Letters From Readers - November 1, 2007 - Below are a few letters we received on topics that appeared in the past few weeks. They capture the essence of how many readers say they feel.

Below are a few letters we received on topics that appeared in the past few weeks. They capture the essence of how many readers say they feel.

Empowering Consumers - October 17, 2007

One must be very careful not to confuse a true focus on efficiency with utility PR and green washing. A utility truly focused on energy efficiency would not tolerate the 5 decade (and counting) failure to drive up the generation efficiency of the US power grid. A utility truly focused on energy efficiency would have been encouraging energy efficiency long before the creation of DSM programs that made it profitable for them to do so. A utility truly focused on efficiency would not maintain rate classifications that provide price-breaks for customers who go on all electric service - or provide price disincentives to those who would install more efficient on-site generation in their plants. Most importantly, a utility truly focused on efficiency would use it's soapbox not to tout their modest DSM programs, but rather to ask loudly for a reframing of the regulatory compact so that the interests of their shareholders are no longer in direct conflict with the interests of their! consumers.

Clearly, DSM programs have created value, and I don't suggest otherwise. But until a utility truly addresses the underlying disincentives in their regulation and behavior to energy efficiency, programs like the ones you describe simply take us one inch closer to a goal line that's still 100 yards away.

Sean Casten
President & CEO
Recycled Energy Development, LLC

Every marketing situation is different, but utilities truly have a unique challenge. Monopolies aren't experienced marketers to begin with. I've been marketing for 25 years and I'll be the first to say that getting customers to buy less requires atypical marketing strategies. Utilities can improve their success by helping customers to understand the relationship between their usage patterns and energy costs. Your Alabama Power and Portland General Electric examples are prototypical.

Marketing budgets are easier to secure when the company stands to sell more. Vendors are motivated to market their goods and services, which in turn enable building automation, demand response and other energy saving or shifting strategies. Some utilities have recognized that the end result is the same -- customers buy less power -- and in your New Economy we should see more utilities joining forces (and budgets) with vendors to accomplish their mutual marketing goals.

Denis Du Bois
P5 Group Marketing
Seattle

I was interested in the article "EMPOWERING CUSTOMERS" on the point of energy conservation. I'm a builder of SUPER INSULATED HOMES in Florida. My type of construction reduces a/c energy consumption by as much as 50% in my state alone.

Why aren't utilities supporting the development of my style of construction? It would seem a very cost effective alternative to new capacity cost. It would be easier than managing customer add programs.

It would also increase security for customers building such structures, as they withstand "category 5 hurricanes". If KATRINA DAMAGED NEW ORLEANS would rebuild using this technology, we would reap multiple benefits nationally.

Roger Plourde
President
ICF PERFORMANCE HOMES, INC.

The Oil Drain - October 19, 2007

Regarding your comment about the Energy Department predicting that the oil peaking will occur in 2037. I don't think so! Oil has already peaked; refer to Hobarts Curve and Senator Russell Bartlett's presentation to the Senate on Energy. Anybody in leadership that thinks we have another 30 years before oil peaking will occur is living in a fantasy world. Other sources? Well, think again, the oil tar sands in Canada require an equal amount (energy wise) of natural gas to make a barrel of oil. You want to use all your natural gas up - then make oil from tar sand. Solar, good luck. A petroleum engineer once told me that most people do not understand how valuable oil crude actually is. He said that they (the industry) crack over 137 different products from crude and gasoline at that time (1972), was only the 67th most important. Oil is probably the single most important item on this planet for human survival.

Turning down the thermostat and using energy saving light bulbs is going to accomplish nothing if in a decade you have twice as many people using energy. I can only remind people of 'Easter Island', that little island situated in the South Pacific where an experiment in human survival occurred in the 19th century. It was not a very nice ending. To that I add, we are in another experiment and it's called 'Easter Planet.'.

R. Bystrak PP_IISIFI

What's the problem? The OPEC countries - together with Russia - are in the driver's seat where world oil is concerned, and they are now aware of this fact. It took them more than 30 years to wise up, but it comes down to the same thing: regardless of what is going to be done on the buy side of the market, those countries are going to stack up big bucks because time is on their side. The interesting question now is what are they going to do with that money, and how will they 'manage' the oil price in the event of a global macroeconomic decline? Let me emphasize however that they will NOT manage it by increasing output, because they don't have any excess production capacity, nor are they in a hurry to obtain any.

The position that OPEC (and Russia) have with oil, Russia almost has with gas. In fact with its access to oil, gas, coal and all the nuclear that they think they will need, Russia is on its way out of the economic doldrums. The 'breakup' of the Soviet Union was probably the best thing that could have happened for Russia, since it left them with a smaller population but still a huge land area. Everyone doesn't understand this situation - where everyone includes a certain prominent gas economist that I listened to a few nights ago - but I hope that our political masters get the message, because if they don't...

