Call a spade a spade and the choices may be different

Warren Causey | Feb 05, 2010

 

Since we began Intelligent Utility Daily slightly more than a month ago, I have been surprised and pleased at the number of university professors we tend to hear from. Obviously because of the slightly more cautious nature of my writing regarding global warming, smart grid and remaking the utility industry all at once, I probably hear from more professors who share my views. What pleases me is that I didn't know there are so many of what I would call "real-world-grounded" professors. I heard from another one this week after my column on demand response entitled "Misrepresenting the public isn't a very good idea."

My correspondent this week wasn't just any old college professor, he was Merwin Brown, Phd, director, electric transmission & distribution research, California Insitute for Energy and Environment, University of California. Brown agreed to let me quote from his e-mail. He started with, "It's about time somebody asked and answered your question, 'does the public want it,' it being demand response in this case. I've pondered your question and Jamie's reply for some time now, but the question remains, 'why push demand response?' I suspect the complete answer is complex, so at the risk of over-simplifying, I suggested that it is a form of rationing electric power."

Actually, I have blogged repeatedly in another Energy Central venue that "rationing" is exactly what demand response is. I was gratified to hear such an eminent person as Brown use the term. Like me, he pointed out that "the electric industry had a long history of providing all the electricity the customer wanted, while continuing for decades to lower the unit cost. Thus reliability and availability were the performance metrics of choice. But around the 1970s that trend was replaced by a new trend. For many reasons, the unit cost of electricity started an upward trend, and perhaps more significantly, new electricity production and delivery infrastructure became increasingly difficult to site."

Brown went on to point out that "It became increasingly difficult to sustain the industry standards of reliability and availability because cost had entered the equation, forcing tougher tradeoffs." He noted that new regulation was adopted to "let market prices" made some of these tradeoffs, at least at the wholesale level.

Demand response came along because utilities no longer able to guarantee the original compact of reliability and low cost, he pointed out. The "deregulation" of the 1980s-1990s let "market prices, at least at the wholesale level, make some of the tough decisions, and letting congestion become, at least economically, a part of the business proposition. Some congestion was cheaper than no congestion, especially because it was becoming harder to site and pay for new infrastructure. Congestion is a form of rationing, but congestion at the wholesale level won't work well unless it influences the behavior at the retail level, hence demand response. So demand response is a form of rationing because it makes the most sense in a world where reliability and availability must balance cost and the difficulty with siting infrastructure that would satisfy all demand.

"Demand response can be implemented fundamentally in three ways: prices, and controlled and uncontrolled actions," Brown continueed.  "Prices bring the consumer directly into the decision process, hopefully making rationing more palatable, but does the consumer want to be brought into that debate, and will it actually work to ration rationally? Controlled demand response is a more certain way of implementing rationing, but it smacks of big brother and is more of 'in your face' rationing. The third method, uncontrolled demand response, i.e. blackouts, is probably universally rejected as unacceptable rationing, for both economic and societal reasons.

"Since we can't have all the electric power when we want it at what appear to be reasonable costs, financially and environmentally, demand response is a good thing in many ways. But the real question is how should it be best implemented? One thing that is fairly clear, in order to avoid the third form of rationing, we will need to have demand response and we will need a more flexible and robust grid to do it."

I agree with virtually all of what Brown said and respect him for willing to use the "R" word. He is exactly right. However, my own position is that rationing shouldn't be necessary.  Coincident with the 1970s period he cited, the environmental movement in this country began to acquire more and more political muscle. As I've noted before, I'm all for preserving a clean environment. What I'm not in favor of is shutting down our ability to keep our society and our economy running through electricity. There are tradeoffs that can and should be made between a clean environment and adequate electricity without the need for rationing. 

However, those tradeoffs are being heavily weighted by current political powers-that-be toward towards environmental constraints that are far beyond the point that electricity can remain ubiquitous and cheap. I don't believe the public is ready for that, nor should it need to be. The global warming movement is just a many-times escalation of the environmental movement.  However, it seems that that movement may have overreached itself with new revelations every day about how the IPPC documents were "doctored," nonsense about Himalayan glaciers melting written by environmental groups (not scientists), etc., etc. It's well past time to step back and consider these tradeoffs rationally. I hope not even the most radical environmentalists want to further crash the United States' and global economies.

Rationing is not a pleasant prospect for the general public and selling it as "demand response" likely is not going to work. It's time for the environmental movement to "cool it" a bit so more base-load power plants can be built, as cleanly as possible, and rationing isn't necessary.  Otherwise, in my opinion, the public is going to awaken one day to what is being done to them and they aren't going to be very happy! I wouldn't want to be an "in-your-face, shut-it-all-down" environmentalist then, nor a political fellow-traveler.