Our local county has formed an Energy Committee and are seeking comments on various issues, so I've prepared the following responses to their inquiries.
1. Issues surrounding various proposed carbon taxes:
The deliberate choice to use the word “carbon” (as in carbon taxes) is an intentional attempt to confuse and misdirect the general public into thinking that carbon dioxide (CO2), which is the actual subject of discussion and is a harmless gas and an intentional byproduct of the combustion of coal (carbon) or natural gas, is “dirty,” like handling a chunk of unburnt coal, and might even cause black lung, like coal miners get when breathing in coal dust. The same special interest groups that wish to vilify carbon dioxide are hoping that a frightened public and government might impose an artificial cost, or tax, on the emission of carbon dioxide, which would directly increase the cost of generating electricity with conventional fuels, which would in turn make their products, “alternative energy” sources such as solar and wind power, more economical by comparison. Of course, the reality and science of the issue is that carbon dioxide (not “carbon”) is a harmless gas, does not cause black lung, does not cause “global warming”, and applying an artificial cost to the electrical power generation process would only be a thinly veiled program to transfer resources from the pockets of those who use electricity (hardest hit would be residential consumers living on fixed incomes and the commercial and industrial consumers that add value to our very weak economy) to special interest groups (GE’s stock has shot up over 60% in the past five years, for example.) The entire ideology behind the concept of “Carbon Taxes” is technically flawed and needs to be eliminated from public debate through education.
2. Costs of renewable resources:
Conventional generation sources, such as coal or natural gas, cost a nominal $1 per watt to construct anywhere in the world. Typically, large generation plants (300-3000 megawatts), with economies of scale, can be constructed in the United States for considerably less than the $1 per watt. “Alternative” energy resources cost considerably more, depending on the type. For example, a hydro-power generation plant would cost $1 per watt for the generation facility, before considering the costs of the civil works (dams, penstocks, etc.) which typically drive the total costs up to at least $5 per watt. Solar power (photovoltaic) typically costs $10 per watt for just the equipment, before considering the labor costs to install the equipment, which would tend to increase the cost by 50-100% to about $20 per watt. Another cost of renewable resources is related to the location of the resource. For example, geothermal plants have to be constructed at the location of the geothermal hot springs, which can be far from existing load centers and transmission lines, and therefore have considerable additional costs associated with the transmission of the power. Another cost of renewable resources is the life expectancy related to that resource and the resulting stranded investment; Geothermal pockets are notorious for cooling off in a relatively short time after the construction of the expensive generation facility. And perhaps worst of all is the availability of renewable resources; solar power is only available when the sun is shining, wind power when the wind is blowing, but demand for electricity also occurs when it’s dark and the air is still, which means that expensive duplicate conventional generation capacity would have to be built to back-up the renewable resources. Scale is another serious issue with renewable resources; utility grade generation comes in hundreds or even thousands of megawatts (1 megawatt = 1,000,000 watts) while renewable energy tends to come in packets of hundreds of watts – a tiny fraction of the capacity required by consumers (a typical home will have a demand of 10-20,000 watts.)
3. Mandated energy portfolio standards and the potential consequences of such, including higher costs, diminished choices, loss of freedom, etc. Please state costs in easy to understand terms such as monthly or annual rate increases that would result.
Mandated renewable energy portfolio standards (RPS) are a highly effective method for government interference in the energy sector to reach catastrophic proportions in the shortest time possible. A typical RPS might mandate that a state receive 25% of their energy from renewable resources. An oversimplified illustration of the effects of this case would be as follows: the rate payers of that state would see their power costs rise from their present cost (call this 1.0 per unit) to the new cost described as:
75% @ 1.0 p.u. + 25% @ 20.0 p.u. = 4.75 p.u.
which means an increase in average energy rates of 475%! Unfortunately, the more complicated reality would be even worse since you wouldn’t be able to actually replace 25% of the generation capacity, since the backup conventional generation would still be required, but only 25% (at best) of the energy production, so you would still have some additional demand costs in this equation, likely taking the average costs up to 500% or higher. Further, the per-unit costs of the energy (1.0 for conventional and 20.0 for renewable) are the relative costs given today’s market when there is little demand for renewable energy. That ratio of 20:1 is likely to increase significantly as utilities in states with mandated RPS start to compete for limited renewable resources. Additionally, this oversimplified analysis does not include the additional taxes applied to the ratepayers that would be required to continue to subsidize the renewable energy resources. If anything can drive our limited remaining industrial and manufacturing sector to India, China, and Brazil, the 1-2 punch of the implementation of a mandated RPS and the increase in taxes can.
