Power struggle
New England probably won't face California-style blackouts this summer, but we've got energy woes of our own
BY DORIE CLARK
CALIFORNIA'S ENERGY CRISIS has rattled the public with rolling blackouts that are expected to get even worse this summer. A recent Gallup poll showed that more than 20 percent of Americans now list energy issues (either shortages or high fuel prices) as the country's most important problem - compared to three percent just a month before. Even President Bush's energy plan, released in mid May, said that " America in the year 2001 faces the most serious energy shortage since the oil embargoes of the 1970s. " Actual blackouts may not be a problem outside the Golden State, but high prices for both gas and electricity are leading Americans across the land to wonder whether they'll be the ones to lose power next. Most experts agree that New England won't face blackouts this summer - despite Bush's plan, which erroneously claimed that New Hampshire might be susceptible (the administration later admitted its mistake). In fact, supplies are fine for now, thanks in part to a number of new, environmentally friendly natural-gas plants. But ironically, New England's environmental zeal may have created a longer-term problem: overdependence on one type of fuel, leaving consumers subject to price fluctuations and vulnerable to shortages. It's clear that New England must develop other sources of power besides natural gas. But the question of how to do so has turned into a showdown between the Bushies' plan to build more fossil-fuel and nuclear plants (one a week for the next 20 years) and environmentalists' hope that - finally - renewable energy might have its day.
One reason New England won't share California's fate is that the two regions pursued market deregulation in different ways. California's recent woes have been " a combination of very bad policy and bad luck, " says Richard Kennelly of the Boston-based Conservation Law Foundation. To prevent utilities from being stuck with unfavorable contracts with power generators if prices dipped - and to avoid back-room collusion - the state's 1996 deregulation guidelines specified that electric companies couldn't enter into long-term deals with suppliers; instead, they had to buy power on the short-term " spot market. " The system worked well under normal conditions. But when supplies sharply contracted last year (because of increased demand in neighboring states that ordinarily help supply California's energy, a nasty drought that cut down on hydroelectric power, and the fact that no new power plants had been built in the state since 1990), prices skyrocketed uncontrollably. Contributing to the problem were consumer price caps, which caused some utilities, like Southern California Edison, to teeter financially - making it even harder for them to buy power from suppliers wary of their shaky credit. In contrast, when New England voted to deregulate its electric-power industry in 1997, it built more flexibility into the process. " There are substantial differences between our situation and theirs, " says Alan Nogee of the Union of Concerned Scientists, in Cambridge. Agrees Ellen Vancko of the North American Electric Reliability Council: " In no way is it the same issue as in California. " One major difference is that New England utilities are allowed to have long-term contracts, which reduces price volatility: with the security of a guaranteed steady income over time, generators are willing to sell power for lower prices. And though the regulations provide for retail price caps, utilities can petition regulators to pass costs on to consumers. Most important, a fleet of new natural-gas power plants have been built: seven since 1999, two more by the end of June, another two by the end of the year, and 11 others before 2005, according to Ellen Foley of ISO New England, the organization that manages the region's power grid. With ISO New England estimating an energy surplus of nearly 19 percent, " we have projected that we'll have an adequate supply to meet the peak demand for this summer, " says Foley. Cautions David O'Connor, the commissioner of the Massachusetts Division of Energy Resources (DOER), " That's not to say there's not going to be an afternoon this summer where there are some conservation warnings, but that's normal. The net result is that's going to be very short-term if it happens, and no blackouts. "
Also, Sam Smith on New England's power plants
Robert David Sullivan on Bush-league environmentalism
A list of New England's grandfathered coal-burning plants
THERE IS a possible hitch, however. The Union of Concerned Scientists' Nogee worries that the power supply could be artificially manipulated. " In California, they've seen as many as a third of power plants [at a time] shut down [since deregulation began], compared to less than 10 percent historically, and most observers believe that generators have been intentionally withholding power to drive up prices, " he says. He fears the same is happening in New England - indeed, a January study by his group revealed that plant shutdowns have increased nearly 50 percent since deregulation took effect two years ago. Massachusetts attorney general Tom Reilly commissioned a study two weeks ago to look at whether the region's wholesale power market (in which generators sell power to electric companies) is uncompetitive. Says Stephen Bilafer of the attorney general's office, " Obviously consumers aren't getting the benefits of competition that were promised them under deregulation, and this is an attempt to take a look at one piece of the marketplace and see what can be done to address that. Hopefully what we'll learn from this study is whether it's structural problems in the market, the behavior of suppliers, or a combination of both that have contributed to recent price increases. " There's