While hardly earth shattering, the Bush administration's National Energy Plan, or NEP, makes a positive contribution to national debate, says an analysis by PA Consulting Group in Washington. The main value of the report, says the consulting firm, "is to position the energy debate right where it belongs, that is, at the intersection of demand and supply issues." The NEP, says the analysis, "surely shows heavy emphasis on infrastructure and new generation and exploration technologies, but it also includes a much stronger focus on conservation and efficiency than earlier drafts."
But the White House report, says PA Consulting, "could have been a lot more specific about demand-side actions and misses entirely the potential for market-based energy efficiency solutions." On the electric side, says the analysis, the Bush-Cheney report does not include many insights into the drastic industry restructuring that is underway. Before the end of this term, President Bush will probably see no drilling in the Arctic and no new nuclear power plants built, but issues like [Federal Energy Regulatory Commission] reform and [Public Utility Holding Company Act] repeal will have started being addressed and their impacts will be felt."
Most significant, says the consulting group, is the report's recommendation regarding federalizing electric transmission siting. This could "go a long way towards removing some of the most significant barriers facing new transmission investment," says the analysis. But state and local Nimby [not in my back yard] and Banana [build absolutely nothing anywhere near anybody] sentiments continue.
The analysis notes an interesting political irony in Bush's plans for transmission - the heavy reliance on government intervention and investment. The plan calls on both the Bonneville Power Administration and the Western Area Power Administration "to examine using federal funds to resolve transmission constraints in the West. In view of the current lack of federal transmission siting authority, this may have been viewed as the most expedient way in which to deal with the need for greater transmission investment, particularly in the West," says the analysis.
PA Consulting also underscores the welcome mat for coal in the Bush report, which it identifies as the dominant fuel for meeting increased electric demand over the next 20 years. "The NEP clearly recognizes that increased use of coal is crucial to meeting the nation's growing electric needs and accords coal a prominent place in our energy future," says the analysis. "This is a change from coal's status over the past decade as a pariah fuel that pollutes the environment, causes global warming and should be replaced with natural gas."
While Washington has been slow to recognize the strength of coal, the analysis notes that the market has not. "Over the past six months, more than 20,000 MW of new coal-fired capacity have been announced - up from zero," says the consulting firm. "The market has already recognized the NEP's conclusion that new coal plants make sense. Escalating natural gas prices, coupled with an almost total reliance upon natural gas for new generation over the past decade has made coal an attractive option."
Copyright 2001, Elsevier Science Inc.
