It's Your Business

Planning for Our Energy Future


by Scott Gates, Consumer & Cooperative Affairs, NRECA

Electricity powers us through every day, from when our alarm clock wakes us up in the morning to when we turn off lights at night. While its easy to take electric power for granted, that may not always be the case. Todays economic crisis makes it all the more critical that work begin soon to address growing issues in the energy industry. Otherwise, electricity could quickly become less of an affordable staple and more of a pricey luxury.

In recent years, the collision of several factors increasing demand for electricity, rising fuel and construction costs, and climate change has created whats been called the energy industrys perfect storm. The U.S. Energy Information Administration (EIA) forecasts that the need for electricity will climb by 30 percent between now and 2030.

To meet this growth, the U.S. Department of Agriculture projects that electric co-ops must double generation capacity over the next 11 years. Yet building new power plants will be expensive, so electric co-ops must turn to both cutting-edge and time-tested solutions to keeping the lights on from advanced power-generation technology still under development to proven energy-efficiency programs.

Without advancing technology, our options are limited, says Glenn English, CEO of the National Rural Electric Cooperative Association, the Arlington, Va.-based service arm of the nations 900-plus consumer-owned electric co-ops. But whatever solutions we come to in addressing this energy crisis must keep consumers in mind. With many electric co-op members already working hard to make ends meet, this is no time to enact hasty energy policy that will push electric bills higher.

Relatively high costs for construction materials and uncertainty about climate change goals, which could place strict limits on carbon dioxide emitted by power plants, have stalled development of new baseload generation: the large, efficient stations that provide dependable and affordable electric power year-round.

New nuclear power plants sources of clean baseload generation are stymied by high costs and local political resistance in many areas. As a result, the last new reactor to become operational was a Tennessee Valley Authority (TVA) plant in 1996, according to the Nuclear Energy Institute. Since then, only one other, older reactor was refurbished, also by TVA in 2007.

Unless new, thoughtful public policy streamlines the process, that trend could continue, English warns.

In years past, the burden of meeting electric demand would typically fall to coal-fired plants, which provide about half of the nations electricity. But with plans for new coal plants hitting snags, utilities are being forced to turn to a more expensive fuel: natural gas. In 2007, generation and transmission co-ops planned on using natural gas for a quarter of their new power plants; in just one year that number has climbed to 53 percent.

The main challenge were facing now is that its hard to build new baseload generation in general, but even tougher for units that dont burn natural gas, remarks Paul McCurley, NRECA chief engineer. The lower up-front costs but higher operating costs of natural gas generation traditionally made it a good fuel source for peaking power used when demand for electricity is at its highest but not for baseload power plants that generate electricity around the clock.

Theres no doubt it is going to be difficult to build new coal-fired and nuclear power plants in coming years, two key sources of baseload generation, English says. The resulting reliance on natural gas increases the risk of higher electric bills to consumers and lowers overall reliability due to decreasing fuel diversity. Unfortunately, the question no longer is whether electric bills will increase, but just how high they will go.

In an effort to broaden limited options and make bills more affordable, electric co-ops have come to embrace the concept of a multi-pronged solution spelled out by the Electric Power Research Institute (EPRI), a non-profit, utility-sponsored consortium whose members include electric co-ops. With heavy focus on research and development, an array of yet-to-be-developed and existing technologies could keep affordable electricity flowing between now and 2030 while significantly reducing carbon dioxide emissions.

Steps to achieving that diverse solution include investing in renewable energy; building advanced, clean coal-fired power plants; expanding nuclear power capacity; stringing new transmission lines; and improving energy efficiency across  the board.

Fortunately, electric co-ops have a long tradition of promoting energy efficiency. The vast majority of electric co-ops, a full 92 percent, already sponsor energy-efficiency education programs, and 77 percent offer residential energy audits to their consumers, explains Ed Torrero, executive director of NRECAs Cooperative Research Network. Just under half provide financial incentives for residential energy-efficiency upgrades.

Load control Pioneers

Electric co-ops are also pioneers in load management programs, which allow them to reduce power consumption by managing when and how electricity gets used. Consumers, who volunteer for the programs, typically dont even notice when load control happens.

For example, Palmetto Electric Cooperative in Hardeeville, S.C., controls 33,000 residential electric water heaters, about half of those in its service territory. As families come home at the end of every day and turn on lights, ovens and dishwashers, electricity use spikes. This requires additional power generally from the most expensive and least efficient generators available to be dispatched to avoid brownouts or blackouts.

But through load management, Palmetto Electric and other electric co-ops with similar programs reduce these demand peaks by switching off water heaters by the thousands.

Load control saves us about $2 million a year in power costs, based on our current demand charge, says Jimmy Baker, Palmetto Electric vice president of marketing and public relations.

Noting that load management acts like a power plant in reverse, Torrero indicates that roughly 37 percent of all co-ops can directly control appliances, chiefly water heaters and air conditioners. Few realize how well electric cooperatives have done in this area.

Between energy efficiency and load management efforts, local electric co-ops reduced demand by 2,200 MW in 2006 roughly the equivalent of three large coal-fired power plants, according to EIA. That added up to $50 million in fuel cost savings and offset more than 2,000 tons of carbon dioxide emissions, equal to what 700 cars put out in a year.

That kind of proactive planning has partially reduced pressure on the electric utility industry as a whole, but more work remains. As soon as next year, some parts of the country could experience a very real shortage of power unless more power plants are built, according to a late 2008 report by the North American Electric Reliability Corporation, a Princeton, N.J.-based non-profit organization charged with monitoring Americas power system reliability.

As the perfect storms thunderheads continue to build, electric cooperatives are working hard to keep electricity safe, reliable and affordable.

English points to the electric co-op grassroots awareness campaign, Our Energy, Our Future, as an important part of solving the nations energy crisis, and encourages consumers to visit to continue the effort.

By creating a dialogue between consumers and elected officials about our collective energy future, we build the foundation for a working partnership in which government understands and can help meet the needs of cooperative members, English explains. Though co-ops are taking steps to deal with this impending crisis through energy-efficiency and demand-response programs, serious policy decisions are ahead of us the root problems are certainly not going away.

According to the U.S. Department of Energy, demand for electricity is projected to increase 30% by 2030.


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