HEATING UP
	THE NEW ENERGY REALITY
	EDITORIAL
	Wisconsin Favorites Snow for You— and a Blue Beast, Too!

Heating Up

Electric Home Heating Could Outpace the Competition

Using electricity for home heating was no longer a brand new idea in the early 1980s, but it was still unusual, and in approving state government’s 1983–85 biennial budget, the Wisconsin Legislature resolved to keep it that way. Passed was a budget amendment made it illegal to build an electrically heated residence unless it met a “superinsulation” standard that lawmakers deliberately left undefined.

Times and technologies have changed, but the law hasn’t. The Wisconsin Department of Commerce, which has responsibility for setting and enforcing building codes, abides by administrative rules tailored to the mandate of the 1983 budget bill. Thus a legislative posture adopted to make a largely symbolic statement against inefficient energy use now serves to deter application of technologies that can offer homeowners better energy efficiency and affordability than the officially favored alternatives.

In a period of high and rising energy prices, this has not gone unnoticed. The Commerce Department is currently engaged in a wide-ranging review of state building codes, to be completed by this fall. In the first week of January electric cooperatives, home builders, geothermal energy providers, and energy efficiency specialists submitted a list of changes they hope to include among any code revisions the department chooses to propose when its review is done.

Today, It’s Conservation

When the technology became generally available in the early 1960s, electric home heating meant baseboard units consisting of glass-covered printed circuits. Since the apparatus would likely replace an oil- or even coal-burning furnace, cleanliness was a significant virtue, as were stable temperature and humidity. Durability was not. The glass panels required frequent replacement due to repeated breakage under heavy heat stress.

Today’s electric heat is something else altogether. A typical modern system might include a heat pump borrowing warmth from groundwater and capable of heat-production-to-electricity-consumption ratios as high as three to one.

Supplementing the heat pump might be a 100-percent efficient electric thermal storage (ETS) unit using high-density ceramic bricks to retain heat from power generated during the night or at other low-demand hours. This enables the homeowner to buy electricity when it’s cheapest and store the heat to use when it’s needed, without adding one watt to a utility’s peak demand.

If this sounds like the very definition of conserving energy, remember that to policy makers of the 1970s and ’80s, electric heat sounded like something that would make power plants run harder. So the 1983 budget directed the Public Service Commission and Department of Industry, Labor and Human Relations (DILHR) to develop regulations setting a tougher energy conservation standard for electric heat than for other available choices.

The resulting administrative rules amounted almost to a state directive to use natural gas. They call for greater resistance to thermal transfer in electrically heated dwellings, translating to restrictions on window areas and a roughly 15- to 17-percent increase in insulation requirements. They also use the low threshold of three kilowatts input to electrical heating equipment—sometimes called “the two-hairdryer rule”—to bring a structure under compliance requirements for electric-heat regulation.

Blocking Credits, Renewable Choice

To accommodate forward-looking technologies, the rules allow a homeowner using high-efficiency heating equipment to qualify for credits against heat-loss limits, but ETS units and plenum heaters aren’t on the approved list. And while geothermal and air-source heat pumps are on the list, the state-approved computer software in general use by Wisconsin building inspectors simply fails to properly credit the efficiency of any system not based on natural gas. Thus many building plans that would result in enhanced energy conservation are doomed by a known error to fail regulatory review.

Assuming those hurdles are overcome, a person who decides to use electric heat must still face significant regulatory costs. An established homebuilder active in reform efforts estimated last summer that existing regulations add two dollars per square foot to the cost of a new home. Of course the recent rise of natural gas prices (see page 14) wasn’t a factor in that estimate; it’s a separate reason why regulatory prodding to avoid electric heat can make life more expensive.

The irony of rules discriminating against heating technologies that favor energy conservation is hard to overstate. Of all energy producers, only the electric power industry is required by law to derive a percentage of its output from renewable sources. Wisconsin residents who heat their homes electrically are using the only heat source that must have a renewable production component, and they’re penalized for that choice.

David Jenkins, manager of the Wisconsin Electric Cooperative Association, credits the Department of Commerce—which supplanted DILHR in the mid-1990s as the regulatory authority—for being receptive to reform of the outdated rules. Especially with today’s natural gas prices, Jenkins says, decisions about home heating should be left to the consumer.

“Homeowners are smart enough to evaluate costs and benefits of various heating systems,” he says. “We are not advocating any particular heating system, we simply want all heating systems to be treated fairly.”

Last fall, stakeholders presented information to the Energy Conservation Code Council and the Uniform Dwelling Code Council, two appointed bodies that give policy advice to the Commerce Department. By the end of 2006, the department is expected to submit a package of rule changes to the Dwelling Code Council for its approval, followed by public hearings.

A Bill Comes Due

It’s highly doubtful that the 1983 legislative action to discourage use of electric space heating had any detectable effect on Wisconsin’s energy situation at the time. But now it’s becoming a different story, as a two-decades-old policy prescription exemplifies the continuing practice of systematically narrowing our energy choices, even as serious pocketbook issues evolve.