4. Municipal and Utility Company alternatives:
All utilities, private, municipal, or cooperative, should be required to develop and acquire the most economical power supply (electrical generation) possible while maintaining legitimate clean air standards (i.e. within allowable limits on particulates, SOx, and NOx.) Further, all utilities should be required to plan their power supplies beyond the short-term (5-years) and into the long range (20-30 years) to mitigate future power shortages.
5. Off peak usage:
Off-peak usage is one way to significantly improve the utility’s “load factor” – the measure of the utilization of the fixed assets, like generation, transmission, and distribution. All utilities must provide their commodity on-demand, at the instant that the consumer requires. In a system with a preponderance of residential customers, that means early in the morning and late in the evening, often producing load factors in the range of 20-40%. That means that the utility’s fixed plant is only utilized 20-40% of the time. If a utility can coax customers to consume energy during off-peak times, specifically during the day and at night, then the utility can improve its load factor, spread its fixed costs over a broader base, thereby decreasing the average cost of power. To this end, most utilities offer incentives to use power at off-peak times, in the form of off-peak rates. This allows the customer the freedom to choose to either pay more to use power on their own time frame, or to save money by shifting their power usage to off-peak times. This is a legitimate free-market solution to overcoming the problem of a low load factor. Any command-economy type solutions, like government mandating of off-peak usage historically has been proven to fail to achieve the desired results.
6. Efficiency & other conservation measures:
In a market-based economy, the consumer has the freedom to choose either to consume more goods and services for the market price, which tends to make the price increase with demand, or conserve (reduce their consumption), which tends to make the price decrease with the decreased demand. The consumer should always be allowed to make that choice based on the economic benefits or costs associated with each choice. Manufacturers of appliances already produce their products with a range of energy efficiencies with their associated costs, which allows the consumer to choose the best appliance for his application, given his own local energy costs. Governmental agencies that spend public money should always perform a serious cost/benefit analysis prior to adopting any efficiency/conservation measure, to avoid paying for flashy but uneconomical measures.
7. Energy development:
Utilities have the responsibility to meet the demands of the consumers in their designated service territories both today and in the future and as such are under an obligation to carefully plan for both power supply and delivery. And since such electrical infrastructure has a 30-year life (depreciation cycle) utilities should always ensure that all new plant constructed should meet the needs of its consumers for the coming 30 years. Also, since lead times for design, permitting, materials purchase, and construction are measured in years rather than months, utilities are under an equal obligation to start developing new energy projects (generation and delivery) years in advance. Elected leaders have an equal obligation to their constituents to see that permitting for such properly planned and justified energy development projects is facilitated.
8. Pollution comparables:
There is no energy development, energy consumption, or manufacturing process that is entirely emissions-free – not burning coal or natural gas for electricity generation, manufacturing compact florescent light bulbs with mercury, nor mining nickel for making Ni-Cad batteries for electric vehicles – everything contributes some pollution to the environment (nickel mining being the worst of the three cases above.) Fortunately for the environment in the United States, we solved most of the emissions problems in previous decades, with the implementation of unleaded gasoline and catalytic converters on our automobiles, “scrubbers” on our coal-fired power plants, and the whole “Pitch In” public service campaign that helped to raise public awareness and to reduce littering on our streets and highways. In recent decades our air emissions from power generation and gasoline powered automobiles has been largely reduced to harmless CO2 (beneficial to plants) and the attempts by the special interest groups to demonize CO2 in order to artificially create an increased market share for their “alternative energy” products is at the very least dishonest.
9. Capital costs and alternative sources:
As illustrated in point #2 above, the capital costs for energy generation range from conventional coal or natural gas fired generation, which costs an average of $1 per watt globally, up to $20 per watt for solar photovoltaic systems. If governmental agencies wish to encourage expensive and immature renewable energy technologies by subsidizing the capital costs, they should do so with open and honest mechanisms such as rebates or grants, paid for with tax dollars as approved by the voters. Governmental attempts to hide such grants, by passing Renewable Portfolio Standards, as in item #3 above, which force the utilities to purchase energy from (i.e. subsidize) expensive and immature energy sources, are misleading and dishonest.
10. Capacity and transmission – including issues surrounding rights-of-way and permitting:
As the County becomes ever increasingly urban, space to accommodate rights-of-way for transmission and distribution power lines becomes increasingly scarce. Accordingly, even though joint distribution facilities don’t make any sense, because the individual utilities in the county serve in distinct geographical areas, it only makes sense for the utilities to work together to create joint transmission facilities, that span from one area to another. Toward this end, a Technical Task Force was formed in the County in 1988 and currently plans and develops and operates transmission facilities jointly (to the extent practical.) These efforts should continue and should be encouraged when considering issues of rights-of-way and permitting.
