Executive Order — Accelerating Investment in Industrial Energy Efficiency
An interesting article discussing the phenomenon when making something more efficient allows you to use more of that something. Energy efficiency is a large piece of a long-term energy plan, but we must consider the source fuel to make it more comprehensive. Written by David Hone on TheEnergyCollective.com.
With the recent passage of the Energy Efficiency Directive through the key EU parliamentary committee on Industry, Research and Energy (ITRE), it is clear that the idea of managing emissions, improving energy security and increasing the competitiveness of the economy through managing energy efficiency remains a key policy objective. The Directive has only one more stage to pass: a vote in the whole plenary in September. The Directive obliges Member States to prepare a long-term strategy to increase the energy efficiency of their entire building sector by 2050 and to set up an energy efficiency obligation scheme that ensures that utilities reach 1.1 – 1.5% energy saving of their end-users. In addition, the Directive aims to stimulate technologies such as Combined Heat and Power in the utilities sector.
In fact many commentators and policymakers continue to believe that energy efficiency alone can address much of the CO2 problem – and that it can do so at very low cost (or even negative cost), at least compared to a ‘do nothing case’. But any successful policy toward mitigation of CO2 emissions must centre on CO2 pricing. Energy efficiency can only be a contributory factor and, in some circumstances, can even have a negative long-term impact if the centrality of CO2 pricing is not recognised.
The impact of energy efficiency policy on CO2 emissions is explored in a paper by a Shell colleague, Jonathan Sample and was recently published in The European Energy Review, but also attached here [The Limits of Energy Efficiency]. The paper looks at the issue of energy efficiency and examines some of the established beliefs about its benefits and impacts. It highlights some important missing nuances in the logic linking efficiency improvements with reductions in CO2 emissions and argues that in the absence of a credible price on CO2 emissions, the effectiveness of energy efficiency measures is greatly reduced. In fact, in some cases they may even make the problem of CO2 emissions worse in the long term.
The key to understanding the impact of energy efficiency on CO2 emissions lies in the long-term competition between the costs of using fossil fuels on the one hand, and of using non-fossil fuels (the latter of which, in this paper, includes fossil-based fuels using CCS technology) on the other. Specifically, innovations that improve the efficiency with which fossil fuel is converted into energy service, but which don’t do the same for non-fossil fuels, make fossil fuels fundamentally more affordable compared to non-fossil fuels, even though they reduce the rate of consumption in the short term. An example of this is a policy which encourages improvements in (internal combustion) vehicle efficiency. In the paper, this is referred to as a “carbon-augmenting” policy (versus a carbon-neutral policy).
Consider the example of a driver who initially uses a 30 mpg (miles per gallon) car to drive 300 miles per week when gasoline costs $4/gallon. If at some point in the future, that same driver acquires a car that achieves 60 mpg, he can carry on driving the same distance per week even if the price of gasoline were to rise to $8/gallon (all other things being equal).
At first sight, the improvement in efficiency seems a good thing: after all, there has been an immediate improvement in the driver’s living standards, as driving is now cheaper than it was before. So how might there be a problem? The greater affordability of fossil fuels caused by such improvements in energy efficiency serves to increase the future supply of fossil fuels – again a matter that Jevons brought up. The increased efficiency of the car effectively has made it profitable to produce oil with higher extraction costs without causing the driver to drive fewer miles. In the short term, the increase in productivity, net income and wealth, which is brought about by higher efficiency, contributes an additional boost to energy affordability (this ‘income effect’ will not be considered further in this paper, however).
In the long run, then, the initial halving in the rate of consumption from replacing a 30mpg car with a 60mpg car does not represent a reduction in CO2 emissions: instead of avoided emissions, it may represent only a postponement, plus a long-term addition to the stock of economically extractable resources.
