some thirty years since the demise of the nuclear power plant (NPP) business notably in the West, ignoring France. France has had the superior logic in these matters. They realized about dealing with unstable countries in the Middle East! We should have realized this also, especially after the Arab embargo in the mid-seventies.
The West was hornswaggled by the various Greens, 'Oh we can manage on renewables, etc.!' Their actions through the legal system pushed up the cost of NPP units by changes in plant hardware and legal delays. We now have reached a state in which there is no US owned nuclear business. Equipment construction of heavy components is in other countries. Universities had cut out their nuclear courses, so very few are being trained. Most of our NPP work staff are old or have gone to other businesses or retired! The Greens, through Jimmy Carter and his mob have effectively destroyed the NPP business in this country. Now we are looking at O'B as the new Jimmy Carter as the messiah to return jobs to the US. I see no hope from this quarter. I would mention that some of the Greens have changed their position on NPP construction, just to show that even the logic that the French had all these years ago is still the same, why deal with the unstable part of the world, when we have (had?) the capability here? Our politicians seem to imagine that normal rules and logic does not apply to them. We should have preserved our NPP design and construction capability but no one thought it was necessary.
We have a tendency to joke about the French, but in this matter as in many other matters, they are on the ball. Perhaps we can restore the strength of the NPP business, remember the basic designs for the French program came from Westinghouse. The Westinghouse designs were and are the dominant Pressurized Water Reactor NPP designs in the world, and they're now owned by the Japanese! Jimmy Carter and the rest of the US politicians have a lot to answer for to the US population.
In addition, we have the fiasco of Yucca Mountain, with Harry Reid trying to prevent its construction. Also, there is Jimmy's role in stopping the reprocessing of spent fuels, because of mythical terrorists removing highly radioactive materials from these facilities, why would they worry when they might just steal a bomb from the Russians or Pakistanis at less risk? The above are not the only poor decisions taken by poor old Jimmy, what about removal of the Shah and the subsequent hostage problems in Iran leading to our current position with Iran's need for a nuclear weapon?
A. J. Spurgin
San Diego, CA
Re-thinking Energy Savings - August 04, 2008
Thanks for shining a spotlight on utility disincentives and decoupling. It was a fair and balanced piece. Once again, John Anderson has advanced the notion that higher electric rates mean higher electric bills, when in fact the evidence shows that the electric bills are lower in those states that have efficiency programs, because consumption per capita is 31 percent less.
In addition, the exploding costs for new power plants, now about $3.5 to $4 million per Megawatt, does not compare very well with the average cost of $1 million per "negawatt," (or the opposite of Megawatt) that energy efficiency programs currently cost.
Without "throwing the kitchen sink at energy efficiency" as Marty Kushler of ACEEE put it, the future rate increases to build new, cleaner power plants are going to be staggering and economically disruptive.
Ultimately, the real cost of electricity and emission reductions will continue its inexorable march higher, but can be controlled by well run energy efficiency programs and utility decoupling. Done properly, it will slow the demand for new electrical capacity and infrastructure at a time when we most need it.
Stephen Heins
VP of Communications & Government Affairs,
Orion Energy Systems, Inc. (Nasdaq: OESX)
Your recent editorial extolling the virtues of decoupling as a way to encourage energy efficiency by utilities I believe left out some key points as to why decoupling is not an effective method of delivering energy efficiency. First and foremost, allowing a utility to recover revenues lost because of the utility's energy efficiency program does not, by itself, give the utility an incentive to engage in energy efficiency. It simply removes the disincentive and makes the utility neutral on whether it will engage in those efforts because it will have the same level of revenue whether it encourages energy efficiency or does not.
But more importantly, allowing a utility to recover all lost revenues without regard to the cause of the revenue loss as most utilities advocate, is grossly unfair to utility ratepayers and removes the tried and true rate case protections that have been developed over the last 100 years to ensure regulated utilities' rates are fair, just and reasonable. The matching principle undergirding all rate cases that all revenues in a test year must be matched with all costs and expenses for that year is compromised when yearly (or monthly) revenue true-ups are allowed between rate cases, based solely on one factor (lost revenue) Also compromised is the equally necessary principle of regulatory lag. The oft-used and hackneyed phrase that "decoupling is a new paradigm in setting rates" is just that -- a hackneyed phrase of no particular substance.