Jenkins, a vocal advocate of diversified energy sources even before natural gas got expensive, doesn’t beat around the bush. “Government shouldn’t be picking winners and losers, especially now, with energy prices so volatile,” he said recently.

He pointed out a letter to the editor—in that same day’s newspaper—from a Madison resident saying her gas bill had climbed more than $100 per month above the previous winter’s “barely manageable” costs. She worried that it might be necessary to “turn the thermostat down even lower” than the 62 degrees where she had it set.

“Because of what government’s done these past 22 years, promoting heavy reliance on natural gas,” Jenkins said, “we’re going to pay a price.”—Dave Hoopman

The New Energy Reality

Fuel prices, global competition pressure electricity cost

Gasoline, heating oil, and natural gas prices have soared. The last thing consumers want to hear is more bad news about their energy costs. But, despite the best efforts of electric co-ops to hold the line, monthly electric bills may also be on the way up for many Americans. Most analysts agree we could see several years of upward pressure on electric rates.

That’s because a complicated set of factors—everything from increased demand for power to dramatic increases in fuel costs in the United States, to long-term economic growth in the Far East—seems to be conspiring to increase the cost of making and delivering electricity.

Gas Pains

The new reality starts with much higher costs for natural gas, used to generate more than 17 percent of the electricity in the U.S. The government’s Energy Information Administration (EIA) estimates that will grow to 20 percent by 2010.

Almost all the power plants built during the last decade in the U.S. burn natural gas. The fuel used to be a great energy bargain, costing about $2 per million Btu as recently as 2002. In 2005, natural gas spiked at $14 per million Btu, but analysts project prices will stay at least in the $6 to $8 range—an increase of as much as 400 percent in only a few years.

The U.S. and Canada now use all the natural gas they can pump out of the ground and more, leaving no slack in the system.

“We’ve been living on this razor’s edge where any change in supply, any change in demand—any significant weather event—makes a difference,” says Chris McGill of the American Gas Association. Noting 2005’s summer was 19 percent warmer than normal, he observed that during the critical weeks of the summer cooling season, natural gas consumption increased by up to 30 percent. Plus, 2005’s devastating hurricanes will dampen the outlook for oil and gas production well into 2006. In a tight market, that can send prices skyrocketing.

Some consumers have already seen “fuel cost adjustments” added to their electricity bills.

Global Squeeze

Another part of the problem is that the world faces a new era of increased global competition for limited energy and other resources. India, China, and Brazil are rapidly industrializing. World energy consumption is projected to increase by 57 percent from 2002 to 2025, according to the EIA.

Worldwide electricity use is expected to grow even faster, possibly doubling in the next two decades alone, the agency projects in its study, International Energy Outlook 2005. Leading this charge is China, recently announcing another year of sharp economic growth above 9 percent.

In the U.S., demand for electricity is growing more modestly. Rising natural gas costs here could be partially offset by increased investment in nuclear or coal-fired plants and by more conservation by consumers. More investment in alternative energy sources can also help reduce dependence on world energy markets.

But unfortunately, another problem remains. The nation’s high-voltage electricity transmission network needs updating.

Beefing Up Transmission

Many analysts agree that state and federal attempts to deregulate the electric industry contributed to the reluctance to invest in transmission. Complicating matters, the past 20 years have seen a 100-fold increase in activity on the transmission grid.

“Throughout the 1990s, there was a significant slowdown in investment in transmission,” says Alan Beamon, director of the coal and electric power division of the EIA. “Utilities are going to have to invest in updating their transmission as new generation comes on line.” Electric co-op leaders estimate co-ops alone will have to invest heavily in new capacity over the next 10 years—some $28 billon worth.

The bottom line: Even with increased conservation and the pursuit of alternative energy sources, the price of electricity is still going up for many Americans. The EIA’s forecast shows energy costs falling back from last year’s highs, but not to previous lows, and then increasing more slowly over several years.

Most of the power used by the nation’s electric co-ops comes from coal-fired generating plants, and the price of coal is less susceptible to the sharp ups and downs of oil and natural gas. But cooperatives will not be able to escape all the nationwide pressure on electricity costs; some will have to adjust their rates to deal with the new energy reality.—Reed Karaim, for the National Rural Electric Cooperative Association

EDITORIAL
by Perry Baird

Required, Repealed, Required

The same year an executive order established the nation’s rural electrification program, Congress passed landmark legislation to rein in speculative business practices of holding companies that owned utilities. The 1935 Public Utility Holding Company Act (PUHCA) for 70 years provided a succession of federal agencies the tools to restrict both type and extent of the companies’ non-utility business, protecting utility consumers from paying costs for failed ventures.

Big business perennially backed efforts to repeal the law, including unsuccessful tries in each of the past several sessions of Congress. Regarded by some to have outlived its usefulness, the act finally succumbed last summer in the 2005 Energy Policy Act. Though the large, compromise package won approval by a wide margin, Wisconsin’s electric cooperatives had misgivings about that portion of the new law that repealed PUHCA.