CO2 pricing (through measures such as cap-and-trade or taxation) is the key to unlocking the full potential of energy efficiency to reduce CO2 emissions. In the absence of an offsetting price on CO2 emissions, measures to encourage (specifically carbon-augmenting) energy efficiency can lead to higher ultimate/potential emissions. However, where an offsetting CO2 price is applied, this can be avoided. Importantly, where there is an increase in carbon-augmenting efficiency, it is the price placed on CO2 emissions that leads to the offsetting reduction in economically extractable fossil fuels. In other words, it is the CO2 price, which does most of the work to avoid emissions, and not the efficiency increase. Unless such a price on CO2 emissions is established, carbon-augmenting energy efficiency increases should not be viewed as an “alternative” or equivalent means of reducing CO2 emissions.
In the short term, more effective and less risky options than energy efficiency measures are available in the form of transitions such as coal-to-gas switching. The effectiveness of energy efficiency measures (particularly in their carbon-augmenting form) will be greatly constrained until a CO2 pricing system is in place. Before this comes about, it is necessary to pursue more realistic, yet cost-effective alternatives.
While I agree there should be a cogeneration standard, there also needs to be a minimum efficiency of 60-65% for these cogen plants otherwise the net efficiency gains are negligible versus standard efficiencies. Found on Forbes.com written by William Pentland.
As the consumer of about one-third of the nation’s energy, the industrial sector presents a significant opportunity to save energy, according to a new report by the U.S. Department of Energy’s Oak Ridge National Laboratory and Georgia Institute of Technology.
The report, “Making Industry Part of the Climate Solution,” reviewed seven federal policy options for promoting energy efficiency in the industrial sector. Chemical manufacturing, petroleum refining, pulp and paper and iron and steel manufacturing dominate industrial energy use. Large firms with more than 250 employees are responsible for about two-thirds of industry’s energy consumption.
While the report found all seven of the options to be feasible, mandating procurement of combined heat and power (CHP), sometimes referred to as “cogeneration,” is probably the most politically palatable of the possibilities. CHP produces heat and electricity in a single process. In conventional electricity generation, roughly one third or so of the energy potential contained in the fuel is converted into electricity. The remaining two-third of the energy contained in the fuel is lost as waste heat. By capturing a large share of this wasted heat for end users, CHP can achieve an efficiency of as much as 90%. The bottom line is that CHP uses about 40% less energy than conventional production of heat and electricity.
The report contemplated creation of a federal “Energy Portfolio Standard” (EPS) that mandates electric distributors to procure a certain amount of CHP. The EPS strategy would also expand the current investment tax credit to 30% of the total CHP system cost.
The result: industrial CHP capacity would more than triple from 28 GW in 2010 to 90 GW in 2035. The total electricity generation from CHP facilities would grow nearly twice as rapidly over the next two decades. These findings are generally consistent with an analysis by ICF International, which evaluated the impact of a 30% ITC for CHP projects with overall efficiencies of 70% lower heating value or greater.
CHP in the chemicals and pulp and paper industries generate approximately 50 billion kWh of electricity today. Under a CHP standard, the chemicals industry would generate nearly 200 billion kWh by 2035, compared with a more modest expansion for pulp and paper, which grows to about 75 billion kWh. The food industry starts at only about 5 billion kWh today, but grows to more than 50 billion kWh in 2035, nearly matching the pulp and paper industry.
A very good article on the benefits of CHP found on MetalMiner.com
by stuart on July 13, 2010
Solar and wind power projects are much in vogue this year supported on the one side by environmentalists keen to see us move to a low carbon future regardless of the cost and on the other by politicians keen to secure funding for their regions that could lead to employment and favorable headlines. Am I being unduly critical in those comments? May be, I am sure most of those involved are motivated by the best of intentions but sometimes when everyone jumps on the same bandwagon some more deserving causes get overlooked in the headlong rush to subsidize this or that. The technology being overlooked and which is capable of delivering so much more than wind power or solar power for a fraction of the cost is Co-generation or Combined Heat and Power (CHP) Technology.
