by jboullion | Feb 22, 2010 | Uncategorized
Commentary
by Michael Vickerman, RENEW Wisconsin
February 22, 2010
As the Legislature mulls over the pending comprehensive energy bill known as the Clean Energy Jobs Act (SB 450/AB 649), both supporters and opponents have been keeping their artillery banks busy, peppering the airwaves and cyberspace with press releases, position papers, radio advertisements and economic impact studies. It’s a veritable war of words out there.
In pursuit of the larger objective of undermining public support for that bill, several opponents of the energy bill are attempting to manufacture a controversy out of the State of Wisconsin’s purchasing of renewable electricity, an outgrowth of the state’s current energy policy law (2005 Act 141). That law directed the State of Wisconsin to source 10% of its electrical usage from renewable resources by 2007 and 20% by 2011. In the initiative’s first year, the purchase of renewable energy added $1.4 million, or 1.7%, to the state’s overall electric bill.
The critics, led by Rep. Brett Davis (R-Oregon), contend that the state’s purchase is a budget-straining extravagance that taxpayers cannot afford at this time. In a letter sent to the Department of Administration, Davis insinuated that one of the energy purchase contracts amounts to a sweetheart deal for the utility provider, WPPI Energy, because it charged higher premiums than the other two utilities. Davis has asked the Legislative Audit Bureau to review the WPPI contract. WPPI, it should be noted, is a nonprofit wholesale energy provider serving more than 40 municipal electric utilities in Wisconsin.
Before we plunge into the politics behind this puffed-up molehill, a brief primer little on energy pricing is in order. First and foremost, the renewable energy in question is acquired by the state under long-term contracts that set forth a fixed price. Whether we’re talking about windpower, solar or biogas, the price of that resource remains steady over time. It does not yo-yo up and down the way certain fossil fuel prices do.
By contrast, an unregulated energy commodity like natural gas is especially susceptible to price volatility. Even though natural gas is primarily used as a heating fuel in Wisconsin, its price behavior strongly influences wholesale electricity costs at the margin.
Back when the State of Wisconsin signed its contracts with its renewable energy providers, natural gas prices were significantly elevated. After July 2008, they plummeted, which took the air out of wholesale electric markets. As a result, the cost differential between conventional energy and renewable energy widened going into 2009. But the renewable resources didn’t become more expensive; their costs stayed the same as it was two years ago.
The energy provided by WPPI Energy comes from the Forward Wind Energy Center located in Fond du Lac and Dodge counties. Keep in mind that the Forward project is a local energy source; no state dollars leave the state to procure the electricity. This 129-turbine installation pumps more than $1 million a year into the local economy in the form of land rental payments, local government revenues and maintenance crew salaries. Not a single dollar from the State of Wisconsin stays with WPPI Energy.
The State’s arrangement with WPPI Energy is nothing more than a standard hedge contract. This type of arrangement is common between suppliers of propane or fuel oil and their customers. Those businesses routinely offer their customers an opportunity to lock in a certain fuel price in advance of the heating season. Sometimes it works out for the customer, sometimes it doesn’t. But many customers and suppliers elect to enter into hedged contracts, because both parties can lock in their fuel expenses for the winter regardless of how the energy markets behave.
Yet, if wholesale electricity prices are slumping, then so is the cost of heating buildings with natural gas. According to a recent post by Milwaukee Journal Sentinel reporter Tom Content, residential and business customers are spending 15% to 30% less on heating bills this winter. The primary cause of the reduction in heating bills is the ongoing slump in the price of natural gas.
Content goes on to say that while electric rates rose at the beginning of this year, the savings on the heating side are neutralizing the impact on customer pocketbooks. If you and I and every other utility customer are seeing significant reductions in our heating bills, then it stands to reason that the State of Wisconsin is too. Put another way, the very dynamic that lifted renewable energy premiums last year also lowered energy bills statewide this winter.
Most people expect fossil fuel prices will rise again, and history will not disappoint them. Rep. Davis knows this too, which is why he and every other Republican legislator except one lone dissenter voted in favor of the state renewable energy purchasing initiative four years ago. But the Republicans were in the majority back in 2006, and thus took credit—deservedly so–for their leadership in passing Act 141.