1. Issues surrounding various proposed carbon taxes:
The deliberate choice to use the word “carbon” (as in carbon taxes) is an intentional attempt to confuse and misdirect the general public into thinking that carbon dioxide (CO2), which is the actual subject of discussion and is a harmless gas and an intentional byproduct of the combustion of coal (carbon) or natural gas, is “dirty,” like handling a chunk of unburnt coal, and might even cause black lung, like coal miners get when breathing in coal dust. The same special interest groups that wish to vilify carbon dioxide are hoping that a frightened public and government might impose an artificial cost, or tax, on the emission of carbon dioxide, which would directly increase the cost of generating electricity with conventional fuels, which would in turn make their products, “alternative energy” sources such as solar and wind power, more economical by comparison. Of course, the reality and science of the issue is that carbon dioxide (not “carbon”) is a harmless gas, does not cause black lung, does not cause “global warming”, and applying an artificial cost to the electrical power generation process would only be a thinly veiled program to transfer resources from the pockets of those who use electricity (hardest hit would be residential consumers living on fixed incomes and the commercial and industrial consumers that add value to our very weak economy) to special interest groups (GE’s stock has shot up over 60% in the past five years, for example.) The entire ideology behind the concept of “Carbon Taxes” is technically flawed and needs to be eliminated from public debate through education.
2. Costs of renewable resources:
Conventional generation sources, such as coal or natural gas, cost a nominal $1 per watt to construct anywhere in the world. Typically, large generation plants (300-3000 megawatts), with economies of scale, can be constructed in the United States for considerably less than the $1 per watt. “Alternative” energy resources cost considerably more, depending on the type. For example, a hydro-power generation plant would cost $1 per watt for the generation facility, before considering the costs of the civil works (dams, penstocks, etc.) which typically drive the total costs up to at least $5 per watt. Solar power (photovoltaic) typically costs $10 per watt for just the equipment, before considering the labor costs to install the equipment, which would tend to increase the cost by 50-100% to about $20 per watt. Another cost of renewable resources is related to the location of the resource. For example, geothermal plants have to be constructed at the location of the geothermal hot springs, which can be far from existing load centers and transmission lines, and therefore have considerable additional costs associated with the transmission of the power. Another cost of renewable resources is the life expectancy related to that resource and the resulting stranded investment; Geothermal pockets are notorious for cooling off in a relatively short time after the construction of the expensive generation facility. And perhaps worst of all is the availability of renewable resources; solar power is only available when the sun is shining, wind power when the wind is blowing, but demand for electricity also occurs when it’s dark and the air is still, which means that expensive duplicate conventional generation capacity would have to be built to back-up the renewable resources. Scale is another serious issue with renewable resources; utility grade generation comes in hundreds or even thousands of megawatts (1 megawatt = 1,000,000 watts) while renewable energy tends to come in packets of hundreds of watts – a tiny fraction of the capacity required by consumers (a typical home will have a demand of 10-20,000 watts.)
3. Mandated energy portfolio standards and the potential consequences of such, including higher costs, diminished choices, loss of freedom, etc. Please state costs in easy to understand terms such as monthly or annual rate increases that would result.
Mandated renewable energy portfolio standards (RPS) are a highly effective method for government interference in the energy sector to reach catastrophic proportions in the shortest time possible. A typical RPS might mandate that a state receive 25% of their energy from renewable resources. An oversimplified illustration of the effects of this case would be as follows: the rate payers of that state would see their power costs rise from their present cost (call this 1.0 per unit) to the new cost described as:
75% @ 1.0 p.u. + 25% @ 20.0 p.u. = 4.75 p.u.
which means an increase in average energy rates of 475%! Unfortunately, the more complicated reality would be even worse since you wouldn’t be able to actually replace 25% of the generation capacity, since the backup conventional generation would still be required, but only 25% (at best) of the energy production, so you would still have some additional demand costs in this equation, likely taking the average costs up to 500% or higher. Further, the per-unit costs of the energy (1.0 for conventional and 20.0 for renewable) are the relative costs given today’s market when there is little demand for renewable energy. That ratio of 20:1 is likely to increase significantly as utilities in states with mandated RPS start to compete for limited renewable resources. Additionally, this oversimplified analysis does not include the additional taxes applied to the ratepayers that would be required to continue to subsidize the renewable energy resources. If anything can drive our limited remaining industrial and manufacturing sector to India, China, and Brazil, the 1-2 punch of the implementation of a mandated RPS and the increase in taxes can.
