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Re: E-M:/ Public Service Commission Concerned about Michigan Overloading!



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Enviro-Mich message from David Wright <wrightd@voyager.net>
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I must say it truly is an honor to have both Will and Adam Smith respond
jointly to my e-mail and in such a cordial manner.  While I've had the
opportunity to interact with some high powered folks in my time, this is
truly a first -- The Fresh Prince of Bel Air and the Economic Legend
himself.  WOW!

My comments are included in your original text.  

At 02:42 PM 7/29/99 EDT, A. FRIEND wrote:
>"Power Corrupts.  Absolute Power Corrupts Absolutely"

ABSOLUTELY, enough said.

>
>SUPPLY SIDE - Getting rid of "dirty" coal plants is a good idea but it 
>doesn't lessen consumer demand -- it only decreases supply.  The last time 
>Michigan/U.S. government mandated "energy efficiency" on the producer/supply 
>side we saw the development of nuclear energy.  We can discuss the pros and 
>cons of nuke power regarding Michigan later.

I don't understand the point that either Will or Adam is attempting to make
here.  I also don't get the connection between "mandated "energy
efficiency"" resulting in the development of nuclear energy.  The energy
efficiency that I am referring to is demand side energy efficiency --
replacing less efficient devices with more efficient devices or devices
that do not require electricity to operate -- like daylighting.   

>
>DEREG IS GOOD - Also, you mentioned the proposed utility deregulation.  If 
>you are familiar with the proposal, this is more of an economic debate than 
>an environmental one. The existing environmental laws (adequate or not) will 
>continue to apply to the production of power in Michigan under this 
>proposal. Therefore, while the reasonableness of current standards is a 
>healthy debate (PUN INTENDED) - it is separate from the question of who 
>should be allowed to produce power once those standards are established.

I do not agree with the blanket statement, DEREG IS GOOD.  Have you heard
of "BIG DOGS EAT FIRST (M. Kushler, 1999)"?  The utilities and their
largest industrial consumers are the big dogs.  You and I are dog chow.
Rate reductions will go to the largest consumers and increases will be had
by the smallest consumers.  So, what's an economic debate got to do with
the environment?  All those uneconomic assets the utilities built (like the
nuke plants) which are WAY MORE EXPENSIVE THAN THE MARKET RATE FOR
ELECTRICITY WILL CONTINUE TO OPERATE.  Why is that, the free market
economist asks?  Because the utilities have convinced your legislators that
you should get to add another item to your bill to cover those costs,
whether you stay with or choose another supplier.  Utilities get their bad
investments back, the largest purchasers see rate decreases, all of the
utilities old customers underwrite the continued operation of the nuclear
plants (which can't compete at market prices) and our rates go up.  I think
Will and Adam should take another look at DEREG.  

>
>This appears to be an effort to open the market beyond the current monopoly 
>(and often dirty) providers.  You attempt to link this proposal with more 
>pollution.  However, if we open up the markets beyond the current government 
>protected monopoly we can get our energy from other states (that, in your 
>opinion are much better at producing energy anyway)and lessen demand on the 
>old coal plants.
>

Hold on Will and Adam!  I never said other states are "better at producing
energy."  I said other states that have deregulated have created markets
for energy efficiency.  In some cases another states electricity is just as
dirty, or dirtier than Michigan's fleet of dirty, old, grandfathered,
coal-fired power plants.  

Today, our coal plants are producing electricity that in some cases is
"wheeled" into Pennsylvania.  In other cases our coal plants are selling to
Ontario (mostly in the winter).  If dereg means low cost generation wins,
there is no cheaper method to produce electricity than dirty, old,
grandfathered, coal-fired power plants.  And, just as importantly these
plants that were polluting us while producing our electricity may wind up
polluting us more and producing electricity for penny-pinchers elsewhere.
Our communities get the smog, soot, and mercury, and the out-of-towners get
the cheap electricity. 

