Short Circuiting Our Energy

How Dept of Energy (DOE) plans will raise your energy prices, jeopardize energy

reliability, reduce consumer choice, and increase wasteful federal spending

Presentation Overview• Obama’s State of the Union message on energy

• How DOE will deploy clean energy

• A review of energy sources and costs

• Impact of regulations, subsidies and loan guarantees

• DOE 2011 objectives and budget

• Snapshot of legislative activity

• What we can do

• Questions and Answers

Obama’s State of the Union Address

• Clean energy means national security, protects the planet and creates countless new jobs

• Reinventing policy to make achieving 80% energy from clean sources the “space race” of our time

• Goal of one million electric vehicles on the road by 2015

OBAMA’S DOE MANDATE• Using the Clean Air Act and the Energy Independence and Security Act of 2007 (EISA)

• Requests EPA and the NHTSA to–make new rules on fuel efficiency and GHG emissions standards for• commercial medium- and heavy-duty vehicles beginning with model year 2014

• light-duty vehicles of model year 2017 –review current non-GHG emissions “as part of a comprehensive approach toward regulating motor vehicles”

• Requests the Secretary of Energy –Promote the deployment of electric vehicles

Source: Obama Presidential Memorandum to Secretaries of Transportation, Energy, EPA, National Hwy Traffic Safety Administration – May 21, 2010

Impact

• CAFÉ standards (corporate average fuel efficiency – the average fuel efficiency of a car manufacturer’s product line for passenger and light trucks)

– Current goal: 35 mpg by 2016– EPA’s new goal: 62 mpg by 2025

• Center for Automotive Research: increases cost of a vehicle by more than $9,000 by 2025

Source: National Taxpayers Union “Is a Hidden Tax on Cars, Trucks and Tractors and Other Vehicles Just Around the Corner?” – March 15, 2011

Electric CarsPros• Low emissions• Fuel savings• Quiet • Gov’t incentives

Cons• More expensive purchase price ($3,000-8,000)• Maintenance costs

– Battery life: 3 years (lithium a fire risk when overheated)– Replacement battery: $8,000 plus disposal cost– Hard-to-find repair shops

• Shock hazard, esp in accident• Not suitable for snowy or flooding areas• Quiet • Plug-in models

– Home charging units $1000-2000 plus installation, circuit upgrades, metering

– Range anxiety

Taxpayers foot $2,500-$7,500 for every electric vehicle purchase.64% of Americans say they’re not likely to buy an electric car in the next 10 years.

GSA stated US gov’t bought 25% of GM/Ford hybrids in 2010.

Source: Rasmussen poll - 1/25/11; Heritage Foundation; George C. Marshall Institute “Electric Cars” Dec 2010; various

Four Tactics to Deploy Clean Energy• Former Assistant Energy Secretary Cathy Zoi

– Four tactics for green energy projects• Government subsidies for private-sector• Special tax incentives • Low-interest government-backed loans • “The fourth one, which the secretary and I love,” said Zoi, “is

where we have a mandate. Where we can actually just issue regulations and do market transformation.”

Source: CSNNews.com – “ Energy Department Says It Has ‘Mandate’ to Force ‘Market Transformation’ for Household Appliances – Sept 17, 2010

OBAMA’S DOE MANDATEUnder the Energy Policy and

Conservation Act of 1975 (EPCA), the Department of Energy (DOE) is required to

establish by certain dates energy efficiency standards for a broad

class of residential and commercial products. These products are appliances and

other equipment used in consumers' homes and in

commercial establishments.

Source: Obama Presidential Memorandum to Sec. of Energy - Feb 5, 2009

New DOE Regulations• DOE has issued new efficiency standards for more than 25 different products

and still more are on the way

• Appliances covered– Water heaters and furnaces – Showerheads (limited to 2.5 gal per min – even if two or more showerheads)– Refrigerators, dishwashers, microwaves, ovens and ranges – Central air conditioners and window units and gas-fired wall, floor and hearth heaters – Beverage vending machines and commercial clothes washers – Small electric motors, battery chargers, general service lamps

• Changes energy efficiency measurement system to include “full fuel cycle” analysis including greenhouse gas emissions

– Requires greater and greater use of estimates and approximations, which at some point introduce a false sense of precision. For example, the effort to calculate the imputed ‘social cost’ of each ton of carbon emissions actually introduces more uncertainty and confusion into the rulemaking process.”

