President Gerald R. Ford had an Energy Vision

 by Bruce Goodman, Energy Lawyer

On his last day in office, January 19, 1977, President Gerald Ford issued a clarion call on energy: 

“America cannot permit the excessive delays associated with the commercialization of unconventional energy technologies.  New production is essential.  Our national security and economic well-being depend on our ability to act decisively on energy.”

More than three decades have passed since President Ford and his energy czar, Frank Zarb, worked to develop the nation’s first comprehensive energy policy and put the United States on the rocky road to rethinking energy technology.  At the time the first energy policy was developed, Ford’s administration was responding primarily to the oil embargo crisis of the early 1970s.  A major goal was to drive the amount of imported oil used for transportation down from the then-current 35 percent of national consumption.  Despite the President’s warnings, and the recognized negative influence that oil dependency has on foreign policy and defense policy options, current statistics show that 49 percent of our oil consumption is from foreign sources.

As to the production of electricity, since Ford’s call to action some of the “unconventional energy technologies” have matured, and some have not.  While unlimited fusion energy remains a far-off dream, renewable energy technologies are being deployed.  Wind energy has gained a strong foothold in our nation’s energy portfolio, and solar energy is finally on the brink of becoming a major energy source.  Bioenergy, in a variety of forms, has both near-term economic applications and long term possibilities, such as airplane fuel from algae.

Under President Ford’s leadership and Frank Zarb’s foresight, the Energy Research and Development Administration was created as part of the Energy Reorganization Act of 1974. This agency, which was replaced three years later by the Department of Energy, was an important step in bringing together the diverse energy activities across the federal government.  It produced a series of national energy plans that advocated experimentation and energy leadership to stimulate private-sector commercialization.

So where are we on President Ford’s vision thirty-four years later? The alternative energy effort had plodded along with the help of National Renewable Energy Laboratory (another offspring of the Ford Administration’s pioneering efforts) and a mixed bag of partial governmental energy policies still aiming for the “commercialization of unconventional energy technologies.”  No one can doubt the government’s role is critical.  As with many new technologies that have yielded benefits across the nation over time, such a large undertaking requires “encouragement”.  The Union Pacific and Central Pacific railroads were given twenty square miles of land plus mineral rights for every mile of track built as the encouragement that ultimately led to the interstate railroad system (and tangentially to the development of the steel industry).   The fledgling airline industry was able to grow due in large measure from the U.S. post office paying to carry the mail at rates which allowed the growth of passengers carrying capacity.  Oil and gas companies lease federal lands at rates intended to encourage these industries.  Who can argue that these governmental policies have not been important to the nation’s overall economic development and ultimate strength and well-being?  

Electric utility companies are not going to voluntarily adopt renewable energy technologies merely because they will improve air quality (and thus national health) or because they will utilize abundant, locally available, and free resources (such as the energy of the wind and the sun) or because they will improve national security (through distributed generation and providing transportation alternatives to imported oil).  No, a national energy policy, such as the one envisioned by President Ford, is needed to further encourage and drive renewable energy technologies.  Just as seat belts and air bags would likely not have reached the marketplace without governmental requirements, and gas mileage improvements were not on the horizon until governmental standards were devised to drive innovation, a national energy policy is needed to finally realize the goals of unconventional energy technology implementation envisioned by President Ford.

On Tuesday, September 20, Frank Zarb will in Grand Rapids to give a free lecture at 7:30 pm at the Ford Museum entitled:  Our Most Important Policy Failure – Energy. If you would like to attend, please contact the Gerald R. Ford Presidential Foundation at events@38foundation.org or call 616-254-0393 to reserve your seat.