CHP can be applied to pretty much any process that involves the production of electricity or thermal energy, by which I mean supplying heat for industrial or commercial activities. Take electricity production for example, according to Richard Munson, Senior VP Strategy of Recycled Energy Development (RED) quoted in a YouTube recording of a short but interesting speech recently that the energy efficiency of electricity generation has barely changed since Eisenhower was in the White House. It still takes 3 units of fuel to make one unit of electricity. The balance 67% is wasted as heat and yet the focus is on trying to remove at great cost the CO2 from that waste, rather than finding ways to reduce the amount of electricity required in the first place or trying to produce more energy from the original three units of fuel than the paltry 33% efficiency rate that is the norm. The same can be said of many industrial processes, in a recent article on FoxNews Michael Tobin makes a compelling case for the application of CHP by describing the example of ArcelorMittal at a steel plant of theirs in East Chicago. AM takes coal and reduces it in coke ovens to pure carbon coke used in the smelting of iron in the company’s blast furnaces. This is done in some 260 coke ovens where the coal is heated and in a controlled burn the impurities are driven off – in the process a huge amount of heat is consumed and released. AM partnered with RED and installed boilers on the top of these coke ovens to capture the heat before it dissipated into the atmosphere. The steam from the boilers was then used to generate some 220 MW of electricity and in the process AM saved US$100 million per year. In fact that one project is said to generate more clean energy than all the clean energy projects in the US MidWest.
West Virginia Alloys, a silicon producer, reduces quartz to silicon in furnaces heated to 3000 degrees requiring a huge input of thermal energy. They then cooled the product with chillers so that it could be handled and stored. By incorporating a CHP system WV Alloys now generates 45-50 MW of electricity and saves US$65m per year. As a result, they have become so efficient the business has expanded, they have added a new furnace and employed an additional 30 workers.
Saving the planet needn’t cost money, it can be a great money spinner. 69% of all CO2 emissions in the US comes from electricity generation and thermal power production yet nearly all the financial incentives are poured into car emissions and wind/solar power production.
The good news according to a Chicago Tribune article is that opportunities for similar efficiency gains abound in the US. According to the Department of Energy’s Oak Ridge National Laboratory, a large-scale expansion of co-generation could provide 20% of U.S. generating capacity by 2030, generate $234 billion in new investment, and create nearly 1 million jobs. Such an expansion would also reduce carbon dioxide emissions by more than 800 million tons per year, the equivalent of taking more than half the current U.S. passenger vehicles off the road.
And hey here is one other big advantage of CHP. Unlike solar panels or wind turbines the US doesn’t import this technology or the jobs that go with it from abroad. Although the US lags many other parts of the world in applying the technology it is more than capable of applying the techniques via home grown engineering firms.
Measures Would Cut Costs for American Manufacturers and Businesses, Create Up to One Million Jobs and Slash Greenhouse Gas Emissions
WASHINGTON, Apr 15, 2010 (GlobeNewswire via COMTEX) –Capstone Turbine Corporation (www.capstoneturbine.com ) (Nasdaq:CPST), the world’s leading clean technology manufacturer of microturbine energy systems, joined more than 80 business, labor, environmental and government organizations this week urging Congress to adopt a new tax policy to significantly enhance industrial energy efficiency. If adopted, the United States can expect increased manufacturing competitiveness, creation of new jobs and reduced pollution.
On April 12, Capstone and other supporters sent letters to the Senate Finance Committee and the House Ways and Means Committee asking for tax credits to expand use of combined heat and power (CHP) and waste-energy recovery. Both technologies are capable of roughly doubling the energy efficiency of an industrial plant or other energy user. The result is significantly lowered energy costs and a reduction of greenhouse gas emissions.
“Capstone’s American-made, ultra clean microturbine products have helped customers worldwide reduce energy consumption and lower pollution for more than a decade,” said Darren Jamison, President and CEO. “An increased tax credit will enable future customers to purchase the cleanest and most efficient technologies available and receive shorter paybacks.”