Electric co-ops here have consistently fought to keep diversified interests of holding companies under the watchful eye of federal and state authorities, despite repeated moves to weaken or eliminate that oversight.

Prox Prevails

In 1985, for instance, Wisconsin electric co-ops enlisted the help of Senator William Proxmire when utilities and their administration allies mounted a drive to gut the Interstate Commerce Commission of its PUHCA enforcement capabilities. Proxmire, as ranking minority member of the Senate Appropriations Committee, led the opposition to the Holding Company Act repeal, ultimately forcing authors to withdraw the proposal.

Earlier that same year, the Wisconsin Legislature adopted its own Holding Company Act embodying similar protections to those contained in the federal law that insulated consumers from risk associated with utility holding companies’ non-regulated, non-utility ventures.

That protection was the essence of the federal PUHCA, and it remains the core of the Wisconsin law, which two years ago survived virtually unscathed after a three-year legal battle Madison’s Alliant Energy waged all the way to the U.S. Supreme Court. Wisconsin’s electric co-ops were among the groups that played an active role in defense of the state law.

Big Energy Getting Bigger

Big Energy is coalescing at a rapid, scary pace. While it might be a stretch to claim the repeal of PUHCA was the trigger for a recent rash of energy-industry consolidations, vacating that law certainly hasn’t slowed things down.

Among maneuvers attracting attention: New Jersey’s Public Service Electricity and Gas and Exelon Corp. continue progress toward a merger; in mid-December, Des Moines-based Mid-American Energy Holdings gets federal approval for acquisition of a Portland-Oregon-based former Enron subsidiary, PacifiCorp; North Carolina’s Duke Energy Corp. has the green light for a $9 billion purchase of Cincinnati-based Cinergy Corp; just before Christmas, Florida’s FPL Group and Baltimore’s Constellation Energy agree on plans for the former to acquire the latter for $11 billion.

These activities have prompted California, Kansas, Maryland, and New Jersey to begin pondering bills patterned on the Wisconsin holding company law. Why? They’re seeking a replacement for the 70-year-old federal law that got compromised out of existence last year for having outlived its usefulness.

No need to get “cabin fever” during Wisconsin’s winters. Just gather up your snow gear and go out to play at Christie Mountain, near Bruce. There’s plenty of fun to be had at the snow area, located on the lines of Jump River Electric Cooperative. Even if you arrive by yourself, you’ll find many playmates among the slopes there. And don’t be too surprised if one of these playmates turns out to be an amiable, shaggy blue monster. Yes, after sleeping for many eons in the Blue Hills, the Blue Hills Beast awoke, folks say. He now makes regular appearances at Christie Mountain, welcoming skiers, snowboarders, and tubing enthusiasts to the snow area and adding to the fun for all ages.

Skiers and snowboarders will find excellent snow conditions; the resort has added 75 percent more snowmaking capacity this season. A variety of terrain is available, from seven easier trails to the four progressive terrain parks. Two cliff jumps test your mettle, and you can dodge trees through the wooded trails of Timber Pup and Timber Wolf. Wildcat and Bob Cat provide you with a secluded t-bar area to play on.

Terrain parks offer challenges for novice and expert skiers and snowboarders alike. Those new to terrain parks can experience such features as rails, just inches from the ground, at the newly enlarged Fox Hop. The two intermediate parks offer larger jumps and different types of rails, while Rusty’s Revenge incorporates the most challenging features for advanced skiers and snowboarders. Leashes are required at the terrain parks.

The separate tubing park offers six groomed chutes; you can slide your way down gently or take a white-knuckle ride over jumps and bumps in the fast lane, then take the lift so you can do it all again. Tubes are rented, as are alpine and telemark skis, snowboards, and snowshoes.

Can’t ski, but you’d like to try? Christie Mountain’s qualified instructors offer beginning and advanced lessons for both skiers and snowboarders. Little ones, ages 3 to 8, will love Kinderschool, where they’ll learn to ski while the adults enjoy the slopes or other amenities, such as the rustic northern chalet that offers food and beverages. Picnic tables are also provided for those who prefer to bring their own snacks.

Go play on the snowy slopes of Christie Mountain for an afternoon or for an entire weekend. But do go—the Blue Hills Beast is waiting for you!—Linda Hilton

Christie Mountain is located W13755 Hwy. O, about eight miles northwest of Bruce. The ski hill is open 5–9 p.m. on Wednesday and Thursday; 10–10 Friday and Saturday; and 10–5 Sunday. Snowtubing hours are 5–10 p.m. Friday; noon–10 Saturday; and noon–5 Sunday. Winter Carnival is scheduled for March 18–19, and the tentative closing date for the season is March 26. For further information about the snow area or nearby overnight accommodations, call 715/868-7800 or visit www.christiemountain.com.