- Testimony of Kenneth Barker, on behalf of Edison Electric Institute

Source: Competitive Enterprise Institute – “How Obama Is Invading Your Home” - Oct 11, 2010

Consumer Impact• Will raise the price of appliances (often by more than energy savings) and

some will perform more poorly– Water heaters

• Energy Department estimates cost of compliance will hike water heater prices from $67 to $974 depending on the size

• “Electric resistance water heaters with a capacity of more than 55 gallons no longer would be available after 2015” – Edison Electric Institute

– Washing machines• Consumer Reports - several ultra-efficient models "left our stain-soaked swatches

nearly as dirty as they were before washing" and that "for best results, you'll have to spend $900 or more."

– Refrigerators• Energy Department admits that most consumers will lose money on its latest

refrigerator regulation because the energy cost savings will be less than the higher price consumers will pay

• Potential to eliminate entire classes of appliances from the market

DOE states the final rule may impose expenditures of $100 million or more on the private sector, although DOE believes such expenditures are likely to be less than $50 million.

Small Business Impact Example: Direct Heating Equipment (DHE) Manufacturers

• DOE Cost-Benefit analysis – Save enough energy over 30 years to eliminate the need for three new 250 MW

power plants– Reduce greenhouse gas emissions

• Impact on Direct Heating Equipment (DHE)– The majority of manufacturers are small businesses – cost of compliance: $1.92

million each– Larger firms have few manufacturing lines to convert – cost of compliance:

$790,000 each

• DOE acknowledges the negative impact– Small business are more likely to be disproportionately harmed – Concluded that some manufacturers will be able to maintain a viable number of product

offerings – Determined that the final rule may impose expenditures of $100 million or more on the

private sector

Source: Government Accountability Office Memo – May 26, 2010

US Energy Policy is Causing Decline in Electric Power Generation

• In 2009, generation decreased 4% following a 1% decline in 2008– Largest decline in 60 years– First time in 60 years that generation has fallen two consecutive years – Some decline attributed to poor economy but most is a result of environmental

regulation

• North American Electric Reliability Corporation (NERC) - highly regarded federal energy advisory body

– Issued a special assessment on EPA’s pending electric utility regulations– Regulations, as proposed, will reduce national power generation by 7.2% by

2015, mostly coal-fired plants

• Credit Suisse estimates $150 billion in capital investment by 2019 in order to comply with new regulations

Sources: NERC, Credit Suisse, Energy Information Administration

Electric Power Net Generation - 2009

Source: Energy Information Administration – Electric Power industry 2009

Coal50%

Nat Gas14%

Nuclear31%

Other Renew

3%

Hydro2%

Petroleum0%

Coal45%

Nat Gas23%

Nuclear20% Other

Renew4%

Petroleum1%

Hydro7%

Other0%

Other Gases0%

USTotal = 3,950 billion kWh

GeorgiaTotal = 9.8 billion kWh

• Abundant supply: ~25% of the world supply of coal is in the US• Coal-fired electric plants: very low-cost source of power

– Produces almost half of all US electricity and half of Georgia’s electricity

• New EPA regulations to control emissions give 44% of plants 3 yrs to comply

– EPA: Industry annual cost $11 billion, customer cost by $3-4/mo, creates jobs, health cost savings– American Coalition for Clean Coal Electricity: Industry costs $100 billion by 2015, job losses due to higher

electricity costs and retirement of plants

Coal

Upgrade29%

56%

Close18%

Source: Credit Suisse – “Growth From Subtraction: Impact of EPA Rules on Power Markets” Sept 2010, USA Today – “EPA proposes rules to limit emissions from coal-fired plants

60GW

100GW

180GW

Impact of EPA Regs on CoalOlder

than 40 yrs33%

Plants outside life expectancy

Natural Gas• Huge supply of natural gas in the US; vast new reserves discovered

– US is the world’s largest producer• Natural gas electric plants

– Produce almost one-fourth of all US electricity– Produce 14% of Georgia’s electricity

• Low cost power, smaller scale plants, flexible generation

Nuclear• Uses uranium to produce power

– Abundant supplies of uranium– Megatons to Megawatts: US-Russian program recycles uranium from

nuclear warheads into fuel for nuclear plants• Low cost source of power but large construction costs and waste

disposal needs

0

2

4

6

8

10

12

Nuclear Coal Gas

Cen

ts p

er k

ilow

att h

our

Fuel CostsOps & MaintenanceProduction

Constr Cost $/kWe $5,500-$6,100 $4,700 $1,200Capacity MWe 1,400 600 400

Source: Nuclear Energy Institute

Renewable Energy• Includes solar, wind, hydro, biomass, geothermal• Considered “intermittent” sources of energy

– Weather dependent: sun must shine, wind must blow, rain must fall, etc.

