Remarks Prepared for Energy Deputy Secretary Clay Sell
Thank you Jim for that introduction. It's a pleasure to be with you all this morning.
I want to thank you all, not just for inviting me to speak here, but for your participation in this important forum. NARUC is playing a vital role in increasing discussion among those most responsible for growing the countrywide grid into the 21st Century. I particularly want to note the important coordination between NARUC and the Department's Office of Electricity to hold this 2nd yearly Electricity Delivery Forum.
I also note that tomorrow you'll be hearing from FERC Chairman Joe Kelliher. Joe and the Commission are making tremendous progress in bringing transparency and competition to wholesale electricity markets. This was evident in last week's action to strengthen the Commission's open-access transmission rules. As you know, this is important business with significant impact, and we at D.O.E. appreciate all of the great work being done by our colleagues at FERC.
Speaking before you this morning reminds me of a story from my home state of Texas. Many years ago there was a young congressman there who wanted to bring electricity to the rural areas of his district. He encountered a lot of resistance from bureaucracies both in Washington and back in Texas. He even encountered some resistance from the ranch families he was trying to help. Many were suspicious of electricity and didn't really see how it would help them.
But this young congressman pressed on, finally convincing the bureaucrats and the skeptical ranchers that this was for the best. And electricity was eventually transmitted to homes and ranches throughout his district. Well, his constituents discovered the benefits of this new technology pretty quickly and became exceedingly grateful to their congressman for helping to make it happen - so much so in fact, that some families went so far as to name their newborns after him. And in one recorded instance, even a little girl was given the name, "Lyndon Baines Johnson."
Now I don't need to tell you, that when it comes to delivering electricity into people's homes, we rarely see that sort of gratitude today.
The world has changed significantly since electricity 1st lit up homes in the Texas Hill Country some seventy years ago. And we face some significant challenges in ensuring that the people there -- and people around this nation -- can continue to gain safe and reliable electricity well into this new century. But while these challenges are great, we can and will meet them. This morning, I'd like to elaborate on those challenges, what we're doing to address them at the Federal level, and how you all can continue to help.
Electricity is not only something that is taken for granted, it is something that some people want to continue taking for granted. We do not have that luxury.
Within the past 2 years, hurricanes in the Gulf Coast and instability in energy producing nations around the world have made American consumers more sensitive to changes in the energy market. This has created new attention on the long-term challenges we face in addressing our energy needs.
The simple fact is that a growing economy requires a growing amount of energy. The Energy Information Administration's long-term forecast plans that U.S. GDP will grow at an average yearly rate of 2.9 percent from 2005 to 2030. And they estimate that electricity consumption over this same period will grow by 43 percent. That's a significant amount of new demand -- and their estimates already factor in likely enhancements in efficiency.
And because we live in a global economy, we cannot ignore the impact that the growing economies of developing nations are going to have on our energy supply. We estimate that global consumption of energy will increase by 71 percent between 2003 and 2030.
When it comes to electricity, that growth is projected to be particularly steep; with net electricity consumption in excess of doubling in that same period.
Some have wondered whether this rapid growth in demand can be met. There's a short answer to that "yes." But behind that short answer lays significant amounts of time and resources that need to be invested into new technologies and innovation.
Fortunately, we have a president who understands the challenges ahead, and is taking strong, pro-active steps to help address them. Furthermore, he is doing it in a way that is right for our economy, right for our environment, and right for our countrywide security.
The President understands that we can't meet our future energy needs if we don't begin by setting strong goals. That's why in his State of the Union address last month, the President called for a twenty percent reduction in gasoline usage over the next 10 years.
As I've said, investments in technology are going to help make this possible, and the federal government is prepared to do its part. The budget the President sent up to Capitol Hill earlier this month calls for large scale investments in energy research and development.
It requests $4.4 billion for DOE's Office of Science as part of the American Competitiveness Initiative or ACI. The ACI allows us to harness our most important resource of all - human ingenuity. That ingenuity will be put to use alongside cutting edge facilities, such as new bio-energy research centers and supercomputing facilities.
