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Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: "SCIENTECH IssueAlert" <IssueAlert@scientech.com< X-To: X-cc: X-bcc: X-Folder: \Mark_Haedicke_Jun2001\Notes Folders\Notes inbox X-Origin: Haedicke-M X-FileName: mhaedic.nsf SCIENTECH's IssueAlert Today's IssueAlert Sponsors: [IMAGE] EXPERIENCE THE PEACE SOFTWARE DIFFERENCE. DISCOVER THE POWER OF SUCCESS. Peace Software customers are experiencing real, measurable results using Peace's advanced customer and commodity suite, EnergyTM. Discover what the world's leading energy providers already know. Leading energy providers prefer Peace Software. Find out why...at CIS, Booth #501. www.usa.peace.com/CIS2001 [IMAGE] Vice President Cheney recently stated that to meet projected energy demands the US requires between 1,300 and 1,900 new power plants. That averages out to more than one new plant per week, every week, for 20 years running. Learn about the pivotal role of natural-gas based generation in solving the US energy crisis, attend Natural Gas and Power Generation Strategies 2001, June 13-15,Tucson, AZ. [IMAGE] In an exclusive SCIENTECH PowerHitters interview, Keith Stamm, President and CEO of Aquila, Inc., shares on the dynamics behind the highly successful April IPO and Aquila's view of broadband and other trading markets to watch for in the upcoming months. Read the questions Stamm was asked at: www.scientech.com [IMAGE] [IMAGE] May 11, 2001 Bush Energy Plan Expected Next Week; Nuclear Power, Eminent Domain Emerge as Key Elements By Will McNamara Director, Electric Industry Analysis [IMAGE]With California struggling through yet another round of rolling blackouts this week and reportedly its thirty-ninth issuance of a Stage 3 emergency warning since January, the Bush administration is putting the finishing touches on its much-awaited energy strategy. A national energy plan, which is the culmination of nearly three months of meetings by a task force led by Vice President Dick Cheney, is scheduled to be announced by President Bush sometime next week. Even before being released, the plan is surrounded by controversy and criticism that the Bush administration remains too focused on long-term solutions and has not provided any immediate fixes to national energy problems that are most extremely illustrated by the power crisis in California. Analysis: As noted, the Bush administration won't officially release its energy plan until next week. However, based on recent statements made by both the president and the vice president, we already have a good indication of the broad strokes of the plan. Since January, it has been expected that President Bush will unveil an energy plan that strongly encourages exploration for domestic oil and natural gas. The administration's position on conservation efforts and renewable energy as long-term solutions to the nation's power needs is less clear, as both Bush and Vice President Cheney have made rather inconsistent statements regarding these issues (conservation in particular). Yet perhaps the most controversial elements of the plan are the administration's expected positions on nuclear energy and the right of the federal government to usurp state authority and mandate the placement of new electric transmission power lines. As noted, for several months it has been anticipated that President Bush will allot more funding for exploration efforts than renewable energy or conservation efforts (see my IssueAlert from 3/25/01 for more information on this). Despite the fact that this position has been intensely criticized, it is important to note that the president has not indicated that these approaches will not have a role in his administration's strategy. In fact, recent word from the administration is that at least conservation will receive a "major emphasis" in the plan. However, at the same time, the president has stated publicly that the nation can't "conserve its way to energy independence." Vice President Cheney echoed this sentiment by remarking that conservation "is not a sufficient basis for a sound, comprehensive energy policy." In addition, realistically, renewable energy sources only account for about 2 percent of the total energy supply. Cheney claims that even if renewable sources were tripled over the next 20 years, they would only account for 6 percent of the nation's total energy mix. Consequently, although conservation and renewables will be included in the imminent energy plan, the Bush administration is clearly focused on other solutions that it believes are more realistic. We will have to wait until the plan is released to adequately assess the extent to which conservation and renewable energy will be supported by the Bush administration. Perhaps more interesting at this time are two controversial components of the forthcoming energy plan that have emerged this week. First, a key element of the Bush administration's plan will be the expansion of energy infrastructures to deliver power across the nation. Specifically, it is becoming increasingly clear that the energy task force led by Vice President Cheney will recommend that Energy Secretary Spencer Abraham draw up legislation that allows for FERC to assume control over private property to accelerate the construction of transmission power lines. The task force believes that the lack of transmission capacity is one of the key causal factors of the California energy shortage and concerns about power supply in other areas of the country. In other words, in addition to California's in-state power supply deficiency, power from outside the state cannot be easily imported due to clogged infrastructure. A deficient transmission system is also a major factor in potential power problems facing New York City this summer. FERC already has what is known as "eminent domain authority" over the siting of natural-gas pipelines, which typically are underground and therefore do not spark much public resistance. The construction of new power