Up Close and Personal
Feds Eye Household Energy Use
Last year brought a sea change in federal energy legislation. In every congressional session since the 1990s, big energy bills focused on how utilities are structured and regulated. These were invariably pared back and usually abandoned, thanks to concerns about taking utility restructuring nationwide.
But last December, Congress passed and President Bush signed a very different energy bill. Known in legislative shorthand as H.R. 6, this new energy law is not about how utilities are structured but about telling them and their consumers how they’re going to obtain energy and how much they’re going to use.
It goes straight into the daily routine of every energy consumer in this country, as spelled out in a January headline from the Pittsburgh Tribune Review: “Energy law will alter American households.”
How that will happen was the discussion topic last month for a panel of energy professionals as Wisconsin electric co-op directors and management gathered in Madison for an annual conference.
The First Step
Scott Neitzel, a vice president at Madison Gas and Electric Company (MGE) and former member of the Wisconsin Public Service Commission, agreed that H.R. 6 represents “a sea change” but added that it’s only the beginning.
“This energy bill is kind of really the primary of energy legislation, maybe the ‘Iowa Caucuses’ of energy legislation and I think after the elections this year we are really going to see, probably early next year a kind of Super Tuesday on energy legislation and probably a year or two after that, a big general election on energy,” Neitzel told the audience of about 150 co-op leaders.
Even so, as a first step H.R. 6 is a pretty big one. Neitzel continued, “If you look through this legislation, I don’t think there’s an appliance used in your house that the federal Department of Energy doesn’t have to set a standard for or do a study on. In reading through the legislation last night I think the only appliance I didn’t see that’s going to have a new efficiency rating is maybe an electric toothbrush, but I might have missed that one.”
Kenric Scheevel, government affairs specialist with Dairyland Power Cooperative, took note of “efficiency standards raised on everything from light bulbs to dishwashers to refrigerators. Essentially anything that uses energy in your home is going to be affected by that.”
Scheevel added, “A little-known provision you may not be aware of, is an efficiency standard by which the incandescent light bulb will become obsolete in the next five to 10 years. Those of you that are putting in the compact fluorescents, it’s inevitable. The traditional bulbs won’t be for sale after a while.”
With H.R. 6, Scheevel sees energy policy “moving away from production of energy and toward conservation of energy…I think this energy bill is the first step in the next sea change in terms of energy production, energy conservation, the types of energy production that are going to be prominent in the next 50 years.”
Todd Stuart, executive director of the Wisconsin Industrial Energy Group and a former state Senate staffer instrumental in passing Wisconsin’s 2005 renewable energy law, said climate change issues are driving H.R. 6 priorities. He saw lessons in 1990s utility deregulation.
“There were two states that were racing toward deregulation a decade ago: California and Wisconsin,” Stuart said. “Wisconsin happened to slow down and step to the edge and look down and say, ‘Wait a minute, maybe we don’t want to do that,’ whereas several other states did do it, and I think as consumers we really need to think hard about some of the provisions that are coming.”
His organization represents Wisconsin’s largest electricity users—manufacturers and paper and related industries. They’re seeing annual increases of about 7 percent on energy costs and Stuart expects that to continue.
Climate legislation is inevitable and will be “very expensive,” he predicts, adding, “I want to preface everything else by saying as consumers, we’re going to get hit hard no matter what happens.”
When you finish with your energy-efficient electric toothbrush and head off to start the workday, you’ll encounter more of H.R. 6. It calls for a 40-percent increase in corporate average fuel economy (CAFE) standards—to 35 miles per gallon by 2020. Some say that’s bad for the auto industry but others will like it a lot.
“For those of you who like soy diesel and ethanol,” Scheevel says, “this is tremendous legislation because it raises the usage standard from nine billion gallons to 36 billion gallons, meaning we’re going to have to go beyond corn to meet the biofuels mandates.”
Score that as a spur to development of new alternative fuels and a revenue stream for agriculture. For the average motorist, Stuart says the results are uncertain.
“On one hand you have CAFE standards that should increase the gas mileage for your car and you supposedly use less gasoline,” Stuart says. “On the other hand you have more biofuels which don’t give as great gas mileage, so I’d like to see a study of how these things offset each other.”
Again, a tradeoff with every provision. On efficiency standards, Stuart sees new expense “that hits almost everything in your home.” But he sees opportunity nearby.
“I think some of the green building standards could be an area where we save a lot of money over the long term,” he says. “If we reinvest in some of the building stock, retrofit our factories with energy efficiency projects, that could save this country a lot of money long-term.”
Those are tradeoffs many will no doubt be willing to weigh and accommodate in what they view as the most advantageous manner. Other tradeoffs will be more complicated because they involve one of today’s most controversial issues: siting and construction of electric infrastructure.
No Free Lunch
Conspicuously absent from H.R. 6 is a national renewable portfolio standard (RPS) mandating a set percentage of electricity from renewable sources by a specified date. That looks like a prime target for new federal legislation. And in any event some states—including Wisconsin, Minnesota, and Iowa—already have their own RPS.
Wisconsin has a quota of 10 percent renewably sourced electricity by the end of 2015. Governor Doyle has called for 25 percent by 2025 and his Task Force on Global Warming is believed likely to propose a number in between by this spring.
Our panelists agreed on the large implications.
“If we’re going to have either a state or federal RPS increase we have to tell people what that means in terms of building transmission, because the renewables aren’t next door to the load,” Neitzel explained.
Both Neitzel’s MGE and Dairyland Power Co-op have popular wind-energy programs, but because the wind resource is less reliable in Wisconsin, much of the power is imported.
“The wind is better in Minnesota, North Dakota, South Dakota, Wyoming—great wind resources in some respects the same places the coal is,” Neitzel says. “We move coal by train right now but you can’t move wind by train so you’re going to have to move it by wire.”
Scheevel sees rural co-op country as home to most renewable generation but not to the greatest energy demand.
“Just the Buffalo Ridge region in Minnesota [where Dairyland obtains much of its wind power] has roughly 25,000 megawatts of projects proposed,” Scheevel said. “We all know there’s not that much transmission available, so one of the big fights coming up is going to be who has to build it and who is going to pay for it,” meaning which utilities will incur the costs and pass them on to their customers.
Reeling off a list of infrastructure projects now in the pipeline, growing regulatory compliance costs, the presumed need to build approximately 33 times more wind capacity than our existing 50 megawatts, and the new transmission lines to deliver it, Stuart estimates Wisconsin energy consumers will see $15 billion in new expenses over the coming decade.
“The numbers,” Stuart says, “are eye-popping.”—Dave Hoopman