Power Utilities Violate Miss Piggy’s Fourth Law
Cold showers, warm beer and lost jobs--is that what Americans face if they don’t build more multibillion-dollar coal and nuclear power plants?
This is the scenario drawn by advocates of bigger and more powerful generating facilities--unless we undo whatever laws, constitutional principles or market forces that might block such “progress.” But let’s consider whether those who say we need more big power plants are really trying to solve the problem they predict.
A troublesome smell of hypocrisy rises. Most U.S. utilities have virtually abolished programs to help customers use electricity more efficiently, because they’ve spent about $200 billion building plants to produce power people don’t want to buy. (Ironically, we import oil today because we bought those power stations, instead of making more efficient use of oil.) These utilities have violated Miss Piggy’s Fourth Law: Never try to eat more than you can lift. Now, seeking their money back, they’ve turned efficiency programs into marketing programs trying to sell more electricity. The Electric Power Research Institute estimates that by the year 2000, today’s power-marketing programs will have deliberately created roughly 35 huge plants’ worth of new peak-hours national demand.
At the same time, many customers, especially in industry, who don’t want to pay for those unneeded power plants are offering to generate new power more cheaply than the utilities can. Yet most utilities, at the same time they cry “shortage,” are thwarting new, cost-effective sources at every turn. By the spring of 1985, California utilities had been offered private capacity equivalent to 57% of their total peak load--all cheaper than building their own plants--and new offers were arriving at a rate equivalent to a quarter of total demand per year. Over half of that capacity, mostly renewable, was already built or being built. Before the glut forced suspension of bidding, utilities had already bought more private output than they needed. Now they’re trying to defer or wriggle out of many contracts.
Just when Public Service Co. of New Hampshire was predicting blackouts if it didn’t run its Seabrook nuclear plant, it was rejecting three times as much power offered, at a fraction of the cost, by independent producers. More recently, a half-dozen utilities nationwide have run auctions to see who wants to make power and sell it to them. They’ve all been offered five to 10 times as much as they wanted. Yet we’re still being told--chiefly by those who hope to sell them--that there is no supply alternative to big coal and nuclear plants. Never ask a pusher if you need a fix.
Most puzzling is continuing silence about the cheapest, fastest option of all: new technologies to wring more work from the electricity we already have, and new ways to finance and rapidly deliver that hardware. There’s a quiet revolution going on here. Full use of today’s best commercially available efficiency techniques (many less than a year old) could provide unchanged or improved services using only a fourth as much electricity as now used. Quadrupled efficiency would cost less than it costs just to run a coal or nuclear plant, even if building that plant was free.
Lighting savings alone, from improved equipment producing a finer quality of light, could displace 120 huge plants costing over $200 billion, and save $30 billion a year in fuel and maintenance costs.
The staggering efficiency potential isn’t just theoretical. If all Americans saved electricity at the same speed and cost as did the 10 million people served by Southern California Edison Co. from 1983 to 1985 (before management’s attention started to wander a bit), national long-term forecasts of power needs would drop by 40 Chernobyl-sized plants per year. Such savings would cost the utilities roughly 1% as much as building and running new power plants.
Yet, bucking the industry trend, a growing and highly profitable minority of American utilities now recognize and capture the potential for using this costliest form of energy more productively. These utilities sell less electricity and more efficiency, not only to avoid financial and environmental risks, but to make more money. That’s why Puget Power is selling “negawatts”--electrical savings--in six states, five more than it sells electricity in. It’s why Wisconsin Power & Light may set up a new subsidiary to sell efficiency in the territory of heavily nuclear, high-rates Commonwealth Edison Co.
Such leaders are in the vanguard of what should be a national best-buys-first movement. Electric efficiency, systematically practiced, can abate nearly a third of our carbon dioxide emissions, much urban air pollution and most acid rain and nuclear waste generation--and simultaneously save the nation as much as $100 billion per year.
Yet federal policy is just the opposite. And this isn’t the first time the United States has blundered into a misguided effort to boost energy supplies while ignoring demand. In response to the 1973 and 1979 oil shocks, our government provided extraordinary help--$50 billion in annual subsidies, giveaway leases of federal resources, relaxed safety and environmental standards, law-avoidance, promotional rhetoric, you name it--for grandiose schemes to produce more energy.
Now the landscape is littered with the wreckage of Project Independence, the nuclear power program, the Western coal boom, the Synfuels Corp. They all failed, not only because they were politically and often technically infeasible, but most fundamentally because they couldn’t compete. While political rhetoric focused on costly megaprojects, the market quietly produced a gush of energy efficiency, sticking the supply industries with costly, unsalable surpluses. Now these operators are said to require still more demand-stimulation and even bigger subsidies.
Today the same people who made that mistake twice want to make it a third time. They tell us soothingly that they’ve now learned the need for balance--we need both new supply and efficiency, albeit in roughly the proportions of the classic recipe for elephant-and-rabbit stew: one elephant, one rabbit. The central lesson of the post-embargo period, however, is that efficiency holds immense, proved, yet largely untapped promise. Today, the 15-year-old “efficiency industry”--chiefly such commonplace methods as caulk guns, duct tape, insulation, better cars and plugged steam leaks--is producing 40% more energy each year than the century-old oil industry.
Yet if we continue trying to buy both efficiency and costly new supply, especially at the recent expenditure ratio of about 1-10, we may end up doing neither effectively, because they compete for the same resources. Indeed, each dollar spent on supply cannot be spent on the efficiency that would yield bigger, earlier benefits. Thus such supply investments actually make all energy problems worse.
Worst of all would be--as we’ve done in recent years--to succeed in buying both supply and efficiency. Such success can bankrupt energy industries: To repay costly supply ventures, they need energy demand to rise, but efficiency makes it fall. Yet if supply is bought, the higher prices needed to pay for it will inevitably spur private efficiency investments, bankrupting the supply industries later. There is no winning strategy other than to sell customers the best buys; the only question is how many more billions we’ll squander before lobbyists accept that truth.
