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The need for a National Energy Plan has become apparent due in part to the following:

Energy Security

• The power blackout of 2003 impacting New York, Detroit and other major cities indicates that the present transmission grid is congested, outdated and in dire need of overhaul. According to the Energy Information Administration, electricity use will increase 22% by 2010 placing further demands on an obsolete transmission grid.
• Since 1985 imports of refined petroleum products have increased by 34%. Today the total import of oil is 55%. The volatility in the Mideast can lead to disruptions in oil supply and higher prices. Since 1970 US production of crude oil has declined from 9.6 million barrels per day to 5.8 million barrels per day. During this same period consumption has increased from 14.7 million barrels per day to 20 million barrels per day. The Organization of Petroleum Exporting Countries (OPEC) has in the past tightened supplies and has caused gasoline and oil prices to spiral. The “War on Terrorism” will cause further instability to the Mideast region and prioritize this nation’s need to be energy secure.

The current domestic energy situation and our increasing dependence on foreign oil makes the United States more vulnerable, economically and from a national security perspective, than at any time in our history. A National Energy Plan is required that recognizes the urgent need for Energy Efficiency, Load Management and Supply Strategies.

The objective of the National Energy Plan is to foster a reliable power generation and transmission system, reduce dependence on foreign oil, and minimize future oil price shocks.

Following are the recommendations of the National Energy Policy Council of the Association of Energy Engineers:

Energy Efficiency Technologies and Load Management Programs

Energy Efficiency
Energy efficiency technologies can give the nation time to rebuild and modernize the electric transmission infrastructure.

Energy efficiency improvements have had a major impact on companies’ profitability, decreasing energy usage and reducing greenhouse gasses. Over the last 25 years the per capita use of energy has declined .8 percent. A continuing drive for energy efficiency can help keep prices down and buy the nation time to address critical supply problems.

Energy efficiency programs have saved consumers over 25 billion dollars a year while improving the quality of life. Energy efficiency has saved 70 quadrillion BTUs from 1972 to 1999. Specific programs which need to be included in a National Energy Plan are:

Reduce Energy Consumption in Buildings & Residences through Efficiency Improvement
A comprehensive energy strategy could double the energy efficiency of buildings by 2010, slash carbon emissions in half and save $100 billion a year in energy bills. Strategies to reduce energy consumption for this sector should include the following recommendations:

• Research and development investment for energy efficient buildings must be increased.
• The Institutional Conservation Program for Schools and Hospitals, originally started in 1978, should be reinstated and expanded to state and local government buildings.
• Regulatory agencies should require energy suppliers to promote energy efficiency improvements to their customers.
• Investment tax credits and accelerated depreciation should be implemented to stimulate adoption for efficiency investments.
• The Federal Government is the largest energy consumer with 500,000 buildings. By funding energy efficient technologies, consumption can be reduced by 20%, saving a billion taxpayer dollars on energy costs annually.
• Appliance standards need to be upgraded. New efficiency standards for clothes dryers, water heaters and air conditioners could reduce electricity demand by the equivalent of 170 300-megawatt plants over 20 years.
• A tax credit should be given toward the purchase of high efficiency appliances.
• Fund weatherization programs for low income housing and provide tax credits to improve the efficiency of existing and new homes.

Reduce Energy Consumption from Industrial Processes through Efficiency Improvement

• Industrial processes account for approximately 37% of total energy used.
• Large industry has demonstrated that on a voluntary basis it can make significant improvement in process efficiency. Small and medium manufacturing plants, however, lag behind. Energy awareness through education and low-cost audits can stimulate this sector of industry.
• Research and development investment should be increased to improve process efficiency, which will make a significant impact on reducing industrial energy consumption.
• Investment tax credits and accelerated depreciation should be implemented to stimulate adoption for efficiency investments.
• Increase education in the area of load management, assisting industry in better understanding the value of time when making electric and gas energy purchases.

Reduce Oil Consumption for the Transportation Sector

• Fifty percent of the world’s oil is consumed by vehicles. In the US there are more than 200 million gasoline and diesel powered cars, buses and trucks, which account for 27% of the energy consumption. Fuel economy standards reached their peak in 1988 when the average passenger vehicle covered 26 miles on a gallon of gasoline. The average fell to 24 miles per gallon in the year 2000 because more people were driving light trucks, which have lower mandated efficiency standards than cars.
• It is recommended that manufacturers be required to raise the average fuel use by cars and light trucks to 35 miles per gallon by 2010, which would result in oil savings of 1.5 million barrels a day.
• A tax credit should be given to consumers who purchase alternate fuel vehicles.

