| OPINION A blueprint for our energy future We should build a four-legged stool, not a superhighway By A.J. (Nino) Amato While we don’t know the cause of last summer’s massive blackout, we do know that the nation’s electric transmission system is overloaded, antiquated and misused. By misused, I mean the system was not designed as a for-profit superhighway, wheeling power from region to region. That’s analogous to putting I-90 traffic volumes on Mifflin or Pinckney streets day after day. It won't work for long. But advocates of a competitive energy market made that fundamental miscalculation, just as their miscalculations about deregulation blew up in California three years ago, with skyrocketing prices and energy shortages. Still, we're told that Wisconsin needs more deregulation and competition in its energy market. I strongly disagree. It's a mistake to think that the energy market operates like other commodity markets. Electricity is not like pork bellies, corn or Bucky Badger sweatshirts. It cannot be stored for future sale. Supply must be generated to meet demand in real time. As a result, traditional price and market-clearing signals don't work. With a spike in electrical demand, you can’t go to the storeroom and pull out old electrons from the stockpile, nor can you save newly generated electrons as inventory once demand falls. Wisconsin, it's clear, needs fresh thinking to deal with increased energy demand. A market-based solution is no answer. Energy prices here are skyrocketing. Electricity rates were, on average, the lowest in the Midwest in 1997. Now we rank fifth for residential and fourth for commercial and industrial out of eight regional states. During that same period, electric rates in most other Midwest states have remained fairly steady, or even declined, while ours have climbed. These rate increases are, in effect, a property tax on anyone who owns a home, rents an apartment, runs a business and uses electricity. They hurt people on low and fixed incomes, forcing them to make impossible choices about whether to buy food, electricity or medicine. And it’s a job tax, as employers must spend more on energy and invest less in wages, training, benefits and job creation. Meanwhile, our supplies are faltering. Every summer since 1997, Wisconsin has been on the verge of an East Coast-style blackout. The transmission system here is antiquated and overloaded. Power-generating capacity is inadequate. And programs to encourage energy conservation, which are funded by ratepayers and taxpayers in this state, are being decimated precisely at a time when cost-effective conservation is needed. What do we do? Here are five suggestions for the state's Public Service Commission (which regulates energy in Wisconsin) and the Legislature.
These are good initiatives, but both have displayed alarming weaknesses. The assessment is limited only to facilities that will commence construction within three years, and due to understaffing at the PSC, reliability-reporting rules are nowhere to be seen. We don’t need a return to the cumbersome 20-year Advance Plan process. But we do need a robust strategic planning process that brings energy consumers, environmental groups, energy providers and energy regulators together. Again, generation, transmission, renewables and conservation must all be part of this strategic planning mix, with electric efficiency and conservation being at the very top of our list. That’s good public policy and sustainable economic development. Although the alarm bells are sounding, it’s not too late. Wisconsin enjoyed decades of progressive government regulation, reliable energy supplies and affordable rates. With the right level of engagement from all parties involved, and the voice of the consumer clearly heard, we can move forward again. This article originally appeared in the Madison weekly Isthmus. A.J. (Nino) Amato is president of the Wisconsin Coalition of Energy
Consumers Reprinted with permission of the author. |