>Open markets reward those who can produce and deliver the most efficiently.  
>Coal plants aren't efficient or clean which is why CP/Edison only crank them 
>up when they run out of reserves.
>

Sorry Will and Adam, Michigan's coal plants run all the time.  Michigan's
leading source for producing electricity is dirty, old, grandfathered,
coal-fired power plants (approximately 75%), followed by nuclear
(approximately 15%).  The plants are cranking full speed during summer with
the addition of peaking generators that run intermittently to meet the
demand humps.  Peakers tend to run on cleaner fuels like natural gas.

>
>DEMAND SIDE As far as "energy efficiency" on the consumer side - shouldn't 
>voluntary efforts and public education be encouraged? There are some awesome 
>opportunities (high efficiency light bulbs, furnaces, insulation, turning 
>lights off and AC down, etc) that consumers are starting to support because 
>it is in their own financial self interest. I will admit that if we 
>deregulate, costs will go down, and it will be harder to convince consumers 
>to cut back (however, there is still a natural economic incentive to cut 
>back).
>
ABSOLUTELY.  And why not take it one step further, why not create a market?
 You should like that Adam Smith.  An energy efficiency market, where
buyers and sellers meet to trade a commodity like the load in your house.
One example is interruptable air conditioner service.  Customers that allow
a utility to shut off their air condition (not to exceed 15 minutes every
hour -- or something like that) get reduced rates.  And, when the load goes
high and the utility turns off their air conditioner, they get somewhat
hotter.  However, this market exists and provides a known reduction in
demand when needed.  Why not market this to existing customers?  Why not
expand it?  Other examples abound, and others on this list can provide some
more as well.  

>EQUALIZATION OF CHASTISEMENT - Please be fair and hold all government in 
>contempt.  It is both the state and FEDERAL government that created the 
>current system.  I wonder if any of the grandfathering occured during the 
>Blanchard/Dempsy Administration? I do not believe that MORE government 
>planning is the answer.
>
I hold no one or any organization in contempt.  I find certain actions to
be somewhat contemptuous and silly (like being unwilling to sign your name
to your e-mails).  It is through the institutions of our society
(governmental and private) and citizen action or inaction that have brought
us to the point where the PSC issues energy efficiency press releases.  No
more, no less.  

Grandfathering of the dirty, old, grandfathered coal-fired power plants
occurred in the 1970s with the revisions to the Clean Air Act.  

My post has nothing to do with more or less government.


>YOU JUST CAN'T WIN, INC. Your criticism that the utilities provide energy 
>efficiency consulting to industrial users is puzzling.  Given limited 
>resources and increased pressure for "corporate responsibility", doesn't it 
>make sense targeting those places where your biggest gains can be made?  I 
>don't have the data, but I am sure GM uses more power in one day than I will 
>use in five years.  While I feel good about the efforts I make at energy 
>conservation - the largest gains are with the largest consumers.  Also, 
>assuming the rumor about corporations caring only about the bottom line is 
>true - - it makes sense to show them how to save energy.
>

I'm glad that both Will and Adam Smith are taking action on their own.  I
look forward to the day when my renewable generating system is up and
running and I am off the Grid.  In the meantime, I too am working to reduce
my consumption at every opportunity I get.  More power to you and the
others throughout Michigan and the world who realize the importance of
their individual actions.  

When the PSC was in fact regulating the electric utility monopolies,
Michigan had one of the best energy efficiency programs in the nation.
Michigan's program was tanked by industrial consumers unwilling to have a
portion of ever consumers electricity bill be used to reduce demand (at
facilities other than their own).  This totally short-sided approach killed
Michigan's program.  It can be shown that it is cheaper to reduce demand
than to build more power plants (even cleaner ones).  So by killing the
program for everybody, except themselves, their bills decreased, they now
have in house utility personnel looking to reduce demand and the rest of
the consumers are left out.  I believe it can be done better.  The old way
could probably be improved upon, but Michigan through the baby out with the
bathwater (how's that for a tired old cliche!).


>Will and Adam Smith
>
>
Yeah Right!  And, I'm the King of England!

Keep in touch.

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