The Tyranny of the Or

Inconsistent Regulation Negatively Impacting Energy Supply Portfolios

We seem to live in a time of profound division.  As the US Congress wrestles with how to keep the nation open for business, we find our elected representatives lined up neatly on each side of the aisle proclaiming, “it is either my way or I will refuse to sign.” In Minnesota, where I live, the state government is essentially shut down for a similar lack of agreement regarding the budget. Interestingly, in Minnesota, the courts have declared certain services “essential” and required that they be funded.  While that makes perfect sense to me, it does leave me wondering when and why Minnesota started burdening taxpayers with non-essential services, but that is a topic for another blog. Lately, it seems that our industry is not much different, especially related to issues regarding energy supply and environmental concerns.

We have those who favor fossil fuels lined up across from those who prefer renewable energy with each side proclaiming “it is either my way or…prices will increase so much that only the rich will be able to afford electricity, or we will lack quality air and leave a poisoned environment for future generations and we will all suffer a horrible death as the planet loses the ability to sustain life.” It is disturbing how quickly we turn to extremist – and unsupported – positions when trying to make our points, both as a society and as an industry. Overall, I find it myopic and unproductive.

The truth of the matter is that electricity is quite reasonably priced throughout the entire country, though certain segments of the country do pay more than others. The good folks at Build Energy America did a terrific job of outlining this fact in their recent publication, “Electric Values: Ten Quantitative Analysis Challenging the Myth that Electric Bills are High and Going Up, Up, Up.” The full publication can be found here and I highly recommend it: http://www.buildenergyamerica.org/_ElectricValues_.pdf.

As outlined in their comprehensive study, electric bills are quite reasonable and have lagged the rate of inflation for many years. Some increases, even dramatic increases from the current levels, would not leave electricity as a convenience only for the rich. There are vast segments of our society who pay as much or more for their daily coffee (or beer) than they pay for their daily electricity. By any standard of measure, electricity is a great value and has helped sustain the economic vitality of this nation – and will continue to do so even if we have to forego a coffee or a beer to pay the increased costs that may or may not occur.

Similarly, those who disfavor fossil fuels and beat the irrational drum of imminent global disaster if coal plants are allowed to continue operating are equally misleading. The truth of the matter is that even the experts don’t agree on the science and, as a result, framing environmental policy is a difficult endeavor. The rules whipsaw back and forth depending upon the political flavor of the day and the political party sitting at the head of the EPA. It is an absurd way to run a country and a tyrannical way to regulate an industry, especially an industry that is tied so tightly to our economic vitality and way of life.

We need the nation and the industry to be guided by those who can recognize and support rational long-term views and without being tied to political agendas. The energy supply issues in this country grow more urgent each year and we need a comprehensive strategy to resolve them. Energy supply is made most efficient when planned over the long-term and that has been impossible for an industry that is guided by inconsistent regulation. Where there are abundant renewable resources, our society needs to find a way to leverage them. Similarly, where there is an abundance of coal or other fossil fuels, we would be irresponsible to not leverage them for our energy needs.

I live near the Buffalo Ridge in Minnesota and it happens to be one of the windiest places around and, of course, is now one of the largest wind farms in the nation. It would have been ridiculous not to capture that natural resource, not unlike how we built out hydroelectric generation decades ago. Similarly, it is silly to not leverage fossil fuels when and where they are abundant, such as the massive quantities of coal and natural gas that exist within our borders. Mankind will not become extinct if we do.

Of course, all of our efforts should be guided by reasonable approaches to extracting those resources. But, we should never attempt to frame the energy supply issues as either alternative A or alternative B. Doing so reflects a lack of understanding of the complexity of the issues and, in the case of our elected leaders and regulators, it demonstrates an inability to properly govern and regulate. We need them to be better and they need to stop kicking the can down the road to the next administration or agency leader.

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