Energy Policy and Congress

A key difference between the Congress and EPA plans is that the latter seems to allow more for regional differences in energy markets and also to rely more on states, divided into five regions, to make the necessary government interventions. As the name implies, the EPA plan also emphasizes conservation and energy savings rather than changes in the supply infrastructure. It also makes provision for valuing the reductions in energy usage in terms that can be translated into capital gains for all stakeholders based on new financial models yet to be developed. This feature is important as it tends to remove or at least mitigate the emphasis on reduced profits resisted by suppliers in the Congressional plan.

The report cites these benefits to its recommendations: “Customers across the residential, commercial, and industrial sectors would have ready, uniform access to comprehensive energy-efficiency services across the country. These services would bring a range of efficiency improvements to homes, buildings, and facilities, and reduce customers’ bills below what they would have been without these programs. Customers would also have clear information on the cost of energy and increased awareness of their total energy use. In addition, new, efficient appliances and other equipment will help to control the peak demand of utility systems and give large customers greater flexibility in how they manage and control their own operations to reduce energy use, reduce costs, and increase their own competitive positions. New homes and buildings would meet up-to-date energy codes … By 2025, the energy system would focus on providing energy services rather than energy supply, energy providers would see energy efficiency as an important business area, a vibrant energy-efficiency services industry would be in place, there could be greater reliance on clean distributed generation, and the system would be modernized to facilitate appropriate price signals and digital communication, analysis, and system control. It would be very different in terms of how consumers receive and value energy services.” Sounds good, doesn’t it?

The problem, as I see it, is one that plagues most government programs. There is a big gap between planning and implementing. The EPA study group recognizes that many existing federal energy programs and all the states would need to be focused toward a common objective – something that has proven to be daunting in the areas of Homeland Security and intelligence. Managers of existing programs, such as the EPA ENERGY STAR® program for efficient appliances, would need to subordinate their organizations to the larger whole. Organizations that do not presently cooperate with each other would need new connections and communications channels. Money that is channeled separately to different agencies may need new forms of appropriations.

Unfortunately, the EPA’s solution for such problems is yet another plan. It is titled National Action Plan for Energy Efficiency and was issued in July 2006. That was a year ago. (Since it is 216 pages long, you just may want to read the executive summary.) Its stated goal is “… to create a sustainable, aggressive national commitment to energy efficiency through gas and electric utilities, utility regulators, and partner organizations … Bringing more energy efficiency into the nation’s energy mix to slow demand growth in a wise, cost-effective manner – one that balances energy efficiency with new generation and supply options – will take concerted efforts by all energy market participants: customers, utilities, regulators, states, consumer advocates, energy service companies (ESCOs), and others.” I hope you get the picture, because this is an example of circular reasoning. You end up right where you started because everyone wants to protect their own interests.

The bottom line is that energy efficiency is likely to begin and continue in your own organization – or not – no matter what government does. In free capitalism, demand always drives supply. When building owners and managers can calculate the financial benefits are worth the investments in implementing the best energy-efficient technology available in new-building construction as well as energy reduction in existing buildings, it will get done. Until then, Washington may produce yet another energy policy that fills up many pages, which are likely to be most highly valued by the people who write them.


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