– Requires back-up source of power and storage• Very high cost source of power • Addition of transmission grid construction also costly• Most components for renewable energy plants come from foreign

sources (China, Japan, Europe)• Many grants and subsidies granted to foreign-based companies

“We don’t want to swap our dependence on foreign oil for dependence on clean energy.” - Phyllis Cuttino, director of the Pew Environment Group’s Global Warming Campaign

Land Requirements

850 MW Wind270,000 acres

Deliver power 25-30% of time

850 MW Solar6000-10,000 acres

Deliver power 20-30% of time

850 MW Coal1650 acres

Deliver power 90% of the time

Source: Power4Georgians

Likely Voters Believe…

What is the better long-term financial investment for America: investing in renewable energy resources like solar and wind or

investing in fossil fuels like coal, gas and oil?

Renewable66%

Fossil23%

Not Sure11%

Source: Rasmussen Poll – Energy Update – January 11, 2011, June 18, 2010

Which is more important, finding new sources of energy or reducing the amount of energy Americans now

consume?

New Source58%

Less Consumption

35%

Not Sure7%

But do they understand what it will cost them?(52% not willing to pay more for clean energy)

Renewable Energy is Very Expensive Natural Gas

0

50

100

150

200

250

300

350

400

450

AdvancedCombined

Cycle

ConventionalCombined

Cycle

Advanced CCwith CCS

AdvancedCombustion

Turbine

ConventionalCombustion

Turbine

2008

$/m

ega

wat

t hr

Source: US Energy Information Administration – Annual Energy Outlook 2010

Coal

0

50

100

150

200

250

300

350

400

450

Conventional Advanced Advanced withCCS

2008

$/m

ega

wat

t hr

"Green" Energy

0

50

100

150

200

250

300

350

400

450

Biomass Geothermal Hydro Wind Wind-Offshore Solar Thermal Solar PV

2008

$/m

ega

wat

t hr

Explanation of Terms• Advanced = improved

combustion technologies• CCS = Carbon

Capture/Storage• Combined Cycle = use of

waste heat to generate steam with additional turbine

• PV = photovoltaic

+5% +43% +56% +76% +10% +29%

Renewable Energy Standards (RES) (part of HR 2454 aka Cap & Trade)

• Minimum levels of electricity supplied by approved renewable sources– Usually expressed as a percentage of total electricity generation

• Lack of transmission grid– 20% of its electricity from renewable energy by 2024

• 15,000 circuit miles of extremely high voltage lines• cost up to $100 billion • assent of local authorities and landowners, and might require

federal intervention • Heritage Foundation study

– RES starts at 3% 2012 and rises by 1.5% per yr• Minimum 15% renewable electricity by 2020• Minimum 22.5% by 2025• Minimum of 37.5% by 2035

Source: WSJ “New Grid for Renewable Energy Could Be Costly” – Feb 9, 2009 ; Heritage Foundation

Impact of RES by 2035Cumulative Impact on GDP Change in Employment

(Thousands of Jobs)

Cumulative Change in Family of 4’s Share of Federal Deficit

Source: Heritage Foundation – “A Renewable Electricity Standard: What It Will Really Cost Americans” May 5, 2010

Raise electricity prices by 36% for households and 60% for industry

Cut GDP by $5.2 trillion

Reduce employment by more than 1,000,000 jobs

Add more than $10,000 to a family of four’s share of the national debt

Clean Energy Standard (CES)

• POTUS proposed in SOTU address– 80% of energy from clean technologies by 2035

• Senate Committee on Energy and Natural Resources (Bingaman and Murkowski)– March 21 – Issued a “white paper”– Soliciting public input

Cost of Energy Subsidies• Joint Committee on Taxation – Tax Provisions

– Renewable energy projects: ~$12.5 billion a year– Oil and gas: ~$1 billion/yr

• Administration plans to reduce fossil fuel subsidies while raising taxes on fossil fuel companies

• Subsidies re-allocated to "renewable energy projects" (spending shifted, not reduced)

• By favoring renewable energy over fossil fuels, the government is manipulating the free market through the tax code – In the free market, the most cost-efficient energy would win, but

subsidies and tax breaks create government-picked winners

Source: townhall.com - “The Obama Energy Tax Hike May Not Be Dead”

Subsidies Distort Free Markets

Source: Briefing Memo Oct 25, 2010 (Browner/Klain/Summers) to Pres. Obama “Renewable Energy Loans and Grants

Federal 1603 Grant Program• Over $1 billion in 2009• Extended one year by Tax Relief Act passed Dec 2010

Federal 1705 Energy Loan Guarantee Program• Over $4 billion in 2009 – zero in DOE 2011 budget

Shepherds Flat – Wind Project in Oregon

Other24%

Co Equity11%

Premium for state

renewable energy std

12%

Value of Fed Loan Guarantee

16%

Accel. Deprecia-

tion on Fed & State Taxes11%

State Tax Credit

1%

Fed 1603 Grant25%

Source: Briefing Memo Oct 25, 2010 (Browner/Klain/Summers) to Pres. Obama “Renewable Energy Loans and Grants