In fact, there are a number of reasons a utility's revenues may decline between rate cases that have nothing to do with a utility's energy efficiency programs. For instance, government tax credits for the purchase of energy efficient devices and homes, customer initiated conservation efforts (such as turning down the thermostat or buying energy efficient appliances, HVAC equipment, housing stock), loss of large customers, economic conditions, or weather, to name a few, all provide a significant reduction in the current and future growth of retail electricity usage. In fact, according to a recent study by EEI and EPRI, between now and 2030 electric demand is projected to grow by 30%, of which 23% can be met by market driven energy efficiency and 7% can be met by utility energy efficiency programs. Energy Efficiency: How Much Can We Count On? April 21, 2008. Why should all of a utility's lost revenues be recompensed to encourage it's promotion of energy efficiency programs when much of that loss was not incurred because of the utility's energy efficiency programs?
The real reason utilities push decoupling is the fact regulated utilities have long bemoaned the perceived effect of regulatory lag on their profits, complaining it is often several years between rate cases and the rates set by a utilities commission three or more years in the past are out of date even before they go into effect. They also maintain that bringing yearly rate cases to keep rates current with the utility's actual costs, expenses and revenues is too expensive.
What these utilities fail to acknowledge in their argument against regulatory lag is the simple fact that states have granted regulated utilities a legal monopoly in which to operate and have guaranteed the utility that the state will not allow any competition. In exchange for that state-granted monopoly, the utility has agreed to allow the state to set it's rates. Regulated utilities don't have competitors constantly nipping at their heels to keep their prices low. The only means the state has to ensure fair rates is the rate case and regulatory lag between rate cases which helps ensure that the utility will operate as efficiently as possible to keep its costs down and ensure the best possible return for its shareholders and that its rates will not need to be constantly increased. When revenue falls between rate cases, utilities that fail to adjust non-fixed costs and expenses will earn a smaller profit, as will their shareholders. And they will undoubtedly be in sooner for a rate case in which they will have to explain to regulators why they need to increase rates one year after receiving an increase from the commission.
Decoupling removes regulatory lag which is the only competitive force the state has to make sure a utility operates efficiently between rate cases. It forces a utility to operate as if it did have competitors. Clearly, utilities don't like that "competition" and this is the reason regulated utilities espouse total decoupling. They see the public and political will to engage in more vigorous energy efficiency efforts as a great excuse to eliminate what they have railed against for years -- regulatory lag.
If utilities sought to decouple only those revenues specifically lost because of their energy efficiency efforts (and not those revenues lost because of the efforts of the government or by consumers of their own volition or because of economic conditions), their decoupling argument that they are just concerned about delivering more effective energy efficiency would be more credible. As it is, seeking total decoupling for all lost revenues when their energy efficiency efforts account for only a portion of that loss, makes their true agenda obvious. Allowing a utility to recover all of its lost revenues, even when tied to some energy efficiency benchmark, does a disservice to ratepayers. The utilities want too high a price to provide energy efficiency because they see it as a method to defeat the competitive effect of regulatory lag rather than as their self-proclaimed tool to deliver energy efficiency. The dollars utilities charge us to deliver energy efficiency in the form of decoupled revenues would be better spent on allowing non-utility energy efficiency experts to deliver those programs and funding research into effective energy efficiency deliverables by government and private institutions.
John R. Perkins
Iowa Consumer Advocate
Office of Consumer Advocate
Thanks for calling attention to the decoupling issue. While you noted that there are two camps on this and I am not willing to say that decoupling is never beneficial, I was surprised to see you come down in favor of decoupling in such a sweeping fashion. Decoupling as it is often times being advocated should be considered more as another patch on an unwieldy and imperfect system than a great new idea. It is important to distinguish decoupling from incentivizing utilities to sell less power. Couldn't we just as well apply Mr. Heins' question to the oil industry: "How can we expect [major oil companies] to sell less of their product without giving them some reward for doing it?" Yet, I don't envision that cause getting much support.
