The Bush administration has come up with the sort of energy policy
one would expect of oilmen -- long on breaks for the energy industry
and short on promotion of conservation, alternative energy sources
and help for working people.
Congressional Democrats were closer to the mark with their own
energy plan. They called for the government to hold down price
increases for electric power, offer tax credits for energy-efficient
homes, cars and businesses and spare environmentally sensitive areas
from oil and gas exploration.
The Democrats also called for the Federal Energy Regulatory
Commission to stop producers from charging "unjust and unreasonable
wholesale prices.'' FERC would return to "cost-of-service-based
rates'' until March 2003, which would limit wholesalers' profits. The
D's also want FERC to order refunds of any unjust charges that have
occurred already and are pressing the Justice Department to "assure
that illegal price-fixing does not occur.''
Vice President Dick Cheney has ruled out price limits and federal
investigations into allegations of price gouging by gasoline
companies. The former Halliburton CEO, who headed up the secretive
energy task force, belittled the role of conservation, which he said
"may be a sign of personal virtue, but it is not a sufficient basis
for a sound, comprehensive energy policy." Instead, he said, the
nation should encourage oil exploration and build a new power plant
every week for the next 20 years.
But utilities around the country say they have achieved remarkable
successes by encouraging conservation. Timothy Egan of the New
York Times wrote May 10 that city-run utilities in Sacramento and
Los Angeles have avoided the rolling blackouts of the past few months
by opting out of California's deregulation experiment and promoting
conservation. "Over the last ten years, we have conserved enough
energy to save us the equivalent of having to build one huge new
power plant," Mike Weedall, a manager at the Sacramento Municipal
Utility District, told Egan. "Instead, we like to say we built the
conservation power plant."
Egan also found officials at big private utilities who said
choosing conservation over big new power plants has paid off for
them. Potomac Electric Power Co., which serves 600,000 customers in
Maryland and the District of Columbia, has invested $360 million on
conservation in the last 10 years and eliminated the need for at
least two medium-sized power plants.
But Bush and Cheney have used the California deregulation debacle
to promote energy policies that would benefit their allies in the
fossil fuel and nuclear industries. The plan depends upon raising
fears of an energy crisis. For example, the White House predicted
severe power troubles ahead for New England, and New Hampshire in
particular, but when Tom Oliphant of the Boston Globe looked
into it, the director of New Hampshire's energy office said the state
has plenty of supply and electricity prices are falling. An official
at New England's Independent System Operator likewise said the region
has a "reserve energy margin" of nearly 19% more than it needs.
Cheney's doomsday scenario apparently relied on a report by the
North American Reliability Council, an umbrella group of the
country's electric utilities. It failed to include at least 1,500
megawatts routinely available to New England under an agreement with
a hydropower operation in Quebec.
"This is what happens when a secretive White House drafts a
supply-fixated 'policy' from the bedrooms of the energy industry,"
But private utilities in other parts of the country are picking up
on the theme of "energy crisis." Alliant Energy of Cedar Rapids,
Iowa, chose mid-May to close down three of its power plants for
"repairs," cutting power to schools and large industrial customers in
eastern Iowa as a taste of what could come if the Legislature fails
to pass a bill favorable to private utilities. Coincidentally, the
Legislature is preparing for a special session. In a crude corporate
blackmail, Alliant threatened not to build another generating plant
it has on the drawing boards unless the state grants it the breaks it
demands, including deregulation of rates it passes through from
wholesale generators (which would allow the same sorts of abuses of
the ratepayers that are occurring in California).
The federal government, through FERC, should re-regulate wholesale
generating companies. The debacle in California illustrates the error
in trusting an unregulated market to cure utility excesses.
California deregulated the wholesalers but not the retailers, so the
energy holding companies transferred their assets to their wholesale
operations and gouged the retailers, leaving the tax- and rate-payers
to foot the bill. Energy corporations have made it clear that if they
see an advantage they will take it. The government should not let
If private utilities are unwilling or unable to build new power
plants or operate their old ones, states or the federal government
should take them over. Public power, from the Tennessee Valley
Authority to the Bonneville Power Administration, is one of the
proudest legacies of the New Deal. Municipal or state-owned utilities
typically are able to operate at less cost to the consumer than
investor-owned utilities, if for no other reason than they are not
required to show a profit. San Francisco will vote this November on
whether to create a municipal utility district, and labor and
consumer groups are promoting the establishment of a California
Public Power Authority to provide adequate electric generating
capacity. If necessary, they should use the power of eminent domain
to take control of generating plants previously owned by the
utilities to force power generators to lower their prices.
The government should not only promote alternative energy sources,
such as wind, solar and renewable fuels, but also adopt regulations
that mesh these systems with regional power grids. Wind turbines near
our office in Storm Lake, Iowa, can generate more than 193 megawatts
-- an amount that could light up every home in Des Moines. Expansion
of the "wind farms" is limited only by the number of transmission
lines to the power grid, but at a cost of approximately 3 cents per
kilowatt hour -- and lower in some areas -- wind turbines are cheaper
to operate than gas, coal or nuclear plants, according to Ken Hach of
Clipper Wind Power, which operates 259 turbines in northwest Iowa.
Windmills now supply about 1% of the national electrical supply, he
said. With a little help that capacity could increase to 10%.
There is ample reason to doubt that there is even an energy
crisis. David Whitman of US News & World Report wrote May
15 that the power plant industry already is in the midst of an
unprecedented building boom, and is adding more than the plant a week
Cheney called for. Last year, 158 new power units were completed
nationwide, or three plants a week, according to the federal Energy
Information Administration. The electricity industry already expects
to build 1,453 new power units from 2000 through 2004.
Cheney's energy plan did include tax credits to help people buy
hybrid gas-electric cars that get substantially better gas mileage
than regular cars, but the only versions currently available are
Japanese-made Toyotas and Hondas. American automakers aren't expected
to debut their hybrid vehicles until 2003, and even then it's unclear
whether they will be widely available. Meanwhile, the Bush
administration is canceling a 2004 deadline for automakers to develop
prototype cars that would get up to 80 miles per gallon. The federal
government spent $1.4 billion on the research, in what some called
"corporate welfare," but now that the technology is on the verge of
being reached, the plans for a "supercar" are being set aside.
More oil and gas production is not going to solve our energy
problems, particularly when refineries already are operating at
capacity. The increase in the price of gas is attributable to the
demand for gas-guzzling cars, particularly sport-utility vehicles.
Oil companies and carmakers have worked hand-in-glove for years to
sideline fuel-efficiency standards. The carrot has not worked so far;
it's time for Feds to use the stick.
Jim Cullen is the editor of The Progressive Populist and formerly a veteran daily newspaper reporter in Texas and Louisiana and associate editor of the Texas Observer .