Survey: State regulators showing less faith in renewables, more in clean coal
Monday, June 07, 2010 3:54 PM ET
State regulators are banking less on renewable energy and more on clean coal technology to achieve greenhouse gas reductions, according to Deloitte's annual survey of state utility commissioners.
In the "2010 State Utility Commissioner Survey," released June 7, 40% of state regulators said they believe renewable power sources are moderately or extremely effective in reducing emissions. That marks a dramatic drop from a year ago, when 76% of regulators said they believed renewables to be at least a moderately effective way of reducing emissions.
Regulators' faith in carbon capture and sequestration technology, meanwhile, surged this year, with nearly 62% of state commissioners ranking the technology as extremely or moderately effective. Only 44% of regulators described clean coal technology as effective in last year's survey.
Deloitte energy and resources regulatory policy leader Branko Terzic, who conducted the survey by e-mail earlier this spring, said he believes the rise of carbon capture technology and fall of renewables are directly related.
"I think more regulators now have more experience watching the renewables market and are realizing that expanding renewables is a little more difficult than they first thought," said Terzic, a former FERC commissioner who previously served on the Wisconsin Public Service Commission. "I think more and more people are also understanding that the wind just doesn't blow as much we think it does."
Siting wind and solar power plants has become just as difficult as siting any other plant, he said, and transmission linking up to remote renewable resources has proved costly and controversial. In fact, regulators identified the high price to consumers as the largest barrier to renewable energy adoption, with transmission constraints ranking second.
Consumers, meanwhile, appear less willing to subsidize "cleaner" energy resources. More than a third of regulators, or 34%, said they believe electricity customers would not accept a rate increase to mitigate greenhouse gas emissions, compared with 23.3% in 2009. The percentage of regulators who felt consumers would support an increase in costs of up to 5% annually fell from 55.3% in 2009 to 34.3%.
And yet nearly all regulators surveyed agreed that the cost of residential electricity is bound to rise next year, with environmental compliance accounting for the bulk of that increase.
The disconnect between consumers' unwillingness to pay more and the inevitable increase in electricity costs has an increasing number of utility commissioners looking into time-of-use rates. According to the survey, 60% of regulators surveyed said their states are considering time-of-day rates, and nearly 83% said those types of rates need to be considered.
"The message here is that I think regulators are pretty on the ball as to what needs to happen for us to be able to tolerate increasing costs and, at the same time, not have a consumer rebellion," Terzik said.
"The only way you can square the circle between costs going up and the concern about rate impact is to look at the bill impact and say, 'The only way I can have higher prices and keep bills the same is if people use less.' And they're only going to use less if we send them the time-of-day signal," he said.
That also has prompted regulators to eye potentially less expensive alternatives to renewable power generation, such as small-scale nuclear power and clean coal technology, Terzic said.
Nearly 63% of those polled said small nuclear reactors, thought to be less costly and time-consuming than building larger, more traditional nuclear power plants, would be an "attractive alternative."
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