also a growing concern that too much of the region's power is coming from one source. A February study by ISO New England estimated that in four years, 45 percent of the region's power supply could come from natural gas - up from only 16 percent in 1999. The result is that the region's power is tied to a commodity that isn't indigenous to New England and must be imported from other states or nations. An October 2000 study prepared for the Competitive Power Coalition of New England, an industry group that represents oil and coal plants, raised concerns about disruptions of supply or price spikes if the region is overly dependent on natural gas. Says Carolyn O'Connor (no relation to DOER commissioner David O'Connor) of the New England Council, a business group that studies energy issues, " Without homegrown supplies, we need to ensure reliability and hedge price volatility. To the extent you can get as many different sources of fuel into the mix, you can hedge those concerns. " Derek Haskew of the Massachusetts Public Interest Research Group (MassPIRG) agrees: " A lack of energy-source diversity is like an investor who only invests in high-tech stocks. " The region would either enjoy a flood of cheap supplies or be crippled by price rises. Distribution may also be a problem. The ISO New England study warned that during peak periods in the winter of 2003, there may not be enough pipelines to bring the necessary quantity of natural gas into the area. If more pipelines are not added, the problem could last through much of the winter of 2005. ISO New England's Foley says that if the study's recommendations are followed (increasing pipeline capacity and ensuring that new natural-gas plants have the ability to burn oil as a back-up measure), any pitfalls could be averted. But Thomas Kiley of the New England Gas Association disputes the whole premise of the study, noting that a number of pipelines in the early stages of development were not counted; he insists that distribution will be smooth. Environmentalists, meanwhile, are relatively unconcerned about over-reliance on natural gas. Kennelly of the Conservation Law Foundation believes that such talk actually stems from kvetching by the owners of dirtier coal and oil plants, which are groaning under Governor Jane Swift's move to require them to meet significantly tougher clean-air standards by 2004. He notes that the new natural-gas plants are " twice as efficient " as older coal- or oil-fired plants - " they need half the fuel to provide the same electricity " - and don't release toxins like mercury or arsenic. " This is an incredible environmental gain, " he says. While David O'Connor of DOER voices support for fuel diversity, he says he's " actually not very worried " about relying too heavily on natural gas. He agrees with Kiley that a number of pipelines weren't considered in the study, and notes that half the new natural-gas plants include a back-up mechanism to burn oil in case of shortages of natural gas. " It's not a big concern of mine, " he says. EVEN FROM an environmental perspective, however, natural gas has shortcomings. Though it's less harmful than other fossil fuels, it still releases greenhouse gases that contribute to global warming when they're burned. And, as is the case with coal and oil, drilling for natural gas can destroy wildlife habitats and pollute nearby land and waterways. The simplest solution, of course, is to reduce consumption, and America has so far done a surprisingly good job of that. Fuel-efficiency regulations have resulted in eco-friendlier cars, and the federal Energy Information Administration reports that American household energy consumption actually dropped 27 percent from 1978 to 1997 (the latest figures available). Notes Kennelly, " If it weren't for the [overall] improvements we've made since the 1970s, we would have used 40 percent more energy last year. " But it would be rash simply to assume that the future will bring similar reductions. President Bush certainly doesn't; to increase both fuel supply and diversity, his energy plan suggests building more fossil-fuel plants. It also notes, " Nuclear power today accounts for 20 percent of our country's electricity. This power source, which causes no greenhouse-gas emissions, can play an expanding part in our energy future. " The nuclear industry believes the time is right to tout its advantages: " Nuclear can solve the acid-rain problem; we have no pollutants, " says Melanie White, manager of media relations for the Nuclear Energy Institute in Washington, DC. And support seems to be growing, at least in the most energy-stricken areas. A recent poll taken by the nonpartisan Field Institute showed that 59 percent of Californians advocate building more nuclear plants, compared to 61 percent who opposed them the last time the organization polled Golden Staters on the question in 1984. Even eco-stalwart senator John Kerry has recently suggested that nuclear power might be worth another look. " I will not dismiss the potential for technology to solve the existing problems with nuclear power, " he said in April. Not surprisingly, environmentalists are livid over this resurgent interest in nuclear power. " This is a technology that's been proven to threaten public health and safety, " says Cindy Luppi of Clean Water Action. " Bottom line: there's still no safe, permanent way to store the waste from these facilities, " which remains radioactive for at least 10,000 years and toxic for nearly half a million. Says Haskew, " Nuclear power is not a viable option on any terms. " The activists hope that New Englanders will share their sentiments, even though the region gets a quarter of its power from nuclear energy. " New England has a long history of a very forceful anti-nuclear movement, " notes Kennelly. Eric Weltman, organizing director of Citizens for Participation in Public