States Say YES to Energy Dominance

Governors, state lawmakers, and state energy regulators convened this week at the Southern States Energy Board’s (SSEB) 58th Annual Meeting to discuss how the region is helping the nation move purposefully toward the Energy Dominance goalpost. SSEB brings together a diverse set of states, from Texas to Maryland, and Oklahoma to Florida, and including the territories of Puerto Rico and the U.S. Virgin Islands, for a regular series of conversations about energy policy issues and ideas.

Empathy for citizens, first responders and energy providers in the path of Florence helped focus the discussions around the benefits of an all-of-the-above approach to energy and the value of cooperation between the states, the federal government and our trading partners.

There were too many top-shelf speakers to list here, but highlights included Southern Company CEO Tom Fanning and EPA Region 4 Administrator Trey Glenn. Tom offered sobering insights into the sustained cybersecurity threats surrounding all critical infrastructure, along with reassurance that the energy sector continues to lead in ideas and efforts to anticipate and combat cyber aggression. Administrator Glenn provided color commentary on EPA’s mission to right-size regulations and reduce red tape.

Governor Phil Bryant (MS), SSEB 2017-2018 chair, reminded us all how much progress the region and nation have made, using impressive statistics from his own state to highlight the linkage between energy and a strong economy. He also emphasized the value a state can derive from creating and adhering to an Energy Plan.

Governor Bryant handed off the leadership gavel for 2018-2019 to Governor Matt Bevin (KY). Both men understand the connection between economics and energy, the importance of environmental stewardship, and the energy sector’s dependence on a trained and engaged workforce. Governor Bevin will use his year to guide the Board through exploring energy storage, electrification and other innovations that can help assure the continued availability of affordable, reliable energy.

SSEB is a leader in research, but also in ideas through its annual resolutions process, which provides lawmakers and regulators with concepts and text they can take home and adapt for upcoming legislative sessions. Energy Fairness contributed to two resolutions this year. The first recognized the 2018 Missouri resolution we helped enact on the value of utility hedging programs. The second followed on our July presentation at SSEB highlighting the pitfalls of negative power pricing brought on by too-rich wind production tax credits.

If there’s one takeaway from the last two days, it’s that Energy Dominance is a journey rather than a destination. We can all applaud the huge strides forward in oil and gas production that make us dominant by some measures. With every opportunity, however, new challenges usually arise, whether delivered up by nature or man. Making sure that cleaner, more affordable, and more abundant energy is there for the long-run requires a huge amount of intellectual and human capital in addition to the needed infrastructure and financial investments. SSEB and its elected and appointed leaders are contributing at all points on the compass, to the benefit of the region and the nation.


Gambling on the Mirage of Customer Choice

With summer diversions in the rearview mirror, it’s time to look ahead to the mid-term elections. Down the ballot from attention-grabbing federal and statewide races sit some key ballot initiatives. Nevada’s Question 3, if approved, would amend the state’s constitution to enshrine deregulation – also known as restructuring, competition, or customer choice – of the state’s electricity market. What’s behind this attempt to make lasting energy policy decisions at the ballot box?

Voters generally respond enthusiastically to the idea of CHOICE in any arena. But in Nevada, famed for casinos and deserts, many are starting to see that Question 3 is a big roll of the dice for consumers and that its benefits are a mirage. Since April, three important voices have emerged to oppose deregulation and Question 3.

In April, Nevada’s PUC issued a report projecting deregulation’s impact on consumer bills and renewable energy supplies. It saw costs rising over the first decade due to billions of dollars in stranded asset liabilities and significant new costs for re-assembling the state’s power supply system. The neutral regulatory body also believes that distributed and utility-scale renewable development will slow significantly under deregulation.

In July, the Guinn Center released a report and voter guide highlighting several potential pitfalls, based on examining the history of deregulation in several other states over the last two decades. It focused on the dangers of making sweeping changes in the state’s foundational document, affirming the common-sense notion that unwinding all or part of it would be cumbersome, costly and take up years. The Guinn Center also flagged the likelihood of a decrease in consumer protections.

Later in the summer, more voices joined the chorus opposing deregulation, including national environmental groups such as the Sierra Club and the Natural Resources Defense Council. The groups cited disruption to the state’s energy market and uncertainty as chief concerns. In their view, if Question 3 passes, and the state’s leading utility has to get out of the generation business, mature plans for large renewable and storage projects could disappear into the sands.

The fallacies of Question 3, as noted by these three distinct groups, track with what Energy Fairness has researched and advocated over the last decade. “Customer Choice” is often pushed by large commercial entities seeking to break away from the established electricity system designed to serve all citizens and strike bargains with energy providers. It’s an open question whether and how their assumed savings would trickle down to their customers, or offset the higher electricity bills that may result for all.

In most states with deregulation implemented, retail electricity rates are actually higher, and it’s hard to detect consistent benefits for end-use consumers. If you’d like more information, a first-rate report by Paul Zummo examines EIA cost data across deregulated states.