Supporters of industrial and commercial energy efficiency are asking for passage of the bipartisan S. 1639, which is sponsored by Senators Jeff Bingaman (D-NM) and Olympia Snowe (R-ME). The supporters are also requesting passage of H.R. 4144, which is sponsored by Representative Jay Inslee (D-WA), and H.R. 4751, which is sponsored by Representative Paul Tonko (D-NY). The legislation encourages near-term, shovel-ready projects that will create and maintain thousands of jobs within the industrial and commercial sectors. In addition, the bills support the manufacture, installation and operation of CHP and waste-energy recovery equipment.
According to Oak Ridge National Laboratory, a large-scale expansion of CHP could provide 20 percent of U.S. generating capacity by 2030, generate $234 billion in new investment and create nearly 1 million highly-skilled, technical jobs in America. Such an expansion would reduce CO2 emissions by more than 800 million tons per year, the equivalent of taking more than half the current U.S. passenger vehicles off the road.
Waste-energy recovery, which captures waste energy from industrial facilities, now receives no tax benefits. Combined heat and power (CHP), a process by which manufacturers and businesses generate electricity and heat on site, obtains only a 10 percent investment tax credit for the first 15 megawatts of a project limited to 50 megawatts in size. The bills now in the House and Senate would remove the limitation to small projects and apply the tax credit to a project’s first 25 megawatts (S. 1639 and H.R. 4144), and provide a 30 percent tax credit for recycled energy and CHP with efficiencies above 70 percent (H.R. 4751).
Supporters of the legislation include:
Capstone Turbine Corporation
Cummins Power Generation
Libbey Glass Inc.
United Technologies Corporation
Veolia Energy North America Holdings
ACCO Engineered Systems (California,Washington, Idaho, Nevada)
ACR Sheet Metal Company
Avalon Consulting, Inc. (Illinois)
BHP Energy (Ohio)
Calnetix Power Solutions, Inc. (Florida)
Charles P. Blouin Inc. (New Hampshire)
Circle “R” Mechanical, Inc. (Indiana)
Climate Energy (Massachusetts)
DCO Energy (New Jersey)
ECR International (New York)
Endurant Energy LLC (Illinois)
Energenic LLC (New Jersey)
Energy Solutions Center (Washington,D.C.)
Ernest D. Menold, Inc (Pennsylvania)
GEM Inc. (Ohio and Georgia)
KGRA Energy Corporation (Illinois)
Lewis and Lambert Industries, Inc.(Texas)
National Heating & Ventilating (New Mexico)
NV Energy (Nevada)
NewLoop Energy (Illinois)
Melrose Metal Products (California)
Midwest Fabricators, LLC
Recycled Energy Development (Illinois)
RHP Mechanical Systems (Nevada)
RSP Systems (New York)
Rudolph Libbe Companies (Ohio and Michigan)
Sheet Metal Engineering, Inc. (Iowa)
Tal-Mar Custom Metal (Illinois)
Turbine Air Systems (Texas)
Zeledyne (Michigan, Oklahoma, Tennessee)
Contractor and Industry Associations
American Chemistry Council
American Forest and Paper Association
The Association of Union Constructors
Electricity Consumers Resource Council
Glass Manufacturing Industry Council
International District Energy Association
Mechanical Contractors Association of America
National Council for Advanced Manufacturing
National Electrical Contractors Association
Sheet Metal and Air Conditioning Contractors’ National Association
Steel Founders’ Society of America
U.S. Clean Heat and Power Association
International Brotherhood of Boilermakers
Sheet Metal Workers International Association
Alliance to Save Energy
Association of State Energy Research & Technology Transfer Institutions
Business Council for Sustainable Energy Center for American Progress Action Fund
Energy Future Coalition
National Association of State Energy Officials
World Alliance for Decentralized Energy
President Obama is taking the goal of United States cutting 2005 emissions levels by 17% by 2020 to the climate talks in Copenhagen. Hopefully China will take the lead and offer the same. Although many feel this is not enough, it’s a start. Found on msnbc.com.