• Total project cost: $1.9 billion

• Total gov’t subsidies: $1.2 billion (65%)

• Sponsor’s equity: 11% with 30% ROE

• Carbon reductions must be valued at $130/ton of CO2 for climate benefits to equal the subsidies (more than 6 times the primary estimate used by gov’t in evaluating rules)

• $35.4 million for each of the 35 permanent jobs the project will create

Note: Carol Browner, Obama’s climate change “czar,”Larry Summers, director of the National Economic CouncilRon Klain, chief of staff to Vice President Joe Biden

Source of project funding

Solar Bankruptcies• Solyndra

– Thin-film solar cells for commercial rooftops– $535 million gov’t loan (DOE)– A few months later, withdrew its initial public offering due to a sub-par review

from auditors– A year later, closed its first factory and eliminated 200 jobs– Can’t find financing to finish expansion of the second factory

• Evergreen Solar– $76 million in state subsidies and millions in federal subsidies– Shutting its Massachusetts factory, laying off 700 workers and moving production

to China

Source: Heritage Foundation – responses to Obama’s State of the Union Address

“If a company needs a subsidy to hire a worker, that worker will be out on the street when the subsidy expires.” – Heritage Foundation

Ethanol Mandates are Ineffectual

Source: US Congressional Budget Office, “The Impact of Ethanol Use on Food Prices and Greenhouse-Gas Emissions” April ‘09

2008 Results:• Reduced gasoline consumption ~4%

• Reduced greenhouse gas emissions from transportation by less than 1%

$0.45 cents fed subsidy (tax credit) per gal added to gasoline$3 billion in lost fed tax revenue in 2008$5 billion in 2010

The Ethanol Impact• CBO: Diversion of cropland to corn ethanol contributed 10-15% of

the increase in food prices between April ’07 and April ’08– Food expenditures rose between $700 million and $1.1 billion– Corn, soybeans, meat, dairy

• Higher food prices drove up federal spending on SNAP (food stamps) and child nutrition programs by $600-900 million in 2009

• Higher food price impact Consumer Price Index– affects cost-of-living adjustments for Social Security, military and civilian

retirement (no dollar amount available)

Source: US Congressional Budget Office, “The Impact of Ethanol Use on Food Prices and Greenhouse-Gas Emissions” April ‘09

Ethanol’s Problems• Problem with pipelines

– water affinity problem: pipeline condensation risks rendering it unusable as a transportation fuel

– corrosion issues: high concentrations corrode, including internal stress corrosion cracking (very hard to detect) and accelerated at weld joints

• Liability issues for fueling outlets– Violation of local building or fire codes– Equipment that may need to be modified or replaced, relabeling

• Gasoline blends with more than 10% ethanol may harm some conventional vehicles

– FTC proposal labeling requirements for E10+ to warn may harm some conventional vehicles– May void automobile warranties, creating potential liabilities for vehicle owners

• Use of E10+ blends in other gasoline-fueled equipment include: – Engine operability problems, including loss of power, stalling and overheating – Substantially shorted engine life due to enleaned air-fuel ratios– Catastrophic engine failures– Incompatibility with fuel system materials– Increases in exhaust and evaporative emissions levels

Sources: Association of Oil Pipe Lines, Sierra Research

Ethanol in Atlanta

WSB-TV Atlanta reports:

• Roswell auto repair shop states $1000 to $3000/mo in fuel-related repairs

• Ga Association of Convenience Stores says pumps won’t work with E15 and must be recertified for insurance purposes

• Colonial Pipeline (carries 70% of Atlanta’s gasoline) won’t risk carrying E15 – still has not pumped E10

• QuikTrip issued statement that it will not sell E15 due to uncertainties

Yet Gov’t Pursues Higher Ethanol Blends

Despite Subsidies, Ethanol Bankruptcies• Verasun Energy

– “World’s largest” ethanol producer with 14 refineries, 7% share corn ethanol ‘08– Founded 2001, first plant operational in 2003, filed for chapter 11 Nov 3, ‘08

• Aventine Renewable Energy– 10% share corn ethanol ‘08– Founded 2003, filed for chapter 11 April 7, ‘09

• Pacific Ethanol– Largest West Coast producer, four plants (three largely idled in 2009)– Founded 2005, filed for chapter 11 May 18, 2009

2007 Avg Production Cost Per Gallon

Avg Sales Price Per

Gallon

Margin without Subsidy

Margin with $0.51

Subsidy

Verasun $2.25 $1.99 ($.25) $.25

Pacific Ethanol $2.41 $2.15 ($.26) $.25

Aventine $2.22 $2.08 ($.14) $.37

Source: www.wikiinvest.com

Despite Subsidies, Ethanol Bankruptcies• Range Fuels, Soperton GA (cellulosic ethanol)

