Governor Kitzhaber’s draft Ten Year Energy Plan

Oregonians should carefully evaluate Governor Kitzhaber’s recently released draft Ten Year Energy Plan. The draft Plan aggressively mandates energy conservation, further development of green renewable energy and the rapid phasing out of the use of fossil fuels.

The draft Plan calls for no-net increase in statewide energy use for the next decade. The goal is stated: “Maximum energy efficiency and conservation to meet 100% of new electrical load growth”. At best, the draft Plan appears to cap future energy availability at current levels. At worst, it will actually reduce energy availability in the likely event that conservation methods are inadequate to compensate for increased demand. Neither the methods to be used for efficiency and conservation nor their inherent costs are fully described or quantified. Further, the increased competitive costs that always occur when energy demands exceed energy supplies do not appear to be addressed.

Oregon has the most aggressive Renewable Portfolio Standard in the nation. Oregon law articulates the aspirational goals of reducing fossil fuel usage by 30 percent by 2020 and by at least 80 percent by 2050. Actions taken in the attempt to achieve the Standard are already forcing the change from reliable low-cost hydropower and coal generation to much higher-cost wind and solar renewables. The draft Plan appears to dismiss low-cost, reliable and relatively clean electrical generation from abundant natural gas primarily because natural gas is a fossil fuel.

The huge investments and increased production costs required to meet energy policies adopted in the past few years have already driven energy prices sharply higher in Oregon. Those aspirational policies include the Renewable Portfolio Standard, programs to significantly reduce greenhouse gas emissions including the banning of coal fired electrical generation in Oregon and establishing strict industrial emission performance standards, sharply increasing funding for energy efficiency programs, enacting the Solar Initiative that requires substantial investment in large-scale solar generation and even a pilot Solar feed-in tariff program. PacifiCorp’s nearly 60 percent increase in residential, commercial, industrial and irrigation rates since 2005 is a salient example of the cost of these policy changes. Those average annual rate increases were nearly triple the rate of inflation during the same time period.

The governor’s draft Plan, if adopted, will force the rapid implementation of these “aspirational” policies. The certain result can only be further significant rate increases. Unfortunately, Oregon’s business and manufacturing interests were not adequately involved in the consultation and formulation of the draft Plan. Arguably for that reason, the expected sharp increases in energy costs that will result from implementation of the draft Plan were not adequately addressed

The entire Plan appears to aspire to reduce greenhouse gas emissions in Oregon. However, we need to understand that the emission of greenhouse gases is a global function. Oregon’s population is about 3.8 million people. It makes up about 1.2 percent of the 310 million population of the United States and only about five one-thousandths of one percent (.00005) of the global population of about seven billion. The fact of the matter is that implementation of the Governor’s policy aspirations would not make a measurable difference in global greenhouse gas accumulations even if Oregonians discontinued the use of all fossil fuels, totally stopped emissions of all greenhouse gases, and totally stopped using all forms of energy from any source.

Regardless of our perceptions regarding alleged anthropogenic effects on global temperature changes, the global atmospheric concentration of greenhouse gases cannot be measurably changed by implementation of any action or plan by Oregon policy makers.

Oregon continues to be mired in a five year economic recession. Unemployment and underemployment are untenably high and rising. Our per capita income continues its fifteen year slide relative to incomes in other states and the nation as a whole. I believe that a great deal of that economic malaise is the direct result of transformative changes in our state’s energy policies made between 2005 and 2010. In my opinion, implementation of the Governor’s draft Plan will certainly add further stress to our already anemic rate of private sector job creation and family earning capacity. Moreover, Oregon poorest families, including those who are unemployed or underemployed, will be disproportionately disadvantaged by the higher energy costs inherent to the draft Plan.

The draft Plan appears to ask Oregonians to “take a leap of faith” and simply assume that its implementation will result in the best economic and environmental outcomes for our state. A decadal decision of this economic magnitude must not be made based on emotion. We must demand a complete and thorough examination of both the costs of existing Oregon energy policies as well as the actual measurable environmental benefits that have resulted from those policies before we consider accepting even more stringent and costly regulation.

I believe that any long term energy Plan for Oregon must be first and foremost a blueprint for achieving plentiful, affordable and accessible energy for all Oregonians. The Plan’s primary focus should be on helping to make Oregon businesses more competitive. The creation and maintenance of Oregon family wage jobs is dependent upon competitive production costs.

The Plan must recognize that energy production and markets are regional and cannot be isolated by singular state actions without creating severe economic disadvantages. It must break down and remove existing state government barriers to low-cost energy production. The Plan must encourage free market solutions in energy production and distribution rather than creating inflexible and costly government mandates.

Finally, energy users must be charged only the fair costs of energy production and distribution. It is both unfair to ratepayers and counterproductive to our economy to tax energy users through their utility rates to achieve broader public policy.

From my perspective, the Governor draft Plan will result in more limited, more costly and less assessable energy. This in turn will lead to a higher cost less competitive business environment that will be able to create and sustain fewer family wage jobs.

That is not the future that I envision for Oregon.

Please remember, if we do not stand up for rural Oregon no one will.

Best regards,

Doug