Monday, April 17, 2006

Energy Games

Sometimes you just have to wonder if the problem with legislatures is that people with financial backgrounds don't run for office. Last week, for example, the House Republicans hurriedly brought up a proposal that promoted electricity rate tax cuts. Note, not rate relief which is a real issue, but the tax that the state takes in. Now why would the House Republicans do this at this time. Basically, to create an election issue. But while creating an election issue is all part of politics, the real overwhelming problem is that our CT based electric companies are in a serious bind. Fuel costs are soaring, and because the rates they can charge is regulated, there is a squeeze being placed on those companies. And the squeeze is that they can sell their electricity to other markets, now that the grid can move electricity to where more profits are avaialble. Which makes me wonder if CT is not being set up for a manufactured California style energy crisis. CL & P has in the last two years hiked rates 10% and 22%. Fuel costs have doubled during the same time. If you were CL & P, where would you want to sell your electricity?

Meanwhile the House Republicans blame the House Dems for tabling the electric rate tax cut proposal, and then talk about their grand "energy proposal." If you want to cut tax rates, do it in the budget bill. But more importantly, why give up state revenue on energy consumption when the only thing that can drive down the costs of energy is less consumption. Why aren't energy tax revenues being set aside for alternative energy generation projects or energy consumption reduction projects? Today there are parts of Connecticut that are seeing gasoline break the $3/gallon barrier. Rising fuel costs are not going away. Why aren't our elected officials focusing on the real problem instead of manufacturing one?

14 comments:

BDRubenstein said...

Dear Turfgrrl:

You and the other bloggers in here probably wont like this answer...but...i do

Some years ago both parties were convinced to de-regulate...even so-called liberals voted for it ....rowland had his way and now we live with the consequences of it.

We need to both re-regulate all utilities...have a windfall profits tax for some of the worst companies making excess profits...and plow the tax money raised into state owned utility companies that could deliver utilities cheaper and better to its citizens.

BRubenstein said...

dear turfgrrl

Some years ago parties gave in to Rowland and de-reulated the utilities company and now we see the results.

I maintain that they should all be re-regulated and there should be a federal and ste windfall profits tax....the tax collected should be used to state state owned utilitie companies whose mission is deliver oil,gas,electric,water,heat etc cheap and not for profit to the citizens.

disgruntled_republican said...
This comment has been removed by a blog administrator.
disgruntled_republican said...

Let's not lay this all on Rowland. I refer you this Dick Blumenthal press release from 1997 where he urges the CGA to pass deregulation. Also, not everyone voted for deregulation way back in 1998. Seven Senators including Sen. John Kissel voted nay.

disgruntled_republican said...

Sorry,

Here is the link I was referring to in my post about the Atty General.

Gabe said...

I agree with both of you in part: Deregulation was a huge mistake, and both parties are complicit.

goodbye said...

What the Republicans are saying is that the tax is a "windfall profit" to the state budget because it rides on the backs of the increased prices of fuel. It is a good idea and it ceratinly is not a regressive tax. Is it an election issue? unfortunately, yes.

CT is a very small state and to a large part we are plagued by the operational mentality of two very small utility companies - CL&P and UI.

goodbye said...

disgruntled: Blumenthal argued consumer choice back in '97 as your link shows but since then he has argued against CL&P or UI being acquired by larger utilities to improve their buying power and operational effectiveness. When I first moved to CT I was served for my land line telephone by CT only SNET, then I had SBC and now AT&T; my service is a good now as it ever was and I have more choices all the time. Not so with rinky dink UI who spends a ton of money lobbying Hartford and who was never really a good corporate citizen. When PSE&G took over the UI coal generating plant in Bridgeport they brought in clean burning Indonesian coal among other things to be a good coroporaate neighbor. I wonder how much Bloomie and his network rake in for their campaigns from UI.

disgruntled_republican said...

red october-

My post was in response to brubenstein who layed it all on Rowland. I just wanted to show him that "Bloomie" was in on it too.

As for choice, I don't disagree. I have Cox Communications for my telephone service. When I got the bundle package from them I saved alomst $70 per month.

With electric, its a mess. CLP/UI must take management classes from the legislature. They NEVER seem to look at ways to cut costs and only puill the trigger on raising rates. Between the too, its no wonder the state is the way it is.

goodbye said...

disgrunteld: your spelling is no better than mine; I was hoping the government-can-always-do-it-better folks on this blog would see that I am quite happy with AT&T who was absorbed by SBC (but SBC kept the biiger name) who bought out SNET a few years ago. We are screwed by these two little electric distributors who have been manipulating the state legislature every step of the way in the name of local control or some bull like that.

stomv said...

I'm an energy geek.


Firstly, separate electricity costs from gasoline costs. For all intensive purposes, they're relatively unrelated in the short and medium term in Connecticut.