– Feb ’07: $76 million federal grant– GA: $6 million– 2008: $80 million federal loan guarantee (Biorefinery Assistance Program)– Total: More than $300 million in state, federal and private funding

– Timeline• Broke ground in 2007• Operations did not begin until 2010 due to delays and financial crisis

– Capacity of 10 million gallons, with plans to expand to 60 million gallons in 2011• Produced one batch of methanol in August 2010, one batch of cellulosic ethanol• January 2011 – laying off majority of workers, shuttering operations

Source: www.sustainablebusiness.com, www.ajc.com

Even Al Gore admits corn ethanol subsidies should be ended, favoring cellulosic ethanol (wood, waste or

grass)

Note: Competition for wood could have similar upward price pressure impact on lumber, furniture, writing paper, cartons (corrugated boxes, food packaging for cereal/frozen food), etc.

Cost of Loan Guarantees

• The federal government manages a loan guarantee portfolio of approximately $1.1 trillion, consisting of more than 65 loan guarantee programs

• DOE has $16 billion in loan guarantees for 15 renewable energy projects (so far)– White House advisors recommended cutting off federal loans for

renewable energy

Sources: NEI.org, WSJ – “U.S. Weighs Funding for Renewable Energy Projects” 11-3-10

When the federal government’s ability to repay its own loans is questionable, does it make sense for them to guarantee loans?

When Federal Gov’t Lends Money• Loans are not recorded as an expense in the budget• Records the interest payments as a surplus• Records losses (loan defaults/bankruptcy filings) as a budget expense

• DOE changed its loan guarantee rules – No longer requires the U.S. government to hold a “right of first lien”– Means U.S. government doesn’t necessarily get paid before other debt holders– Rule just says not be subordinate, no collateral required

Source: DOE, commonsensecapitalism.blogspot.com

If gov’t makes loans with taxpayer money to companies that default, our dollars are gone!

Validate this

Dept of Energy Budget

Source: DOE Secretary Chu’s Presentation on FY2011 Budget

NOTE: American Recovery and Investment Act (ARRA) of 2009 provided DoE with $36.7 billion in projects and $6.5 billion in borrowing authority. NNSA – National Nuclear Security Administration

Renewableenergy

Environ-mental

clean-up

Electric vehicles

Energy efficiency Nuclear

Non-Prolifera-

tion

Nuclear security

DOE Strategic Objectives and High Priority Goals

Fiscal Year Budget 2011: $28.4 billion 2.8% increase vs 2010 and 17% more than 2008

Source: DOE Secretary Chu’s Presentation on FY2011 Budget

More than 100,000 federal and contractor employees

Objective: address climate change, be the world leader in clean energy, and reduce carbon emissions by 80% by 2050.

Renewableenergy

Environ-mental

clean-up

Electric vehicles

Energy efficiency Nuclear

Non-Prolifera-

tion

Nuclear security

DOE Strategic Objectives and High Priority Goals

Source: DOE Secretary Chu’s Presentation on FY2011 Budget

Double our electricity generation capacity from clean, renewable sources by 2012

• $500 million in credit subsidy to support $3-5 billion in projects• Expands the Advanced Energy Manufacturing Tax Credit by $5 billion• Eliminates $2.7 billion in tax subsidies for oil, coal and gas ($38.8 billion

savings)• Terminates ultra-deepwater exploration program ($50 million savings)• Cancels planned expansion of Strategic Petroleum Reserve ($71 million)• Increase research for “clean” coal technology

“Accelerating revolutionary change in the Nation’s energy economy”

DOE Strategic Objectives and High Priority Goals

Source: DOE Secretary Chu’s Presentation on FY2011 Budget

Support advanced battery manufacturing capacity to deploy 500,000 plug-inhybrids a year by 2015

• Make loans to auto and parts manufacturers to re-tool

Renewableenergy

Environ-mental

clean-up

Electric vehicles

Energy efficiency Nuclear

Non-Prolifera-

tion

Nuclear security

In Obama’s SOTU address – 1 million electric vehicles by 2015

DOE Strategic Objectives and High Priority Goals

Source: DOE Secretary Chu’s Presentation on FY2011 Budget

Accelerate an aggressive, self-sustaining home energy efficiency effort that will save energy and money for America’s families

• Reduce energy requirements and integrate renewable energy to allow construction of “Net Zero Energy Homes” by 2020 and 2025

• “Market transformation” of lighting, windows, heating & air, refrigeration• National Buildings Rating Program for energy retrofits• Weatherization programs for low-income families

