Comments of the Western Interstate Energy Board
in Response to the National Energy Policy Review of the Programs of the
Office of Energy Efficiency and Renewable Energy
The Western Interstate Energy Board is an association of 12 western states and three western Canadian provinces(1). Our comments focus on the needs of the western region. Individual states will be offering comments that reflect their unique needs. Our comments are guided by the policies of western governors.
Western governors have recognized the importance of the federal government 's role in energy efficiency and renewables in their policy statement on renewable energy (http://www.westgov.org/wga/policy/98026.htm) and in the recommendations that were adopted at the Western Governors' Energy Policy Roundtable on February 1-2, 2001 (http://www.westgov.org/wga/press/energy_agree.htm).
On February 26, Western governors met with Vice President Cheney to discuss the recommendations from the February Energy Policy Roundtable and to initiate a collaborative effort between western states and the federal government to address the immediate western electricity crisis and long-term energy policy needs for the West.
The Office of Energy Efficiency and Renewable Energy has responsibility over issues that are critical to the energy future of the West and requires adequate resources to fulfill those responsibilities. The successful execution of these responsibilities is of paramount interest to western states. The Board believes there are a number of EERE programs that have made important contributions to the energy future of the West. However, these programs are hampered by inflexible delivery mechanisms.
Our general recommendation is that EERE should expand programs that support state initiatives and provide significant flexibility to adapt to changing state and regional energy needs. Programs, such as the SEP program, should become models for other EERE programs.
Electric Industry Restructuring: A Case Study Illustrating Needed Reforms
DOE Item 1: The objectives of the current energy efficiency and renewable energy research, development, demonstration and deployment programs
Department policy pronouncements related to electric industry restructuring are not clearly linked to EERE programs or funding. DOE has correctly recognized the fundamental change underway in the electric power industry. However, EERE has been unable to direct resources to address the challenges and opportunities arising from those changes. For example, the Department has been unable to focus significant resources on fundamental changes such as: the formation of new grid management institutions such as Regional Transmission Organizations; electric system reliability in a competitive market; transmission pricing; demand-side price responsiveness; and generation and transmission siting.
Electric power grids are regional in character. The Western Interconnection spans all or parts of 14 states, two Canadian provinces and northwestern Mexico. The power grids define the geographic extent of reliability problems and power markets. In responding to a need, DOE's programs should recognize the regional character of issues. A uniform national response to an issue may not effectively address regional issues or, worse yet, may result in federal solutions which hinder regional action. EERE needs program objectives that recognize the regional character of many issues and use existing structures to achieve program objectives.
DOE Item 2: Suggested potential objectives for future programs
While budgetary protocols may have led DOE to shoehorn its responsibilities related to electric industry restructuring into the solar program budget, this is an inappropriate programmatic approach to addressing one of the largest public policy energy issues in decades. Decisions being made today and in the next few years will set the ground rules within which renewable energy and energy efficiency technologies must compete in the coming decades. The rules being established in the Western Interconnection are particularly important to achieving EERE's renewable energy objectives because of the high quality solar, wind and geothermal resources. DOE needs to adopt the above new program objective and marshal resources necessary to meet this objective.
Additionally, there appears to be a working assumption within many parts of EERE that if an initiative is undertaken in one particular section of the country it must be undertaken in all sections. DOE needs to replace this implicit goal of national uniformity with a mix of initiatives that reflect the needs of each section of the country.
DOE Item 3: Implementation of current and future programs
Observation 3: EERE's efforts on electric industry restructuring, as well as other EERE
programs, are characterized by inflexible delivery mechanisms that are not capable of responding
to current crises or adapting to take advantage of opportunities.
The ongoing western electricity crisis has illustrated the inability of EERE programs to adapt to changing needs. It is only through the actions of individuals within DOE that the Department has been able to provide assistance to the West in response to the ongoing electricity crisis. As an institution, DOE has been unable to adapt to the changing conditions in the West and provide constructive assistance.
The inability to quickly adapt is due to: (1) DOE's almost exclusive focus on nationwide programs that are developed in Washington, D.C.; (2) a field structure that does not reflect the realities of the electric energy system; (3) cumbersome funding processes that do not enable DOE's limited internal technical expertise to be quickly directed to areas of opportunity; and (4) extraordinary time delays between the announcement of program funding opportunities and delivery of resources. Such delays often result in programs that are out of synch with ongoing events and represent lost opportunities for DOE.The Board understands the short-term political imperative of announcing programs to get the attention of key groups inside the Beltway. However, for such programs to cause changes on the ground, they need to be developed in cooperation with parties within the regions that are impacted.
In addition to rethinking the geography of its field structure, EERE should also rethink the role of its regional offices. The primary roles of the regional offices should be to: (1) advocate for the region's needs within the DOE structure; and (2) help states access expertise within the DOE structure. Administrative roles, such as grant management, may be appropriate if the regional level is the most cost-effective level at which to organize such activities. Regional offices should not attempt to replace state energy offices in the delivery of services to businesses, institutions or individuals within a state. Typically, states are the most effective deployment mechanism for most EERE programs. To fulfill these roles, a different, more technical set of skills will be needed in regional offices or in other parts of the DOE structure. Such skills could also be located in states. Wherever such skills are located they must be accessible to states in a rapid manner.
The technical capabilities in the Department to address issues such as those presented by the ongoing western electricity crisis are often found in diverse locations within the DOE structure. Individuals with expertise within various labs or support offices want to apply their expertise to the problem. However, they are hampered by cumbersome funding mechanism that preclude their timely participation. The result is that the limited expertise within the EERE sstructure is not mobilized to resolve a real world problem.Some innovative actions to make EERE programs more responsive to the problems and opportunities that arise, such as the annual broad-based solicitation, are hampered by extraordinary time lags between the time the solicitation is issued and the time when resources are available. These lags, which have typically been six months or longer, have contributed to lost opportunities to make progress toward EERE program objectives. The effectiveness of the broad-based solicitation has also been hampered by very low limits on awards (e.g., $70,000) which discourage sustained initiatives. The low award limits also encourage fragmented project proposals that cannot achieve the success of more integrated efforts..
DOE Item 4: Whether these Federal programs are achieving intended objectives
Even within these programs there is room for improvement. For example, the appliance
standard program should recognize the need for higher efficiency air conditioners in western arid
climates rather than national standards based on constant temperatures and high humidity. The
Energy STAR program could refocus its promotional activities on receptive areas, such as western
states experiencing enormous electricity price increases.
1. Arizona, California, Colorado, Idaho, Montana, Nebraska (associate member), Nevada, New Mexico, Oregon, Utah, Washington, Wyoming, Alberta (associate member), British Columbia (associate member), Saskatchewan (associate member). The legal basis of the Board is an interstate compact that has been ratified by Congress. The Board has responsibility in all energy fields. The Board serves as the technical energy arm of the Western Governors' Association.