Regarding electricity, there are two issues:
1. Ensuring that there is enough generationg capacity to serve absolute maximum demand -- 4pm on a weekday on the hottest day in August, generally.
2. Working to reduce the marginal rate for electricity production, so that the average rate is reduced, making electricity cheaper for everyone.


1. can be solved, but not quickly with political home runs. Wind power can't solve (1), because you can't guarantee that the wind will be blowing at that peak usage. Solar can be used, since peak usage always comes on hot (sunny) days, but it takes an awful lot of solar and many years to ramp up that kind of install. CT could do with with good public policy (including tax rebates), but I wouldn't hold my breath. That leaves: coal, gas, or nuclear. Coal shouldn't happen, due to health concerns and air quality. Gas could (gas pipelines do cut through Fairfield Cty, at the very least) and is probably the most palatable. Nuclear is a non-starter at a federal level, at least for now.

2. Reducing marginal cost. This is where green energy does wonders. The marginal cost of solar and wind is virtually $0.00. So, whereas coal might cost $0.04/kWh to produce, wind costs less than $0.0001/kWh to produce. This ignores sunk costs (the cost to build the wind or coal plant) because those costs aren't relevant when working with the marginal bids the electricity produces provide. Renewable energy runs on free fuel (sun and wind, etc), and so has no marginal costs -- and hence reduces the cost to produce electricity whenever those renewables are cranking out the kWs.


So: you want to avoid rolling blackouts? Either start really encouraging blue roofs (solar cells on homes and businesses) with tax rebates, or build a gas-fired power plant. Want to lower people's electricity bills? Windmills are the cheapest way to have an immediate impact; solar cells and biogas "harvesters" have a high up front cost but do the job, wood chips have a marginal cost exceeding $0.00 but has a lower start up cost.


As for gasoline: there isn't much that Connecticut can do to reduce price (short of reducing the tax on gasoline, a horrible public policy decision). What Connecticut should be doing is using public dollars to make it easier for people to not be moving around at 20 miles/gallon. Carpooling immediately bumps you to 40 mpg or 60 mpg (3 people x 20 miles = 60 miles on each gallon of fuel). Trains run on electricity, burning no oil and much more efficient per unit energy. Smart development allows more walking or cycling or rollerblading or skateboarding for short trips, saving gas a bit at a time.

CT can't reduce the wholesale price of a gallon of gasoline, but it can provide cheaper alternatives for its citizens so that some of them can choose to avoid contributing to ExxonMobil's record profits.

FrankS said...

The effect of New York's growing energy demands and draining these resources away from Connecticut for better price will not abate until market prices stabilize.

WE continue to lose with projects like the Cross Sound Cable and energy savings progams simply can't the additional demands.

That's a Rowland/Republican legacy we shouldn't forget.

Tim White said...

stomv... you make some interesting points, including sharing rides. And for anyone who is interested, check out this website www.nuride.com. It hooks up CT drivers for rideshares... Or consider buying a hybrid. When you look at the tax bene's offered a civic hybrid and the gas savings over the next five years, the hybrid civic costs ($22k) about the same as the basic civic ($16k) b/c it's about a $5-6k savings.

And on a separate point, you're a self-acknowledged energy geek... is 5% (or 8%) of our electricity created from oil? (That's what I've heard.)

stomv said...

^

As of 1999, no. It was 29%. I don't know what it is now.

But, let me explain:

Very often, coal fired plants can cheaply be converted to burn oil. Yeah, it's dirty. But why does it happen?

* Oil != oil != oil. There are different grades and qualities. The good stuff becomes gasoline, the really bad stuff becomes tar for roads and the like. Somewhere in between is a grade of oil that can't be used in engines for vehicles. This sludgy oil is used for, amoung other things, power plants. A slightly cleaner version is used as home heating oil.


In general, the only states that use oil for electricity production are states in New England minus VT, plus NY, FL, and HI. Also, in general, these oil production plants are used for peak power -- they're turned on after all nuclear, natural gas, and coal plants are being used and aren't enough to meet the power needs.


It would be nice to turn them off, but the region has to build some new power plants to replace that operational capacity -- and that's not so easy to do. Of course, two ways to reduce the frequency with which the oil burning plants are used are (1) conservation, and (2) rolling out renewable energy production in state. For CT, that might mean some small windmills in the "mountains", solar cells all over the place, wood chips transported in from the forrests of MA, NY, VT, NH, and ME, and biogas from landfills.


Some power plants are listed at
http://www.net.org/air/local/ct.pdf
but I don't know of a comprehensive listing of all power plants, including location, production, fuel, and pollution emissions. As far as I'm concerned, the DOE/EPA ought to require it be made public and easily accessible, but I don't know that to be the case.