• GAO/DOE IG: waste, substandard workmanship, poor record keeping, fraud

Renewableenergy

Environ-mental

clean-up

Electric vehicles

Energy efficiency Nuclear

Non-Prolifera-

tion

Nuclear security

Home Energy Scoring• Pilot consumer program

• Provides a home energy score between 1 and 10

• Compares home against others in region• includes recommendations to reduce energy

costs and “improve the comfort “ homes

• Workforce Guidelines and Training for Home Energy Upgrades

• VP Biden – Green Jobs Program

• Federal and state financing programs• FHA PowerSaver: low interest rate, long-term

financing backed by federal government• State and local revolving funds• Property Assessed Clean Energy (PACE)

financing programs to attach the cost of home energy improvements to a property instead of an individual borrower

• Senior lien to mortgage in default

Source: www.consumeraffairs.com – “Feds launch home energy scoring program” Nov 10 2010; www.whitehouse.gov

Danger: Poor audit skills, savings don’t materializeInability to sell your home/cost to upgrade

DOE Strategic Objectives and High Priority Goals

Source: DOE Secretary Chu’s Presentation on FY2011 Budget

• Provide technical and financial support to restart the American nuclear power industry

• $495 million for technology• $500 million for subsidies• Additional $36 billion in loan guarantee authority

Renewableenergy

Environ-mental

clean-up

Electric vehicles

Energy efficiency Nuclear

Non-Prolifera-

tion

Nuclear security

Nuclear Waste Management• Congress established a nuclear waste fee and Nuclear Waste Fund,

a federal trust, in 1982 to bankroll the DOE repository program

• DOE signed contracts with nuclear utilities in 1983– DOE was to begin disposing of utility spent fuel in 1998, which did not

happen – Utilities, in return, were supposed to fund the program via the waste fee.

• Collectively, nuclear utility customers pay roughly $750 million a year into the Nuclear Waste Fund– Waste fee is 1 mill (one-tenth of a cent) for every kWh of nuclear-

generated electricity sold– Including interest, the fund now is worth about $25 billion

Source: Platts.com – “US court dismisses NARUC, NEI nuclear waste fee petitions” Dec 13, 2010

Yucca Mountain Nuclear Waste Disposal• Established in 2002 as sole repository, $20 billion spent on construction

• Sec of Energy recommending closure of Yucca mountain– “not a workable option”…” Nation needs a different solution”– All funding for development is eliminated in FY 2011– Establish a Blue Ribbon Commission to develop a new strategy

• Attny General for Washington State is petitioning against the DOE– Spent $12.8 billion for its waste treatment plant designed in conjunction with Yucca (50%

construction complete)

• Gov. Nikki Haley: “Then give us our money back”– “The taxpayers of South Carolina have paid $1.2 billion to [develop a plan] to send our

nuclear waste to Yucca Mountain. I asked [Mr. Obama] if he would consider honoring the federal commitment and allow waste to go to Yucca Mountain. His answer was no.”

• DOE does not have an alternate waste disposal program

DOE Strategic Objectives and High Priority Goals

Source: DOE Secretary Chu’s Presentation on FY2011 Budget

• Detect, secure, and dispose of dangerous nuclear and radiological material worldwide within four years

• Stockpile until “a world without nuclear weapons can be realized”

• Reduce the risk of proliferation by securing vulnerable materials: $2.7 billion +26%• Agreements with foreign governments• Radiation detection equipment at borders and megaports• Construction of U.S. facilities for disposing weapons-grade plutonium• $100 million of a $400 million U.S. commitment to help build plutonium disposition facilities in

Russia

Renewableenergy

Environ-mental

clean-up

Electric vehicles

Energy efficiency Nuclear

Non-Prolifera-

tion

Nuclear security

DOE Strategic Objectives and High Priority Goals

Source: DOE Secretary Chu’s Presentation on FY2011 Budget

Maintain the safety, security, and effectiveness of the US nuclear deterrentwithout underground nuclear testing

• $11.2 billion for the National Nuclear Security Administration• Invest in Nuclear Security Enterprise for stockpile management and

infrastructure: $7.0 billion: +9.8%

Renewableenergy

Environ-mental

clean-up

Electric vehicles

Energy efficiency Nuclear

Non-Prolifera-

tion

Nuclear security

DOE Strategic Objectives and High Priority Goals

Source: DOE Secretary Chu’s Presentation on FY2011 Budget

Reduce Cold War legacy footprint by 40 percent by 2011•Accelerate environmental cleanup: $6.0B to clean up cold war legacy sites

Renewableenergy

Environ-mental

clean-up

Electric vehicles

Energy efficiency Nuclear

Non-Prolifera-

tion

Nuclear security

According to recent testimony by the GAO on ARRA, the DOE had• No accurate assessment of job impact

