An Uneven Burden Higher Prices Less Reliability

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An Uneven Burden Higher Prices / Less Reliability
Morry C. Davis National Energy Efficiency Team
Lead Legislative Issues Public Policy
Committee American Association of Blacks in
Energy
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What is the American Association ofBlacks in
Energy?

• The American Association of Blacks in Energy
  (Association) is a national association of
  energy professionals founded and dedicated to
  ensure the input of African Americans and other
  minorities into the discussions and developments
  of legislative and regulatory policies,
  regulations, RD technologies, and environmental
  issues.
• The purposes of the Association are the
  following
• To serve as a resource for policy discussion of
  the economic, social and political impact of
  environmental and energy policies on African
  Americans and other minorities.
• To ensure involvement of African Americans in
  governmental energy policymaking by recommending
  capable sensitive and informed personnel to
  appropriate officials.
• To encourage both the public and private sectors
  to be responsive to the problems, goals and
  aspirations of African Americans in
  energy-related fields.
• To encourage African American students to pursue
  careers in energy-related fields and to provide
  scholarships and other financial aid for such
  students.

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The Use of Coal is Critical to SustainingAffordab
le Electricity in the U.S.
Retail Cost Per kWh Percent of Coal Generation
13.3 2
6.4 8
6.4 94
7.5 64
7.4 60

7.0 8
8.4 63
5.1 1
6.8 47
8.6 59
5.3 95
9.1 55
6.8 77
6.2 60
7.9 86
6.5 94
10.0 22
8.5 47
5.3 98
6.4 85
7.1 45
7.7 68
12.8 1
6.9 73
6.5 82
5.8 93
7.8 61
7.1 64
NH 14.0 17 VT 12.0 0 MA 15.2 25
RI 13.2 0 CT 16.2 11 NY 15.4
15 NJ 13.4 16 DE 11.4 66 MD 11.4 59
7.3 47
7.2 40
6.9 47
8.5 37
7.4 77
average retail price per kilowatt hour for
CY 2007 percent of total generation from coal
for CY 2007
7.8 62
7.5 54
8.1 35
10.3 36
8.4 25
10.3 30
lt 7.0 gt 7.0 - lt 8.5 gt
8.5 - lt 10.0 gt 10.0 - lt 11.5 gt 11.5 - lt
13.0 lt 13.0 Hydro
21.3 13
13.2 9
Source Energy Information Administration Mar.
2008
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Rising Energy CostA Cause for Concern in
Arkansas
Energy cost are rising far too rapidly for
working families to keep pace ... the elderly,
the disabled and those on low or fixed incomes
are especially vulnerable. - Arkansas Governor
Mike Beebe February 2008
Percent of Generation
5
20
50
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Increases in Energy Prices Hit Low-
andFixed-Income Families the Hardest

• Income spent on energy for households earning
• gt50,000 / year 7
• 10,000 - 30,000 / year 20 (25 of
  households)
• lt10,000 / year 46 (8 of households)
• Households earning lt 30,000
• Mostly senior citizens, single parents, and
  minorities
• Force hard decisions about what bills to pay
  energy or housing, food, education, health
  care, child care other necessities

One-third of Americans shoulder major energy
burden
Sources Redefining Progress U.S. Census
Bureau, Current Population Survey, 2006 Annual
Social and Economic Supplement
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LIHEAP in Arkansas isStruggling to Meet Needs
With natural gas prices already at record
levels, the cost of electricity and heating a
home will likely increase for Arkansas. -
Arkansas Senator Blanche Lincoln

• About 50 of the families in Arkansas heat with
  Natural Gas
• A 90 rise in Natural Gas prices since 1999 has
  overwhelmed the LIHEAP budget
• Using more Natural Gas for electricity will
  increase both Natural Gas prices and electric
  rates
• LIHEAP in Arkansas does not have the resources to
  accommodate higher electric bills for cooling

Number of Families eligible for assistance
Number of Families actually receiving assistance
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Reserve Margins Have ReachedDangerously Low
Levels
Electricity Demand is Far Outpacing Generation
Growth

• U.S. baseload generation capacity reserve margins
  have greatly declined
• Without significant baseload transmission
  development going forward, most regions of the
  country will have reserve margins well under 15,
  which is generally considered the bare minimum
• NERC encourages improved infrastructure and fuel
  diversification
• 2007 North American Electric Reliability
  Corporation Long-Term Reliability Assessment

Source NERC 2007 Long-Term Reliability
Assessment, October 2007.
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Electric Reliability is Important toAll
Households Businesses

• The U.S. electric grid has been the most reliable
  in the world
• Americans have benefited greatly from affordable
  and stable electricity prices
• The continued availability of a reliable and
  reasonably priced supply of electricity and
  natural gas is critical to our nations economic
  well-being, security, and the health and
  well-being of our citizens National
  Association of Regulatory Utility Commissioners
  (NARUC) Resolution, June 25, 2007

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Electric Reliability is Highly Critical
toLow-Income Households Small Businesses

• The Association believes that given the
  socioeconomic profile of many minority-based
  communities, the consequences of extended outages
  are more severe, including
• Loss revenue for small businesses, which may
  result in price increases for local consumers
• Loss wages for inability to get to work
• Job losses if small businesses are significantly
  affected
• Disruptions in mass transit
• Health mortality concerns
• Impacts on families if schools are closed

August 2003 New York City Blackout
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India and China The Second Industrial
Revolution is Underway
Population vs. Projected 10-Yr. Growth in Total
Energy Demand per Capita
33
12
7
88
4
5
17
13
36
37
20
27
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Industrial superpowers will compete
with developing nations for access to energy
resources
Source U.S. Census Bureau, International Data
Base U.S. Energy Information Administration,
International Energy Outlook 2006
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Range of Potential Impacts From Climate
Legislation?

