Tuesday, September 19, 2006

Energy Plans

Yesterday, Governor Rell proposed her energy plan to solve the state's energy problems:
NEWINGTON -- Gov. M. Jodi Rell proposed a four-year, $500 million energy plan for Connecticut on Monday, marking one of her first major public policy initiatives in this year's race for governor.
It's interesting that Governor Rell seems only to tackle problems once they become just that, a problem. The DeStefano team wasted no time in calling her out on this:
"Connecticut has the highest electric rates in the continental U.S. and rates are about to rise again in a few months, just as winter arrives," spokesman Derek Slap said. "Incredibly, Governor Rell offers no help. It's another example that she just doesn't understand the simple fact that you can't afford to live in Connecticut anymore."
How long have Connecticut energy prices been high for? How long has Governor Rell been Governor? Is she chronically behind the curve?

Update:
  1. Read DeStefano's plan here.
  2. Read Governor Rell's plan here.
Update II: GMR has a very well thought out comment on the substance of the plans:
Neither one of these candidates proposes adding more power plants, as that would not be politically acceptable I guess. Instead, they speak of various conservation schemes, and a little bit about clean fuel. If Connecticut wants lower electricity rates, it has to build more power plants. Otherwise, we're going to keep having to buy power from other states and from Quebec Hydro.

JDS, and I am sure Rell also, is opposed to the LNG terminal in LI Sound. So my question is, where should there be a LNG terminal in the tristate area? If having a terminal 11 miles out at sea is not appropriate, would anyone like to volunteer a place on land for it? Because both NY and CT talk about increasing natural gas as a source for power generation, and since pipeline capacity is full, where is this natural gas going to come from?

JDS says he's going to take $50 million from the pension fund and invest in "high performance energy projects with high returns." Hey, JDS, in case you missed it, there are several thousand investment funds out there all looking for the high returns investments. How is it that state bureaucrats in Connecticut are going to find these high return projects that investment professionals are all missing?

Connecticut has low population growth, but it has some population growth: between 1990 and 2005, we added 223,181 people, or 6.8%. If this growth rate keeps up through 2020, which is when a lot of Jodi Rell's goals are supposed to be met, that'll be an additional 238,334 people.

These people are all going to use electricity (and if they don't, we'll have bigger problems to deal with). Yet there's Jodi Rell saying she's going to reduce peak electric demand by 20% by 2020. How in the world is she going to get each person to use 25% less electricity (because there'll be more people)? As I look around Fairfield county, it seems like many small houses are being replaced by large ones. These will presumably require more energy to cool and heat (not in direct proportion to size because of improvements in HVAC systems and insulation, but when you replace a 2,200 square foot house with a 4,900 square foot house, the new house is still going to use more energy).

We've got entities like Royal Bank of Scotland moving into Stamford, with the largest trading floor in the world. That'll take some electricity.

The fact is, we need more power plants. That's going to get electric rates down. Only problem with power plants is that there's probably no place in the state that they can be built. Meanwhile NY state politicians talk of closing Indian Point, even though that nuclear plant supplies about 11% of New York's energy needs.
I'm not going to pretend to know much about our energy problems, or how to solve them. Nuclear power always seemed like an attractive alternative to me, but in a state as densly populated as CT I can't imagine any new nuclear power plants. Conservation I think is also important in the long run, but it's always a balancing act.

Another great comment from Aldon Hynes:
Energy policy is a complicated area, and I won’t pretend to be an expert in it. I will recommend a few resources that I’ve always been impressed with. One is the World Changing blog. It covers a lot of interesting areas in innovation in sustainability. Another is Energy Outlook. I got to know Geoff, who writes this blog, when he lived in Greenwich. He is an energy strategy consultant, having worked for big oil.

GMR does make some very good points, thought I would quibble with some of them. Specifically, the assertion that the only way to lower energy costs is to build new energy plants. This is an over simplification. The price of electricity is a function of the price of the fuel used to make the electricity. No matter how many oil-based plants you build, the price of the electricity won’t go down if the price of oil keeps going up. The same applies to natural gas.

