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It's a War Out There: A Gas Man Questions Electric "Efficiency".

Fortnightly Magazine - December 1996

commented extensively on such issues prior to this report.33 In fact, the Office of Utility Technologies (OUT) specifically requested comments through the Federal Register,34 and stated that the report relied upon those comments.35

Administration of DOE's DSM and IRP programs is the responsibility of OUT; whose mission statement follows:

"The Office of Utility Technologies leads the federal government's efforts to help America's electric power producers develop clean, renewable, and more economical forms of energy."36

The only noteworthy involvement that OUT had with the

natural gas industry was a one-time workshop, co-funded by the Gas Research Institute (GRI), for the purpose of assessing the largely academic status of fuel-cycle analysis models.37 The Edison Electric Institute (EEI) apparently assumed that the purpose of this workshop was to better quantify environmental externalities; this confusion reduced the productivity of the workshop. However, the general consensus of the workshop "clearly stated that there is a need for an analytical method to perform full and consistent comparisons of energy conversion technologies throughout the total fuel cycle of an energy resource"38 and recommended that DOE consider the following activities:39

s Establish a fuel-cycle-assessment focus group

s Conduct an assessment of alternative total-fuel-cycle analysis approaches

s Further analyze the models presented at the workshop

s Identify/develop data elements to support total-fuel-cycle analysis.

Apparently, the effects of this workshop continued to be misconstrued as advocating the issue of environmental externalities. Around the time of DOE's well-publicized congressional funding problems, certain individuals close to OUT's programs explained that EEI had stated its intention to influence congressional budget cuts if OUT pursued anything even remotely associated with environmental externalities. OUT then attempted to restructure its IRP program into a new "competitive resource strategies" program. Apparently, OUT's efforts proved too little too late, as the budget for IRP was still eliminated. However, it is expected that this successor to IRP will continue to be funded through "reallocations." DOE is also reported to be considering offering its services to the electric utility industry for a fee.

The Texas Solution:

Competitive Bidding Among All Sources

Texas provides a much better example of how DSM, IRP, and competition may be integrated. Final IRP rules were recently adopted by the Texas PUC that effectively call for "exhausting all cost-effective alternatives to power-plant certification because that will lower costs to consumers."40 The theoretical cornerstone of IRP in Texas is all-source bidding for least-cost energy services. The IRP rules state: "Nothing in the integrated planning progress shall inhibit the development of competitive markets for electric power or energy services"41 Further: "The commission believes that IRP will foster and compliment the development of competitive markets."42 However (up to this point), the term "all-source" has primarily been interpreted as some sources (i.e., "electrotechnologies") and "least-cost" has primarily been interpreted as perhaps a little less costly (at best). Consequently, the PUC has voiced the following concerns:

s "[L]imited retail competition ... occurs among electric utilities and the suppliers of natural gas and propane fuels."43

s "[M]onopoly electric utilities may use revenues from one sector of their operations to subsidize activities in partially competitive