By the time you receive this news-letter, our next President will already be elected. Regardless of who is chosen, he will inherit some of the most significant challenges any United States President has ever faced. There will also be some new faces in Congress, and they, too, will have difficult issues to address. Providing affordable health care to the American public, restructuring Social security, protecting our borders, and redefining our international polices are only a few of the crucial issues needing immediate attention.

There is also the most obvious and important challenge that is affecting everyone in the world today, and that is our economy. The financial crisis we face with the collapse of the credit market and the failures on Wall Street are hitting everyone hard. Many people are losing their homes, our retirement plans and other investments are a fraction of their peak value, and the price of everything we need and use is going up tremendously. Our economy is in serious trouble. Developing a plan for revitalizing our economy is essential.

At the center of the financial turmoil is Energy. Whether it’s fuel for our vehicles, heating oil, or electricity, we all use and need energy. The cost of energy has increased substantially in the last few years mainly because demand is exceeding supply, and the price to increase these supplies is considerable. The rest of the world has caught, and in some instances, surpassed America in energy usage. China, India, Russia, and Japan are industrializing at a rapid pace and have the same needs for energy we do here in the United States. As time goes forward, there will be more worldwide competition and demand for these resources.

The United States must build additional facilities to generate electricity to meet the increased future demand. Currently there are few viable options for utilities. New coal-fired electric generation plants have been completely taken out of the mix for now due to increasing threats of environmental legislation which would make it cost prohibitive. A nuclear power generation facility takes at least twelve years to build, and with financial markets in turmoil, delays could extend the time even longer. The only readily available choice is natural gas fueled turbines. However, the forecast price for natural gas is expected to triple in just four years. If increases in demand can only be met with natural gas, then we are in for significantly higher electricity bills.

Some question why we cannot use renewable energy resources to meet these increases in demand. While renewable energy can reduce the amount of gas or coal we burn, currently its production is only possible when the renewable resource is accessible. Today, and for the foreseeable future, base load generation must be derived from fossil fuel facilities due to its superior availability. Generators can readily control these plants and keep them operating at all times, whereas renewable facilities only generate when the sun is shining or the wind is blowing.

For example, the Tennessee Valley Authority (TVA) has approximately 50 megawatts of wind generation capacity. At the peak usage time in August of this year when TVA needed maximum output from its generation facilities, it received no energy from its wind generation. Utilities are required to have enough generation in their portfolio to provide all the electricity needed at all peak times. They must know this generation is available when called upon and cannot gamble whether resources will be there when needed the most.

Our leaders in Congress must recognize this fact and plan accordingly. Enacting legislation which aggressively eliminates fossil fuel generation and does not allow adequate time for the development of carbon sequestration and other new technologies will decrease reliability and increase costs. A balanced and well thought plan is what is needed to make sure we have the energy we need at a price we can afford.

Thank You,

Jeff Loven
Email: jeff.loven@frenchbroademc.com


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