Energy, Ecology, Economy

The Capitalist powers that be have decided that electricity prices are too high (even though the US has the lowest rates of anyplace on the globe) and, therefore, competition should be introduced to make the electric generation industry more efficient. The model for the electric industry make over is that which was used for the telecommunications industry. Individual and business customers will be allowed to select an electricity provider located anywhere in the US. It doesn't have to be the current local utility. This is called retail wheeling and it will provide us all with choices having important environmental and economic ramifications.

Retail wheeling has been talked about for a couple of years now and will actually begin on the east and west coasts of our nation within 12 months. Effects from this impending shock are already being felt. The first casualty has been the energy efficiency industry.

Utility companies have enjoyed monopoly status and guaranteed profits for decades in this country. They have always been regulated because it was felt they they provided an essential public service which should be available to all. In the case of natural gas, regulation kept prices artificially high to get the industry established in the first place.

Retail wheeling is obviously a real threat to the culture and profit margins of electric utilities. Neither have they been all that fond of energy conservation programs because these directly reduced their gross revenues. So as implementation of wheeling programs has approached, utilities have refused to renew programs which offer energy efficiency services to their customers.

Out of fear that GM and Ford would jump ship when wheeling begins, Detroit Edison and Consumers Power, the two largest electric utilities in Michigan, made sweetheart deals with the auto companies. Edison and Consumers guaranteed the auto executives low rates for electricity for the next 10 years in return for a promise not to switch electricity providers. They even provided for utility staff engineers expressly devoted to energy efficiency projects for the auto companies. These negotiations were carried out and approved by Engler's Commissioners without opportunity for public comment.

The real agenda behind wheeling becomes very clear in this case. Corporate America will buy up all the cheap power and leave the rest of us holding the bag. But this need not be the case. Residents in some states, notably California, have begun to influence regulators to correct for potential negative effects in this new energy market system.

There are two inherent dangers allowing market forces to select this path. First, as the electrical generation industry relies more heavily on natural gas as a fuel, it will become more susceptible to fluctuations in costs for natural gas. Electricity prices may become unstable. Who knows how long this natural gas bubble will last? Second, reliance on natural gas may retard efforts to bring alternative renewable energy sources on line. Renewables are our only hope to leave the fossil fuel age without collapse.

RENEWABLES NOW
There are several renewable electrical generation technologies which are now mature, proven, non-polluting and are entering the marketplace. These energy sources still seem expensive in comparison with the conventional because the coal and natural gas industries enjoy a variety of government subsidies which keep their prices artificially low. Any new market system must take into account the fact that renewables do not compete on a level playing field. The utility restructuring in California will require a percentage mix of renewables for that state.

Another means to guarantee a place for renewables in future energy supply is the use of green rates. This concept assumes that consumers will pay more per unit for electricity generated using clean technologies. This idea has already been successfully used twice in Michigan. Traverse City Light and Power funded the erection of a 600-kW wind turbine, the largest such device on the North American continent, using green rates. Detroit Edison also used this idea to establish a 28.4 kW solar powered photoelectric generation site.

WHICH WAY DO WE GO?
No one can predict where utility restructuring and deregulation will take us. The Great Lakes states and their utilities are at a particular disadvantage in this corporate game of musical chairs. We have little fossil fuel supplies and must import almost all that we use. We import gasoline for our cars and deisel for our trucks. We import natural gas and fuel oil for heating our homes and businesses. We import coal and uranium for our electrical generation plants. Our coal plants are old, inefficient and dirty. Our nuclear plants are expensive to operate and place our environment in jeopardy.

Soon we will all be involved in making decisions as to where we get our power from, who produces it, and how it is produced. These decisions will have both environmental and economic effects beyond our individual households. Our neighborhoods, communities, states and region could be helped or harmed by these decisions.

What can an individual do to protect himself, his family,and his community? The first thing is to stay informed. Knowledge is power as the saying goes. As indicated in the beginning of this article, this change in our energy environment will not be televised. One must dig a bit deeper than what is offered in the popular media. Sharing this information with others is another important step. Then we must act.

A STRATEGY
We can choose a renewable energy supplier for our electricity when possible. The closer the renewable generation plant is to us the better. We can prod our local utilities into providing this option if none is available to us.

We can invest in energy efficiency; everybody gains. First, by purchasing energy efficient technology, an individual can often save money at a rate of return far exceeding that of playing the stock market. Second, dollars spent on energy efficiency circulate through the local economy 3 to 4 times before leaving than dollars spent directly for an energy resource. For instance, compact fluorescent lamps replace incandescent types while using only 1/3 as much energy -- big savings for the individual. Michigan has a manufacturer of compact fluorescent lamps. Instead of money for electricity being exported to pay for the coal to produce it, money used to purchase compact fluorescent lamps will stay in our region as income for shop owners and paychecks for workers.

We can work locally for energy efficiency services from our local electricity provider. For instance, Michigan law requires utilities to enter into franchise agreements with municipalities. Ann Arbor, through its Energy Commission, has begun the precedent setting process of establishing a side agreement with its natural gas provider, Michigan Consolidated Gas. This agreement would set forth energy efficiency services which Ann Arbor desires for its residents and assistance with energy efficiency projects for the city, itself. A similar process is expected with the electricity provider franchise agreement.

We can work at the state level to guarantee energy efficiency services. For instance, in Wisconsin a proposal has been discussed to create a state energy authority, funded by a surcharge on everyone's utility bills (as have all previous utility programs). If the utilities want out of the energy conservation business, let them go, but the public interest in this important area must be served. This idea should be discussed for every state in the nation.

We can work at the national level for a sound energy policy. Contact your congress persons and let them know you are watching and do not want an energy policy dictated by the narrow vision of corporate America. Call Bill and let him know, too.

Bob Tinker is a Principal in Kelly-Tinker Architects in Ann Arbor specialiizing in energy efficiency and solar energy use in buildings. He is a current member and former chair of the Ann Arbor Energy Commisssion.

Return to the Index of Synapse 39, Spring 1997