Consider [More...]]]> Perhaps nowhere else is the old adage that if something “is too good to be true, it probably is” more true than in the energy sector. With highly interconnected systems, complicated cost accounting methods, and heavy, long-term capital investments, adjusting one lever in the energy sector almost always produces an unintended consequence somewhere else.

Consider the recent news from Hawaiian Electric Company, which recently announced that its customers installed a record amount of solar power last year. That is welcome news in a political climate demanding more renewable energy, right? Well, not so fast.

Customers who installed nearly 30 megawatts in nameplate capacity from solar panels have saved about $7.4 million in electricity costs. While that is good for them, the millions of dollars in lost revenue to their regulated utility would have been used to pay for a number of fixed costs such as billing, meter reading, and transmission. To make up for the shortfall, Hawaiian Electric Company is forced to raise its rates between half-a-cent and 1.7 cents per kilowatt/hour. That’s about $10 per month per customer on the high end.

You see, no electricity customer lives on an island, even if do live in Hawaii. Even customers with solar panels remain connected to the grid, taking advantage of services and infrastructure for which they don’t fully pay. That’s because Hawaiian Electric Company collects funds for these fixed costs through its power rates, which those with solar panels avoid, at least when the sun is shining. And when the sky is dark, Hawaiian Electric must stand ready to power those homes.

In other words, some in Hawaii who are able to afford expensive solar panel installations are saving money. Those who can’t are picking up the slack, paying more for services and infrastructure that all customers enjoy, but not all customers pay for. Tripling Hawaii’s residential solar capacity sounded good, but it was too good to be true. An economist might refer to the higher rates in Hawaii as an ‘externality.’ For the rest of us, especially those Hawaiian customers paying more for the same services, it’s just a raw deal.

It’s the illusion that customers who install solar panels are ‘leaving the grid,’ when they are firmly tethered to it. The same illusion that more distributed energy is good for consumer choice, when the reality is that allowing ventures such as independent solar power producers, for example, to cherry-pick profitable industrial customers is bad news for all other customers. It’s good politics, but bad economics. Great for headlines, but neglectful of the customer bottom line.

Initiatives like this are being considered in states and cities across the nation. In Georgia, for example, Senate Bill 401 runs the real risk of recreating the faulty experiment of our 50^th state. For the sake of power customers, let’s hope that policy makers consider the outcome in Hawaii and avoid making the same costly mistakes.

Last week, President [More...]]]> Late last week, the National Journal asked its panel of energy experts what the President’s State of the Union address means for the energy agenda. Among the numerous responses from across the nation was a piece by PACE Executive Director Lance Brown entitled “Obama’s Blueprint: Built to Last?” This response appears below.

Last week, President Obama’s State of the Union address touted an economic blueprint for an “America Built to Last.” But unless that blueprint includes overturning recent regulations implemented by the Environmental Protection Agency, our economy will continue to suffer. While President Obama and the EPA continue to defend new rules – like Utility MACT – consumers can look forward to higher costs and less reliability.

The president’s address also included a number of sound bites on energy, including pledges to install renewable power on federal lands and to launch new initiatives to boost renewable power use in the military branch. Instead of focusing on common-sense initiatives that will lower the price of energy for Americans, the administration stubbornly continues to pursue renewable power experiments that make little sense in the current economic reality.

According to a recent report by Bloomberg News, Spain has halted subsidies for renewable energy projects in an effort to rein in the nation’s spending. Spain was among the first nations in the world to aggressively subsidize renewable energy projects, often cited by renewable advocates in the United States as a policy model for American lawmakers. Just days prior to Spain’s announcement, the German government announced it would phase out all national subsidies for renewable power by 2017. And yet President Obama continues to position America as a leader in the “clean energy race?” Mr. President, it’s time we start learning from the mistakes of others.

We have real opportunities here at home to make American less reliant on foreign oil – opportunities that have been rejected simply for political gain. The Keystone XL is but one example. As the USA Today editorial board put it, Obama’s decision “exemplifies the continuing fecklessness of U.S. energy policy.” And yet – at the same time – the president moves forward with Arctic drilling. I applaud the administration on this decision, but it’s time to stop talking from both sides of our mouths. To reject a stable, reliable and vast source of energy that Keystone XL would provide while advocating for new energy initiatives is counterproductive and unrealistic.