Oil has been coming off of its recent highs, but is likely to remain high. Natural gas is down considerably, yet is highly volatile. As an aside, Amaranth Partners, a large Greenwich based hedge fund recently suffered enormous losses due the recent decline in the cost of natural gas. (Ref: Toomre Capital Markets)

So, looking at ways to conserve and to move away from oil and natural gas based electricity are important. The City of New Haven has done a couple interesting projects in this area. For example, the Barnard elementary school in New Haven recently installed 272 solar panels on its roof, making it the second-largest solar panel project in the state. (Ref: The New Haven Independent). New Haven is also the home of Connecticut’s first fuel cell power plant. (Ref: Yale Daily News. While the fuel cell plant runs on natural gas, and doesn’t really address the supply problem posed above, it is a cleaner, and I believe more efficient fuel plant, that faces less local opposition.

An advantage of such fuel cell plans is that they can be smaller and built closer to where the electricity is being used. This cuts down on the transmission costs of electricity. However, I don’t know what sort of offset is tied to the delivery of the natural gas.

Connecticut is a center of excellence for fuel cell technology and whoever gets elected Governor would be wise to focus on promoting fuel cell technology in our state.

Another area of interest is cogeneration. I seem to recall that there were some very successful cogeneration projects in both Stamford and New Haven. Perhaps others can recall and comment on some of them.

As to conservation, Anon(10:00) is right to point out that more space does not necessarily mean more power requirements. We can and should be building more energy efficient buildings. We should be filling them with more efficient equipment. As an example, flat panel computer screens use substantially less energy. Intel and AMD are fighting it out to make more energy efficient chips. This doesn’t have a big effect on most of use individuals with a PC or two at home, but when you take a large trading operation, such as RBS which GMR mentioned, this can have a very big energy impact. The energy policies need to be encouraging companies to be more efficient in these areas.

I can’t really comment on which plan would really address our energy issues more effectively. When I worked for Mayor DeStefano’s campaign in 2005, I saw that his approach was well thought out and something he had been working on in New Haven for quite a while.

I am glad that both candidates have energy plans and I hope we have a vigorous discussion that will result in beneficial refinements to both plans.

- - -
Susan Haigh. "Rell Proposes Energy Plan". Hartford Courant. 9/19/2006.

29 comments:

Anonymous said...

You might not like it, but apparently the public does. Rasmussen has a new survey out, with Rell still crushing DeStefano.

GMR said...

Neither one of these candidates proposes adding more power plants, as that would not be politically acceptable I guess. Instead, they speak of various conservation schemes, and a little bit about clean fuel. If Connecticut wants lower electricity rates, it has to build more power plants. Otherwise, we're going to keep having to buy power from other states and from Quebec Hydro.

JDS, and I am sure Rell also, is opposed to the LNG terminal in LI Sound. So my question is, where should there be a LNG terminal in the tristate area? If having a terminal 11 miles out at sea is not appropriate, would anyone like to volunteer a place on land for it? Because both NY and CT talk about increasing natural gas as a source for power generation, and since pipeline capacity is full, where is this natural gas going to come from?

JDS says he's going to take $50 million from the pension fund and invest in "high performance energy projects with high returns." Hey, JDS, in case you missed it, there are several thousand investment funds out there all looking for the high returns investments. How is it that state bureaucrats in Connecticut are going to find these high return projects that investment professionals are all missing?

Connecticut has low population growth, but it has some population growth: between 1990 and 2005, we added 223,181 people, or 6.8%. If this growth rate keeps up through 2020, which is when a lot of Jodi Rell's goals are supposed to be met, that'll be an additional 238,334 people.