4. Municipal and Utility Company alternatives:
All utilities, private, municipal, or cooperative, should be required to develop and acquire the most economical power supply (electrical generation) possible while maintaining legitimate clean air standards (i.e. within allowable limits on particulates, SOx, and NOx.) Further, all utilities should be required to plan their power supplies beyond the short-term (5-years) and into the long range (20-30 years) to mitigate future power shortages.
5. Off peak usage:
Off-peak usage is one way to significantly improve the utility’s “load factor” – the measure of the utilization of the fixed assets, like generation, transmission, and distribution. All utilities must provide their commodity on-demand, at the instant that the consumer requires. In a system with a preponderance of residential customers, that means early in the morning and late in the evening, often producing load factors in the range of 20-40%. That means that the utility’s fixed plant is only utilized 20-40% of the time. If a utility can coax customers to consume energy during off-peak times, specifically during the day and at night, then the utility can improve its load factor, spread its fixed costs over a broader base, thereby decreasing the average cost of power. To this end, most utilities offer incentives to use power at off-peak times, in the form of off-peak rates. This allows the customer the freedom to choose to either pay more to use power on their own time frame, or to save money by shifting their power usage to off-peak times. This is a legitimate free-market solution to overcoming the problem of a low load factor. Any command-economy type solutions, like government mandating of off-peak usage historically has been proven to fail to achieve the desired results.
6. Efficiency & other conservation measures:
In a market-based economy, the consumer has the freedom to choose either to consume more goods and services for the market price, which tends to make the price increase with demand, or conserve (reduce their consumption), which tends to make the price decrease with the decreased demand. The consumer should always be allowed to make that choice based on the economic benefits or costs associated with each choice. Manufacturers of appliances already produce their products with a range of energy efficiencies with their associated costs, which allows the consumer to choose the best appliance for his application, given his own local energy costs. Governmental agencies that spend public money should always perform a serious cost/benefit analysis prior to adopting any efficiency/conservation measure, to avoid paying for flashy but uneconomical measures.
7. Energy development:
Utilities have the responsibility to meet the demands of the consumers in their designated service territories both today and in the future and as such are under an obligation to carefully plan for both power supply and delivery. And since such electrical infrastructure has a 30-year life (depreciation cycle) utilities should always ensure that all new plant constructed should meet the needs of its consumers for the coming 30 years. Also, since lead times for design, permitting, materials purchase, and construction are measured in years rather than months, utilities are under an equal obligation to start developing new energy projects (generation and delivery) years in advance. Elected leaders have an equal obligation to their constituents to see that permitting for such properly planned and justified energy development projects is facilitated.
8. Pollution comparables:
There is no energy development, energy consumption, or manufacturing process that is entirely emissions-free – not burning coal or natural gas for electricity generation, manufacturing compact florescent light bulbs with mercury, nor mining nickel for making Ni-Cad batteries for electric vehicles – everything contributes some pollution to the environment (nickel mining being the worst of the three cases above.) Fortunately for the environment in the United States, we solved most of the emissions problems in previous decades, with the implementation of unleaded gasoline and catalytic converters on our automobiles, “scrubbers” on our coal-fired power plants, and the whole “Pitch In” public service campaign that helped to raise public awareness and to reduce littering on our streets and highways. In recent decades our air emissions from power generation and gasoline powered automobiles has been largely reduced to harmless CO2 (beneficial to plants) and the attempts by the special interest groups to demonize CO2 in order to artificially create an increased market share for their “alternative energy” products is at the very least dishonest.
9. Capital costs and alternative sources:
As illustrated in point #2 above, the capital costs for energy generation range from conventional coal or natural gas fired generation, which costs an average of $1 per watt globally, up to $20 per watt for solar photovoltaic systems. If governmental agencies wish to encourage expensive and immature renewable energy technologies by subsidizing the capital costs, they should do so with open and honest mechanisms such as rebates or grants, paid for with tax dollars as approved by the voters. Governmental attempts to hide such grants, by passing Renewable Portfolio Standards, as in item #3 above, which force the utilities to purchase energy from (i.e. subsidize) expensive and immature energy sources, are misleading and dishonest.
10. Capacity and transmission – including issues surrounding rights-of-way and permitting:
As the County becomes ever increasingly urban, space to accommodate rights-of-way for transmission and distribution power lines becomes increasingly scarce. Accordingly, even though joint distribution facilities don’t make any sense, because the individual utilities in the county serve in distinct geographical areas, it only makes sense for the utilities to work together to create joint transmission facilities, that span from one area to another. Toward this end, a Technical Task Force was formed in the County in 1988 and currently plans and develops and operates transmission facilities jointly (to the extent practical.) These efforts should continue and should be encouraged when considering issues of rights-of-way and permitting.
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