September 15, 2008
Over the past several months, Energy Central has met with the top executives of some of the largest investor-owned power companies, rural electric cooperatives and municipal utilities, as well as state regulators from California to North Carolina. Highlights of our discussions are featured in the pages that follow.
Everyone believes that how we power our lives is -- or should be -- the top priority facing America. Most agree that we have lost our way. Jesse Tilton, the chief executive of ElectriCities of North Carolina, told us, "Our biggest challenge is that we lack a long-term federal energy policy that is based on science and economics and produces an acceptable environmental result."
That is a pretty broad indictment.
Some statistics are in order. The United States is the Saudi Arabia of coal, blessed with abundant supplies of the stuff. Yet the U.S. Energy Information Administration forecasts that we will build just 920 megawatts of coal generation this year. That is less than the Japanese Aerospace Exploration Agency is planning to generate in space and beam back to Earth via microwave in a few decades.
New coal generation in the works is eclipsed by the 5,329 megawatts of wind generation constructed in the in 2007 -- estimated to be about one-third of all new generation. The federal government recently reported that we could aim to have one-fifth of our electricity generated by wind. So why are wind projects sailing to completion while proposed coal power plants get buried?
Marc Gerken, president and chief executive officer of American Municipal Power, in Ohio, told us, "Coal has a bright future. Politicians are just afraid to utter the word."
So let's talk about politicians in this political season.
John McCain and Barack Obama have both said repeatedly that they want to run on the issues and avoid divisive, partisan backbiting. Energy Central has a modest proposal. Let them immediately and jointly name John Rowe, who is the chairman, president and chief executive of Exelon, as secretary of energy -- designate and charge him with developing a commission on national energy policy. Rowe and that commission should begin their work in advance of the election and come up with a series of policy recommendations for the next president -- be it McCain or Obama -- Congress and state legislatures by next summer.
Why Rowe?
Frankly, we were awed by his comments when we met with him and his industry peers in Toronto at the Edison Electric Institute annual meeting.
"If the next president sets a course that deals with climate and energy supply issues in a decisive way, most of the country can have 15 to 20 cents per kilowatt-hour electricity and continue to have a high degree of reliability," Rowe said. "The next administration tries to make all these decisions in the most politically correct fashion, then I think we're looking at 30 to 40 cents electricity and very radical structural changes."
He continues: "Neither party has got its act together on how to combine environmental policy and energy policy."
Then, wittingly or unwittingly, Rowe revealed why he would make a fine secretary of energy for these times of unprecedented challenge. He said, "there's a real dichotomy between advocating what we think is good for America, which we all try to do in our own halting ways, and doing what we must do for our shareholders kind of continues to haunt this industry as it always has."
A man that honest with himself should be freed to put a career's worth of wisdom to work for his country. Just what the next administration plans to do about it is another issue.
Editor's Note - Ref. 9/10/08 Issue Explaining TVA's Rates
TVA does not buy or import any coal from China. All of the coal it buys is domestic (mined in the U.S.). CEO Tom Kilgore was making the point China is not exporting as much coal now because demand is up in Asian markets, which reduces the overall supply of coal available and drives up the cost.
Thank you.
Ken Silverstein
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Martin Rosenberg Editor-in-Chief EnergyBiz Magazine
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