a non-green argument for efficiency standards, ctd.

Reihan Salam responds to my argument on efficiency standards. He’s not buying my arguments (though I’m not particularly surprised by that).

His rebuttal to my claim that the only way to eliminate the spillover effect where someone else’s consumption affects the cost of my energy:

I think it’s fairly easy to argue for [individual contracting for generation, transmission and distribution services]. In New York city, electricity prices are considerably higher than the national average and this has appeared to have a significant impact on consumption. Granted, it’s not entirely fair, but gas prices also reflect the consumption choices of others and this hasn’t deterred calls for higher gas taxes.

“Fairly easy to argue for” individual contracting of generation, transmission and distribution services? I have to disagree with that. Competition among generators is certainly possible, though historial experience (California in 2001, anyone?) indicates that deregulation of generation sources needs to be carefully managed. My former colleagues Dr. C.K. Woo and Michael King have catalogued the potential costs associated with deregulation in this paper. They’re not guaranteed dealbreakers, but they call into question the efficacy of deregulation.

But individual contracting in the transmission and distribution sectors? I’m not aware of anyone actually proposing this, and frankly, it doesn’t make much sense to me. I can think of two ways that such individual contracting would work: (1) a single transmission/distribution provider contracts with individuals, opening the door for massive price discrimination due to the transmission provider’s monopoly power; or (2) multiple wires companies compete for customers, each operating their own grid. The first option seems likely to just result in massive profits for the companies that have the infrastructure, as they can construct individual pricing schemes to extract as much consumer surplus as possible. The second, meanwhile, seems wildly inefficient and likely to lead to skies criss-crossed with transmission lines if consumers are actually going to have real choices between transmission/distribution companies.

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a non-green argument for efficiency standards

The above chart shows the historical per-capita energy use in California, a state with aggressive appliance standards and energy efficiency programs, as compared to the rest of the United States. This image comes from the California Attorney General's Website (click the image for a larger version).

On January 1st 2012, as a result of a provision contained in the Energy Independence and Security Act of 2007, the U.S. will start phasing out incandescent light bulbs.* This provision has prompted some outrage amongst conservative and libertarian pundits lately as an infringement on the rights of Americans to choose their lighting. Sen. Rand Paul from Kentucky has a somewhat infamous rant against efficiency standards where he discusses the fact that the toilets that he has to buy as a result of government mandates cannot handle the job: he has to “flush them 10 times”, so they’re not even saving water! (One wonders what Sen. Paul is eating to cause such a demanding workload for his toilets.)

Via Andrew Sullivan a few weeks ago, I came across this article by Virginia Postrel criticizing the measure, with approving nods of support from Reihan Salam, Conor Friedersdorf, and Jacob Sullum. The argument against the ban is this (from Postrel’s article):

What matters, from a public policy perspective, isn’t any given choice but the total amount of electricity I use (which is itself only a proxy for the total emissions caused by generating that electricity). If they’re really interested in environmental quality, policy makers shouldn’t care how households get to that total. They should just raise the price of electricity, through taxes or higher rates, to discourage using it.

Instead, the law raises the price of light bulbs, but not the price of using them. In fact, its supporters loudly proclaim that the new bulbs will cost less to use. If true, the savings could encourage people to keep the lights on longer.

A simplification of this issue down to “just raise the price of electricity” indicates, to me, a profound misunderstanding of the way electricity pricing works.

The biggest missed point is that on some level, due to the shared nature of generation, transmission, and distribution resources, electricity must be priced on an average rather than marginal basis. This leads to problems of free-ridership under almost any conceivable electricity pricing scheme. Allow me to attempt to explain.

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badger state recalls

(Image from badassoftheweek.com)

Since the upheaval in the Badger state over the public employee union battle, there have been a number of recall campaigns underway, against both the legislators responsible for passing the law and against some of the members of the “Wisconsin 14”, the state senators that left the state to prevent a vote on the law (which worked until Republicans stopped insisting it was a budget issue that would require a 20 senators quorum). In March, before before Walker had even signed the collective bargaining bill, recall campaigns were launched against all 16 state senators eligible to be recalled.

Wisconsin recall law prohibits recalls within the first year of a legislator’s term, and requires those seeking to force a recall to gather signatures amounting to 25% of the total votes cast in the last gubernatorial election won by in the district of the legislator being recalled. Anyone seeking to recall a legislator must register with the Wisconsin Government Accountability Board, and must gather the required signatures within 60 days of registration.

The 25% requirement means that recall seekers must collect between 13,622 signatures (for State Senator Luther Olsen from District 14) and 24,382 signatures (for State Senator Alberta Darling from District 8) 11,817 signatures (for State Senator Spencer Coggs) and 20,973 signatures (for State Senator Mary Lazich). With the 60 day timeline, that means between 227 197 and 406 350 new signatures per day from people who want their state senator to face another election.

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left on the cutting room floor – stewart and wallace interview

You’ve probably seen the interview Jon Stewart did with Chris Wallace this weekend on Fox News Sunday, either the version that aired (14 minutes) or the complete unedited version (24 minutes). It’s not really a new data point in the Daily Show – Fox News battle . . . Wallace spends the whole time trying to get Stewart to acknowledge what he sees as an obvious truth: Stewart focuses more on Fox News than on CNN or MSNBC because he’s more aligned with them ideologically. Stewart pushes back that while he is more liberal than conservative, he is a comedian before anything. He says that while his ideology certainly informs his comedy, he is much more concerned with the comedy than the ideology.

