News and Analysis
39,000 Jobs Linked to Ohio Shale and Gas
A new study finds that more than 39,000 Ohio jobs will be created by the shale drilling industry. The study states that the number of jobs attributed to this industry in Ohio could easily triple by the end of the decade. The report was financed by groups that are advocating for shale drilling, including the American Petroleum Institute and America’s Natural Gas Alliance.
OMA Signs Letter to the President Urging Keystone Pipe Action
On Wednesday, the National Association of Manufacturers submitted a letter to the President urging him to work to approve the Keystone XL Pipeline. The OMA and 151 other businesses and business groups signed on the letter.
The pipeline is estimated to create 20,000 manufacturing and construction jobs, and more than 118,000 spin-off jobs. The project has been in limbo for nearly five years and continues to be reviewed by the current the administration.
First Multi-State, Long-Term Energy Efficiency Forecast
ISO-New England just released the first multi-state, long-term forecast for energy efficiency savings. ISO-New England is the regional transmission organization for the six New England states.
The study looked out seven years past the three-year Forward Capacity Market auctions to the year 2021. The findings: energy efficiency is having a “significant” impact on electricity consumption and peak demand, and will result in a deferral of $260 million in otherwise necessary transmission expenses.
The study authors noted, however, that “the ISO did not attempt to estimate how much money may be saved by consumers using more efficient devices and processes, nor have we analyzed the efficacy of the existing, state-sponsored EE programs.” Efficacy and cost-benefit are policy questions in need of study in all the states in the new electricity market structures.
A View to 2040
ExxonMobil released its annual “Outlook for Energy,” which assesses “future trends in energy supply, demand and technology to help guide the long-term investments that underpin our business strategy.” This one looks out to the year 2040.
Key findings of this year’s Outlook include: “Efficiency will continue to play a key role in solving our energy challenges; Energy demand in developing nations will rise 65 percent by 2040 compared to 2010, reflecting growing prosperity and expanding economies; Technology is enabling the safe development of once hard-to-produce energy resources, significantly expanding available supplies to meet the world’s changing energy needs; and, Oil will remain the No. 1 global fuel, while natural gas will overtake coal for the No. 2 spot.”
Energy Efficiency Opportunities for Manufacturers (Video)
If you are wondering what energy efficiency is all about, OMA has created a 14-minute video that summarizes the benefits and opportunities for Ohio manufacturers. In this video, professional energy engineers succinctly describe which energy-reducing projects typically provide a good return on investment in manufacturing settings.
To learn more about how you can investigate energy and cost-savings for your facility, contact OMA’s John Laughman.
Energy Efficiency Acquisition Models Compared
From a new study by the Institute for Industrial Productivity: “Thinking about energy efficiency as a “resource” that can be purchased is a novel concept. Energy savings resulting from more efficient use of energy is indeed something that cannot be seen – it is energy that is not being consumed … Over thirty years of practical experience in energy efficiency resource acquisition have proven that energy efficiency resources can be calculated reasonably well and relied upon as a key resource to meet electricity system demands. Costs, resource characteristics, and availability over time can be analyzed and determined with reasonable certainty. As a result, to cite just one example, the four states of the U.S. Pacific Northwest are now relying with confidence on energy efficiency to meet 85% of their new demand for electricity over the next twenty years.”
The study analyses acquisition models from several states and Canadian provinces.
LNG export vs. Manufacturing Feedstock
A much anticipated, and twice delayed, federally-commissioned study on the national economic effects of LNG exporting appears to give a green light for permitting LNG exporting facilities.
This controversial study outcome triggers a big concern: the rich asset that lies beneath Ohio, and other shale formation regions of the country, might now be put on the balance sheet of other nations, rather than on developing the infrastructure that would improve the competitiveness of U.S. manufacturing. And here is a Forbes piece on the issue.
Are Electricity Markets Working?
In the energy policy arena, there’s a simmering, and economically important, debate about whether electricity markets organized through “Regional Transmission Organizations” (RTO’s) are working, or whether RTO price signals fail to develop adequate generation resources.
Recently, the American Public Power Association took issue with a white paper from the Compete Coalition (made up of merchant electricity generators) that praised the RTO markets.
“Instead of inducing new resource development, RTO price signals provide a financial incentive for incumbent generation owners to keep supplies constrained and drive up prices. The financial benefits of constrained supplies can be seen in the presentations by merchant generation owners to the financial community wherein factors that restrict power supply, such as the potential closure of coal plants, are touted as a benefit to their earnings,” wrote APPA.
“Investment in new generation requires long-term contracting and not the volatile revenue streams from the RTO markets, as confirmed by a recent APPA study finding that 98 percent of the new capacity constructed in 2011 was built under utility or customer ownership and not for sales into RTO markets.”
Supreme Court Upholds AEP “Excessive Earnings” Order
In a 6 to 1 decision, the Ohio Supreme Court this week upheld a PUCO decision that American Electric Power had profits that were excessive enough to require a financial penalty. AEP had argued that the law, Senate Bill 221, passed in 2008, was too vague to be enforceable. The PUCO had fined AEP $42 million.
Justice Paul Pfeifer disagreed with his colleagues on the adequacy of the level of the penalty: “Our deference to…the commission’s interpretation of statutes diminishes this court’s role in reviewing the commission’s determinations and shifts the balance too far in favor of the executive branch in the separation of powers. Ultimately, Ohio consumers pay the price for that deference. Judging from Ohio utilities’ status at the top of the heap in profits nationwide—Columbus & Southern Power (AEP) had the highest equity return of 143 investor owned regulated electric utilities in the United States in 2009—that price is steep.”
No Lame Duck Energy Efficiency Amendment
The Cleveland Plain Dealer’s John Funk reports, “Ohio’s energy efficiency standards will remain intact — for now. FirstEnergy Corp. has abandoned its behind-the-scene lobbying campaign to persuade lawmakers to gut a four-year-old law requiring utilities to help customers use less electricity by switching to energy efficient equipment and lighting.”
The OMA had circulated an energy efficiency fact sheet to call for more study of the issue before legislative action. The OMA has commissioned research on the issue.