December 21, 2014

Energy Policy

Enough Juice?

Officials say a state energy policy can make a difference.

Neil Skene | 1/1/2006
A contentious local plebiscite over energy policy in Tallahassee offered a glimpse of the future in a world where oil is unlikely to see $10 a barrel again and once-cheap power sources like natural gas become almost as precious.

The issue for Tallahassee voters was whether the city's municipal power company, which relies mainly on natural gas, should become a partner in a $1.5-billion coal-fired generating plant to be built in Taylor County, about 50 miles away. The city commission said the deal would diversify energy sources beyond the city's predominant dependence on natural gas and, not incidentally, mitigate the effects of sharp increases in natural gas prices. The cost of 150 megawatts from the new North Florida Power Project, the city analysis claimed, would be half what they will be next year from current energy sources.

A strong opposition, which lost but rallied 40% of the vote, said coal plants are bigger polluters than most other fuels. The issue wasn't cost or diversification; it was the environment. Regulated investor-owned utilities, they said, are moving away from coal. For example, Progress Energy Florida, based in St. Petersburg, is converting its oil-fired Bartow plant to natural gas, which would not only reduce pollution but also reduce Tampa Bay barge traffic from oil shipments. Even more significantly, Progress is planning a new nuclear plant in Florida. Nuclear generation is again in utilities' growth plans after a quarter-century hiatus. (see "Utilities - Industry Outlook", in this month's issue).

Tallahassee's debate portends growing friction over the availability, price and sources of power all across this fast-growing state. Besides prompting a re-examination of federal and state policies, this situation could have a political effect as Republicans, traditionally defenders of market forces, defend their hold on federal and state offices in 2006.

So it is no surprise that Gov. Jeb Bush has ordered up a new "comprehensive energy policy" from his Department of Environmental Protection by mid-January. Attorney General Charlie Crist, who wants to be the next governor, even offered the very un-Republican idea of reducing power company profits to mitigate fuel surcharges on electric bills.

There is already, of course, a hodge-podge of programs -- state and federal incentives and subsidies, marketing programs and economic-development initiatives. These sorts of things in Florida go back a quarter of a century, to the sharply rising energy prices of the 1970s.

Why no solar?

And yet, none of those strategies has really taken hold. The state with more sunshine than just about any other state gets more power from converting garbage than it does from solar energy. "Why isn't (solar) more developed here in Florida?" wonders DEP Secretary Colleen Castille, who is in charge of writing the report for the governor. "Why aren't more products developed for the average homeowner?"

Sen. Lee Constantine, a Republican from Altamonte Springs who is a Senate pointman on energy legislation, agrees on a need to make hydrogen and solar and other fuels "more than a sliver on the pie charts" while use of natural gas grows dramatically.

One thing Castille wants to focus on is moving beyond pilot programs. She says she'd like to identify a small number of areas where the state can have a real impact and expand those beyond pilot programs and isolated ventures, either by creating a market as the buyer of goods and services or through state encouragement, including continued attention to attracting alternative-fuel businesses. The Bush administration has been a booster of hydrogen projects lately, but biodiesel, solar and ethanol are also good prospects for more state support.

"It's not rocket science," Castille says. But it is economics. Alternative fuels have big research-and-development costs and don't yet have economies of scale, so they cost more than traditional fuels. For these newer technologies to become mainstream, some big customers are going to have to make big investments.

To make that happen, traditional energy sources will need to be permanently more expensive (as a result of market forces, tax policy or environmental restrictions), and a couple of the new technologies will have to emerge with substantial new demand (perhaps promoted by state purchases, subsidies or regulatory preferences).

Policy matters

With so many forces beyond state control, from weather to the industrialization of China and India, can Florida energy policy really make a difference? "Yes," says Castille. "If we support certain types of industries here in Florida and work with those in conjunction with federal subsidies, we can diversify the fuel supplies that we have here in the state."

But choosing among alternatives and pushing faster change could be contentious. Which brings us back to that Taylor County coal plant. OUC in Orlando is building a $550-million coal-gasification plant as a "demonstration project," with the federal government providing a huge portion of the money, yet the electricity co-ops behind the Taylor County project are still proposing coal (and touting the amount they're spending to reduce the pollution).

Would a Republican administration that decries regulation actually try to push the builders to use the less polluting coal-gasification rather than regular coal?

When growth-management and water-management legislation was working its way through the Legislature last year, energy supply was one aspect of Florida growth that nobody talked about. With 1,000 people a day pouring into the state, Bush says Florida is likely to use half again as much electricity in 2020 as we used in 2002.

It won't be cheap, though. The question over the next 20 years is whether it will be available, how much it will damage the air and water, how much it will cost and in whose "back yard" will we put new plants -- whether coal, gas or nuclear. With the hurricane season behind us, it's worth stepping back to ponder a future where the main concerns aren't getting the wires and poles back up, but making sure there is enough juice flowing through them.

Tags: Politics & Law, Big Bend, Around Florida, Government/Politics & Law

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