Last night, Stewart talked a little about the interview on the Daily Show, highlighting the HuffPost’s coverage of it (they put Stewart’s “you’re insane” quote on the front page in approximately size 3000 font) and talking about the differences between the full interview and the version aired on Fox. Stewart highlighted this statement by Wallace, which Fox edited out of their aired version:

Stewart: You believe that Fox News is exactly the ideological equivalent of NBC News.

Wallace: I think we’re the counterweight. I think we’re the counterweight. I think that they have a liberal agenda, and I think we tell the other side of the story.

That’s not an insignificant statement, in that it basically gives away the fact that the whole “Fair and Balanced” thing is a total lie, as Stewart and David Corn at Mother Jones pointed out. But seeing Stewart point that edit out made me wonder what other differences there were between the unedited version and the version that aired on Fox News Sunday. So this morning, I put together this video that compiled all of the segments that Fox edited out.

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it ain’t easy bein’ green, ctd.

(Image from matthewcolvin.wordpress.com)

Last week I posted a critique of an article about wind integration that had shown up in my Twitter feed, shared by David Roberts. The article dismissed concerns about the cost of integrating wind into our energy mix, based on a number of claims that I found questionable. Along with that critique, I mentioned another tweet by Roberts, which directed people to this article claiming that the “cost of adding tons of renewables to the grid has been almost zero, say studies.” This one, like the article on wind integration, raised some red flags based on my experiences over the last four years doing energy consulting.

The article is basically a Huffington Post-style repackaging of another piece from the Midwest Energy News (MWEN), which asked whether renewable portfolio standards were driving up energy rates. This article, which focuses specifically on Midwestern states, concludes that

the most comprehensive studies to date and the experience of utilities so far suggest that, by and large, renewable portfolio standards haven’t had a significant impact on customers’ bills. Still, there’s room for more study, and in some states, including Minnesota, there remains relatively little data about the ratepayer impact of renewable policies.

This conclusion acknowledges that there are plenty of studies on either side of the issue, and specifically mentions the following data points:

  • Minnkota Power locked in wind contracts to cover its renewable energy needs for 25 years when Minnesota’s Renewable Portfolio Standard was passed in 2007. Since then, demand and market prices have both decreased, and it now has a surplus of wind that it is selling at a loss. According to the article, Minnkota is “making up the difference with with a half-cent per kilowatt-hour surcharge on its customers.”
  • A 2008 Lawrence Berkeley National Lab study found the rate impacts of RPS programs in force in 2007 to be near or below 1% for the 12 states in which renewable energy credit (REC) prices could be used to estimate those impacts. LBNL is updating the report but does not expect the conclusion to change.
  • A 2009 EIA study on a national RPS that MWEN said “projected no impact on rates through 2020, followed by a less than 3 percent increase by 2025. By 2030, however, it projected little difference in rates with or without a national renewable mandate.” More on this study below.
  • A Minnesota Free Market Institute study that estimated a rate increase between 9% and 37% depending on the assumptions. This study criticized the EIA resource cost estimates as “a rather optimistic picture of the cost and generating capacity of renewable electricity, particularly for wind power.” More on this study below as well.
  • Xcel Energy estimates a $0.003/kWh increase in 2025 from complying with Minnesota’s RPS, compared to the case in which it stops adding new wind capacity in 2012. Xcel projects 19% of its load will be met by renewables in 2012, most of the way to its 30% requirement in 2020, though that percentage will decline as load grows from 2012 – 2020.
  • Representatives from Otter Tail Power and Minnesota Power estimated that renewable additions to date did not have a significant impact on power costs.
  • Great River Energy in Wisconsin estimated a 1.8% rate increase due to wind energy purchases.

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it ain’t easy bein’ green

If you’re interested in energy and climate issues, then you should definitely check out the writing of David Roberts at grist.org, a news/blogging site that focuses on environmental issues. I don’t always agree with him, but I find that his analysis is usually insightful and his twitter feed is full of links to great articles, both his own and others’.

That’s why I was so surprised to see two successive tweets last week that (in 140 characters, no less) raised some major red flags about renewable energy in the U.S. The first claimed that the intermittency of wind resources is “NOT a big deal”:

The second seemed to downplay concerns that renewable energy requirements in states around the nation would lead to increases in energy costs:

Now, Mr. Roberts is not the author of either of the articles to which he linked, but by sharing them to his 11,000+ followers, he’s certainly giving them his endorsement. Which is why I was disappointed to find, upon reading them, that neither of them is a very good analysis, and both downplay some very real issues that will have to be dealt with as renewables become a larger part of our nation’s energy mix.

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coming attractions: the badger state

(Image from sazs.com)

Herb Kohl, the senior Senator from Wisconsin (and my former employer*), has announced that he will not be seeking re-election in 2012. Senator Kohl has, for as long as I can remember, been content to quietly pursue his legislative priorities while letting Feingold take the lion’s share of the Wisconsin Senator media coverage. However, this is not to say that Kohl is unpopular: he has won by increasingly large margins in every election since his first in 1988.

The question becomes, who will replace him? With the liberal bastions of Madison and Milwaukee, and the conservative nature of the rest of the state, Wisconsin elections are always a toss-up. In the most recent Senate election, Republican Ron Johnson ousted incumbent Russ Feingold (much to my chagrin), ending 18 years of two Democratic Senators. Kohl’s seat has been occupied by a Democrat since 1957 (though only by two men, William Proxmire from ’57 to his retirement in ’89 and Kohl from ’89 to current), while Feingold’s seat has alternated between Republicans and Democrats (not necessarily by term, but without any retirements) since 1927. If a Republican wins the 2012 election, it will be the first time since Proxmire’s election in 1957 that Republicans have controlled both Senate seats in Wisconsin.

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