In a further irony, the source of Davis’s ire was a pet policy of a fellow Republican legislator, former representative Scott Jensen. As a member of Gov. Doyle’s Task Force on Energy Efficiency and Renewables, Jensen championed the idea of the state acting as a “model customer,” whose leadership by example serves to educate other customers on the virtues of renewable energy.
But the real reason why Rep. Davis and others have sought to make a federal case out of this molehill is to blow up the Clean Energy Jobs Act bill before it can pass a Legislature that is, this time around, controlled by Democrats. Unlike their rivals four years ago, Republicans don’t see any electoral advantage to working with the majority party on this bill, even though it is clearly the most important economic development initiative that the Legislature will entertain this session.
During most of my 19 years as a renewable energy advocate, there has been an implicit recognition that both parties should share in the risks and rewards associated with something as fundamentally important as state energy policy. But times have certainly changed. Bipartisanship is completely MIA in this debate, as evidenced by the unnecessary and unconvincing posturing over the state’s renewable energy purchase. To echo the great Irish poet W.B. Yeats, the center is not holding.
Michael Vickerman is the executive director of RENEW Wisconsin, a sustainable energy advocacy organization headquartered in Madison. For more information on the Clean Energy Jobs Act bill (SB450/AB649), visit RENEW’s web site at: www.renewwisconsin.org.
by jboullion | Feb 22, 2010 | Uncategorized
From an article by Megan Loiselle in the Wausau Daily Herald:
ROTHSCHILD — A power plant that has its sights set on this village of 5,390 people has some residents singing its praises and others crying, “Not in my backyard.”
WE Energies plans to build a $250 million power plant that burns low-quality and unusable wood and paper waste, powering the Domtar paper mill and providing electricity to homes in portions of Wisconsin. The plant still needs state approval before construction can begin, but WE Energies is hopeful it will be up and running by fall 2013.
About 300 people streamed in and out of a conference room during a WE Energies-sponsored open house Saturday at the Holiday Inn & Suites seeking answers about how the plant would affect their quality of life — and how many new jobs it would bring to the area.
According to WE Energies, the biomass plant would not only create new jobs, it would bring in shared revenue from the state depending on how much energy is created. The project would create 400 construction jobs and 150 permanent jobs. It also will help Wisconsin reach its goal of having 10 percent of all energy produced using renewable resources by 2015 — a goal established in Gov. Jim Doyle’s Clean Energy Wisconsin Plan.
The plant would cut dependence on fossil fuels, reduce acid rain and be nearly carbon-neutral, according to the environmental advocacy group Clean Wisconsin and the U.S. Forest Service.
John Klosinski, 55, of Rothschild said he supports the biomass plant because it will create jobs for people who have been hit hard by the economy.
“I think it’s great,” Klosinski said. “I’ve been working half time for over a year … I’m not concerned about the emissions or the noise.”
About 10 residents stood outside the conference room and passed out information with a list of their concerns about the smell, sound and emissions the biomass plant would bring with it.
by jboullion | Feb 19, 2010 | Uncategorized
From a news release issued by the Center for Climate Strategies:
Implementation of the recently introduced Clean Energy Jobs Act (CEJA) would expand the state’s economy and create thousands of additional new jobs for Wisconsin. These impacts are reported in a recent Center for Climate Strategies (CCS) analysis of the macroeconomic effects of the proposed law, conducted by Michigan State University and the University of Southern California in association with the State of Wisconsin. The analysis focuses on nine proposed policy actions that address clean and renewable energy, energy efficiency, industrial processes, transportation and agriculture.
Based on a state-of-the-art macroeconomic analysis, implementation of these CEJA actions would result in the following outcomes for Wisconsin:
Create a net increase of more than 16,200 new jobs in the state by 2025;
Boost the state’s economy (Gross State Product) by
o $254 million in the near term (2015),
o more than $700 million in 2020,
o $1.41 billion by 2025, and
o $4.9 billion total over the 2011-2025 period.
