Thursday, July 26, 2007

Electrical Storm-Lights Out Reviewed in the WSJ

Mr. William Tucker, whose own book, titled Terrestrial Energy: Rethinking Nuclear Power in the Era of Global Warming will be published next year by Farrar, Straus & Giroux, reviews both Lights Out and Phillip F. Schewe's The Grid in the July 21, 2007 edition of the Wall Street Journal. All in all, I was very gratified by his comments, although I was a bit puzzled by why he identified me as the founder of the newsletter Common Sense on Energy and Our Environment. I am, but the publication has been defunct for over a decade. (More on Common Sense at another time.) Mr. Tucker talks about Mr. Schewe's description of Edison getting the Pearl Street Station up and running, but neglects to mention that our company is named, uh, Pearl Street.

I would, however, like to address several points he makes where I believe he mischaracterized my views.

On deregulation. Mr. Tucker writes that,
"Like many engineers, he [me] is nostalgic for the days of regulated monopoly, when the utilities built what the state approved at a guaranteed profit.The 1990s deregulation, he [me, again] charges, is at fault. But it is precisely because transmission lines are still not privatized -- serving instead as "common carriers" -- that this tragedy of the commons is occuring.
It's not so much that I long for the good ol' days of regulatory supremacy or that I think that deregulation, per se, is at fault here, but rather that I take issue with the manner in which deregulation unfolded. Most deregulatory plans were, in a word, dumb. And, in another word, shortsighted.

For instance, in one of the more egregious aspects of so-called deregulation, electricity rates were FROZEN in some states and reduced in others (in my opinion to show that deregulation was "working") and are only now catching up (in great leaps and bounds) to reflect actual market rates. Maybe I missed something in Econ 101, but I don't see how freezing or reducing prices unleashes positive market forces or changes consumer behaviors. (And, if I can toot my own horn here, I predicted this precise scenario way back when I was still Editor-in-Chief at Power magazine.)

Because of the way deregulation was conceived and implemented by state governments, transmission became the ugly one wanted to give her a second look, let alone invest billions of dollars, spend gazillions of hours fighting property owners and untangling redtape state-by-individual-state, just to try to dress her up and get her ready for the big dance. Transmission, as an investment, just wasn't very attractive.

As I write in the book,
Market activity and trading didn't cause a third-world grid. The way deregulation and competition unfolded simply made it much easier to make the big bucks from other parts of the value chain. And who wants to invest in something with a low return when there is an opportunity to be had over on the other side of the value chain?
But that doesn't mean that I believe competition is right for the whole system. There should be a "backbone" electricity generation/transmission capability that is regulated/monitored/secured by our government in case of national emergency and to provide a basic level of service to all consumers. My point is that the backbone shouldn't be subjected to unbridled competition, but careful competition with federal oversight. Competition is fine for some parts of the system and large customers buying at the bulk rate, but when our national interests are at stake, and consumers are affected, the backbone must be online, all the time.

On EMF. Mr. Tucker mentions the link (unfounded and overwhelmingly refuted) between transmission lines and cancer and notes that protests have often succeeded in stalling transmission installation, However, I don't think I mention EMF at all, and if I do, it is in passing...very quick passing. There are many more important problems with transmission siting than EMF. That problem is so last decade.

On distributed generation. There are several chapters in which I discuss distributed generation, but although Mr. Tucker writes that I demonstrate why backyard windmills and homefuel cells will not render utilities obsolete, I also write:
“The right side of the value chain requires a much greater emphasis on integrating generation, storage, grid interface equipment, and intelligent meters at consumer sites into an intelligent microgrid….To the extent possible, distributed microgrids should be based on renewable power systems—such as roof-mounted solar photovoltaics or small wind turbines on top of tall buildings.”

All in all, it was a very gratifying review. And if you're out there, Mr. Tucker, I'd like to buy you a beer and talk transmission.

If you have read the book, or are preparing to, please download the Lights Out Discussion Guide. We'd love to hear from you!

1 comment:

Joel Deguito said...

Nice website related to my website
I'm jojo from philippines wanna be your blogs team since we have the same lines. I working as a distribution engineer my task is to make design and estimate for transmission and distribution line.

tnx. jojo