Thursday, October 22, 2009

Back to the Future for Energy Policy

By Ed Smeloff and Scott Denman

Too much heat and too little light are being generated right now inside the Washington, DC Beltway on the issue of global warming. Some electric utilities and allies in the coal and nuclear industries claim that only coal or nuclear reactors can meet future energy needs and combat global climate change. They say there is no other way.

However, beyond the Beltway there is clear evidence that there is another way. There is a prosperous new direction – without using more polluting coal or building more expensive, dangerous nuclear reactors.

This “third way” takes advantage of America’s vast – and easily recovered – energy efficiency ‘reserves’ and dramatically expands reliance on a wealth-creating mix of advanced and renewable energy technologies.

Quietly, but steadily, one major U.S. utility, California’s Sacramento Municipal Utility District (SMUD), has spent the last 20 years demonstrating that this “third way” powers economic growth, is easier on the family pocketbook, and slashes air pollution.

Despite its odd sounding acronym, SMUD’s success – now spanning two decades – is a model for other cities, states and indeed, for Congress. SMUD’s path to success began in 1989 when Sacramento voters closed the problem-plagued and expensive Rancho Seco nuclear reactor. SMUD's citizen leaders then embarked on an ambitious and remarkably productive, utility-led, energy efficiency and green energy initiative.

Since the vote to shutdown their troubled reactor, Sacramento’s industries, commercial businesses, residents, and nonprofit institutions, have benefited from consistently lower electric rates than California’s major utilities. Close collaboration with customers is a key to SMUD’s comprehensive energy efficiency programs and renewable energy development, ranging from detailed audits of industrial facilities to incentives for miserly refrigerators and compact light bulbs. SMUD even enabled local manufacturers to “co-generate” electricity for the community together with the steam needed for their industrial processes.

Moody’s Investor Service, Wall Street’s fiscal watchdog of U.S. utility performance, rates SMUD higher than or equal to other U.S. utilities that operate nuclear reactors. In June, Moody’s warned that: “The likelihood that Moody’s will take a more negative rating position for most issuers actively seeking to build new nuclear generation is increasing.”

On the cost side of the energy equation, a new, comprehensive academic report from Vermont Law School (VLS) on the prospective economics of new reactors underscores Moody’s wariness of embracing a new generation of reactors. The study, conducted by Dr. Mark Cooper, found that efficiency and renewable energy cost estimates average 6 cents per kilowatt-hour, while the cost of electricity from new nuclear reactors is estimated in the range of 12 to 20 cents per kilowatt-hour. VLS’s analysis concludes that, “the additional cost of building 100 new reactors, instead of pursuing a least cost efficiency-renewable strategy, would be in the range of $1.9-$4.1 trillion over the life of the reactors.”

Congress and the American people have heard this story before – promises that nuclear power is a solution to America’s energy needs. In fact, nuclear power continues to be a fiscal black hole; looming as a fool’s gold solution to the growing real threat posed by global climate change.

Many states “get it” and are now implementing SMUD-type programs. More than two dozen states have legislated or passed referenda requiring that utilities provide a specific percentage – typically ranging between 10-30 percent of their electricity supply – to be generated by sustainable energy resources by a certain date. Nearly 1,000 mayors of cities like Denver, Chicago, Portland, Austin, and Salt Lake City, representing tens of millions of Americans, have signed the Mayor’s Initiative on Climate Change, pledging to use sustainable energy resources to power their jurisdictions to prosperity.

Nevertheless, Beltway cheerleaders for the nuclear and coal industries are trying to force us, the taxpayers, to give away tens of billions more in shaky loan guarantees. This scheme shifts responsibility for failed nuclear projects onto the backs of the American families and businesses -- despite the conclusion of the Congressional Budget Office that 50 percent of such nuclear reactor loans will likely default.

The nuclear industry and their lobbyists want us to take the risk while they pocket the profits. New nuclear reactors would lead us deeper into national financial debt, and weaken our economy.

Congress must look outside the Beltway and adopt practical and profitable solutions like Sacramento did 20 years ago. It’s time to make energy efficiency, wind, geothermal, biomass, and solar power the cornerstone of America’s energy future.
Smeloff is a developer of utility-scale solar projects for SunPower Corporation and the former president of the Sacramento Municipal Utility District. Denman is an energy policy consultant and the former executive director of the national sustainable energy advocacy coalition, the Safe Energy Communication Council.
Copyright (C) 2009 by the American Forum. 10/09