To get to the heart of this issue and make proper policy decisions, it is essential to recognize that decoupling comes in more than one flavor and to understand our starting point. Assuming we need to live with regulated monopoly suppliers, the desirable form of decoupling consists of aligning pricing structures with cost causation. To do this, consumers must have full access to price signals and the industry must deploy meters capable of time-of-use pricing. Were this to be done, then both suppliers and consumers could do the "right thing", (i.e., make economically efficient choices between various energy supply and conservation options). Profits at that point become the traditional regulatory exercise of identifying what is necessary to attract needed capital to this essential industry. Utilities would be rewarded for running their companies efficiently (producing its product at the lowest cost to society) and reliably, not for selling more or less of the product.
Unfortunately, we are no where near deploying rate structures and meters that provide for the ideal regulatory process. For political and social engineering reasons, energy regulators, especially at the state level, have historically abhorred coupling prices to costs. Charging residential consumers a fixed rate based on the capacity costs they impose and a variable charge to reflect the costs of operating and fueling fixed assets to furnish energy raises concerns for affordability and has led to over allocating costs to industrial and commercial consumers, as well as rates that include fixed cost recovery in variable charges. Such rate design can often mean that reducing sales can lead not only to a reduction in profits, but actually losses. Further, prior to advances in metering technology in the past decade or so, such pricing was impracticable. Whatever the root causes, when you start from where we currently are without fixing the underlying cost allocations, it is not clear to me how anyone can make a generic conclusion that decoupling is likely to encourage any industry stakeholder to do the right thing.
Further, decoupling should not be confused with incentivizing utilities to sell less energy. If we, as a society, decide we should consume less energy, then other methods should be employed to achieve that goal. To blend these two concepts creates the substantial risk that we will inadvertently reward utilities for doing the wrong thing or at least encouraging consumers to do the wrong thing. In this context, Mr.Heins' question needs to be reformulated: "How can we expect consumers to buy less of the utilities' product without giving them some reward for doing so?" It is consumers that will be doing without, not utilities, and they will need to be the ones that receive an offsetting benefit.
As to true decoupling, we need to go back and fix pricing to allow consumers to buy a rational amount of the product being sold and ensure that alternatives to consumption have a real opportunity to compete. If it is done properly, ensuring that monopoly utilities are justly compensated will simply be an integral part of the effort, not a patch that further obscures our mutual self-interest in determining just how much energy is the right amount.
Erik Swenson
Decoupling is a sham and will only impede energy conservation. As an energy project engineer the process of decoupling will reduce the cash flow to the owner since Local Distribution Company (LDC) cost will not be reduced due to the energy improvements. This can be 20 to 30 % of the project revenues.
The utility companies are regulated delivery companies guarantee a fixed return on the cost of doing business. If the quantity of electricity delivered is reduced then the regulators have to increase the per unit LDC cost to adjust. This increase in LDC unit cost will further increase the cost of electricity motivating the none improved customers to do something as the economics improve. It will also improve the investment of those that have done the work. The market will push more conservation as each person gets a better return on investment. Meanwhile the utilties are making there profit, seeing cost go down due to lower maintenance, and everyone wins. Let the market work.
Under the Decoupling scenario if I have a client that is thinking of improving his operation he has to consider the consequences. If he drops his consumption significantly below average for his service classification there is a potential that the decoupling will result in his overall bill not changing or the project economics being reduces significantly.
Markets work best when the customer is the one making the decisions not the provider of service.
Utility companies have to adjust to lower sales, smaller business models, and stable profits. That is what happens to mature businesses.
Scott Greenbaum, PE CEM GBE
Now that's just plain wrong.
Regulated IOU's are guaranteed a reasonable rate of return on investment for providing safe, efficient, and somewhat reliable power to their connected customers. That return on investment is largely independent of the size or growth of the utility, and needs to remain that way.