If we’re going to move forward, we need energy policy based on reality rather than focus groups.

Read Brown’s response online here.

“In his State of the Union preview, President Obama indicated his plans to lay out a ‘blueprint for [More...]]]> In response to the president’s State of the Union address Tuesday evening, the Partnership for Affordable Clean Energy released an official statement detailing  its concerns regarding energy affordability and reliability. An excerpt of that statement appears below.

“In his State of the Union preview, President Obama indicated his plans to lay out a ‘blueprint for an American economy that’s built to last.’ But unless that blueprint includes overturning recent regulations implemented by the Environmental Protection Agency, our economy will continue to suffer. While President Obama and the EPA continue to defend new rules – like Utility MACT – consumers can look forward to higher costs and less reliability.”

“Media reporting and commentary on environmental progress has overlooked glaring improvements in power sector emissions, leading the public to believe that American air is dirtier than ever when the exact opposite is true. If the president is truly serious about boosting the economy, his administration should reconsider implementing rules that will raise energy prices and cost millions of hard-working Americans their jobs.”

The president’s State of the Union address also included a number of soundbites on energy, including pledges to install renewable power on federal lands and to launch new initiatives to boost renewable power use in the military branch.

“Instead of focusing on common-sense initiatives that will lower the price of energy for Americans, the administration stubbornly continues to pursue renewable power experiments that make little sense in the current economic reality,” states PACE Executive Director Lance Brown. “If we’re going to move forward, we need energy policy based on reality rather than focus groups.”

Coal ash, a natural byproduct of the combustion process for coal-fired power plants, today [More...]]]> According to multiple sources, a number of environmental groups have announced plans to sue the Environmental Protection Agency (EPA) over standards for the treatment of coal ash. The lawsuit will be filed under the Resource Conservation and Recovery Act, or RCRA.

Coal ash, a natural byproduct of the combustion process for coal-fired power plants, today is typically stored onsite at power plants or sold on the open market for use in the production of concrete and other materials. In 2010, EPA proposed a pair of regulatory approaches for dealing with coal ash, one under RCRA Subtitle D that states could adopt at their discretion and another under the hazardous waste Subtitle C that would place coal ash under a federally enforceable permitting program.

“The type of lawsuit has become pattern in practice for environmental groups whose real goal is to shut down fossil power in the United States,” explains PACE Executive Director Lance Brown. “The most stringent coal ash proposals could endanger the very viability of half the nation’s power production capacity. The EPA, seemingly unconcerned with reliability or cost issues, welcomes such lawsuits.”

Groups reported to have announced their plans to file suit are Earthjustice, on behalf of Appalachian Voices; Chesapeake Climate Action Network; Environmental Integrity Project; French Broad Riverkeeper; Kentuckians For The Commonwealth; Moapa band of Paiutes; Montana Environmental Information Center; Physicians for Social Responsibility; Prairie Rivers Network; Sierra Club and Southern Alliance for Clean Energy.

PACE has written extensively about coal ash regulation, citing a study published in June 2011 that found EPA’s regulatory proposals on coal ash could cause as many as 316,000 job losses and cost $110 billion over a 20-year period. A documentary released last year by PACE, entitled Unplugged, also deals with the coal ash issue, citing officials with TVA and elsewhere who fear that classification of coal ash as a hazardous waste would severely restrict options for coal ash storage, causing either the retirement of some coal-fired facilities altogether or a drastically higher cost for burning coal for electricity.

“The public needs to understand that half of the 130 million tons of coal ash being generated each year ends up in places like our roads and our carpet. The rest is being stored under close supervision,” says Brown. “There is a way to handle coal ash that protects the public while not taking half of America’s power generation off the grid. Let’s hope the courts and policymakers have the wisdom to acknowledge that fact.”

Check out this video by Platts Energy Week.