Reactions to the study: Governor Doyle and CREWE.
by jboullion | Feb 19, 2010 | Uncategorized
From a news release issued by the Center for Climate Strategies:
Implementation of the recently introduced Clean Energy Jobs Act (CEJA) would expand the state’s economy and create thousands of additional new jobs for Wisconsin. These impacts are reported in a recent Center for Climate Strategies (CCS) analysis of the macroeconomic effects of the proposed law, conducted by Michigan State University and the University of Southern California in association with the State of Wisconsin. The analysis focuses on nine proposed policy actions that address clean and renewable energy, energy efficiency, industrial processes, transportation and agriculture.
Based on a state-of-the-art macroeconomic analysis, implementation of these CEJA actions would result in the following outcomes for Wisconsin:
Create a net increase of more than 16,200 new jobs in the state by 2025;
Boost the state’s economy (Gross State Product) by
o $254 million in the near term (2015),
o more than $700 million in 2020,
o $1.41 billion by 2025, and
o $4.9 billion total over the 2011-2025 period.
Reactions to the study: Governor Doyle and CREWE.
by jboullion | Feb 19, 2010 | Uncategorized
From a news release issued by the Center for Climate Strategies:
Implementation of the recently introduced Clean Energy Jobs Act (CEJA) would expand the state’s economy and create thousands of additional new jobs for Wisconsin. These impacts are reported in a recent Center for Climate Strategies (CCS) analysis of the macroeconomic effects of the proposed law, conducted by Michigan State University and the University of Southern California in association with the State of Wisconsin. The analysis focuses on nine proposed policy actions that address clean and renewable energy, energy efficiency, industrial processes, transportation and agriculture.
Based on a state-of-the-art macroeconomic analysis, implementation of these CEJA actions would result in the following outcomes for Wisconsin:
Create a net increase of more than 16,200 new jobs in the state by 2025;
Boost the state’s economy (Gross State Product) by
o $254 million in the near term (2015),
o more than $700 million in 2020,
o $1.41 billion by 2025, and
o $4.9 billion total over the 2011-2025 period.
Reactions to the study: Governor Doyle and CREWE.
by jboullion | Feb 18, 2010 | Uncategorized
From a letter to State Rep. Spencer Black and State Sen. Mark Miller from RENEW Wisconsin:
RENEW is pleased to provide the enclosed copy of the narrative and appendix of tables from an economic analysis that we commissioned.
The analysis concludes that special buyback rates (sometimes called Advanced Renewable Tariffs) designed to stimulate small-scale renewable energy installations would have negligible impact on residential utility bills, averaging about $10 a year. That’s less a dollar a month for the typical customer. And it’s less than a household’s cost of purchasing the smallest block of green power from Madison Gas and Electric, for instance.
Compared with other forms of economic stimulus, promoting small-scale renewables through utility buyback rates would deliver a substantial and long-lasting economic punch with minimal impact on the Wisconsin citizen’s pocketbook.
Prepared by Spring Green-based L&S Technical Associates, the study modeled rate impacts from the legislation’s provisions for ARTs on the state’s five largest utilities. The modeling predicts cost impacts ranging from a low of $8.12 a year for a residential customer of Wisconsin Public Service to as high as $11.07 for a Wisconsin Power and Light (Alliant) customer. The projected impact would amount to $8.81 a year for a We Energies customer, $9.71 for a Madison Gas and Electric customer, and $10.11 for an Xcel Energy customer.
The projections assume that when each utility reaches its maximum threshold of 1.5 percent of total retail sales. In the aggregate, this percentage equates to 1/70th of total annual sales. That’s one billion kilowatt-hours a year, out of total annual sales of 70 billion kilowatt-hour.
Though the principals of L&S Technical Associates serve on RENEW’s board of directors, they have prepared numerous renewable energy studies for other clients, including the U.S. Department of Energy, Energy Center of Wisconsin, and the Wisconsin Department of Natural Resources. L&S has also co-authored renewable energy potential studies in response to requests from the Wisconsin Public Service Commission.
The bill’s renewable energy buyback provisions would unleash a steady flow of investment that would lead to new economic activity and jobs while moving us toward energy independence – exactly what we all hope to accomplish by passage of the Clean Energy Jobs Act legislation.