•3,000 jobs “created” by ARRA spending are being eliminated• No clear measure of how work would reduce environmental risk• Life cycle costs savings could be 80% less than DOE estimated

Smart Grid

Source: Dept of Energy Smart Grid Primer

Enabling nationwide use of plug-in hybrid electric vehicles

Making large- scale energy

storage a reality

Making use of solar energy – 24/hrs a day

Allowing the seamless integration of

renewable energy sources like the wind

Ushering in a new era of consumer

choice

Exploiting the use of green building

standards to help “lighten the load”

Smart Grid As It Applies to Consumers

• 33% – 50% of your power bill funds “infrastructure mortgage”

• Consumers are “already comfortable with the concept of time-differentiated service thanks to time-dependent cell phone rates and airline fares”

• “Consumers will have the opportunity to see what price they are paying for energy before they buy – a powerful motivator toward managing their energy costs by reducing electric use during peak periods”

• Consumer concerns: malfunction, overcharges, confidentiality, radiation, supplier choice, plan options, type of device

Source: Dept of Energy Smart Grid Primer, theatlantic.com – “What's Really Wrong With the Smart Grid” Nov 19 2010

Crony Capitalism?• Obama appointed the CEO of General Electric Co., Jeffrey Immelt, as the

head of his outside panel of economic advisers - President’s Council on Jobs and Competitiveness

• Facts on GE– Product lines: equipment for oil, gas, electric, wind, solar, water industries;

transmission grid, aviation and train engines, appliances, smart meters– 44%of GE’s employees are based in the US (134K in 2009 )– Has shuttered more than 25 US manufacturing plants and dropped 25,000 US

jobs, while building facilities and hiring employees overseas– Credit division has $17 billion in impaired loans– Received $11 billion in bailout money– Spent $18 million on federal lobbying – majority for cap & trade– Immelt quote: “I am a nut on China.”– In mid-January, announced joint ventures and orders for Chinese rail, aviation

and energy projects that may yield $2.1 billion in sales, creating or retaining about 5,000 jobs

Will General Electric become Government Electric?

Crony Capitalism?• Cathy Zoi, former assistant secretary of DoE

– Obama appointee– Served as the founding CEO of Al Gore’s Alliance for Climate Protection– Disclosure statement shows she owns between $250,000 and $500,000

worth of shares in Landis+Gyr• Preferred provider of smart meters

– Her husband is a top executive at Serious Materials, a company who makes green building materials

• Obama praised Serious Materials for opening a plant in Pittsburgh that makes energy efficient windows for the weatherization program

• Biden visited Chicago location, touting its windows• Sen Dick Durbin promoted company’s contribution to weatherization program

– Recently announced her resignation to work for George Soros venture capital firm, Silver Lake Kraftwerk Fund, which will invest in green energy firms

OverseesNERC

Self regulatory org to ensure bulk power reliability; Has legal authority to enforce reliability standards

independent gov’t agency that regulates interstate power generation and transmission to provide

consumers with reliable, efficient and sustainable energy at a reasonable cost

OverseesFERC

Chairman: Jon Wellinghoff (apptd by Obama)

Committee onEnergy &

Commerce

National energy policy ; generation of power; reliability, transmission and ratemaking; siting; general mgt of DOE and FERC

Chairman: Fred Upton (R-MI)Secretary: Dr. Stephen Chu(apptd by Obama)

OverseesDOE

Administrator: Lisa Jackson(apptd by Obama)

Energy, power grid, & Clean Air Act

Chairman: Ed Whitfield (R-KY)

Subcommittee on Energy

And Power

Safe Water Drinking Act, nuclear waste, Resource Conservation and Recovery Act, Superfund, etc.

Chairman: John Shimkus (R-IL)

Subcommittee on Environment

And Economy

Pres & Ceo: Gerry W. Cauley

HOUSE

OverseesEPA

OverseesNERC

OverseesFERC

Chairman: Jon WellinghoffFERC

Chairman: Fred Upton (R-MI)House Energy & Commerce

Secretary: Dr. Stephen ChuDept of Energy

OverseesDOE

Administrator: Lisa JacksonEPA• Apptd by Obama• Said Georgians support EPA’s

activities because they voted to approve multiyear contracts for energy efficiency

Chairman: Ed Whitfield (R-KY)House SubCom Energy & Power

Chairman: John Shimkus (R-IL)House SubCom Energy & Environment

• Apptd by Obama• Rated “A” by Union of

Concerned Scientists (left-wing political advocacy group)

• suggested US may never need new coal or nuclear energy plants

• Apptd by Obama• Nobel Prize-Physics• Said “Coal is my worst

nightmare”• Conceived a “global

glucose economy” where oil from tropical plants is used like oil is today

• Advocates painting roofs white

• Wants gas prices to rise to “coax” consumers to buy electric cars

• Formerly at Berkeley

• Co-authored ban on incandescent light bulb

• Been called a socialist by Glenn Beck and Rush Limbaugh

• Opposed cap & trade but not against reducing emissions

• Embraces all forms of energy, including domestic resources

• Wants delay of EPA’s clean air transport rules

• Wants to require EPA to consider economic impact of policies

• “global warming denier”• Called efforts to stop climate change as

“the largest assault on democracy and freedom in this country”

• Said because humans “breathe out carbon dioxide. Carbon dioxide is not a toxic emittant.”

