Energy bill: tilting at windmills 

Green may be in vogue, but that doesn’t mean utilities want the government forcing them to build windmills.

It could happen. Rep. Tom Udall, D-N.M., proposes making the biggest utilities across the nation acquire 20% of their electricity from renewable energy sources like wind, solar and geothermal power by 2020. The plan is gaining momentum as the House of Representatives readies for debate on a massive energy bill this week.

“We’ve had growing support over the last 10 days,” says Udall, noting the proposal’s 150 co-sponsors and support from House Speaker Nancy Pelosi, D-Calif. “I think we’re coming very close to the numbers in terms of our count, but the leadership’s working very closely with us.”

Last month a similar proposal by Sen. Jeff Bingaman, D-N.M., in the Senate’s energy bill died due to a razor-thin procedural vote. But things could be different this time around. On Friday, the wind energy industry, which would be the biggest beneficiary of the national standard, launched a media blitz to try to sway at least 11 key members of Congress to vote for Udall’s plan. Sources say President Bush is not likely to veto bipartisan energy legislation over the renewable standard.

Greg Wetstone, a lobbyist for the American Wind Energy Association (AWEA), is optimistic that the renewable standard will pass, but he acknowledges it won’t be easy. “There’s a lot of well-financed opposition,” he says.

Wetstone is referring to the Edison Electric Institute (EEI), the powerful industry group that represents investor-owned utilities like Southern Company and American Electric Power –both of which are against the standard for renewables.

“We are concerned that people would think they might just want to take a green vote,” says Tom Kuhn, EEI’s president. He argues that a national standard “makes absolutely no sense” because it would be too costly to customers of utilities in some regions of the country.

The issue is of particular concern to utilities in the Southeast, like Southern, which argue that there is simply not enough wind energy in the region to warrant a mandatory standard for renewables. Those utilities and EEI say electric companies that can’t meet the mandate will pay expensive fees. Last month Sen. Pete Domenici, R-N.M., who opposed the renewable standard in the Senate, said a national renewable standard would cost $175 billion through 2030.

In addition, 24 states and the District of Columbia have renewable standards in place. Opponents of Udall’s plan argue that state-tailored plans are better for utilities and worry that a national mandate would pre-empt the standards in place. Utilities also would have to make significant investments in power lines to get wind energy and other renewable sources from remote areas to people’s homes.

Nonsense, says Udall. “I think that utility companies are finding that this is easier to do than we thought,” he says, noting that utilities in New Mexico and Colorado have met their renewable standards early.

AWEA points to a February study by the independent energy-consulting firm Wood Mackenzie, which concluded that over the next 20 years a renewable standard of even 15% would lead to a “savings of $240 billion [2006 dollars], outweighing the higher capital investment.”

Even if Udall’s amendment falters during this debate, he’ll get another swing. This fall the House is scheduled to take up climate change legislation, and he says that he’s willing to try to fit the renewable energy standard into that measure if necessary.

“The typical thing that you hear in Washington is ‘We can’t do this. We can’t do this,’ ” Udall says. “But this is one I think that they can do.”

By Brian Wingfield

Forbes

30 July 2007