Secretary of Energy Bill Richardson first noticed, last spring, that important regions of the United States are short of electricity capacity. This was Big News around the country. It hit the major network newscasts and all the major newspapers.
Typically, the storyline played out like this: The 35 percent growth in electricity demand over the last 10 years has led to the circumstances that we find today; people should be aware that we may have problems this summer with electricity supply.
It is incredible that the Clinton administration has just now noticed–after seven-plus years in office–that we have an electricity shortage. We know they are intelligent people. We know they understand facts. We know they understand the economy. We know they understand electricity demand has been growing. So why is it that on President Clinton’s watch nothing has been done on the supply side insofar as electricity is concerned?
The answer is simple: Al Gore. The Vice President has adopted the environmental community’s “nega-watt” paradigm. Nega-watt is a term coined by electricity conservation proponent Amory Lovins some two decades ago. The concept it embodies is that we can conserve our way to prosperity, and that increased electricity usage is a bad thing and not necessary for a modern economy.
Because Gore has adopted nega-watts, and because he is completely fixated on carbon dioxide emissions as the sole criteria for energy policy in the United States, the Clinton administration has done nothing for seven-plus years with respect to electricity supply.
Because they have done nothing, and because we are moving into a period where supply concerns will be front-and-center and in the news, you can expect the administration to be furiously creating scapegoats for the problem that is coming at us (and as you read this, may already be here). Indeed, on the day he made his announcement, Richardson blamed “transmission constraints.” By the second day, he had begun talking about utilities being at fault because they were unwilling to allow distributed generation into their systems.
On the transmission side, there certainly is something to the notion that we are supply-constrained. As has been explained to me, the problem concerns the FERC (Federal Energy Regulatory Commission) Orders in effect with respect to universal access to transmission and the inability of a transmission line owner to charge someone else more than they charge themselves for use of the line.
Now, that is good policy if you are an egalitarian. But from an economic standpoint, it means there is no incentive for additional transmission capacity to go in. Therefore, the investments are not being made.
The distributed generation scapegoat is a canard. To the extent that distributed generation is being kept out of the market (and nobody can really say whether it is or not), it doesn’t matter. The amount of supply being installed in this arena is very small and would be under even the most optimistic of circumstances.
The problem of electricity supply, at base, is that we are using up the capacity in existing power plants, including those that are coal-fired. We are using up this capacity at a very rapid pace because of “the wired world”–the increase in electricity demand attendant with the development of the Internet and the broadband revolution. Both are going on right under our noses.
Greening Earth Society has issued various studies on electricity supply, including a September 1998 study by David Wojick identifying what, two years ago, was a “coming power capacity crisis.” In 1999, we issued a study by Mark Mills called The Internet Begins With Coal. Earlier this year, Mills performed a follow-up study for us concerning the need for a supply side-oriented national policy for electricity.
These studies follow earlier studies Western Fuels Association sponsored in the 1990s that identified the importance of cheap electricity to the American economy and to the technology revolution that was underway and obvious, even though the Internet wasn’t. All of these studies show, beyond doubt, the linkage between the success of an economy, the wealth creation, and the health creation that attend societies that are electricity-intensive.
Nevertheless, the environmental community, blinded by its ideology, continues to deny the importance of electricity supply at a reasonable cost, pursuing will o’ the wisp policies (such as climate change) that will have the effect of artificially constraining energy supply in all arenas–including electricity supply–thus harming us all.
So we no longer are warning that the chickens will come home to roost. In fact, the chickens are in the coop and are clucking furiously even as our capacity problems grow with each passing day. How will the Clinton administration rationalize its way out of this fix that they helped create? Stay tuned.
Meanwhile, let’s hope those who understand the importance of increased electricity supply to the health and wealth of our people come to the forefront of the policy debate over energy in Washington, DC.
Fredrick Palmer, in addition to being president of Greening Earth Society, is general manager and chief executive officer of Western Fuels Association Inc., a not-for-profit fuel supply cooperative comprised of consumer-owned electric utilities.
