‘All of the above’
It is trendy these days to champion every imaginable energy resource under (and including) the sun. Who hasn’t heard a politician, pundit, so-called energy expert or even President Obama declare support for using all options at our disposal to solve the nation’s energy problems?
This frustrates me. The trouble, of course, is that money is limited. Money you spend to build a new baseload power plant (with a life of more than 40 years) is not available to upgrade the grid or fund energy efficiency. At the end of the day we need to decide: how much money should we allocate to generating energy, upgrading the grid, and to energy efficiency?
Those struggling with household budgets easily grasp the necessity of making hard choices. But when it comes to energy policy, many of our legislators and regulators do not. The reality is that while ‘all-of-the-above’ can be the right answer on a multiple choice test, it fails as a viable approach to strategic energy planning.
Strategic energy planning is woefully lacking in Michigan. The Michigan Public Service Commission, the state agency charged with overseeing utilities, needs to exercise its authority and lead in the development of a strategic energy plan for Michigan. A process is needed that establishes goals, evaluates different choices, and authorizes the utilities to implement a Michigan-specific energy plan.
A key component will be to decide what our long-term goals should be. My suggestions for goals would be:
- Keep rates low. The process must determine the long-term life cycle cost of each method of meeting demand, including energy efficiency investments. Included in the analysis should be capital costs, fuel costs, long-term operation and maintenance, and public health impacts.
- Minimize risk of price spikes and long-term increases. Each method should also include the risk that the prices could change in the future due to fluctuating fuel cost markets or other factors.
- Make it dependable. We need to balance investment between generation, transmission, distribution and storage to make sure the energy gets to where we need it.
- Include all costs. All the costs associated with various options — not just those that are included in rates — should be inputs in the decision-making process. Those costs include health care expenses and damage to natural resources from pollutants.
In the end, a well-designed process would result in a template to guide utility investments. The utilities would resist. But that should be the deal: if they want guaranteed cost recovery from ratepayers, we should know what we’re buying for our money.
Before we can make those choices, though, we need to acknowledge that ‘all of the above’ is a slogan, not a plan.
David Gard is energy program director with the Michigan Environmental Council.