Action (CPPAX), thinks the chances of additional nuclear plants being built in the region are slim. " There's too much resistance at the local level, " he says. " Where are you going to site one of these? " For now, O'Connor of DOER agrees. " I think new nuclear plants are really a long way off in the future, " he says. But he notes the state's support for the five nuclear plants currently operating in New England: " They've demonstrated that they're safe and they're an important part " of the power supply. Of course, that praise applies only when nuclear reactors can keep track of their waste: in April, two radioactive fuel rods were discovered missing from a nuclear power plant in Waterford, Connecticut. IN THE face of such dangerous errors, activists are hoping that the time for renewables like solar and wind - the Holy Grail of energy production - has finally come. In fact, the Worldwatch Institute, a Washington-based environmental group, reports that from 1990 to 2000, wind was the fastest-growing energy source, increasing by an average of 25.1 percent a year; it was followed by solar energy at 20.1 percent. Consumption of natural gas, by contrast, grew only 1.6 percent a year. Environmentalists laud the fact that wind and solar energy don't cause any pollution. And business interests like the New England Council - which supports a diverse mix of energy sources - are thrilled that renewable energy, unlike fossil fuel, can be produced in New England, lessening our dependence on other states or nations. But despite its virtues, the growth of renewable energy has been hindered by political pressure from the fossil-fuel and nuclear industries. " In the mid 1970s, there was a tremendous sense that solar energy was going to replace fossil fuels, " recalls Weltman, " and that died down with the election of Ronald Reagan. He cut research funds; there were solar panels that had been put on the roof of the White House and he tore those down. " When gas lines ended, there was little incentive for consumers to embrace what was in practice a costly - and often unreliable - power source. " You tell people about solar, " says Warren Leon of the Northeast Sustainable Energy Association, " and they say, 'I knew somebody who had solar panels on his roof in the 1970s and they didn't work so well.' " Advocates insist these alternatives have improved. " The technology has advanced tremendously and it's capable of being used on a large scale, " says Leon. But cost is still a barrier. " Under normal conditions, it's still not competitive in price, " says Marija Ilic, a senior researcher at MIT. The problem with renewables is that power generators have to be designed individually. Whereas a natural gas or coal plant can work successfully just about anywhere, a windmill needs to be precisely situated - along the coast or on hilltops, for instance - to capitalize on the natural environment. In Massachusetts, wind turbines currently operate in Holyoke, Princeton, and Beverly. " One of the things renewables have struggled with is they've never had an economy of scale like oil has, " says Haskew. That can be overcome only with research dollars: " It's going to need that push to become more cost-effective, " says Ilic. Nationally, Bush's energy plan promises $1.2 billion (taken from " bid bonuses " for drilling in the Arctic National Wildlife Refuge) for research on renewables. It also would give tax incentives for electricity generated by wind, methane gas from landfills, and biomass (natural products like wood, sewage, or solid waste that are burned to produce electricity). But critics scoff at these allocations compared to the plan's heavy emphasis on traditional sources of fuel (including $2 billion for " clean coal, " which environmentalists call an oxymoron). " He substitutes drilling and destruction where energy efficiency should be, " says Daniel Becker, director of the Sierra Club's Global Warming and Energy Program. " He's trying to use a thin veil of energy efficiency to hide a cesspool of polluter giveaways. " Massachusetts's Renewable Energy Trust Fund, set up when the electric industry was deregulated, will - thanks to a small charge of about 50 cents per month imposed on residential customers - receive $150 million by 2003, and $20 million per year thereafter, to spend on such projects as environmentally responsible building plans, wind power, and fuel-cell (or large-scale battery) technology. And by the end of the year, says David O'Connor, DOER expects to put forward regulations requiring energy companies to add at least one percentage point by 2003 to the 12 percent of power they currently obtain from renewables, rising to an additional five percentage points by 2010. Those initiatives are only a start, of course, and it's going to take a great deal of political will to keep the country interested in green energy when gas and oil prices come back down. " The environmental movement shouldn't think that a short-term spike in energy prices is what's going to spark a movement to cleaner energy sources, " says Weltman. Indeed, even CLF's Kennelly admits, " We are not going to have 10 or 20 percent of our energy come from those sources [renewables] in the next five or 10 years. We're not ready for that kind of revolution. " New England is, so far, successfully straddling the line between increasing power supply and maintaining environmental integrity. But in the next few years, says MassPIRG's Haskew, " there's a real threat that we could make the wrong choice yet again, and choose fossil fuel and nuclear " instead of renewables. In a few years, the consequences of those decisions - air pollution and nuclear waste, for starters - could make California's problems look simple by comparison. Dorie Clark can be reached at dclark[a]phx.com.
Issue Date: May 31 - June 7, 2001
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