Distributed Energy Needs: Better Net Metering; Lower Standby Rates; and Self-Service Wheeling

by Bruce Goodman, Energy Lawyer

One of the real opportunities for energy security and emission reductions is distributed energy. That hundreds, even thousands of smaller electric generating projects (solar, geothermal, wind, combined heat and power, cogeneration) could supply a large portion of the nation’s energy needs is no longer a pipedream. Although it may cut against a myriad of vested interests, having electricity produced locally (as local as a factory rooftop, a parking lot, or a farm-based biomass unit) would provide many benefits. Yet every week I deal with valid, real projects that are stymied by Michigan’s inadequate net metering program, unreasonably expensive utility standby rates, and lack of self service wheeling rights. The MPSC (and where necessary the legislature) needs to be aggressive in getting this situation corrected so that Michigan can partake in the many benefits of distributed energy. We need to get past the paradigm that taking load off the grid is bad and should be penalized. Unleash Michigan’s creativity and innovation. Let the wild rumpus begin

Waste to Energy Plant Operating Again in Detroit

by Bruce Goodman, Energy Lawyer 

The 24-year old refuse derived fuel energy plant in Detroit has reopened under new ownership. Detroit Renewable Power LLC has invested $50 million in improvements, and is back processing up to 3,300 tons of municipal solid waste per day. The facility provides steam to Detroit Thermal LLC’s district heating system which serves 145 buildings along the Woodward Corridor from downtown Detroit to the New Center area. The facility also sells electricity to the Detroit Edison Company. 

Michigan Needs to Get Hip on Energy?

by Bruce Goodman

Earlier this month, I had total replacement surgery on my right hip. Nagging pains that started ten years ago gradually developed into stronger, sharper pains, causing me to walk off-kilter. I knew it was time for corrective action and thanks to my skilled surgeon, I now look forward to a future free of pain. Michigan’s alternative energy development efforts are kind of like that: we are off kilter and surgery is needed. Ever since 1978 and PURPA, standby tariffs in Michigan have taken the incentive out of self-generation projects that make economic sense. This “nagging pain” must be corrected by the MPSC before self-generation developers give up on Michigan. Adding to the pain is the refusal of the major utilities to use their purchasing power to attract an established wind turbine OEM to Michigan. Our legislature gave the utilities a gift of half the RPS action; the quid pro quo should have been to use that gift to bring an OEM to Michigan. Whether it is the MPSC, the Governor, or the legislature, someone needs to find the political will to make this happen, before the utility wind turbine orders are placed. Where is our political team of surgeons?

Old Roadblocks Resurfacing

by Bruce Goodman

For many who have been in the energy practice since the PURPA days it seems like history is repeating itself. The Public Utilities Policy Act of 1978 had as its laudable goal the encouragement of renewable energy and energy efficiency. Small power production (renewable) projects and cogeneration (energy efficiency) projects were intended to make the nation more energy efficient and self sufficient. Just as now, ratepayers saw renewable energy and dispersed power as a way to save money while contributing to energy independence. However, progress was impeded by Michigan utilities who challenged the meaning of “avoided cost” and who imposed stifling standby rates. Today the utilities are again impeding the development of alternative energy and again are using purchase power rates and standby rates as two of their weapons. [Setting standby rates at a level that assumes all independent power on the grid will go down at the same time is not appropriate.  Notwithstanding a good start on the standby issue in the new net metering rules, except for very small projects standby remains a hurtle and an impediment.]  Unless the legislature aggressively addresses competitive pricing and standby rates, it may be déjà vu again in Michigan.

What Does an Interrobang Add to the Energy Discussion‽

by Bruce Goodman

This month I rediscovered the interrobang (‽), first introduced in 1962. Intended to be used when a sentence is both a question and an excited exclamation, it never caught on. Writers and editors have been satisfied with ?!?! It strikes me that alternative energy is the epitome of the interrobang—both an exciting prospect, but just as often an open question. Alternative energy was last in vogue in the 1980s, as a response to the mid-east oil embargos. Then it was called small power production. Energy independence was the goal. We got the 55 mph speed limit, expanded daylight savings, and CAFÉ standards. This is when the first wind turbines were installed in the U.S. under PURPA. But the electric utilities did not like this statute, another oil embargo did not occur, and the public concern over gasoline prices subsided. Now the “energy crisis” has been rediscovered, global warming has been added, and we have revived some of the old strategies. Here comes alternative energy‽