A Sweet Side to Coming Energy Legislation

[GG]

http://www.kiplinger.com/businessresource/forecast/archive/Sweet_Side_to_Energy_Legislation_090410.html

Can you wait a few years before replacing an aging washer and dryer or that industrial boiler? If so, utility companies may pay the bill for you.

By Jim Ostroff, Associate Editor, The Kiplinger Letter

When new comprehensive energy legislation aimed at reducing U.S. dependence on fossil fuels and curbing emissions of greenhouse gases earns approval by Congress, utilities will have to slow growth in electricity use. Legislators will require power companies to offer programs that put the brakes on consumption before they can get an OK for new plants or transmission lines. To do so, they'll offer sweet deals to both businesses and homeowners: juicy rebates on the purchase of new, super-energy-efficient household appliances, industrial boilers, heating and air conditioning systems and so on, replacing old energy gulpers.

Lawmakers aim to be fast out of the blocks. They'll craft energy legislation in the House this spring, hoping to get a final version to the White House by year-end. So, within two years or so, there'll be programs to help you pay for new appliances or equipment.

The creation of Energy Efficiency Resource Standards, which impose progressively tighter caps on the growth of electricity consumption, will force electric utilities to change their century-old business model. "Traditionally, utilities made money by increasing the amount of electricity they sold, but with a national law to slow the growth of power, they'll have to spend money to help consumers use less," says R. Neal Elliott, associate research director with the American Council for an Energy-Efficient Economy. Utilities will have little choice but to assist consumers and businesses to buy more energy efficient appliances and equipment.

But utilities won't have to do it alone. They'll get help in several forms, including current federal incentives for energy efficiency and weatherization of homes and businesses. Most importantly, state regulators will OK slightly higher electric rates -- adding perhaps $1 or $2 a month to a typical homeowners' bill -- to help defray power companies' rebate costs. Over time, the slightly higher monthly bills for consumers will be offset by holding down the need to build -- and pay for -- new generating plants.

Also likely to be in a new law:

    * A requirement that 25% of electricity come from renewable sources such as wind, solar, biomass or hydropower by 2025.
    * Mandated efficiency standards for appliances, motor vehicles and commercial and residential buildings.
    * And provisions to aid in the development of a smart power grid, a system of sensors and communications devices that will enable consumers and businesses to dial back their electricity usage, curtailing its growth.

Curbing the need for new natural gas- or coal-fired generating plants pays off both directly and indirectly. It means fewer new emissions of carbon dioxide -- widely believed to contribute to global climate change. But it also makes it more feasible to meet additional power demands with wind or solar power systems. They might be sufficient to service a relatively small increase in a town or small city's needs. But the only practical way to provide much more power would be to build a large coal- or gas-fired power plant.

To cross the finish line on comprehensive energy legislation this year, Congress will jettison controversial proposals for a cap-and-trade program, intended to curb carbon dioxide emissions. Democrats won't risk a prolonged fight.

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It will be interesting to see the unintended consequences of Congress legislating physics.  We had a preview in the 70s.

[nathanm]

I have no problem with Congress requiring power companies to do what they can on the demand side before building new supply. That's just good sense.

What's not good sense is lumping in transmission with generation. Our transmission facilities are already in dire need of upgrade and modernization. All the energy efficient appliances and insulation in the world won't do one iota to help the transmission issues we already have.