Electricity for Santa Fe’s Water Supply

Santa Fe recently announced their intention to award PNM a contract for the 27 million kilowatt-hours of electricity needed per year to pump drinking water from the planned Buckman Direct Diversion to Santa Fe. Were the operating cost estimates for this system calculated using last years electricity price, this years price, or next years? What escalation rate for electricity prices was used in the forward projection of costs? Based on the recent and proposed rate hikes, an increase of 17.5 percent per year may be reasonable. Will the proposed 9.5 percent per year increase in water rates be enough to cover that?

Norm Guame, the City’s consultant on the project, said that alternatives to awarding PNM the electricity contract were unfeasible, risky, and uncertain.

Does is seem odd that our least risky alternative is to entrust our drinking water supply to a company with a plummeting stock price, that is owned by global investment firms, that has raised rates by 17 percent this year and is seeking another 18 percent hike next year, and that is under investigation by the State Environment Department?

Could it be time to consider an alternative energy supply for Santa Fe?

Creating Local Energy Markets

This commentary aired October 1, 2008 on KUNM.

Listen to Commentary (Quicktime, 3.5Mb)

One of the greatest myths of our time is that renewable energy isn’t quite ready to compete with so-called “conventional” sources of energy. More research is needed, we are told, because renewables are still too expensive. So onward we march, powering our homes with coal and filling our gas tanks with imported go-juice, all the while shipping bagfuls of cash out of our communities to pay for it.

There is a lot of evidence that this myth about renewable energy is false. Many countries smaller than ours are installing renewables faster than we are, creating jobs and increasing their self-reliance while lessening their environmental footprint. So, why does the myth still play so well in the United States?

One reason is that the oil, gas, coal, and nuclear companies here are actively engaged in energy policymaking, and they repeatedly tell the myth to lawmakers at all levels of government. Using carefully crafted messages backed by well-funded research, they tell the same story again and again: We wish we could...we look forward to the day when we can...but right now, we just can’t.

The key to telling a lie is delivering it alongside the truth. And it is, in fact, true that we haven’t figured out how to turn bloated, investor-owned monopolies and their overpaid executives into agents of community sustainability. If that were the plan, renewable energy would never be ready.

There is, on the other hand, a way to roll out renewables right now that would stabilize energy prices, create good jobs, retain energy-dollars in the local community, and provide secure and sustainable energy for the long term. It isn’t being proposed by either of the major party candidates for president, who instead keep insisting that renewables aren’t enough, and that we need to develop nuclear power as well as some strange substance they are calling “clean coal”.

No, it turns out that renewables can serve all of our needs, and the transition can happen quickly if we would just provide one thing that’s missing: a market. If we set up a market whereby independent energy suppliers could trade with independent energy consumers, we’d be all done.

Now, there have already been many attempts to create local markets for energy, but nearly all of them have been shut down by incumbent energy suppliers. I know this one guy who was trying to sell high-efficiency cogeneration systems, until one day he discovered that the utility was offering cut-rate electricity to his prospective customers in exchange for an agreement that they don’t buy one of his systems. He sued the utility, but as soon as the utility realized they were going to lose the case, they settled out of court. Did the utility retreat in shame, and amend their practices? Hardly! Instead, they drafted a law making what they were doing legal, and persuaded their state legislature to enact the law. Now, whenever a customer even thinks about putting in a clean, efficient, on-site system to generate their own power, utilities can offer something called a “load-retention rate” to entice them not to do it. That’s just one of their tricks – the list is long.

If lawmakers and regulators are unwilling to keep incumbent energy suppliers from obstructing the market for local, independent renewable energy, we’ll need to create this new market ourselves. All we need to do is organize all the energy consumers who already want to buy clean, locally generated power and heat, and form alliances with the local, independent energy producers. The only hard part will be fighting against an enormous, entrenched opposition of dirty energy suppliers, but in reality, we have all the power we need to pull this off.

Because next year, as we set out to spend another two-trillion dollars meeting our energy needs, we can simply decide to give the money to independent energy companies right here in our community.

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PNM Wants a Rate Increase...Again

Now that the 5-year moratorium on increasing electricity rates has ended, PNM has filed for one rate increase after the next. The New Mexico Public Regulation Commission (PRC) approved a $33 million rate increase for PNM in April – then tripled the award to around $100 million after PNM protested that the increase was too small. This week, the utility filed a request for another $123 million on top of that, which will raise residential electricity bills by another 23.5 percent next year if approved.

In addition to the rate increases granted by the PRC, PNM was awarded the right to raise its rates as needed to cover increases in their fuel costs.

Ratepayers should not only expect PNM’s new rate request to be granted, they should expect similar rate increases every year for awhile as PNM works to recover the $1.3 billion it plans to spend on its system over then next five years.

Oil and Gas Industry Damaged by Hurricane Ike

Reports of damage caused by Hurricane Ike to oil and gas infrastructure are still coming in, but so far the U.S. Minerals Management Service is reporting that 52 offshore oil and gas platforms were totally destroyed and another 62 were badly damaged. Most of the 3800 offshore platforms in the Gulf of Mexico are still shut down – oil production is currently operating at 38 percent of its normal level, and natural gas is operating at 43 percent of normal. Six gas transmission pipelines were reportedly damaged, but reports of damage to underwater oil pipelines are not yet available.

Ten oil spills have been reported so far – three on land and seven in the water. The land-based spills, reported by the company that lost the oil, were said to have totaled more than 1000 barrels. No estimates were given for the seven spills in the water.

Damage caused by the storm is adversely affecting natural gas prices, with wholesale natural gas prices up 18 to 28 percent over the past week in the region hit by the storm.