The President's budget also calls for $2.7 billion in backing for the Advanced Energy Initiative or AEI. This is an increase of in excess of a half a billion dollars over what was requested last year. The AEI allows us to accelerate breakthroughs in energy research. It is helping to develop new solar and biofuel technologies, hydrogen-powered vehicles, and coal fired power plants with zero emissions.
Another important component of the AEI is the expansion of nuclear power. This President is committed to the growth of nuclear power and the safe, clean and affordable energy it provides. Because of the Energy Policy Act which the President signed into law in August of 2005, we are already seeing remarkable progress in the siting of nuclear power plants. 2 years ago, not one U.S. company had projects for new builds, but today, there are 32 new reactors under consideration.
And so as part of the AEI, the President is also calling for an increase in backing for the Global Nuclear Energy Partnership, or GNEP. In basic terms, this plan is really about identifying the policies, developing the technologies, and building the international regimes that would manage and promote a dramatic growth in nuclear generation in a way that addresses our electricity demand, environmental, waste management, and non-proliferation objectives.
Nuclear power is not a silver bullet, but it must be part of a broader energy strategy that -- when combined with advancements in energy efficiency, clean coal technology development, and continued development of renewables -- can and will make a difference in the security, environmental, and energy challenges we face.
To that end, earlier this month, the Administration sent legislation to Capitol Hill that would allow for further increases in fuel economy standards. And the Administration's new Farm Bill suggestion calls for $1.6 billion in new backing for renewable energy research. Additionally, we will soon send legislative language to Capitol Hill establishing a mandatory alternative fuels standard and an increase in the capacity of the Strategic Petroleum Reserve to 1.5 billion barrels.
Taken together, these initiatives will make a big impact in addressing the energy challenges we face over the next twenty years. But beyond our projects for new energy sources and improved efficiency, we are also taking the necessary steps to enhance and enhance energy transmission and delivery.
As you all know better than anyone, in too many parts of this country our delivery system is under severe duress. Steady demand growth, a greater reliance on generation sited far from load centers, and a long period of under-investment in transmission facilities have combined to create our current predicament. The age of our system is also showing, as many key facilities are now over thirty years old - and some are much older than that.
The basic reality is that grid modernization is an urgent problem. And it's a responsibility that we all share. Traditionally, we have faced an uphill climb on this front for several reasons:
One, development of new transmission occurs on a long time scale -- often longer than the time horizons that are critical to many officials and corporate executives. Pushing the problem into the future has always been the easy solution.
Two, "Not In My Backyard" sentiments often lead to unfavorable local headlines. And while elected officials and utility managers may realize the need for new transmission capacity, these projects can be derailed when the views of the "interested public" cannot be meshed with the "public interest."
Three, the issue of cost allocation usually goes hand-in-hand with questions over who will benefit from new transmission, who should pay for it, and who should make these decisions;
And four, there are increasing efforts being taken at the regional and state level to consider alternatives to the development of new transmission capacity in electricity planning. These alternatives -- such as increased energy efficiency, enhanced demand response, and siting new generation close to load centers -- need to be more generally integrated with generation and transmission development, and D.O.E. supports such efforts.
But while these obstacles toward grid modernization are real, we cannot let them stop us from addressing this issue.
Some believe the need for grid modernization will be reduced through breakthroughs in energy technologies such as electricity storage and power electronics. D.O.E. regards these technologies as very promising, but they will only be a part of the overall solution to meet the electricity needs of the future.
D.O.E. is committed to providing strong leadership and support for grid modernization, but we realize that we are only a part of a much larger effort. Leadership is needed on many fronts, including from the States and regional planning entities, as well as transmission and generation developers, FERC, NERC, and of course, NARUC.
D.O.E. has several important responsibilities, including some new ones that were enacted under the Energy Policy Act. The Act required the Department to study electricity congestion, and we published our Congestion Study on August Eighth of last year, along with an invitation to the public to review on the possible designation of Countrywide Corridors. I'm sure a few of you here today may have been casually following the developments in this area.