These people are all going to use electricity (and if they don't, we'll have bigger problems to deal with). Yet there's Jodi Rell saying she's going to reduce peak electric demand by 20% by 2020. How in the world is she going to get each person to use 25% less electricity (because there'll be more people)? As I look around Fairfield county, it seems like many small houses are being replaced by large ones. These will presumably require more energy to cool and heat (not in direct proportion to size because of improvements in HVAC systems and insulation, but when you replace a 2,200 square foot house with a 4,900 square foot house, the new house is still going to use more energy).

We've got entities like Royal Bank of Scotland moving into Stamford, with the largest trading floor in the world. That'll take some electricity.

The fact is, we need more power plants. That's going to get electric rates down. Only problem with power plants is that there's probably no place in the state that they can be built. Meanwhile NY state politicians talk of closing Indian Point, even though that nuclear plant supplies about 11% of New York's energy needs.

Bobby McGee said...

Very informational comment GMR, I'm promoting it to part of the post.

bluecoat said...

Neither Nassau or Suffolk county want the LNG boat/plant either; the proposed market for the NG as I understand it is NYC; on electricity, CT needs to get over the idea of self sufficiency - importing power from anywhere is like sending it across the state for many states; it's a small state with small utility distribution companies - UI and CL&P - that are screwing the customer with the help of the legislature;

bluecoat said...

Lamont Turns To Health Care-- Visit To Community Clinic Reflects Democrats' Push To Frame Election Issue
September 19, 2006
By MARK PAZNIOKAS, Courant Staff Writer


Doctor Pleads Guilty To Fraud-- He Failed To Pay Taxes On $883,000
September 19, 2006
Associated Press

Anonymous said...

GMR... i disagree on your assessment that 4900ft2 requires more energy than 2200ft2.

google "amory lovins" or the "rocky mountain institute." (www.rmi.org)

you'll be amazed at the possibilities that already exist... as for cost... think "life cycle cost," not "first cost."

we can get there, but we need leadership.

Aldon Hynes said...

Energy policy is a complicated area, and I won’t pretend to be an expert in it. I will recommend a few resources that I’ve always been impressed with. One is the World Changing blog. It covers a lot of interesting areas in innovation in sustainability. Another is Energy Outlook. I got to know Geoff, who writes this blog, when he lived in Greenwich. He is an energy strategy consultant, having worked for big oil.

GMR does make some very good points, thought I would quibble with some of them. Specifically, the assertion that the only way to lower energy costs is to build new energy plants. This is an over simplification. The price of electricity is a function of the price of the fuel used to make the electricity. No matter how many oil-based plants you build, the price of the electricity won’t go down if the price of oil keeps going up. The same applies to natural gas.

Oil has been coming off of its recent highs, but is likely to remain high. Natural gas is down considerably, yet is highly volatile. As an aside, Amaranth Partners, a large Greenwich based hedge fund recently suffered enormous losses due the recent decline in the cost of natural gas. (Ref: Toomre Capital Markets)

So, looking at ways to conserve and to move away from oil and natural gas based electricity are important. The City of New Haven has done a couple interesting projects in this area. For example, the Barnard elementary school in New Haven recently installed 272 solar panels on its roof, making it the second-largest solar panel project in the state. (Ref: The New Haven Independent). New Haven is also the home of Connecticut’s first fuel cell power plant. (Ref: Yale Daily News. While the fuel cell plant runs on natural gas, and doesn’t really address the supply problem posed above, it is a cleaner, and I believe more efficient fuel plant, that faces less local opposition.

An advantage of such fuel cell plans is that they can be smaller and built closer to where the electricity is being used. This cuts down on the transmission costs of electricity. However, I don’t know what sort of offset is tied to the delivery of the natural gas.

Connecticut is a center of excellence for fuel cell technology and whoever gets elected Governor would be wise to focus on promoting fuel cell technology in our state.

Another area of interest is cogeneration. I seem to recall that there were some very successful cogeneration projects in both Stamford and New Haven. Perhaps others can recall and comment on some of them.

