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A Look at Energy Policy Elements of a Balanced Policy

Bush/Cheney Proposal

NEMA

IEEE USA

Alliance for Energy and Economic Growth

Generation Plans

Transmission

Energy Efficiency

Other

Per DOE, US energy use ~ 100 Quads/yr in 1998

(1) Quad = 1015 BTU

Balanced US Energy Policy needed

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Energy Sourcing

Energy Conversion/Transportation Infrastructure

Energy Efficiency and Conservation

Balance Requires 3 Ingredients

Oil, Coal, Nuclear, and Natural Gas are basis of present economy

Each fuel/technology should be expanded

We should not concentrate all efforts on one singular choice

Alternatives, like renewables and the nuclear power option should be encouraged

We should favor domestic sources of BTU’s

Energy Sourcing

We need regulatory policies that encourage investment

Electric transmission is in direly short supply

Energy Conversion/Transportation Infrastructure

1998 total US energy consumption was 1017 BTU’s from all uses

Energy conservation is an important means

of reducing demand

We must work to improve energy efficiency of all power products

Energy Efficiency and Conservation

Three Important Guidelines:

Doable with known technology

Pays for itself within 3-5 years

Results in real energy savings

These guidelines are built into NEMA TP-1 distribution transformer energy efficiency

These guidelines should be used by all power equipment

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Conservation

Sources

Infrastructure

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1.3% yr growth

3 % yr growth

Energy Efficiency Helps Meet Demand

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Energy Efficiency Does Not Mean Sacrifice

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Wide-spread use of Energy Efficient Products has made a difference!

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Electric Generation from Multiple Energy Sources

14High-tech power plants, like this combined cycle plant are signaling a new age in electric power generation. The capability to co-produce electricity and a slate of fuels and chemicals makes the technology economically attractive to a broad range of industrial applications.

Combined Cycle Clean Coal Cuts Pollution and Costs

15Calvert Cliffs is the first US nuclear plant to receive license from the Nuclear Regulatory Commission. The renewal will allow the plant to continue producing environmentally sound electricity for an additional twenty years.

Nuclear Energy an Important Part

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Renewable hydropower has long provided a significantcontribution to the US energy supply. Today, hydropoweris competitive with other forms of conventionally generatedelectricity.

Hydro-generation Renewable and Economical

17A pressing long-term electricity challenge is to build enough new generation

and transmission capacity to meet projected growth in demand

Transmission Infrastructure Upgrades Seriously Needed

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Several federal agencies are authorized to grant rights of way for oil and gas pipeline and electric transmission systems on federal lands and each approaches the issue from a unique perspective. Authorizing agencies include the Bureau of Land Management, the U.S. Forest Service, the National Park Service, the U.S. Fish and Wildlife Service, the Bureau of Reclamation, and the Bureau of Indian Affairs.

Infrastructure Siting a Very Critical Issue

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Contains the 3 Balanced Objectives

Compliments Bush/Cheney Policy

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Energy Efficiency

Regulatory Policies encouraging growth in infrastructure of generation, transmission and distribution

Generation of power from all economically viable and socially acceptable sources.

Market Based Policy Issued May 2001emphasizing:

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Energy Efficiency:

National Concern Should be driven by market forces Must be based on three factors

• Technological feasibility• Economic viability• Real energy savings

Federal Government’s Role• Promoting user education on energy efficiency• Supporting energy efficient upgrades through programs such as the Federal Energy Management Program• Encouraging performance-based incentives in the private sector and use of economically sound energy efficient products and systems

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Generation, Transmission and Distribution Infrastructure

• That technology can provide the basis for major capacity and reliability improvements for the transmission and distribution systems

• That siting permits for new transmission lines and generation facilities need to be expedited

• Market based incentives and regulatory policies are needed to encourage investment into new infrastructure and allow cost recovery

• States should be allowed to enter into regional compacts to address siting issues.

NEMA’s Beliefs and Proposals

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• Who Are They?

• Who belongs to them?

• Where are They Located?

• What’s their position on Energy?

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Who Are They?

• Broad coalition of interests that develop, deliver and consume energy from all sources.• Works to build a National Consensus for a comprehensive US Energy Strategy• Seeks a balance of supply, demand, and environmental safeguards• Website: www.yourenergyfuture.org

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Who Belongs to Them?

Very large organization 60 + members Includes:

• NEMA• EEI• Most American manufacturers-all industries• Many communities• Individual corporations and utilities

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Where Are They Located?

U.S. Chamber of CommerceEnvironment, Technology & Regulatory Affairs1615 H Street, NWWashington, DC 20062Fax: (202) 463-5521

Luke Popovich or Chad McGinnisPh: (703) 683-8934e-mail: lpopovich@mindspring.com

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What’s Their Position on Energy?

Goals:• Increase energy efficiency and conservation• Assure adequate energy supplies and generation• Renew and expand the energy infrastructure• Encourage investment in new energy technologies• Provide energy assistance to low-income households• Assure appropriate consideration of the impacts of • regulatory policies on energy.

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Who Are They?

• World’s largest technical professional society

• Composed of 230,000 electrical, electronic, computer, and software engineers • Power related membership approximately 16,000

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Comments on Bush/CheneyUS Energy Policy Proposal

• IEEE-USA applauds the efforts of George W. Bush and members of both parties in Congress to create a national consensus on energy policy.• Believes policy should support a broad and balanced range of electric generation and conservation options.• States that our nation must invest in new technologies needed to satisfy future demand.• Specifically supports policies that promote:

• Energy Efficiency• Cleaner conversion fossil fuels• Commercialization of renewable energy resources• Nuclear power• Advanced technologies such as fusion and hydrogen

DOE Assumptions Actual

1. Electric Demand Growth 1.3%/yr

2. 25% Reserve Generation Capacity Excessive

3. Not much need for new infrastructure

> 3%/yr Nationwide> 11% 1999-2000 CA

• National energy shortages 1997-8-9-00• California reserve < 1.5%

• Urgent needs for massive installation of generation and transmission year after year.

Fuel costs especially Natural Gas inflated 2-10 times in 1 year due to shortages Infrastructure costs to end consumer will be higher without a guaranteed customer base Utilities must be allowed to earn a profit

Base Generation and Transmission System Expansion are measured in Billion $

increments Affordability and financing are the biggest issues:

30 year amortization and 11.9% return on investment were common under regulation3 year amortization and 35% return on investment are needed with an uncertain customer base under Deregulation

How can Deregulation be improved to accommodateexpensive infrastructure requirements?

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Doug is: • Principle Project Manager of RDI Consulting• RDI is a trademark of Financial Times Energy, Inc. 3333 Walnut St. Bolder Colorado 80301 ph: 720-548-5000 fax: 720-548-5001 email: dlogan@resdata.com Financial Times web: www.ftenergy.com

RDI has developed a comprehensive database on the US and Canadian Electric Utility Systems