WASHINGTON – President Barack Obama will attend the U.N. climate summit next month in Denmark, taking with him a target to reduce U.S. greenhouse gas emissions by 17 percent by 2020, the White House said Wednesday.
The pledge will not be part of a binding international treaty — the hopes for which have been dashed by the lack of a climate law coming out of Congress — but it will mimic the cuts passed by the House earlier this year. The Senate is still debating climate legislation.
“This provisional target” of 17 percent “is in line with current legislation in both chambers of Congress and demonstrates a significant contribution to a problem that the U.S. has neglected for too long,” the White House said in a statement.
The president will attend the summit on Dec. 9 before heading to Oslo to accept the Nobel Peace Prize.
At least 75 world leaders will attend. Unlike Obama, most are expected to attend the final days of the Dec. 7-18 conference.
Cutting U.S. carbon dioxide emissions by one-sixth in just a decade would likely hike energy bills.
Carol Browner, Obama’s assistant for energy and climate change, cited a $173-per-year estimated cost in a briefing Wednesday — a figure for a family of four calculated by the Congressional Budget Office. Republicans say costs would be higher.
But slashing those emissions could save millions of lives, mostly by reducing preventable deaths from heart and lung diseases, according to studies published this week in The Lancet British medical journal.
Cabinet officials going as well
The White House also said a half dozen Cabinet officials including Energy Secretary Steven Chu and Commerce Secretary Gary Locke as well as the head of the Environmental Protection Agency — which is preparing regulations to cut greenhouse gases — will take part in the Copenhagen talks. It is the highest profile contingent of U.S. officials to ever take part in international climate negotiations.
Some environmentalists said they hoped the president’s trip would be more than ceremonial.
“The Copenhagen climate summit is not about a photo opportunity,” said Kyle Ash, climate policy adviser for Greenpeace USA. “It’s about getting a global agreement to stop climate chaos. President Obama needs to be there at the same time as all the other wold leaders.”
But others said the visit will reinforce the U.S. government’s shift on climate policy from that of the Bush administration, which rejected the 1997 Kyoto climate accords out of hand and over eight years steadfastly opposed broad mandatory reductions in greenhouse gases.
“It’s a clear signal to the world that we’re serious … that he is committed to this issue,” said Jake Schmidt, international climate director for the Natural Resources Defense Council. Schmidt cautioned not to expect Obama to “bring back the final deal” on climate, but he said it would help to establish momentum for an agreement next year.
Obama’s negotiating position for the talks in Copenhagen has been hampered by slow progress on a climate bill in the Senate.
The House bill sets a 17 percent reduction target for emissions by 2020 from 2005 levels. A Senate version aims for a 20 percent cut.
The European Union is pressing for more aggressive cuts and has pledged a 20 percent drop in its emissions compared to 1990 levels.
Template, not treaty expected
The conference had originally been intended to produce a new global climate change treaty to replace the 1997 Kyoto Protocol.
However, hopes for a legally binding agreement have dimmed lately, with leaders saying the summit is more likely to produce a template for future action to cut emissions blamed for global warming.
While Obama himself tried to tamp down expectations during his eight-day trip to Asia earlier this month, he also called on world leaders to come to an agreement that has “immediate operational effect” and is not just a political declaration.
A few programs receive money involving energy efficiency in factories. Capstone is a great fit in factories becuase of their constant electrical and thermal need.
By Thomas Content of the Journal Sentinel
CleanTech Partners of Madison will receive up to $14.5 million in funding from the federal stimulus package to fund energy efficiency projects at Wisconsin paper mills and factories.
The state’s Office of Energy Independence will also receive $350,000 in another energy efficiency initiative targeting industry, the U.S. Energy Department said.
