National energy plan may hurt Southeast

By ROSALIE WESTENSKOW, UPI Energy Correspondent   |   Feb. 10, 2009 at 6:32 PM   |   Comments

Congress has resurrected a mandate for clean electricity that could boost energy security and the environment, but opponents say it will transfer wealth from some states to others.

The legislation would establish a Renewable Energy Standard, requiring 20 percent of the electricity provided by U.S. utilities to come from renewable sources by 2020. The idea isn't a new one, but legislation over the past four Congresses hasn't passed both the House and Senate.

With a new administration in the White House and concerns about climate change and energy security climbing, RES proponents hope this year will be different, particularly Sen. Jeff Bingaman, D-N.M., sponsor of the current proposal, longtime RES supporter and chairman of the Senate Energy and Natural Resources Committee.

"The reasons to pass such a provision are as compelling as ever, if not more so," Bingaman said at a committee hearing Tuesday, adding he believes the bill finally has the votes it needs to become law. "Such a standard diversifies our resource base, lessening the effect of supply disruptions or shortages, creating greater economic stability."

The bill also would create jobs in the green power technology, manufacturing and production industries and lower the price of fossil fuels by decreasing demand, Bingaman said.

Opponents argue these economic advantages would benefit only some states, while plunging others even further into the current recession, because renewable resources are not distributed equally throughout the country.

"In particular, my state, South Carolina, does not possess a wealth of renewable energy sources, such as the abundant solar energy that is available to states in the desert Southwest, the wind turbine generation available to states located in the Great Plains, or the hydro generation in the Pacific Northwest," David Wright, president of the Southeastern Association of Regulatory Utility Commissioners, told senators Tuesday.

Producing renewable energy from wind, solar or hydropower in the region would be more costly than in areas where these resources abound.

Data from the Environmental Protection Agency show that current voluntary renewable energy programs already offered by utilities across the country range greatly in price from state to state. While the cheapest program in South Dakota, which has significant wind potential, charges customers 0.5 cents per kilowatt-hour for clean electricity, the cheapest in Alabama is 2 cents/kwh. In Louisiana it's 2.5 cents and in South Carolina it's 3 cents.

In addition, the poverty rate in the South is the highest in the nation -- 14.2 percent in 2007 compared with the national average of 12.5 percent, according to the U.S. Census Bureau. If the RES causes utility prices to rise in the region, as its opponents predict, many people may not be able to pay their monthly bills, Wright said.

The region does have significant biomass resources, particularly in its forests, but the current wording of the RES will severely limit how much of this will count as a renewable resource, said Scott Jones, vice president of the Forest Landowners Association, a non-profit organization.

Because the bill's biomass definition includes only waste materials, such as crop residues or wood waste from construction sites, forest landowners in the Southeast and other areas will not be able to significantly contribute to the RES, Jones said.

"In a mosaic of energy sources, where each region of the country produces energy from its own, best indigenous resources, we seek a level playing field for wood," Jones said. "This level field-of-play will bring the same jobs and new local tax bases to forested regions as other regions will potentially enjoy."

As a result of these factors, utilities in Southeastern states will be forced to purchase renewable energy from other regions of the country, RES opponents said at Tuesday's hearing.

Although it can be fairly economical to produce renewable energy if it's generated close to electricity consumers, the nation's antiquated electric grid makes it expensive to transport it long distances, said Lester Lave, an economics professor at Carnegie Mellon University.

"The transmission itself would more than double the cost of getting it (across the country)," Lave said.

Supporters of a federal RES counter this is a moot point. Southeastern states could fulfill their RES obligation by buying Renewable Energy Certificates, in essence a credit of green energy, which cost the same amount no matter where the buyer lives, said Don Furman, senior vice president at Iberdrola Renewables, a company based in Portland, Ore., that develops and operates renewable energy facilities.

"Someone in South Carolina can buy that REC for the same price as anyone else," Furman said. "It's very egalitarian."

RECs circumvent the transmission problem because the purchaser doesn't necessarily use the actual energy represented by the certificate.

"It just means that we generate the power, put it on the grid and sell that REC," Furman said. In other words, purchasers support renewable energy by buying RECs, thus increasing the total amount of green power on the grid, but the actual electricity running their homes can come from a different source.

Even if RECs cost the same amount everywhere in the country, though, it will still hurt those in the Southeast because the money they use to purchase the certificates will leave their states and communities and go to renewable energy projects elsewhere, said Sen. Bob Corker, R-Tenn.

"To say that it's not a transference of wealth for (Southeastern states) to have to buy certificates to meet a standard and send that money to (other states) is just not true," Corker said at Tuesday's hearing.

The demand for renewable energy will also increase demand for equipment, which can benefit states regardless of their access to renewable resources, said Sen. Debbie Stabenow, D-Mich.

"There are 8,000 parts to a wind turbine, and we can create every one in Michigan," she said.

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