Consumer Affairs Committee
Testimony of Sonny Popowsky, Consumer Advocate
Regarding Renewable Energy Initiatives
October 31, 2001
Good morning. My name is Sonny Popowsky. I am the Consumer Advocate of Pennsylvania. As you know, the job of my office is to represent the interests of Pennsylvania consumers with respect to their utility service, including electric service. Of particular importance in this hearing, we have been involved in Pennsylvania’s development of renewable resources, especially through the electric utility restructuring proceedings under the Pennsylvania Electric Choice Act and as participants in the statewide Sustainable Energy Fund program.
I am here today to express my unqualified support for the wider use of renewable energy technologies and advanced efficiency technologies in Pennsylvania. I believe that we can benefit from the use of these developing resources in terms of:
I know that you will have speakers later today and at your subsequent hearings, who know much more than I do about the technical and environmental aspects of renewable energy and efficiency programs. I would like to discuss, however, what I perceive to be the positive benefits for Pennsylvania consumers of these developments, including the package of legislation that has been introduced by a large group of members of the General Assembly.
If there is one thing we have learned about our national energy policy in the last several decades and indeed once again in the last several weeks, it is that we cannot place our energy future into a single energy source or even a very small number of such resources. A broad diversity of energy programs – both on the supply side and the demand side – is an enormous benefit in and of itself.
Pennsylvania is fortunate to be in the heart of a region that appears to have adequate electric generation capacity to meet its needs today and for the near-term future. We also have a somewhat diverse mix of traditional central station power facilities, including nuclear, coal, oil, and natural gas. Nevertheless, as we move forward in a new era of electric restructuring in an increasingly complex environment, I would argue that we need an even greater array of tools to meet our future energy needs. That is why I am so pleased to support the legislative efforts that have begun in this House and now before this Committee to address these needs.
While I am certainly not suggesting that we abandon any of our existing central station technologies, I would note that future reliance on each of these technologies raises questions that are not only difficult to answer, but questions that simply cannot be answered within the walls of this General Assembly. With respect to nuclear power, for example, our Nation still lacks a permanent repository for the highly radioactive nuclear waste that is produced by our nuclear plants. Clearly, this is an issue that must be solved at the national level, not here in Harrisburg. Similarly, the ability to rely on new coal plants will be affected by the resolution of global climate issues that are being addressed at both the national and international level. Reliance on imported oil raises geopolitical issues that certainly remain uppermost in our minds today. Even natural gas, which is currently the fuel of choice for nearly all new power plants now being built in this region and across the Nation, may not be the "silver bullet" that many people had thought would solve our energy concerns for many years to come. We need only look at last year’s horrendous spikes in the price of natural gas to recognize that over-reliance on a single fuel type can be dangerous.
Renewable energy and energy efficiency may not be the solution to all these concerns, but they can be a significant part of the solution. More importantly, as exemplified by the excellent package of bills that you have before you, these are issues that can in fact be dealt with right now at the state level.
Wind, solar and other types of renewable and distributed generation can serve a number of functions, including providing low-cost energy in some hours and critically needed reliability support in peak periods. The attributes of wind energy and solar energy are very different, but again, this is why a diversity of resources is so important. It should be recognized, for example, that there are a relatively small number of hours each year in the PJM Interconnection when supplies become extremely tight and market prices rise to very high levels. During those hours, the availability of certain types of renewable resources at certain key locations could have a major system-wide impact with respect to both reliability and economics.
Equally important, the availability of demand side resources at critical time periods can have a dramatic beneficial impact on the reliability and economics of any electric system. It is better to pay a large energy user $500 per megawatt hour not to operate at a critical hour than it is to pay a generator $1000 per megawatt hour to serve that load. This is particularly true in a single price auction such as the PJM spot energy market where all generators are paid the highest bid of any generator that is accepted by the PJM in that hour. It is also better to pay a residential customer $5 or $10 per month to allow the utility to cycle off that customer’s air conditioner for brief intervals during peak summer periods than to allow market prices to rise to exorbitant levels in order to meet a multitude of simultaneous peak air conditioning loads. Ultimately, with advanced metering equipment, it may be possible for all consumers to control their electric usage in a manner that can provide substantial benefits to each individual consumer. Even in the absence of such universal metering, however, much can be done to promote reliable and economic service through the strategic use of demand side resources.
The presence of renewable generating systems and energy efficiency programs in the market will give consumers choices which satisfy their primary goals, whether those goals are security, price, or protecting the environment. Renewable energy production and energy efficiency also allow us to meet our energy needs more flexibly. Renewable generation typically can be sited, for grid or distribution system support, where it is most needed. Renewable generation, in some cases, can also be sited more easily because units are smaller and do not impact the surrounding community to the extent of more traditional generating technologies. Energy efficiency measures, of course, are even more flexible, because they are typically installed at the customer’s own premises.
While some of this development can occur and has occurred without specific legislation, I believe that the type of support and incentives provided in the pending legislation before you can accelerate these activities. Moreover, much of this legislation would help to overcome some of the barriers that may stand in the way of this development. It is significant, for example, that the recent very positive developments in wind energy in Pennsylvania have been a result of private/public partnerships that have been made possible by PUC-approved settlements in recent electric utility merger and restructuring proceedings. Similarly, a pilot program for solar water heating for low-income customers has proven cost-effective in the PECO service territory. That pilot program was originally recommended by the Office of Consumer Advocate and was subsequently adopted by the Commission and became part of the settlement in the PECO restructuring case. I do not believe that we should rely on market forces alone to stimulate renewables and advanced efficiency. As with any new technology, there are technical, market and institutional obstacles. If, as I believe, renewable energy and efficiency are strategic choices that should be pursued, then we should do things to stimulate the markets in which they are offered. The proposed legislation now pending in the House makes that commitment.
House Bills 1076 through 1079 contain important provisions that would
advance the development of small onsite power generation units; accelerate the deployment of advanced metering and appliance control devices; establish statewide standards for interconnection of small distributed and renewable generation technologies; create incentives for purchase of energy efficient appliances and construction of environmentally sound buildings; enhance funding for wind and other renewable energy infrastructure; and assure the Commonwealth’s own commitment to renewable energy resources as part of its own substantial energy supply portfolio.
In my opinion, all of this legislation is worthy of careful consideration and action by this Committee and by the General Assembly as a whole. I would be happy to discuss the specific provisions of the legislation as well as any other matters related to this topic with the members and staff of this Committee as well as other legislators.
Again, I wish to commend the Committee for holding hearings on this important set of issues and thank you for permitting me to participate. I’d be happy to answer any questions you may have about my testimony at this time.