Energy Electric Utilities
Energy Newsletter
A Quarterly Review of Energy Policy and Activities in the State Legislatures
March 2005
Vol. 1, No. 1
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Transmission Infrastructure Authorities
The Renewable Portfolio Standard
High Gasoline Prices
Undergoing Electric Lines
State Energy Policies
NCSL Staff Update
Upcoming Events for Newsletter
As of early 2005, at least six states are considering a new kind of entity to encourage construction of new electricity transmission lines. Called a Transmission (or Infrastructure) Authority, this entity would have authority to do everything from encourage new transmission, to participate in financing of new transmission, and even to build new transmission lines. Motivation for these authorities includes economic development and the export of electricity. Only Wyoming has such legislation, but Arizona, Kansas, Montana, North Dakota, South Dakota and Utah are considering similar authorities. Kansas’ legislation has been sent to the governor for signature and is available at www.kslegislature.org/bills/2006/2263.pdf. Information about the Wyoming Infrastructure Authority is available at http://www.wyia.org.
The Renewable Portfolio Standard
The renewable portfolio standard (RPS) requires any electricity retailer that sells power in the state to include a percentage of renewable energy in its fuel mix. To date, 18 states and the District of Columbia (see map) now have an RPS in place. Colorado is the most recent addition; voters passed the RPS on the November ballot.
Source: NCSL, January 24, 2005.
What does the RPS do well?
The RPS in its simplest form carves out a market for the lowest cost renewables and for the more mature technologies.
Developers like the RPS because it guarantees a market for their product. The RPS creates certainty, and that certainty gives developers the confidence to make investments in resource assessment, lease negotiations, permitting, etc. The RPS also helps developers secure financing. As a policy tool, the RPS does a good job of using market forces to drive down prices for new renewables. Rather than set a floor price or offer a subsidy for green power, it creates a market and then forces developers to compete on price to supply that market.
What does the RPS fail to do well?
The RPS is not necessarily the best policy tool to encourage small-scale or distributed energy technologies. In most cases, it has been designed to encourage large, utility-scale projects. Some states are attempting to tailor their RPS to encourage small-scale renewable energy projects, but results from that effort are not yet available.
The RPS is not the best policy to encourage higher-cost technologies; in general, it promotes competition among renewable energy technologies and results in large supplies of the least cost technologies. Several states (New Jersey, for instance) have developed different percentage goals for Tier I (more mature) and Tier II (less mature) technologies. This approach creates a market for both types of technologies and does not allow one technology to dominate.
American drivers now pay gasoline prices that are at their highest levels in years, and they seem to keep rising. For the most part, this reflects the rise in crude oil prices, which have hovered around $50 per barrel for several months now. Adjusted for inflation, gasoline prices are still much lower than they were in 1981, when they reached an inflation-adjusted $2.91 per gallon.
NCSL staff briefed the Colorado House Transportation and Energy Committee in mid-March, and offered the following perspectives.
1. Gasoline prices are high now and have moved higher for each of the past three years. For the most part, gasoline prices tend to increase or decrease with crude oil prices.
2. Gasoline taxes at the federal level are 18.4 cents per gallon. State taxes are generally around 20 to 25 cents per gallon although some states are considerably lower and others somewhat higher.
3. The United States now imports close to 65 percent of its oil, and is beginning to import more gasoline. Most of those imports come from Canada, although Saudi Arabia and other OPEC countries sell a great deal of gasoline to the United States. Dependence on imported oil is increasing.
4. State policy is somewhat limited. Options include: (1) encourage people to buy and use alternative fuels such as biodiesel or ethanol, or to buy hybrid electric or other highly efficient vehicles; (2) reduce demand for oil by encouraging people to use less gasoline by car pooling, telecommuting, and properly inflating tires; (3) address long term policies such as transportation, land use, and public transportation; (4) reduce state taxes on gasoline; and (5) intervene in the market by regulating prices — Hawaii is the only state that has attempted to do this. Reducing state taxes and regulating prices are policies that may encounter opposition.
5. The US Department of Information Energy’s Energy Information Administration (EIA) offers useful information on gasoline prices at www.eia.doe.gov.
Undergrounding Electric Lines
Some people consider overhead electricity transmission lines to be unsightly or dangerous. States have begun to address options for requiring or encouraging these lines to be placed underground (or "undergrounded"), although undergrounding is much more commonly required by local municipal zoning or ordinances. Recently, the Vermont Public Service Board required a stretch of new transmission to be undergrounded. Utility commissions in Florida and Virginia studied the practicability of undergrounding electric transmission lines and found that it would be too expensive. New York has considered requiring it but has not done so yet. The Connecticut siting authority is requiring undergrounding of at least portions of a proposed transmission line.
California requires future electric and communication distribution facilities to be placed underground, whenever feasible, if they will be built visible from a state scenic highway. If requested by a municipality, Alaska’s Department of Transportation and Public Facilities can order undergrounding of electric power transmission lines located in that area. The city of Anchorage, Alaska, passed an ordinance in March 2005 that requires utilities to bury the lines. Montana, Oregon and Utah also empower local authorities or assessment districts to mandate undergrounding.
State Energy Policies
Statutory language in many states outlines the overall energy policy. Policies range from general mission statements or visions to those that address specific topic areas, such as energy efficiency. Most often, they include general objectives for energy usage, encourage research and new technologies, support conservation and energy efficiency, and suggest the use of renewable resources. The key focus in the majority of these policies is economic and job growth, capital savings, security, and environmental accountability.