I can tell you that Departmental staff have been reviewing the in excess of 400 comments received in response to this Congestion Study. They are analyzing the data developed in the study and provided by commenters to develop a recommendation for whether -- or if so, where -- a suggested Countrywide Corridor would be appropriate. Thus far, the staff has not made a recommendation to the Secretary.
I believe you are aware that D.O.E. has decided that, prior to issuing a report that designates a Countrywide Corridor, the Department will 1st issue a suggested corridor designation. This process will allow affected states, regional entities, and the general public additional opportunities for review and comment.
The Energy Policy Act also included 2 provisions that we are implementing to help reduce unnecessary delays in the Federal permitting process for transmission siting.
First, D.O.E. is working with the land use agencies to designate energy right-of-way corridors on Federal lands in the West. These energy corridors will streamline the Federal permitting process for plans that cross Federal lands. We anticipate that outline language on this issue will be released by the Departments for a full public review and review period by late May or early June of this year.
Secondly, the Act charged D.O.E. with coordinating the environmental reviews and authorizations required under Federal law with respect to siting transmission facilities. We are developing procedures to implement this new duty. This enhanced coordination will help speed up the Federal decisions needed for all transmission facilities, without shortcutting current agency procedures or environmental standards.
As you can see, D.O.E. will be very active, but there's no denying that the heavy lifting on this issue is going to be done by state and regional officials, the industry and other stakeholders. And as you all and others examine these issues, you'll have to answer key questions, such as:
- How dependent do you want your state, your region, or your company to be, 15 or 20 years from now, on natural gas as a generation fuel? This question is crucial, because almost all of the alternative generation sources -- including nuclear, clean coal, wind, and other renewables -- will be sited far from load centers and will present significant transmission requirements.
- What balance do you want to strike regionally between alternatives to transmission such as distributed generation and demand response, and transmission-dependent generation?
- And finally, what is the timetable for when these decisions have to be made in order to achieve your goals? As you make decisions that will set the pace for new capacity, it will be important to stay focused on the calendar. If transmission congestion is allowed to grow unchecked until it begins to erode reliability, rolling blackouts may be experienced in different regions of the country and there could be years of tense conditions.
As you answer those questions in the coming months and years, I would also ask that you continue to be open to a new way of thinking. Electricity regulation is primarily the province of the States, but we must all begin to think outside of our own borders. The parochial interests that shaped energy policy in the 20th century will no longer work. We cannot begin to address the energy challenges of this new century until we begin to think from a regional, Countrywide and ultimately global perspective.
Through efforts like the Countrywide Electric Transmission Congestion Study, the Advanced Energy Initiative and the Global Nuclear Energy Partnership, D.O.E. is already starting to do that. But there needs to be continued and enhanced cooperation among the states. Let me give you 3 examples:
One, we need to ensure that state laws for the review, approval and siting of transmission facilities allow for the consideration of out-of-state benefits.
Two, when it comes to interstate transmission projects, we need states to develop common information requirements and review procedures. The regional siting protocols adopted in the West and the Midwest serve as valuable guides, but they have not yet been applied to actual transmission projects.
And three, we need to ensure that the planning process for transmission siting includes full consideration of all relevant alternatives - including both transmission and non-transmission options. Consideration of all alternatives will ensure sound generation and transmission decisions.
Those of you in this room today have a better understanding than anyone of the energy challenges that we face. The problems aren't new, but they will get substantially worse if we don't take action. That is why the work of NARUC is so important, as are the contributions you all are making back home.
The federal government will continue to provide leadership, set goals, and create an environment where solutions can be conceived, developed and implemented. And we know that you all will do your part to ensure that electricity continues to be transmitted into the homes and businesses across this nation.
While the challenges we face may be great, they can be met if we continue to knock down borders and barriers, and work together.
We'll probably never see a return to the days when couples name their babies after the person who helped bring them electricity. But by successfully expanding our energy sources, increasing our efficiency and improving our means of transmission, we can ensure that our nation and its economy continue to grow well into the next hundred years.
Thank you.