Sure, there are some efficiencies and economies of scale to be gained, but if those were overriding factors then the logical right approach would be to form a single, national utility and take away all the squabbles over generation cost equalization and grid interconnect standards. After all, electricity is a pure commodity meaning cheaper, cleaner, and more efficient should be the deciding factor in compensating utilities - right?
No doubt that bandwagon would be absent of utility executives, accountants, and legal counsel.
The high level government-speak we get from what is a straightforward case of engineering economics is mind-boggling... "Decoupling allows utilities to profit from doing the right thing," says Steve Heins... Really, now. Making sound decisions based on how their end product is being used would be of better benefit.
Utilities are still building SUV's - demanding new transmission projects, central station megawatt factories (based on very marginal economic projections), and other "rate base" projects - while the real market has been moving toward addressing peak demand. Decentralized, distributed power systems, local generation using available peaking facilities, promotion of site based renewables through feed-in tariffs all would further the good of the country than rate payer's compensation for bad decisions. The IOUs would rather pursue T&D construction that builds into the rate base and allows the rather profitable bulk power trading to continue.
The state public service commissions aren't held harmless here by any means. Their rubber stamp approval of too many marginal projects have allowed utilities to accept a debt burden beyond what is reasonable for their service markets to bear. Passing on costs for such mutual bad decisions doesn't in any way absolve the process the led to those decisions being made and approved.
There is always the case for a certain degree of large-scale projects. Base load nuclear and grid support for urban areas are cases in point. But the very argument that utilities are reducing demand steers the argument away from some of these expansions. After all, if demand is going down, why is a huge infrastructure construction project required?
Corporate growth is a driving goal for many utilities, but there is no divine - or ratepayer - mandate for this to occur. Utilities need to focus on making the most sound investment decisions possible given the markets they expect to exist in. After all, share-holds obtaining a 10% return on investment don't particularly care if its from a $10 million or $10 billion dollar capitalized corporation.
Andrew Lehing
Building Momentum to Go Green - August 06, 2008
Reducing fuel consumption for economy and conservation of natural resources is to be commended. Reducing it for the sake of reducing carbon dioxide emissions and thus to save the world by reducing greenhouse gases and global warming is a fool's game.
The main greenhouse gas is water. As vapor and cloud, water is responsible for 95% of the so-called greenhouse effect. There is typically 50 - 100 times as much water vapor in the air as CO2 and it absorbs and emits the same longwave IR radiation (from the earth's surface) as CO2 (plus other wavelengths). The water literally swamps the effect of the CO2. IN ADDITION, incoming solar radiation evaporates water at the surface and convection carries it high into the troposphere, where the water condenses, releasing the latent heat. Some of the heat is radiated into space and the rest is conveyed toward the poles to moderate the climate there. IN ADDITION, air is warmed near the surface and is also convected high into the troposphere. According to one source, latent heat is responsible for about 46% of the heat transferred to the troposphere, the sensible heat a further 14%, leaving radiation responsible for only 40%. Gore talks about radiation EXCLUSIVELY, as if it were the only means by which incoming solar energy is transferred out into space to regulate the global climate.
The role of CO2 is almost negligible, yet companies, governments, and organizations have got their, and our, knickers in a knot about a problem that doesn't exist. They are acting on "science" instead of real science. The world has been cooling for several years. Climate is vastly complex, with varying cycles over the Pacific and Atlantic, as well as probable effects due to orbits of the earth, sun, and the heavy planets.
We should be DEMANDING that governments PROVE that CO2 is responsible for affecting the climate before they spend any of our money. They and the other organizations are accepting the IPCC reports as gospel and acting on them instead of investigating and discovering what a can of worms the IPCC process is. Google "IPCC errors". I just got 290,000 (!!!) hits. Don't be misled by greenie propaganda. Insist on a proper scientific evaluation before YOUR government spends another cent on "fighting global warming".
They are fighting a problem that does not exist.
Ian L. McQueen
Glenwood, NB
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