By Wallace McMullen
Will the Environment be at risk?
A battle in the legislature concerning electricity may have major environmental and cost effects for Missourians. Large industrial users such as Boeing, Anheuser Busch and General Motors want the regulatory structure changed so that they can use their buying power to get electricity at a lower cost. Restructuring, or deregulation of the electric industry could have major environmental impact because our big electric utilities emit major amounts of airborne pollution from their generating facilities. EPA and the Missouri Department of Natural Resources (DNR) estimate that coal burning electric utilities in our state put out more than 80 million tons of carbon dioxide and over 60 million tons of Nitrogen oxides (NOx) per year. Carbon dioxide is a greenhouse gas, contributing to global warming; NOx cause acid rain, smog, and harmful deposits in water bodies.
Cheap Coupled with Polluting?
The restructuring of the electric power industry could be potentially very detrimental to the environment and small consumers. Utility companies might be able to evade environmental concerns under the guise of being competitive, despite the social costs and adverse environmental impacts of generating and selling electricity at the lowest dollar cost without concern for the long term effects involved. Big industrial electric consumers want to get the lowest price possible on the electricity which they consume, and from the utility point of view, big customers with a consistent demand for electricity are more desirable than small residential consumers who have great variation in their seasonal consumption of electricity. The result of these factors in a deregulated retail market structure might give the big customers lowered costs, and produce higher charges per unit for the small customers. This would especially hurt residential ratepayers with limited income. On the other hand, environmentalists are hoping to get some environmentally friendly provisions enacted as part of the re-examination of the electric industry that the debate over restructuring has produced. The major themes are encouraging use of renewable energy sources, especially wind and photovoltaic generation , and reducing the consumption of fossil fuel. Policies that reduce the need for fossil fuel consumption prevent pollution.
Net Metering
Homeowners who invest in solar power from photovoltaic cells or a small wind generator at their home soon discover that Missouri has no law about how utilities should deal with the situation of a residential ratepayer who might be able to run their electric meter backward a few hours a month. Common sense would lead us to expect that one could get a credit for home generated electricity, that the credit would be deducted from the bill for electricity consumed, and that the utility would tally up a balance sheet per month, or perhaps per quarter. This concept is called net metering. Net metering legislation has passed in other states, usually establishing a system for credit to residential ratepayers for generation from renewable sources they have installed, and has usually dealt with two other issues that can bedevil solar and wind power enthusiasts: insurance, and interconnection requirements. Some utilities have demanded huge amounts of liability insurance as a prerequisite for connecting small-scale generation to their system. Also, they can impose difficult equipment requirements for making an interconnection between a home and their supply grid. Net metering legislation usually creates reasonable standards for both issues. The Solar Energy Industries Association (SEIA) has developed a model law for net metering and interconnections standards. If such legislation was enacted in our state, it would be a significant step toward encouraging widespread use of solar and wind power in Missouri.
Green Choice and Green Certification
Some enlightened consumers want to purchase "Green Power" that has been generated from a renewable source and are willing to pay a small premium to their utility, perhaps $5 a month, to get it. A related issue is "How much pollution is associated with the electricity supplied by a specific retailer?" since each supplier will probably have a mix of coal, natural gas, nuclear, and perhaps renewable generation in the electric power they supply. The Sierra Club will push for "truth in advertising" provisions that inform consumers about how much pollution is associated with the electricity they purchase, and also for big utilities to be required to provide their customers a "Green Choice" option. UtiliCorp is now offering a Green Power option for wind power in their Missouri and Kansas service areas.
Renewable Portfolio Standard
We need to end reliance on fossil fuels and nuclear generation sources, and develop sustainable alternatives for supplying electricity. The necessary technologies are in place. But the playing field is not level: fossil fuels get government subsidies, and tax incentives in a variety of ways, plus moneys for research and technological development. Oil exploration subsidies, federally funded research, and legal structures that favor established industry are in place and ongoing. One way of aiding renewable sources and enabling sustainable types of generation is to establish a requirement that a small percentage of the market be given to sustainable, renewable sources of electricity. Most proposals increase the requirement incrementally for 15 or 20 years, to a target of about 7.5% of the market. Establishing such a requirement would be a major boost to developing new sustainable generating capacity which will then have a secure market. Once utility scale renewable sources are established, they could eventually supplant current fossil fuel power sources. A requirement that a small percentage of the electricity sold be generated by renewable sources has been termed a Renewable Portfolio Standard (RPS). States that have already passed a RPS have included wind and solar power, and sometimes biomass and hydropower as forms of generation that meet the requirement. Generation from burning biomass has become controversial because the emissions from burning can be harmful. Big dams for hydroelectric generation can also have a major environmental impact, which makes them questionable as desirable sources of electric power.
Legislative Activity
The legislature's Joint Interim Committee on Telecommunications and Energy held monthly hearings in the fall of 1999 on topics pertaining to electric restructuring. Senator Wayne Goode drafted a bill on the subject, and has solicited comments from interested parties. Also, last session Senator Goode introduced a bill creating a revised tax structure that would accommodate electric industry restructuring, which passed the Senate. Some developments have indicated momentum toward the legislature passing electric industry restructuring in the forthcoming session. Last year AmerenUE had their own proposal about the new structure that they favored, with other big firms taking a different approach. Now AmerenUE has joined with the approach of the Missouri Industrial Energy Consumers Association, made up of firms such as Boeing, Ford, GM, and Anheuser Busch, and they are united in pushing for deregulation now. On the other hand, Missouri presently has lower rates than states which have tried deregulation which encourages policy makers to proceed carefully, and avoid messing up a structure that is working acceptably in its present form. The association of rural electric cooperatives has opposed restructuring, and this is an election year, which tends to stymie controversial proposals. Readers who want to follow developments on these issues can subscribe to the Green Report, which covers activities of the legislature, by contacting the Ozark Chapter office. More information on electric utility industry restructuring can be found in a previous articles.