As to conservation, Anon(10:00) is right to point out that more space does not necessarily mean more power requirements. We can and should be building more energy efficient buildings. We should be filling them with more efficient equipment. As an example, flat panel computer screens use substantially less energy. Intel and AMD are fighting it out to make more energy efficient chips. This doesn’t have a big effect on most of use individuals with a PC or two at home, but when you take a large trading operation, such as RBS which GMR mentioned, this can have a very big energy impact. The energy policies need to be encouraging companies to be more efficient in these areas.

I can’t really comment on which plan would really address our energy issues more effectively. When I worked for Mayor DeStefano’s campaign in 2005, I saw that his approach was well thought out and something he had been working on in New Haven for quite a while.

I am glad that both candidates have energy plans and I hope we have a vigorous discussion that will result in beneficial refinements to both plans.

Anonymous said...

The Rasmussen polls confirms - again - that this race is over. 40% have a "very favorable" opinion of Rell; whereas DeStano has more people that view him "very unfavorably" (17%) than he does people that view him "very favorably" (14%).

Hey, I wonder what kind of spin truebluect and the others who have predicted a DeStefano victory are going to give us.

Check out the crosstabs, truebluect, and even one as blindly partsian as you will have to concede that this is over!

FrankS said...

Having more or increasing the efficiency of our generating plants could offer future savings, but added demand from Long Island via a Cros Sound Cable is already overshadowing conservation efforts.

In 2005, the cross-Sound cable had carried 1,195,895 megawatt hours (MWh) of electricity to Long Island – enough to power 127,000 average residential customers – savin the Long Island Power Authority (LIPA) approximately $17.5 million in energy costs."

This figure shows the cable is hardly a two way street, Long Island saves money by purchasing lower cost power from Connecticut, which spends more importing power. Adding Long Island's demand, also creates greater burdens on the existing transmission system.

Bobby McGee said...

I think there are two angles on how to reduce energy costs. Either increase supply (build more plants) or reduce demand (conservation). That may be oversimplifying it too much, but that seems to be the basis of everything i've read today.

Anonymous said...

While I admit that the siting of new power plants is a political liability, there are other, more reasonable explanations for not including this as part of an energy plan.

Just one example: even if the state were to get involved in siting a new power plant (which may require the use of emminent domain) any new plant would face years of litigation from neighborhood and environmental groups. As a result, any new plant would be years off in the future, whereas we could be focusing on energy conservation and alternative fuels proposals today.

Just a thought.

Anonymous said...

Check out Rell's new tv ad (sorry, don't know how to post the link). It's an excellent ad, just what you would expect from her. Just wondering how the Democrats think about the picture of Rell, Dodd, Larsen & Blumenthal announcing that Team CT saved the sub-base (yes Lieberman is there too but not as visible, which appears intentional in my opinion).

JDS - check mate!

GMR said...

I think there are two angles on how to reduce energy costs. Either increase supply (build more plants) or reduce demand (conservation). That may be oversimplifying it too much, but that seems to be the basis of everything i've read today.

Well, as Aldon Hynes pointed out, the price of the input (oil, gas, coal, etc) has an impact as well.

However, it is true that Connecticut's electric costs, and all of New England's for that matter, are significantly higher than in the midwest. Since the cost of inputs (coal, gas, oil) are not that different there than here, there are other factors at play: presumably, it's that the demand for electricity in relation to its supply is higher here. Taxes may also play a role.

bluecoat said...

The two prime regulated electric ditribution companies in CT - Northeast Utilities (CL&P) and United Illiuminating - are screwing the ratepayers courtesy of the vatious protections the CT guvs and legislature have provided, and will continue to, provide them with. Check out their annual reports if you care do go beyond the surface of the debate.

disgruntled_republican said...

A couple comments:

First, Aldon, you said, "Oil has been coming off of its recent highs, but is likely to remain high." On the contrary, many industry analyists have said the exact opposite.