Wisconsin is slated to receive nearly 10% of the $155 million in industrial energy efficiency funds allocated nationwide.
The agency said this program from the American Recovery and Reinvestment Act targets the factory sector because manufacturing uses more than 30% of U.S. energy and is responsible for nearly 30% of U.S. emissions of carbon dioxide, the leading greenhouse gas.
CleanTech Partners is slated to implement 25 projects that will install energy efficient equipment in nine facilities across the state, DOE said.
Companies targeted for energy efficiency projects include pulp and paper mills, printing, corn milling, plumbing and small engine manufacturing, the agency said. Together these 25 projects are projected to save an estimated 1.21 trillion BTUs annually, increasing overall energy efficiency by 45%.
In addition, Wisconsin’s Office of Energy Independence will receive up to $350,000 to expand the Save Energy Now program, launched in 2007 as a federal-state-industry partnership.The funding will be used to help factories complete assessments to save on energy as well as launch training and outreach for the Save Energy Now program.
Details about the projects to be funded are subject to final negotiation between the Energy Department and the grant recipients, the agency said.
On January 1, 2010, many manufacturing facilities, facilities emitting green house gases
(GHGs)1, and suppliers of fossil fuels and industrial GHGs will, for the first time, be required to begin monitoring their emissions of GHGs. Then, on March 31, 2011, these companies must submit the first annual report to the US Environmental Protection Agency (EPA) on the emissions data collected during the prior year.
With the goal of understanding the origin of GHGs, EPA issued these fairly complicated and potentially expensive requirements in a final rule (Rule) on September 22, 2009 pursuant to EPA’s authority under the Clean Air Act to require reporting of GHG emissions (codified at 40 C.F.R. pts. 86, 87, 89, 90, 94, 98, 1033, 1039, 1042, 1045, 1048, 1051, 1054, and 1065).
You can access a copy of the Rule and related analysis and information from EPA at http://www.epa.gov/climatechange/emissions/ghgrulemaking.html.
Companies with facilities emitting or products related to GHGs may consider taking the following initial steps to evaluate appropriate measures related to the Rule. Those not in compliance with the Rule may be required to shutdown facilities and operations until compliance can be achieved.
Step 1-Determine Whether the Rule Applies to You
The Rule applies to a variety of categories of industries and types of facilities; however, in certain categories if the facilities do not emit more than a threshold amount they are exempt from the monitoring and reporting requirements.
Facilities Emitting GHGs:
Suppliers of Fossil Fuels and Industrial GHGs:
Manufacturers of New Vehicles and Engines:
Step 2-Readiness for the Start of Monitoring and Reporting in First Quarter 2010
Step 3-Assessing Other Realities of Disclosure
1The gases considered “greenhouse gases” under the Rule are the “Kyoto gases”-carbon dioxide (CO2 ), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFC), perfluorocarbons (PFC), sulfur hexafluoride (SF6), nitrogen trifluoride (NF3), and hydrofluorinated ethers (HFE).
2The types of facilities included in this category are Adipic Acid Production; Aluminum Production; Ammonia Manufacturing; Cement Production; Electricity-Generating Facilities; HCFC-22 Production; HFC-23 Destruction Processes; Lime Manufacturing; Manure Management Systems; Municipal Solid Waste Landfills; Nitric Acid Production; Petrochemical Production; Petroleum Refineries; Phosphoric Acid Production; Silicon Carbide Production; soda Ash Production; and Titanium Dioxide Production.
3The types of facilities included in this category are Ferroalloy Production; Glass Production; Hydrogen Production; Iron and Steel Production; Lead Production; Pulp and Paper Manufacturing; and Zinc Production.
