Weatherization Department
The Friday * Report Friday, August 22, 1997
FromThe National Conservation Guild's
Weatherization Network Since 1984
970-349-0551 fax
970-349-0923 voice
Report@NationalGuild.com
WebSite
http://NationalGuild.com
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Utilities Save a Penny, Waste Bucks
From Newsday, 7 Aug 1997
EVER SINCE the Federal Energy Regulatory Commission issued an order in 1992 to deregulate and demonopolize the electric utility industry, investor-owned utilities have been scrambling to survive.
Throughout the country, these utilities - especially those invested in nuclear power plants - have found themselves with more
than $200 billion in potentially stranded (unrecoverable) debt if the coming competitive marketplace brings about substantially lower electric rates. No one on Long Island should be so provincial, surprised or naive as to believe that the proposed merger between Brooklyn Union Gas and LILCO and the Pataki-inspired LILCO-LIPA plan weren't promoted to shift nearly $7 billion of LILCO debt from investors to ratepayers.
These two proposals are not just part of a regional utility reconfiguration. Rather, they are examples of a national trend - the electric-gas utility industry effort to control and protect investor-owned utilities.
Utility management strategy is to lock ratepayers into a long-term commitment of payments that will protect investors from risk and avoid bankruptcy but create an aura of concern for the ratepayers in the short run.
Utilities would like to keep rate cuts to a manageable level of 5 percent to 10 percent by convincing public officials and regulatorycommissions that their investors' debt of $200 billion should be amortized over 30 years by sales of public bonds. This means that ratepayers are being asked to pay more than $600 billion as an add-on to
their utility bills. This is a higher amount than taxpayers paid in the
1980s to bail out investors involved in the savings and loan scandals.
Environmentalists, businessmen, civic associations and
municipalities are waking up to this creative financial restructuring and are challenging utility management, governors and Wall Street firms to move away from the fossil fuel (oil and natural gas) industry to open up opportunities for new energy-efficient technologies, conservation and
renewable energy sources.
But utility leaders are ignoring renewables and the advances in
technology that are knocking loudly at their door. Consider the example of recent advances in solar and wind energy.
Last year, the Department of Energy research division announced a six-fold increase in energy efficiency in thin-film solar energy cells. The Energy Department says they'll be available in two years. In May, EPV, a solar cell manufacturer from Princeton, N.J., signed a
contract with the Sacramento Municipal Utility District, a visionary utility, to supply 10 megawatts of solar cells for a five-year period. The 1998 kilowatt-hour cost to Sacramento customers will be 16.3 cents.
But in the year 2002 the cost will be 8.2 cents.
The Sacramento-EPV contract will open the door to other solar
manufacturers and the solar cell price will drop as market share and production increases. President Bill Clinton's recently announcedclean-air program will reduce the price even further.
Similarly, the Zond Corp., a wind-generator subsidiary of Enron, the largest natural gas supplier in the world, signed a contract with an Iowa utility to build 150 wind generators for $100 million to supply more than 50,000 residents with that type of renewable energy.
Utility revenues are imperiled also by increased efficiency in
household appliances. The Department of Energy, concerned about global warming and determined to meet international rules for lowering polluting emissions, has recently arranged a contract with U.S.appliance manufacturers to improve efficiency in refrigerators by 2001by 30 percent over 1993 standards.
The marketplace will improve efficiency even more, for homeowners generally replace their old refrigerators after 15 years. If a 1985 refrigerator, using 1,000 to 1,200 kilowatt hours on an annual basis, is replaced in the year 2001 by an energy-efficient one that uses 535 kilowatt hours on an annual basis, the gain in efficiency is more than50 percent.
The DOE will be signing additional contracts with manufacturers of air-conditioning units, washers, dryers and motors applicable in the year 2001. This will further lower peak load usage - the very basis of high utility rates.
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"What can you say about a society that says that God is
dead and Elvis is alive?"
-- Irv Kupcinet
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