Ferdinand E. Banks Professor

Thank you for addressing this significant concern for the energy industry and society at large. Needless to say, I am an advocate of alternative fuels and smart growth. Still, I would point out what many of the researchers looking at peak oil have said; oil is one of the most precious energy sources we have ever known. With its versatility, transportability, and power density, it has literally fuelled our development to current standards of living. Without it, we are severely disadvantaged. With it, we leapt form the coal burning days of the industrial revolution into the modern era. So, given the finite nature of this vital resource, the question is, "When will the US government and energy leadership put serious effort into preparing for a realistic future of higher costs, lower production, and increasingly greater demand?" What most of us see instead is a rush to increase oil and coal production (and financial returns) for the short term with a "future-be-damned" attitu! de that is frightening. Coal remains dirty, and will likely be so well into the future as new plants are produced without provisions for clean technologies. That doesn't stop our commercial encouragement of projects like mountain top removal mining in the Appalachian Mountains or oil extraction from the tar sands, regardless of the many layers of devastation such projects can incur. Meanwhile, common sense solutions such as planning for community-scale distributed power and commuter transportation seem to be progressing extremely slowly and only supported at the local level in a few economically strong areas. Most state and national incentives for renewable technologies remain in the dark ages. Power Engineering has been non-existent in most schools and curriculums that encourage efficient design (in buildings, mechanical systems, and vehicles as well) are only now grudgingly returning under increasing public pressure for "green"-ness.

Many others have pointed out that a national plan for renewable energy would take money out of foreign oil markets and instead put money into developing local skilled labor, science, and industry, and remove major threats to our future stability. I won't belabor the point, but it doesn't appear to be getting through to those of us who aren't thinking about this stuff all the time. The contractors I hire, the military personnel I meet, or many of my neighbors (I'll work on that a bit myself I think) seem to be unaware of the role that energy plays in their lives and how it can, and will, affect them.

This all makes me think about the multitude of financial planners who advocate planning for retirement and those of us who ignore it all because we are too busy thinking about day to day issues. It may not be an ideal analogy, but I feel a bit like asking if the United States has a retirement plan.

Thank you again for your bringing your skills to bear on these critical issues, as it is well past time for us to do some basic long-range planning.

Luke McKneally AIA, LEED AP
Solar Engineer and Architect
Solar Design Associates, Inc.

Laboring to Attract Talent - October 22, 2007

In this article, you address the need for energy companies to attract talent, and end the article by making an observation that the more developed countries have a leg up on others, due to high salary, benefits, etc. I have no knowledge of other countries, but here in the good old USA, I respectfully disagree.

When I was a graduate student in the early 1970s, the power field was still attractive to aspiring engineering students. I don't think that is the case today. Now, we see more and more engineering students pursuing the computer sciences, solid state physics, and other areas of engineering. And universities are reducing or closing their power engineering programs. Why? Well, in the field of power engineering, I opine that it is salary.

One can, of course, disagree, but consider this observation. Many companies are continuing to bring engineers into the USA via the H1-B visa process. As I understand it, the purpose of the H1-B visa is to allow companies to temporarily import engineers with a distinct specialty that is not readily available in the US. The key words here are temporary and not readily available. Clearly, however, many companies are using this to import engineers from other nations for the purpose of cost cutting.

If there really is a pending shortage of power engineers, why is it that there is no commensurate increase in average salaries?

As an ancillary note, may I suggest that you look into and then publish an article on the use of H1-B visas for technical (re engineering) positions here in the US?

Thanks for the interesting article, and keep up the good work.

Lou Fonte, PE.

Energy Firms Set Sights on Oil Sands - October 24, 2007

Thanks for the article on oil sands...perhaps a little more context would be good however. The major oil firms are in the business of protecting their investment in oil infrastructure, refining and distribution and are not particularly interested how we solve our end use energy problems. Nor are they particularly interested in the issue of catastrophic global climate change. They are flush with cash because $88 per barrel means one thing for them; they cash in. OPEC and big oil benefit as we send $400 billion a year to foreign governments, 5,000 Saudi princes, Exxon, etc., who

are pocketing the cash on a strategic commodity that costs about $6 a barrel to deliver to a U.S. port. Although the real cost is more like $250 per barrel the major costs are socialized as we all realize ...it's just the profits of course that are privatized.

I've read where the net energy balance for tar sands oil is negative, that is it requires more energy to produce than is contained in the oil product. Is that true? Perhaps you could do an article sometime on the energy balance and externalities for tar sands oil compared to biomethane for example, especially using biomass digesters that use sorghum hybrids (H133), that can produce up to 20-40 dry tons per acre with very little energy or fertilizer input which in turn generate ten to twelve million BTUs per ton as methane, in addition to producing a high quality soil amendment as a byproduct.