If you have further questions about the Rule and how our professionals can assist you or generally relating to Nelson Mullins’ Agriculture and Energy Sustainability Practice Group, please contact Alexis Gilroy (202-712-2893), Bernie Hawkins (803-255-9581), Mike Bryan (843-720-4313), Chris Cushing (202-545-2974), David Harlow (919-877-3830), Ashley Cooper (843-534-4255), Reed Hollander (919-877-38), Helen Quick (202-712-2894), Congressman Ron Klink (202-712-2886), or Jack Smith (843-534-4309).
The articles published in this newsletter are intended only to provide general information on the subjects covered. The contents should not be construed as legal advice or a legal opinion. Readers should consult with legal counsel to obtain specific legal advice on particular situations.
This was found on Pantagraph.com.
By Kurt Erickson
SPRINGFIELD — An experimental power plant planned for Mattoon could cost Illinois taxpayers tens of millions of dollars more than initially believed.
Illinois lawmakers are considering an arrangement that would require the state to purchase all electricity produced at the proposed FutureGen power plant — a coal-fired facility designed to operate with near-zero emissions.
Supporters say the deal would help FutureGen qualify for upward of $1 billion in federal grants that would help finance its construction.
But, it also could boost the cost of electricity for a state already struggling to pay its bills. Exactly how much of an increase was not clear Wednesday.
The lack of information left some lawmakers baffled.
“I’m amazed at that,” said state Sen. Dale Risinger, R-Peoria. “There are a lot of issues the state of Illinois is biting off with this.”
The state spends at least $82 million per year to power its office buildings and other state facilities.
Unlike traditional coal-fired plants, the FutureGen facility would pump carbon dioxide emissions into the ground, avoiding the release of pollutants into the atmosphere. For that reason, the cost to build the facility will be higher than a traditional coal-burning power plant.
But, FutureGen CEO Michael Mudd said the facility would operate on a not-for-profit basis and use federal dollars to reduce construction costs, potentially avoiding a hefty price spike for the state.
“I don’t think it will be a significant increase,” Mudd said.
State Sen. Dale Righter, R-Mattoon, said he was comfortable with FutureGen’s estimates and said he is initially supportive of the plan.
Consumer groups and some senators expressed concerned about the effect of the deal on Illinois taxpayers.
“We want to make sure the risks are minimized,” said David Kolata, executive director of the Citizens Utility Board.
Legislation laying out the agreement allows FutureGen to charge rates that reflect not only the cost to operate the plant but also prices that also include debt payments.
The legislation is House Bill 4182.
The latest Wisconsin budget calls for an increase in utility rates to pay for district attorneys across Wisconsin. Its only $6 per customer over 2 years, but a very slippery slope indeed.
By Thomas Content of the Journal Sentinel
The latest reason that utility bills are going up around the state has nothing to do with keeping the lights on.
A new surcharge on utility bills, tacked on as part of the budget that was passed in June, will be used to pay the salaries and benefits of district attorneys in counties across Wisconsin.
The prosecutors are being paid from a fund originally designed to help poor people pay their utility bills and weatherize their homes. The extra fee, which hits We Energies customers in December, is the latest in a series of budget maneuvers that have sent a total of $166 million from electricity ratepayers to non-energy-related state government purposes since 2002.
Low-income advocates are already worried about the next state budget, and will be holding strategy sessions within weeks to determine how to prevent such a move from happening again. The Legislature, they say, can’t seem to resist raising any kind of fee – even those for programs helping the poor – to help balance the state budget.
“The bottom line is this is turning utilities into collectors for other things, and it’s bypassing what the law was supposed to do,” said Bob Jones, public policy director with the Wisconsin Community Action Program. “If it’s not DAs, what’s it going to be, something else?”
He added, “Low-income households are being punished, and utility customers are being punished.”
Gov. Jim Doyle and Wisconsin lawmakers praised themselves in 2006 when they passed a bill that stopped budget raids on utility customers’ bills. That legislation halted the diversion of $111 million in funds for energy efficiency to help balance the state budget.
But the diversions continued – only the state tapped a different pot of money, the funds designed to help the poor pay utility bills or weatherize their homes.