Well I guess I have a lot of thoughts...

The DeStefano plan is a joke. He offers no real plan, only increased taxes. I am wondering where he learned math....by mine, double checked on my XEROX calculator he is spending $675 million dollars...much more than the $175 he cites on his website.

A breakdown:
- $300 million in "rebates". Well if it is a rebate, didn't he already take it from us? Maybe that's why he didn;t count thi but he needs to replace it from somewhere, doesn't he?
- $200 million to support a new energy science center at the University of Connecticut. Just because it is at a college doesn't mean it doesn't count John.
- $100 million for state clean energy and energy efficiency programs. This is part of the money counted and is supported by Rell as well.
- $25 million in federal matching funds to clean energy projects. Again, counted.
- $50 million from the Connecticut pension fund. I personally think this one is a big no no.
TOTAL: $675,000,000.00

Furthermore, there is no possible way he can come close to an accurate estimate on the "savings" number that he sets at $2.157 billion. And not only that, he doesn't cite how he is going to save this money. All he says is, "by implementing an aggressive energy efficiency plan by 2012". Then he says his plan will add 75,000 jobs....um, yeah, sure it will John. Where? Not happeneing bucko. Some jobs will certainly be created but that number is purely political and we all know it.

For all the negative I have about his plan I did find one positive. I really like his idea of the "revolving loan fund to provide no-interest loans to businesses to upgrade to energy efficient equipment and support clean energy generation". This is also a large part of Rell's proposal.

Perhaps he doesn't like Rell's plan because she doesn't spend enough tax dollars?

Looking at Rell's plan, gathering information from her press conference yesterday and her campaign website:

The proposal calls for the use of biofuels and renewable froms of enegy, would cut costs for businesses and families, and charts a course for the state to reduce its fossil fuel consumption, she said. (Courant article)

JDS' campaign's response to this was that it does nothing to help families and that it " "pays lip service" to energy conservation."

OK, by my logic, if we are paying $5 per gallon now for fuel "X" and we would change to fuel "Y" and consume less of it for the same use wouldn't that translate into cost savings? And if the state is saving money wouldn't the people who fund this, the taxpayers, save money too? (At least in theory...my feelings about the us of the "surplus" have been made quite clear from previous posts....)


Looking at her proposal's key components:

- Cap on gross receipts tax when wholesale fuel prices exceed $1.75 per gallon. This is true, measureable savings that would take effect on day one, something JDS' plan lacks
- Eliminating commercial utility surcharge on small businesses. Holy crap, LESS TAXES!!! And it helps ease the burden on small business in CT. Add that to the no-interest loans and its a winner!
- Ban on zone pricing for 2 years. Living in a border town, I am not to keen about this idea.
- Require all state and school construction projects to use energy efficient technology. Save energy from the start with no large cash output...Another winner!
- Creating incentives to promote biofuel production facilities. Not very specific but obvious longterm savings.
- Low interest loans and grants to promote production of biofuel feedstock crops - see above.

And then it adds mandates that make sense (and shouldn't cost anything):
- 20% energy used & sold in CT from clean or renewable resources
- 20% reduction in peak electric demand
- 20% reduction in fossil fuel comsumption
- 20% mixture of alternative fuels in Commercial transportation fuel
- Heating oil in CT to contain a mix of 20% alternative fuel.

I respectfully disagee with the DeStefano campaign's assertion that this is lip service. This is a real plan that offers real savings by cutting down on the consumption of fossil fuels...imagine that !?!


The fact of the matter, looking at the big picture, is that neither plan addresses the need for electric upgrades/reforms. IMHO it is time that the state start slapping these jackasses at UI and NU around and get them to fix the problems. While I agree with GMR for the most part, I wholeheartedly beleive that the state can be doing more to facilitate reform. I also think we need to be looking BIG TIME to UTC for help with fuel cells. I know New Haven uses them and more recently South Windsor now uses a fuel cell to power their high school, the largest building in town. They are saving a bundle (from my memory more than 50%) both on heating and electrical.