Load Management

• Load management and demand response programs encourage electric customers to reduce peak demand through real time pricing, incentives, and utility-customer partnerships.
• Customers of electricity can control load through fuel switching, energy storage, curtailment, self-generation and continuous load shedding. Utilities, Independent System Operators (ISO) and Regional Transmission Operators (RTO) need to encourage load management to reduce transmission congestion and the need for new generation capacity.
• The National Energy Plan should require utilities, Independent System Operators (ISO) and Regional Transmission Operators (RTO) to create and implement load management and demand response programs and provide incentives to customers to shed load.

Upgrading Transmission & Distribution Systems

The United States electric generation and transmission system is 70 years old and is based on technologies from the 1950’s. The electric transmission grid consists of approximately 160,000 miles of high voltage transmission lines and is in dire need of replacement and expansion .The power blackout of 2003 and the conclusions reached by the National American Electric Reliability Council (NERC) indicate that the nation is fast approaching a crisis stage with respect to the reliability of the transmission grids.

The transmission grid has become a “super highway” for electric utilities to buy and sell power. Congestion from the increased flow of electricity over great distances is now a reality. The Federal Energy Regulatory Commission (FERC) has identified causes of congestion including:

• Insufficient transmission lines to match electricity generated.
• Inadequate transmission capacity to meet demand.

According to Edison Electric Institute:
“Between 1979 and 1989, transmission capacity grew at a slightly faster rate than the demand for electricity during peak periods. But in the subsequent years, infrastructure needs did not keep up with that demand. To handle the requirements that the transmission system expects over the next 10 years, about 27,000 gigawatt-miles are required, however, only 6,000 gigawatt-miles are planned.”

A national energy strategy must include:

• Policies that encourage construction and modernization of the transmission grid. There is a need to “streamline” the permitting and siting process.
• Policies that encourage investment in the modernization of the transmission grid. FERC has indicated that $12.6 billion in new transmission investment is needed to overcome 16 major transmission congestions.
• Plans to protect transmission grids from potential computer hackers.

Encouraging Electric Generating Capacity
The National Energy Plan should encourage expanding of energy supplies while recognizing that no single energy source can meet growing energy needs.

A national energy strategy must address the growing power generating and transmission crisis in the United States. Elements of this strategy should include the following measures:

• Encouraging the development of distributed energy resources, including cogeneration through tax credits and accelerated depreciation. Distributed generation near loads reduces transmission congestion.
• Removing the barriers to distributed energy resources, particularly those related to cogeneration.
• Concentrating on clean-coal technologies for repowering and new plants which meet environmental regulations.
• Compressing the time required by the Nuclear Regulatory Commission to license a nuclear plant and support the movement to standardize nuclear plant designs.
• Increasing research and development of new power generating technologies.

Develop Alternative Energy Industry

Alternative energy sources offer environmentally acceptable ways to generate and distribute electricity. The National Energy Plan should include:

• Increased research and development investment funding for alternative energy.
• Increased tax credits to encourage investments in alternative energy.
• Federal & State incentives for deployment of alternative energy.

Oil Supplies A National Energy Plan must include insuring adequate supplies without substantially raising prices. The Energy Information Administration forecasts a sharp increase in petroleum imports from the current rate of 55% to 64% by 2020. It is recommended that:

• Policies that encourage investment in crude oil exploration and production be included in the National Energy Plan.
• Policies to encourage eight or more new refineries during the next 20 years.
• Policies to encourage Energy Technology of research and development for exploration and production, as well as expanding production in existing reserves.

Natural Gas Supplies

• Policies that encourage investment in natural gas exploration and production be included in the National Energy Plan.
• Policies to encourage the expansion and improvement of the gas transmission system.
• Policies to encourage energy technology research and development for exploration and production, as well as expanding production in existing reserves.

Coal

Currently coal accounts for 23 % of the US energy consumption with a 250 year supply of recoverable reserves. The National Energy Plan as related to coal needs to focus on:

• Clean Coal Technologies: The use of advanced coal technologies meets environmental regulations and is more efficient.
• Funding research and development to reduce carbon, sulfur dioxide, and nitrogen oxides emissions from coal.
• Financial incentives to encourage using clean coal technologies to upgrade existing coal fired units.
• Review policies that restrict investment in coal mining capacity.

The National Energy Plan must include encouraging both demand-side and supply-side options. Energy security can best be accomplished by development of all forms of supplies. An effective energy strategy must balance energy needs and be sensitive to environmental issues.