Originally posted by Energy Central


September 18, 2003 | By Stephen Heins

September 8, 2003. As of August 14th, 2003, Americans with short memories or no memory at all about previous blackouts received a vivid illustration of the potential damage caused by electrical outages. While the headlines screamed “third-world electrical infrastructure” and “$100 billion needed to up-date U.S. electrical grid,” the United States Congress is now preparing to debate a national energy policy, including the various proposed solutions for the U.S. electrical grid.

Therefore, before Congress decides to haul out its pitchfork to distribute bails of money into long-term plans of questionable merit and exotic solutions without proper testing, I would like to suggest the following as a cautious first step: Encourage the federal government, individual states and businesses to employ sustainable energy efficiencies. This is a solution that offers an over-sized opportunity to be cost-effective and environmentally sound, without all of the political baggage associated with a national or regional approach to energy policy. In addition, this constructive first step to a balanced national energy policy can begin tomorrow and it will guarantee immediate and significant electrical capacity relief.

First, it is worth noting the festering problems that led up to the latest electrical grid meltdown. Unlike the Federal Communication Commission, the Federal Energy Regulatory Commission does not have a strong, national mandate that would give its efforts more teeth and sway. Effectively, The FERC is forced to act as more of an advisory body with a “bully pulpit.” Coupled with the standard opposition represented by the Not-In-My-Back-Yard (NIMBY) crowd and the myriad of environmental regulations, we should expect the time necessary to create a broad coalition of voluntary compliance to be measured in five and ten year increments.

Then, there is the matter of regional cooperation whereby contiguous states or regions are able to agree in principle on the proper course that inter-connection of state electrical grids should follow. After watching Connecticut and New York do battle over the Cross Sound Cable and the 300 Megawatts of electrical power Connecticut is still delivering to Long Island in the aftermath of the Blackout, I think it is safe to say that collegial cooperation between states is possible only in the direst of circumstances.

The chance that the U.S. Congress can avoid a protracted and rancorous debate over national energy policy is de minimus. In fact, the only way the Senate could agree on a generic energy bill was to adopt last year’s compromise with the proviso that every provision in the 2002 Energy Bill was susceptible to change. This certainly means that electrical capacity components of the bill will be held hostage by the more contentious issues like Alaskan drilling and fuel efficiency requirements for gas burning vehicles.

Consequently, the United States must confront other infrastructure issues especially where the laws of physics meet the laws of economics and the laws of return on investment meet the laws of financing. As far as the laws of physics go, electrons traveling over transmission lines cannot be controlled in the same way water through a pipeline can. The electrons just go their own way, period. Also, without adequate transmission lines which have solid returns on investment, no utility will have the necessary incentive to build them and no financial institution will have the necessary incentive to invest in them.

Finally, there is the issue of asking local and regional utilities to employ sustainable energy efficiency strategies, which would reduce the base load and peak load demand of their customers. After all, the individual utility would be asked to sacrifice a sizable portion of their revenue stream to effectuate any such energy efficiency. Obviously, this disincentive for the utilities has created one of the largest hurdles to a practical approach to displacing current electrical capacity.

Ultimately, a sustainable energy efficiency strategy may be the only solution every stakeholder in the energy policy debate (regulators, politicians, consumers, utilities, environmentalist, etc.) can agree on, especially if utilities and transmission lines are allowed to receive an adequate return on investment. In particular, recent studies suggest 100,000 Megawatts, or 200 power plants of 500 Megawatts, of electricity, could be saved by employing new technologies combined with robust energy efficient initiatives.

There are several ways in which all parties could employ the strategy immediately. One possible answer would be the creation of state and national energy portfolio standards. Another answer would be a “green pricing” approach to customer billing. Each would provide a vehicle to incentivize utilities to assist their customers in energy efficiency efforts.

Finally, the most inexpensive and easiest answer would be for the Federal Government to create significant tax breaks for energy efficiency sources that can deliver measurable and verifiable results with a large enough return on investment to satisfy global competitive needs. By taking large amounts of current consumption off of the national grid through an energy efficiency strategy, the U.S. can take a more rational approach to transmission issues and new power plants. Economic development, states rights, global competitiveness, federal cooperation and the environment would be the benefactors of such an approach.