Some renewable developers jump on the deregulation bandwagon, envisioning higher profits ahead by moving incumbent utilities expert at building and operating large-scale renewable projects off the gameboard. And, deregulating literally often means a diminishment of regulatory oversight, and therefore of regulators’ consumer protection powers.

Energy Fairness hopes that Nevada voters who value consistency and a sustainable path toward a balanced energy portfolio will vote NO on Question 3. Voting NO will help consumers win the bet and dispel the customer choice mirage.


Vogtle Progress Helps US All

This week, we welcome a guest blog post by Dr. David Gattie, an associate professor of engineering in the College of Engineering at the University of Georgia, and a resident fellow in the University of Georgia’s Center for International Trade and Security. He has provided testimony to the Georgia Public Service Commission on the benefits of, and need for, nuclear power. Prior to UGA, he worked 14 years in private industry as an energy services engineer and an environmental engineer. The opinion expressed here is his own. This piece also appeared in “The Hill,” a widely read and respected trade publication serving the advocacy community in D.C. and throughout the nation.

The advances by China and Russia in nuclear power are daunting. Both countries are fully engaged in the construction of nuclear plants, loading fuel into reactors, connecting nuclear plants to the grid, developing programs for closing the fuel cycle, conducting research and development on advanced reactors and, in order to sustain these cycles of activity, securing decades-long nuclear construction deals throughout the world.

In a word, “strategic” characterizes China’s and Russia’s approaches to civilian nuclear power.

Meanwhile, the lone nuclear construction project in the U.S., at Plant Vogtle in Burke County, Georgia, remains on schedule to begin loading fuel in October of 2019 even though it was recently announced that construction costs would increase by $1.1 billion.

While it has been suggested that Vogtle may have become “too big to fail”, the issue of nuclear power in the U.S. extends beyond this project. The disparity that separates the U.S. from China and Russia is not the international order of nuclear science, engineering and technology envisioned by Presidents Truman and Eisenhower and the early framers of U.S. nuclear policy. Moreover, this disparity in progress is a consequence of a disparity in strategy.

The U.S. civilian nuclear sector is in a battle on multiple fronts to hold what ground it has in America’s energy landscape. Domestically, it’s battling a market that, as currently structured, cannot recognize or value nuclear energy for its zero-carbon baseload reliability or for its intrinsic national security attributes. It’s also battling an energy policy ideology based on the U.S. meeting all energy and economic needs with 100 percent renewable energy — no need for fossil fuels or nuclear.

At the global scale, the U.S. nuclear industry is battling deep-pocket Chinese and Russian state-owned nuclear enterprises that are establishing decades-long nuclear power relationships that align with their respective geopolitical objectives — objectives, which when met, establish new geopolitical contours and at the expense of old ones.

Geopolitical contours aren’t perpetual as the common attributes that define those contours across diverse states and regions are subject to revision as relationships and alliances shift. The U.S. leveraged this geopolitical reality in carrying out the Marshall Plan, which helped establish many of the geopolitical contours in place today.

China is particularly strategic with its Belt and Road Initiative (BRI), the centerpiece of its geopolitical strategy, where “advancing cooperation in the development of nuclear power” is incorporated into the BRI vision. In his 2014 address to the Sixth Ministerial Conference of the China-Arab States Cooperation Forum, President Xi Jinping laid out China’s “1+2+3” comprehensive cooperation strategy explaining that “1” refers to energy cooperation and “3” includes cooperation around advanced nuclear technologies — technologies that President Xi identifies as one of the “breakthrough levers in an effort to raise the level of pragmatic China-Arab cooperation.”

Moreover, in its recent report to Congress, the U.S. Department of Defense noted that China has moved up its plans to deploy floating nuclear power plants in the highly sensitive South China Sea by 2020, thus adding a nuclear element to the territorial disputes.

It’s challenging enough that China and Russia are advancing their civilian nuclear programs and expertise at a faster pace than that of the U.S. What’s more concerning is the extent to which nuclear power is being leveraged as a strategic technology within the overall geopolitical strategies of two authoritarian countries.

While the issue of nuclear construction cost in the U.S. must be resolved, cost alone shouldn’t serve as final notice on the future of U.S. nuclear power. Rather, the U.S. must develop a strategic, forward-thinking vision that includes a viable public-private partnership for advancing the state of nuclear science, engineering and technology in America.

The Vogtle nuclear project represents more than just another power plant project, and nuclear energy represents more than an energy option within the U.S. industrial complex. As such, and in response to the advances of China and Russia, the U.S. must compete in the global nuclear sector with a vision that transcends that of nuclear as just another energy commodity. Nuclear isn’t just another energy commodity — it’s intrinsically different. And so are the consequences of underestimating that difference or ignoring the implications of an international nuclear order without a fully-engaged America that is technically competent and advancing in the nuclear field.

The issue at hand is not so much a question of whether nuclear projects in the U.S. are too big to fail. It’s much larger and more systemic than that. The issue is that nuclear power in America is too strategic to fail. And two of the steps necessary to ensure that it doesn’t fail are the completion of Vogtle and the development of a robust public-private partnership dedicated to developing advanced nuclear technologies and keeping the U.S. competitive on the global civilian nuclear stage.