Wednesday, December 13, 2006

NIMBF and electricity prices...

A funny thing happened on the road to electricity deregulation. No - not Enron. I'm talking about the fact that all the schemes to allow users to select from multiple suppliers depended on a national electric grid that could deliver power from anywhere to anywhere. It seemed like such a great concept...

But like our roads and bridges, those transmission lines are clogged to the point of heavy congestion charges being levied in some areas. And the outcome has not met expectations, to say the least.

So why don't we build more transmission lines? Hmmm, let's guess.

The Energy Policy Act signed by President Bush last year seeks to speed construction of transmission lines by preventing state and local officials from blocking lines, or even influencing where they are built.

A federal proposal to invoke these restrictions for a proposed high-voltage line through the Allegheny Mountains in Virginia has generated hundreds of complaints. Business owners, local officials and refugees from big cities said it would be irresponsible to mar their mountain vistas and small towns with a row of 17-story steel skeletons supporting the lines.

Protests are also expected against proposed transmission lines from two nuclear plants in Arizona to Southern California and against a 1,000-mile line that Arizona Public Service plans so it would be able to cool Phoenix with electricity from wind farms and coal-fired plants in Wyoming. [More - great article]

There is strong disconnect for most of us to the benefits we enjoy here in the ol' US of A and the costs of same benefits. largely I think this is because often you can skate by with some other sucker picking up the tab. Nowhere is this more easily seen than when siting public utilities or highways.

Power lines don't need a whole bunch of acreage, and it could just as easily be on your neighbors land as yours, so why not pull in every political favor and stalling tactic to prevent becoming the fall guy. Farmers can often be strong opponents of power lines even when faced with a relatively small impact compared to residential of small business owners whose entire home or business may be in the way. We have our own Not-In-My-Back-Forty attitude to match those who don't want a CAFO sited, for example.

This is America, and so we can take action to prevent needed progress. And boy, do we ever!

Meanwhile the backlash from higher prices is growing and the political change in Washington could radically subvert this experiment in free enterprise. Much as I support the idea, I would have to say the execution of this effort to bring market forces was badly botched. The grid may be the least of our problems. For example, without a robust grid new power plants will have to be sited near population centers, and with nuclear power suddenly looking like a stroke of genius again, we won't be able to site them in less conspicuous locations like Wyoming or Oklahoma. That will slow things down a tad.

Enron was just the first sign of bad management of this transition.

I think we're about to take a step backward in energy economics, and to free market supporters I gotta say:

We had our chance and we blew it.

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