A coherent and comprehensive energy policy provides the basis for a secure, reliable, economic, and environmentally focused energy approach. Additionally, these policies set the agenda for the state’s energy strategy. In 2004, several energy organizations in Florida gathered to discuss the state’s energy policy from an environmental and economic standpoint. The group concluded that: (a) no central entity held the responsibility, authority, or funding to focus on state energy policy; (b) state agencies duplicated the energy efforts of other state agencies; and (c) energy policy provisions often became unfunded mandates. The organizations offered several recommendations to improve Florida’s overall energy policy. A summary of potential considerations for developing and improving state energy policy is below:
• Designate a specific entity to administer the state energy policy with appropriate responsibility, authority, and funding.
• Set short- and long-term energy goals. This might include specific language such as "20% renewable use by 2025," or general language,
such as, "reduce the ratio of energy consumption to economic activity in the state."
• Review current energy policies and evaluate their effectiveness.
• Provide public education through marketing programs.
• Expand energy initiatives by coordinating with environmental programs.
• Lead by example. Require state facilities to uphold the policy standards.
In an effort to track the trends of overall state energy policies, NCSL will post state energy policies to the Energy and Electric Utilities section of the NCSL web site at www.ncsl.org/programs/esnr/energy2.htm.
NCSL Staff Update
NCSL staff continue to develope new ways to help state policymakers deal with vital energy issues such as energy security, renewable energy, energy and air quality, and electricity transmission.
- Matthew Brown, Kate Burke and Christie Rewey are conducting research on state energy emergency planning and response, and on how states can make energy systems more secure.
- Jennifer Smith and Matthew are finishing a report on renewable portfolio standards, finishing a set of primers on geothermal energy, continuing their work on wind energy, and initiating work on biomass energy issues.
- Christie, Jennifer and Matthew have almost completed a primer on energy and air quality linkages.
- With the help of the NCSL Standing Committee on Energy and Electric Utilities, staff will issue sample legislative language that would enable greater interstate collaboration on transmission planning and siting.
- Matthew and Christie are working in concert with the National Governors Association to produce several primers on electricity transmission policy. Part of that work will focus on regional coordination.
- Staff also are pursuing funding opportunities that would allow us to work in-depth on other issues such as energy efficiency and coal.
As always, NCSL staff are available to work with you on these and other energy issues. We can answer your information requests or spend time in person meeting with your committee. Call us at (303) 364-7700.
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Are you using NCSL’s Energy Program? We receive numerous phone calls and e-mails from legislators and staff asking for help to research energy policies. Are you contacting us? Our grants allow us to offer briefings to state committees and other legislative meetings. In the past few months we’ve talked about energy security in Utah, electricity regulation in Kansas and renewable energy in Oklahoma. Can we help your state? Are you on our contact list? We currently are updating our database of legislators and staff who focuses on energy. |
Upcoming Events for Newsletter
April
EIA/OEA/NASEO Summer Transportation Fuels Outlook Conference
April 7, 2005
Washington, D.C.
Energy Information Administration, Department of Energy Office of Energy Assurance, National Association of State Energy Officials
http://www.naseo.org/events/summer/default.htm
NCSL’s Spring Forum 2005
April 14 - 16, 2005
Washington, D.C.
http://www.ncsl.org/forum/
Greenhouse Gas Registries and Competing in a Carbon-Constrained World
April 18 - 20, 2005
Berkeley, California
California Climate Action Registry
http://www.climateregistry.org/EVENTS/Conference/
May
2005 NAESCO Mid-Year Conference
May 18 - 20, 2005
Austin, Texas
National Association of Energy Service Coalitions
http://www.naesco.org/conference.htm
June
American Public Power Association National Conference
June 18 - 22, 2005
Anaheim, California
http://www.appanet.org/events/annualeventdetail.cfm?ItemNumber=438&sn.ItemNumber=0
Edison Electric Institute Annual Convention/Expo
June 19 - 22, 2005
Las Vegas, Nevada
http://www.eei.org/meetings/annual_convention/index.htm
July
2005 ACEEE Summer Study on Energy Efficiency in Industry
July 19 - 22, 2005
West Point, New York
American Council for an Energy Efficient Economy
http://aceee.org/conf/05ss/05ssindex.htm#reg
SAVE THE DATE!
NCSL
Annual Meeting
August 16-20, 2005
Seattle, Washington
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ENERGY NEWSLETTER
Published quarterly by the National Conference of State Legislatures, 7700 East First Place, Denver, Colorado 80230, (303) 364-7700. FAX: (303) 364-7800
William T. Pound, Executive Director
Funding support for this publication is provided by the U.S. Department of Energy. Any opinions, findings or conclusions in this publication are those of NCSL staff and do not necessarily reflect the views and policies of the U.S. Department of Energy.
NCSL ENERGY PROGRAM
The NCSL Energy Program focuses on a number of issues and answers information requests dealing with state actions on energy policies, new energy technologies, potential effects of federal energy regulation on states, upcoming NCSL meetings on energy issues, NCSL publications on key issues, and legislation.
Contributors to this issue:
Matthew Brown, Kate Burke, Jennifer DeCesaro, Christie Rewey
Layout and design: Alise Garcia. |
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