We Energies will collect more than $6 from every residential customer over the next two years for district attorney salaries, utility spokesman Brian Manthey said. Factories, the utility’s largest customers, will pay about $400 each over the next two years to fund DAs, he said.
We Energies will collect $4 million this fiscal year for that purpose, or 12% more than the $32 million for low-income energy assistance and weatherization programs that it would have collected without the new surcharge.
The new diversion of funds appears to have been an unintended consequence of a legislative move to halt similar budget transfers from the state’s Focus on Energy program.
At the time, the Focus on Energy money was protected and it was believed that lawmakers wouldn’t tap the low-income funds. They would be too leery of being perceived as taking money from the poor, several people actively involved in energy policy legislation recalled last week.
“At that time, no legislator would go after that,” said Charlie Higley, executive director of the Wisconsin Citizens’ Utility Board.
But it happened one year later, with the energy funds going to the Wisconsin Works, or W-2 program, and it’s happening again with the funds for the prosecutors.
A Journal Sentinel review of budget documents prepared by the Legislative Fiscal Bureau shows the amount of money being raised from utility customers for non-energy uses essentially doubled, from $18.3 million in the last budget to $36.7 million.
And it’s happening at a time when the effects of the recession are making it harder for people on fixed incomes to make ends meet. The Social Development Commission, which administers utility-bill energy assistance to poor families in Milwaukee County, processed 48,000 aid applications last year, said Deborah Blanks, SDC executive director.
With unemployment up sharply over the last year, the number of people getting energy assistance could jump by 10% or 20% this winter, she said.
“We’re finding people who never thought that they would need energy assistance are coming to us for that support,” Blanks said. “In tight budget times, the Legislature and leaders really have to look at ways to cover a broad spectrum of costs. At the same time, my concern is for the people who need it most, in terms of energy assistance to keep their houses warm during difficult, harsh Wisconsin winters.”
Dan Schoof, deputy secretary of the state Department of Administration, said Doyle’s proposed budget tried to fix the funding gap for energy assistance in this budget.
That proposal would have allowed full funding for low-income energy aid, but then would have tacked on another $9.14 million for W-2. The Legislature went in a different direction, choosing to allocate that extra funding to county district attorneys.
The budget law requires that the fee be collected for two years – and not be carried over to the next budget, in 2011-’13.
Republican lawmakers see this as an example of a broader problem – with the budget raising fees on everything from cell phones to power bills to help fund state government and avoid raising taxes per se.
“This thing for DAs is very, very irritating thing for constituents, and I totally agree with them,” said state Sen. Robert Cowles (R-Green Bay), who led the Senate’s work on the 2006 bill that halted diversions of energy efficiency funds.
Funding district attorney salaries as part of a charge meant to keep the lights on “is absurd,” Cowles said. “There’s no nexus. There’s no connection. It should be coming from the (state’s) general fund.”
Of the state’s five investor-owned utilities, only one – Wisconsin Public Service Corp. – included a description in monthly statements that explained the new fee would pay district attorney salaries.
Schoof, of the Department of Administration, noted that the state has ample funds available for weatherization, thanks to a big jump in federal funding through the American Recovery and Reinvestment Act.
“I don’t think anyone is suggesting right now that there are not enough resources for weatherization in the next two years, with the dollars that have come through with the stimulus bill,” he said.
Low-income energy advocates welcome the federal stimulus dollars, but say giving money to W-2 and now district attorneys isn’t helping poor people pay utility bills. Statewide, the amount of money paid out in energy assistance fell by 3.5% last year even as the number of people receiving energy aid jumped 17%.
The utility bill surcharge for district attorneys is required by law to end on June 30, 2011. But Jones, of WisCAP, said the budget-writers could keep the surcharge alive in the future.
“If I want to pay for DA costs, that’s a legitimate cost but I shouldn’t be paying that on my electric bill any more than I should be paying for that when I go to the grocery store.”