Two Cato analysts suggest a return to the past-vertical integration, but now with no state regulators.
The defeat of the energy bill in...
Feel-Good Electric Waste
Like diets that make us fat, efficiency is bad for the environment.
The last 30 years in America have seen great improvements in the energy efficiency of electric motors, appliances, and other end-use equipment. Think of compact fluorescents, ground-source heat pumps, and thermal window glazing. Add variable speed drives, chilled water AC, and high-pressure sodium street lighting. You name it, we've got it.
But energy efficiency is no saving grace. Like a dieter who keeps gaining weight, our consumption of electricity continues to climb despite our efficiency gains, leaving our environment worse as a result.
Is There Any Way Out?
Since 1969, we have created and promoted electric efficiency through the Department of Energy, various state energy offices, and the Environmental Protection Agency. We have enacted various energy efficiency tax credits, the Model Energy Code, ASHRAE Standard 90, appliance labeling, EPA's Green Lights and EnergyStar programs, a shared savings industry, and Energy Rated Homes.
Yet in the residential sector, we now consume 58 percent more kilowatt-hours (kWh) per individual electric meter than we did 30 years ago: 10,388 kWh per residential meter in 1999, versus 6,571 kWh in 1969, according to the Edison Electric Institute and its statistical yearbooks. The same source reports that power consumption per commercial meter was up 88 percent over the same period. Overall, the EEI data shows that the number of kilowatt-hours sold per American electric meter increased overall almost 40 percent in 30 years. But the increase in the amount of electricity available for consumption-up 2.4 times, or 144 percent, from 1969 to 1999-is even more astounding.
This is no environmental triumph. Yet few, if any, environmentalists dare question the gospel of improved efficiency, or discuss alternatives. They say instead that energy efficiency produces environmentally benign energy faster and cheaper than any other source of energy. I say we just waste more and more electricity, only more efficiently than before.
The proponents of improved energy efficiency argue that if only we do more with less, we won't ever have to face resource constraints. They say that improved energy efficiency is cheaper, faster, and environmentally cleaner than other additions to electric supply. Efficiency seems virtuous, similar to godliness, cleanliness, patriotism, mom, and apple pie. It is fundable, politically correct, popular, and clean. But improved electrical efficiency has not worked.
With all these improvements in electrical efficiency, and all the programs that promote them, electricity used per American electric meter should have dropped, but it hasn't.
The Experts: Lying With Statistics
Congress passed the National Environmental Policy Act in 1969. Then came OPEC, the oil embargo, and Three Mile Island. Oil production in the lower 48 states peaked in 1970, and since then we have known that oil and natural gas are limited resources. So, America found and imported more oil and gas, strongly motivated by oil price hikes in 1973 and 1978. Quietly, efficiency became one "source" of energy. But, is it?
Consider the notion of using demand-side management to create new energy resources-a cannon of environmentalism since the mid-1980s. Chart 1 shows the surprising