Pres & Ceo: Gerry W. CauleyNERC• West Point grad• MS in nuclear engineering and MBA• US Army Corp of Engineers• Grid ops mgr at Electric Power Research Institute

Subcommitteeon Water and Power

Chairman: Jeff Bingaman (D-NM)

National Energy Policy, including international energy affairs and emergency preparedness; nuclear waste policy

Subcommitteeon Energy

nuclear, coal, solar, oil & natural gas; global climate change; energy

conservation programs, utility policy; strategic petroleum

reserves; oil and gas pipelines

power marketing administrations, energy development impacts on water resources; groundwater resources and management;

hydroelectric power

Chairman: Lamar Alexander (R-TN) Chairman: Tom McClintock (R-CA)

SENATE

Bonneville Power Administration

Oversees DOE

Hydroelectric Agencies

DOE Agencies

Chairman: Jeff Bingaman (D-NM)Senate Energy & Natural Resources

• Co-sponsor of S.482 (Energy Tax Prevention Act),

• Supports TN mtntop mining bans• Bought an electric car • Supports nuclear

• Supports tax incentives and direct spending on green energy

• Supports SmartGrid and renewables

• Wants to decrease consumption• Supports reducing CO2 by 80% by

2050

Chairman: Lamar Alexander (R-TN)Senate SubCom on Energy

Chairman: Jeanne Shaheen (D-NH)Senate SubCom on Water and Power

SENATE

• Supports Renewable Energy Standards (RES)• Wants to “create demand” for clean energy • Supports appliance efficiency regulations• Supports creating energy efficiency regulations for commercial bldgs

Georgia Power• Georgia Public Service Commission granted $2.1 billion rate

increase– Planned investments to reduce power use during periods of peak demand

• Investment in Smart Grid– Environmental projects, including replacement of a coal-fueled plant with cleaner

burning natural-gas generators, carbon capture, solar energy – Cost to residential subscribers

• $10.76 a month 2011• $3.08 in 2012• $1.48 in 2013

• Also approved a separate charge on customer bills to cover interest payments on money Georgia Power borrowed to expand its Vogtle nuclear station

– A typical household will pay $3.73 a month starting Jan. 1– Vogtle scheduled to begin producing power in 2016 and 2017

• Announced want to close two Georgia coal-fired plants due to cost of compliance with environmental regulations effective in 2013 (1/2 GW)

Sources: Bloomberg.com “Southern Co. Gets $2.1 Billion Rate Increase Approval” – Dec 21, ’10; www.southernco.com

WHAT CAN WE DO?

Promote Action in US Congress• Support freeze of EPA climate rules

– Energy Tax Prevention Act of 2011 (S. 482, H.R. 910) GTPI SUPPORTS• Amends the Clean Air Act to prohibit the EPA from making regulations that consider the

emission of greenhouse gases to address climate change

• Oppose legislation that establishes Renewable/Clean Energy Standards– Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-N.M.) is

working with Obama on legislative strategy (Murkowski)

• Oppose legislation that further regulates appliances– S. 398: Implementation of National Consensus Appliance Agreements Act of 2011

• sets all kinds of standards on appliances, video games, lighting, heating and air system

• Support repeal of ban on incandescent light bulbs– Better Use of Light Bulbs Act (S.395, H.R. 91)

• Support legislation that repeals subsidies and volume-based mandates, i.e., ethanol, biofuels, green energy sources

• Require return of DOE’s unspent ARRA funds– Only 1/3 of ARRA fund(all agencies) have been spent, and most of that unwisely

• Defund DOE and EPA

Investigate Georgia Legislation• Support a cap on % ethanol mix – Georgia does not have a cap

Conclusion

• Current “market transformation” energy policies– Spend enormous sums on risky, inefficient forms of energy– Reduce the supply of electricity– Decrease the reliability of supply– Increase energy prices– Cost thousands of jobs– Reduce consumer choice– Violate free market principles– Violation of Article I, Section 1 of the Constitution

• “All legislative powers herein granted shall be vested in a Congress of the United States.”

Be Vigilant! Take Action!

Questions?