lines, however, is a contentious issue. New lines are often blocked due to the "not in my backyard" (NIMBY) syndrome. In addition, state governments presently regulate the construction of new transmission lines and have been reticent to relinquish this control to the federal government. In addition, many states view the eminent domain policy as an invasion of home rules and a violation of homeowners' rights. If, as expected, the Bush energy plan extends eminent domain to FERC for electric transmission lines, then the commission would be given the authority to force private landowners to allow new power lines to be built on their land. The government typically compensates property owners for the seizure of their land, but this has not appeased state governments in their opposition to the rule. Once the land is taken from private owners, utilities (and not the government) would be given ownership of the land and allowed to build the new lines. This is something that utilities as a group have requested for some time, as presently they face multiple local and state regulatory obstacles whenever they seek to build new lines. In interviews this week, Cheney admitted that eminent domain would be addressed in the energy task plan, but has not specified what the plan would propose. However, the vice president did acknowledge that the key issue to be addressed is whether or not the federal government should have the same authority on electrical lines as it already has on gas lines. In the second controversial element of the forthcoming energy plan, Cheney also revealed in recent interviews that nuclear power will factor in rather significantly to the task force's proposals. On May 8, in an exclusive interview with CNN, Cheney said that the answers to the nation's energy woes lie in increasing the supply of energy sources, including giving nuclear power "a fresh look." Given the high prices of natural gas, Cheney has argued that from an economic standpoint, now is a good time for nuclear power to re-emerge. In addition, in the CNN interview the vice president pointed to the fact that nuclear power is recognized as a "safe technology that doesn't emit any carbon dioxide at all." The only significant problem that Cheney sees with nuclear power is the nuclear "waste piling up at reactors all over the country." Consequently, although the vice president supports an increase in the nation's reliance on nuclear power, he also supports the use of a national, permanent repository that can be developed for nuclear waste. Yucca Mountain, located in Nevada, is being tested as a suitable site for a spent nuclear fuel and high-level radioactive waste repository. Experts throughout the world agree that the most feasible and safe method for disposing of highly radioactive materials is to store them deep underground. Moreover, when the Bush administration's energy plan is officially released next week, it will be interesting to see the specific proposals that the Cheney task force offers. In the meantime, the plan is already generating a great deal of controversy as some Republicans worry about political fallout from the administration's previous reluctance to intervene and repair problems in California. Constituents across the country increasingly are voicing concerns about pervasive power problems, although California and New York appear to be the only two areas with real worries. Given the growing sense of anxiety about the energy problems and its impact on the nation's economy, it is feared that the lack of any clear short-term solutions will soon spark an intense round of finger-pointing that could impact future elections. Rising gasoline prices and predictions for summer blackouts beyond California are only raising the heat on this red-hot debate. Cheney himself admits that the energy plan has become a "political debate," in addition to being a discussion about policy. For months, it was clear that the Bush administration and FERC preferred to let California solve its own problems. But after months of rolling blackouts, the bankruptcy of Pacific Gas and Electric Co., and projections for severe summer problems, California's problem has now become President Bush's problem. The bottom line is that an enormous amount of political credibility is riding on the forthcoming energy plan, in addition to the fact that the nation will be eagerly looking for the Bush administration to offer reliable solutions to the increasing power problems. An archive list of previous IssueAlerts is available at www.scientech.com [IMAGE] The most comprehensive, up-to-date map of the North American Power System by RDI/FT Energy is now available from SCIENTECH. Reach thousands of utility analysts and decision makers every day. Your company can schedule a sponsorship of IssueAlert by contacting Nancy Spring via e-mail or calling (505)244-7613. Advertising opportunities are also available on our website. SCIENTECH is pleased to provide you with your free, daily IssueAlert. Let us know if we can help you with in-depth analyses or any other SCIENTECH information products. If you would like to refer a colleague to receive our free, daily IssueAlerts, please reply to this email and include their full name and email address or register directly on our site. If you no longer wish to receive this daily email, send a message to IssueAlert, and include the word "delete" in the subject line. SCIENTECH's IssueAlerts(SM) are compiled based on the independent analysis of SCIENTECH consultants. The opinions expressed in SCIENTECH's IssueAlerts are not intended to predict financial performance of companies discussed, or to be the basis for investment decisions of any kind. SCIENTECH's sole purpose in publishing its IssueAlerts is to offer an independent perspective regarding the key events occurring in the energy industry, based on its long-standing reputation as an expert on energy issues. Copyright 2001. SCIENTECH, Inc. All rights reserved.
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