My plan begins with the idea that energy is really about economics. The solutions, therefore, must make economic sense. That doesn’t mean consumers won’t have to pay more — we will. And providers must be able to make reasonable returns.
Subsidies are fine to develop technology, but we can’t sustain businesses that aren’t profitable without them, which is why I’m skeptical of wind power.
Just as the federal enthusiasm for ethanol led to a wave of subsidies that helped feed higher food prices, we must be careful about picking winners before we understand the rules of the game.
Here, then, are the five broad elements of my plan:
1) Enact meaningful conservation programs from the home to the highways. […]
2) Invest in infrastructure. […]
3) Develop what works. […]
4) Continue researching alternative fuels that show economic promise and fund it through federal grant programs and modest tax incentives for promising technology. […]
5) Be prepared to pay for it.
All in all, not a bad effort. I don’t share Steffy’s skepticism of wind energy, which I believe will be a key component to any solution going forward, but I strongly agree with his emphases on conservation and investment in mass transit, both of which will show immediate and long-term gains. And I appreciate the continuation of the conversation. If the focus has shifted from “why do we need to do anything?” to “what’s the best way to deal with this?” then we’ve made progress. Let’s keep that going.
By the way, the Chron got some letters to the editor regarding Steffy’s previous column, including one from the executive director of the American Wind Energy Association Washington. I’m reprinting that beneath the fold. I won’t bother with the subsequent letter, which says little more than “AL GORE IS FAT!!111!!!”, but I will say that if that’s the best folks like that can do, it’s easy to see who’ll eventually win this battle. Click on for the AWEA response.
Going with the wind
The recent column by Loren Steffy criticizing the Texas Public Utility Commission’s decision to expand the state’s electric transmission system relies on unfounded assertions, outdated data and overblown rhetoric. (Please see “Wind might have a big impact on our wallets,” Business cover, July 20.) The decision is in fact clearly in the public interest, and the members of the Public Utility Commission, the governor and the Legislature should be commended for adopting forward-looking transmission policies.
Among facts Steffy neglected to mention:
- Based on a study by the Electric Reliability Council of Texas, a transmission investment of $1 billion a year is expected to lower overall payments by customers to generators by more than $3 billion per year. The transmission can serve other power plants besides wind.
- Due to the current lack of transmission, wholesale electricity prices in Houston were 163 percent higher than those in West Texas in May.
- Every energy technology receives government support in a variety of forms and has for many decades. A report late last year from the Government Accountability Office shows that renewables such as wind still get only a small share of the overall subsidies awarded to the energy sector.
- Recent studies show power generated from new wind projects to be in a range that is competitive with other newly built sources.
- Reliability is a system issue. When a power plant drops its output maintenance or there is a failure at a nuclear or fossil plant, or the wind dies down, other power plants compensate.
Finally, given the high priority of stabilizing energy prices in Texas and elsewhere, the federal production tax credit for wind and other renewables is a wise investment.
executive director, American Wind Energy Association Washington, DC