For the electric power industry, the next three decades will be characterized by significantly increasing demand, new generating plant construction, stronger environmental regulations, and a growing customer motivation to conserve.
That’s the message delivered to GBC members by energy industry experts at the GBC’s Business Outlook Conference 2008 on October 29.
“Our industry is entering the most significant building phase in its history,” William Brier, vice president of public policy for the Edison Institute, told 400 GBC members who attended the breakfast meeting at the Renaissance Harborplace Hotel.
Brier forecast that more than $750 billion in mostly-private investments would be needed for energy industry infrastructure in the U.S. during the next three decades. The future cost of energy will be driven by capital investment in infrastructure and the ability of energy consumers to be more efficient users and conservers.
Brier also predicted “some kind of global climate legislation” in the future. The key to such legislation’s effectiveness will be the extent to which its provisions will be realistically achievable by the industry, he said.
William L. Massey, a partner at Covington and Burling and a former member of the Federal Energy Regulatory Commission, said that innovation in the energy industry will emerge in regions that have competition-based rate structures where investors take the risk, rather than old-fashioned “monopoly” regulation where consumers bear the cost of risk.
“The price of electricity needs to be sufficient to reward the risk-takers,” said Paul J. Allen, senior vice president of corporate affairs for Constellation Energy. “Energy is expensive. It’s going to remain expensive. So it’s very important to do with less.”
A growing area of energy policy development centers around rate structures that provide incentives to customers to use less energy at peak times of the day and to channel their energy use to the most cost-effective times, Massey said.
Malcolm D. Woolf, director of the Maryland Energy Administration, said that Maryland needs more power transmission lines to avoid facing brownouts within three years. The PJM grid, which serves Maryland and 12 other mid-Atlantic states, has ordered the construction of new lines in Maryland, he said.
Woolf also noted that, compared to other states, Marylanders have a substantial capacity to reduce their electricity consumption. For example, if the average Marylander consumed the same amount of electricity as the average California resident, Maryland would us 45 percent less electricity, he said.
“But energy efficiency alone will not get it done,” said Woolf. “We will have to build supply.”
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