Exactly how much methane (natural gas) are they using to produce each barrel of tar sands oil, and what are the other energy inputs? How about emissions with this process? How far would the "$50 billion and rising rapidly" go toward a bio-methane economy? As you know we only need 20 Q of methane to run the entire U.S. economy using technology available today which could be put into place for not a whole lot more than the $50 B per year for a tar sands based/big oil economy.... the economy where OPEC gets together and decides the price of our primary energy for us.

Barry J. Hanson

Please use "tar sands" and not "oil sands." Oil sands term is used by oil industry, to mislead people. The oil is in the tar not in the sand, and to extract it, it takes a lot of energy and water. Someone rightly said: "it is like fabricating a fake crab meat using caviar." It does not make sense to burn the natural gas, which is relatively clean, to produce dirty oil, mainly for Americans.

Mark Kmicikiewicz

Gas is not the only source of heat for extracting oil from the oil sands. Some energy economists conjecture that, at current oil prices, oil companies could construct nuclear power plants to provide the needed heat energy. Smaller reactors such as the pebble bed would be especially suited to this task.

Christopher Pflaum

The Invisible Commodity - October 26, 2007

One of the disconnects for me as we go forward in trying to get our arms around energy issues is that between reports and prognostications about technologies and policies and the ability to execute and actually deploy them.

I mean, Ted Kennedy even had a problem with windmills being built near his sprawling grounds on Cape Cod.

It was at the 100 percent completion point that Mario Cuomo, then Governor of New York, awoke one morning and discovered that a nuclear plant was being constructed and started to give some serious thought to evacuation routes, thus dealing perhaps the final fatal blow to that technology.

As I see it, it comes down to the local permitting and siting of any such facilities, irrespective of favorable policy and even widespread public opinion. Everyone is starting to take another look at nuclear for myriad reasons, the lessened dependence on unreliable foreign sources of oil, some concerns about global warming, pollution, etc. But, tell someone you've chosen their neighborhood and it's a completely different story.

Again, I dice and slice it, but it keeps coming down to that same old nagging issue and, so long as there isn't a way to address that, the policies won't -- and no banker concerned about his job security will sign to pay for it.

George Koodray
Vice President, Communications
The Business Coalition for Educational Excellence

I read your articles and this one I think is showing how narrowly focused the industry is. It kept addressing adding more transmission capability and how fragile that system is currently. The answer is more clearly at the distribution level. Look at the installation of distributed generation and consider all of the potential benefits it delivers above the actual power. Small scale distribution can improve the performance of the distribution system closest to the consumer, and while the cry is over the projected shortage of power, nobody is looking to show that local generation from a range of resources would lessen and or delay the need for major transmission projects.

I only see this constant conversation about building great transmission corridors and more large scale generation is because the major power companies cannot think outside of a preconceived set of requirements. They can't put their head around DG, and they can't make it work within their cost structure and overhead.

This is where they would be smart to look at the smaller companies that can support the DG infrastructure model and can build, own, and operate these facilities which can deliver the locally needed energy.

I know from personal experience that projects producing a significant, albeit small relative to a traditional power station, amount of energy and do it using alternative resources can be profitable and reliable.

There is a lot of talk about conservation programs, smart meters, and a host of other things, but I think until these are all implemented and the means to conserve, more efficiently transmit and use energy, alternatives to generate energy on the local basis we should not consider such large infrastructure investments, place that capital where it gives the largest return regardless of the time period.

Design and engineering for the possible transmission infrastructure improvements, enlargements, and replacement can work in the background and while doing so take into use the very latest advances in transmissions system components, design and operation.

Bradley Schneider
President/CEO
Recovered Energy Resources, Inc.

Controlling Hackers - October 29, 2007

Thank you for a timely editorial regarding cyber security for control systems.

The National Infrastructure Advisory Council (www.dhs.gov/NIAC), an advisory committee to the President, completed a report that touches on topics you raise in your article (http://www.energycentral.com/site/newsletters/ebi.cfm?id=405). I point it out, in the event you would like to see the views of another body that has examined certain of these issues. The report and its transmittal letter can be downloaded from the NIAC website:

Transmittal letter:

http://www.dhs.gov/xlibrary/assets/niac/niac_ physicalcyberreport_trnsltr.pdf

Report:

http://www.dhs.gov/xlibrary/assets/niac/niac_ physicalcyberreport-011607.pdf

In the interest of full disclosure, I was a participant on the study group that supported the report and serve as staff to the Chairman of NIAC.

Bill Muston
Manager, Research & Technology Development
Oncor Electric Delivery

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