Anonymous said...

Build new plants, it's really pretty simple and shocking that these two candidates show no leadership.

Where??? Well how about using all the "open space" we are setting aside. Willington is empty as well...

Anonymous said...

JDS wants to take $50 million out of the state pension plan (imagine if a Republican proposed that what the unions would be saying) and invest it - where? enron.

disgruntled_republican said...

Anon 1228 -

My sentiments exactly.

bluecoat said...

I read the details of Rell's plan. She hasn't costed out every component the way JDS has costed his individual points. So just because JDS tells us the costs and Rell doesn't, doesn't make Rell's plan less costly or better. Both plans have a few good points but neither recognizes fully that energy policy can't begin and end at the state borders.

bluecoat said...

Rell's plan is also hands off to NU and UI if you read between the lines. I am sure they and UTC helped in the preparation of the plan. Fuel cells have their place but I seriously doubt they are the way to go to power four wheeled buggies.

James Aach said...

One of the problems when discussing electric energy supplies is that the general public has no real "feel" for how electricity is really made - how difficult it is, how much you can get from a coal plant vs. a windmill vs. a nuclear plant, etc. I've tried to address these questions in my thriller novel "Rad Decision", which is available at no cost to readers at http://RadDecision.blogspot.com. (Readers seem to like it based on their comments at the homepage.) While the focus of the novel is the good and bad of nuclear power (plenty of both), all forms of electric generation are addressed. I've worked in the electric generation field (nuclear) for twenty years.

disgruntled_republican said...

bluecoat -

Pardon my french but what the hell are you talking about?

Neither plan properly addresses electricity. Furthermore, I never talked about fuel cells in vehicles, only for buildings. Municipalities are starting to use them...I envision more municipalities making that move followed by private companies using them as well in the future.

Unfortunetly we cannot realistically add plants...not in my backyard syndrome will prevail.

As for your comments about costs on Rell's plan...there isn't a lot of cost listed because there isn't a lot of cost invloved. The entire 2nd half is policy not product. Policy doesn't cost a penny. In the first half, it is savings based consumption and cost. If we lower consumption, the savings will go down but so will the cost...simple economics, not to be confused with rowlanomics. (Added that just for you)

FrankS said...

Rell's plan offers only the status quo, a benefit to UI, CL&P and energy companies.

Any gas tax reductions, would offset by price changes that can shift costs 10-30 cents in a day.

Power plant siting in Meriden, Oxford and Middletown languishes and reuse of and exsisting facility in Milford (Devon) should be pursued.

disgruntled_republican said...

FrankS-

Tell me sir, what is this benefit you speak of?

Gas tax: you comment, "Any gas tax reductions, would offset by price changes that can shift costs 10-30 cents in a day."

Hogwosh. Go to Massachusetts where it is 15-20 cents cheaper everyday. And yes, I do buy my gas and will continue to as long as it remains cheaper.

Zzzzzzzzzzz! said...

This post is so boooorrrrinngg that it has actually forced me to go back to work.

bluecoat said...

DG: You're living in a dream world if you think Rell's policy statements don't have a cost. Not to mention that less consumption does not come without a cost.

disgruntled_republican said...

Bluecoat-

Was rethinking my comments and you are correct; and I take back my comments about no cost.

bluecoat said...

DG: Rell says her plan will cost $500 million if I understand her press release but I have no idea where the figure came from was my point; and except to cut the tax rate I don't see her lowering the cost of energy; nor can I be sure JDS's figures are correct,; bottom line I can't tell how either plan will impact my utility bills or my transportation cost.

FrankS said...

DR,

The current energy market favors large profits by energy companies, UI's recent sale on it's share of the Cross Sound Cable and CL&P's sale of it's hydro facilites come to mind.

Buying your gas in MA though is the way to go.