• Cost per household 446 - 2,927 in 2020 /
  year
• Electricity prices 21 - 35 in 2020
• Natural gas prices 20 - 39 in 2020
• GDP 0.7 - 1.74 ( 336B out of 19.2T GDP)
• Employment 1.1 - 2.78 million in 2020
• Coal consumption 42 - 66 in 2020
• Permit prices ( / ton CO2 equivalent) 18 -
  48 / ton in 2020
• Total US GHG emission (mmtCO2-equivalent)
  4,887 6,654 in 2030 (Business As Usual 9,672
  in 2030)

Its All About The Assumptions!
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What is AABEs LIPP committee?

• The Legislative Issues Public Policy (LIPP)
  committee is charged with tracking legislative
  and public policy issues the Association may have
  an interest in and developing position papers on
  these issues to be presented to the Association's
  Board of Directors for approval.
• Through the development and dissemination of its
  position papers, the committee must ensure that
  African-Americans and other minorities have a
  voice in the development and implementation of
  U.S. energy/environmental polices.
• In 2008, the LIPP committee is focusing three
  main areas
• Climate Change What are the potential impacts
  of climate change legislation on
  African-Americans and other minorities? How do
  you minimize the impact of the cost of compliance
  on low-income consumers? What must U.S. climate
  change legislation and carbon management strategy
  include to ensure economic growth and energy
  security and avoid unfairness?
• Energy Efficiency How significant of a role can
  energy efficiency play in the future? How can
  African-Americans benefit and actively
  participate in energy efficiency programs from
  the residential and commercial perspectives?
• Renewable Technology How much can increased
  renewable capacity contribute going forward? How
  can African-Americans get involved in the
  renewables industry?

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Legislative Issues Public Policy Vision

• Establish AABE as a valued resource for decision
  makers addressing social, energy and
  environmental issues impacting African-Americans,
  low and fixed income organizations
• Establish AABE as the preeminent organization
  identifying potential business opportunities in
  the energy and environmental areas for
  African-Americans, low and fixed income
  organizations
• Establish a cadre of experts on energy and
  environmental issues to implement this vision and
  encourage development within the
  African-American, low and fixed income community

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AABEs Critical Role
Low income consumers
Energy Organizations
Public Policy Jobs Education
AABE
Students
Public Policy Leaders
Technology Leaders
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LIPP General Principles

• AABE recognizes that minority communities contain
  higher concentrations of low and fixed income
  households, and therefore, are more sensitive to
  changes in energy and environmental policy
• AABE recognizes the need for increased
  participation in the discussion of global energy
  and environmental policy by the African American
  community and the important need for enhancing
  current and future business opportunities in
  those communities which sound energy and
  environmental policy provide
• AABE recognizes that access to reliable and
  affordable energy is essential to low and fixed
  income households, and it is an important element
  for sustaining business development and economic
  growth both domestically and internationally
• AABE supports efforts to enhance US energy
  development and energy awareness

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U.S. Energy Options are Limited bySupply and
Availability
All Energy Forms Needed for Diversity of Supply
ETHANOL Clean
but energy inefficient, strains food supplies,
cellulosic years away NATURAL
GAS Prices high declining
reserves, sources from volatile regions

ENERGY EFFICIENCY
Greater use of green technologies, energy
management and conservation
OIL Persistent
high
prices reserves declining risky sources
NUCLEAR Valuable
but constrained by cost, safety and
waste disposal concerns

RENEWABLES No growth
in hydro, low availability, still some public
resistance
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LIPP Principles dealing withAdvanced Coal
Technology

• Climate Change Principle 8 AABE recognizes
  that there is no silver bullet for addressing the
  GHG issue. Options that must be pursued include
  but are not limited to the development,
  commercialization and deployment of
• Advanced clean coal technologies (including
  advanced PC IGCC)
• Carbon capture and storage
• Advanced nuclear energy generation
• Energy efficiency
• Renewable energy technologies
• Energy Efficiency Principle 1 AABE supports
  enhancements to U.S. energy infrastructure
  through the development and implementation of
  technologies, which optimize the utilization of
  domestic and foreign energy resources while
  promoting
• Energy security
• Economic prosperity
• Environmental solutions
• Renewables Principle 2 AABE believes that
  renewable programs must carefully balance
• Availability of renewable technologies
• Cost effectiveness of such technologies
• Environmental benefits

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Minority Leaders View Economic Prosperity asthe
Key to Racial Equality in U.S.
Race is still an enormous factor in our society,
but economics can overcome a lot of racial
division. U.S. Senator Barack Obama
National Urban League Conference July 27, 2007

• The Association believes that in order for
  economic equality to be achieved in the U.S., all
  citizens must have access to affordable,
  appropriate, abundant, reliable energy.

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The Path ForwardAn Apollo Like Vision!

• If there is to be a national commitment to
  reducing GHG emissions, reduction programs must
• Involve all sectors of the economy
• Include an aggressive education campaign on true
  costs benefits
• Have consistency between compliance timetable
  needed technologies
• Balance environmental improvements with economic
  development and
• Ensure low fixed income consumers do not
  shoulder a disproportionate impact
• Support accelerated development of needed
  technologies
• Substantially increase funding and related
  incentives to stimulate research, development and
  deployment
• Promote technologies that use our domestic fuel
  supply more efficiency
• Create excitement around engineering, mathematics
  science
• Public / private partnership to replace the aging
  workforce and encourage the next generation of
  technical and strategic leaders

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For More Information,Please Visit
http//aabe.org/about/committees/LIPP
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An Uneven Burden Higher Prices / Less Reliability
Morry C. Davis National Energy Efficiency Team
Lead Legislative Issues Public Policy
Committee American Association of Blacks in
Energy