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Viewpoints: Proposed DOE power policy
ignores goals of SMUD, othersSpecial to The Bee
Published Sunday, Jul. 29, 2012
In 1923 the citizens of Sacramento voted to create their own
electric utility a utility that wouldoperate in the local interest.
Because of this decision, Sacramento has saved billions in
electricitycosts, benefiting the local economy. SMUD's electric
system has been expertly built and properlymaintained, as witnessed
by high reliability and few outages. Environmental matters
anddecisions have been focused on our most pressing regional
issues, namely local air quality. Thiscompact is now at risk from a
new federal policy proposal issued by Department of EnergySecretary
Steven Chu that proposes to change how, when and where power is
produced andmoved across the West.
DOE's desired goal to update the national grid is fine. However,
the DOE directives on how toachieve this outcome ignore the
policies and shared goals of other federal, state, regional
andlocal organizations. The proposed directives lack congressional
authority and clearly fall outsideDOE's statutory authority and
mission. If enacted, the proposed policies will be duplicative
atbest, but will more likely increase cost, lessen reliability and
focus environmental efforts onbroad objectives rather than solving
problems critical to local communities.
The impacts to SMUD and Sacramento consumers could be
staggering. Repurposing federalassets that have already been paid
for, in part, by SMUD customers would have a starting pricetag of
an additional $1 billion to our community. Today those assets are
funded on a "beneficiarypays" model, meaning those that benefit
from and receive the power pay for the power andassociated costs.
This current model ensures economic discipline and accountability
toconsumers. It also prevents unnecessary construction, increases
transparency and avoidsunnecessary subsidies. All of this has a
direct and favorable impact on affordability.
SMUD contributed significantly to the Central Valley Project's
regional transmissionimprovements and has helped fund without
federal appropriations more than $127 million intransmission
improvements. These improvements have significantly enhanced
reliability andstrengthened the region's ability to meet high
electric loads during our hot summers. Theproposed policy would
unfairly ask SMUD customers to pay twice in order to fund
assetselsewhere, even though the need has not been established.
Electric reliability, a very complex task, is the real-time art
of balancing electric demand withgeneration while maintaining
adequate reserves. The directives in the DOE memo would
lessenreliability, all in the name of efficiency. It's akin to
increasing the number of airplanes that canland on a runway in a
given hour in the name of efficiency, without taking into
considerationunintended side effects such as a reduction in
safety.
SMUD is already doing all the things the proposed policy is
designed to promote. Renewablesources already provide 24 percent of
our electricity, not counting large hydropower, which forpolitical
reasons is not treated as a renewable resource. Including large
hydropower, our supplyportfolio is nearly 50 percent carbon-free.
We recently doubled our use of wind power, and solar
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7/31/2019 John DiStasio -- Sacramento Bee Op-Ed -- 7-29-2012
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will double by the end of 2013. The new proposal asks us to pay
for federal priorities and theirassociated costs elsewhere in the
country without any direct benefit to SMUD customers. Thiswould
force us to raise rates.
In terms of reliability, SMUD already coordinates with all
regional partners. The Western AreaPower Administration, a federal
organization, is also a partner. This coordination includes aseries
of initiatives, inside and outside of California, aimed at
increasing regional reliability,keeping rates low, and increasing
the import and integration of renewable resources. The DOEproposal
would move the interests of SMUD customers to the last
consideration and all but
eliminate local decision-making.
More than 160 members of Congress have signed a bipartisan
letter to Secretary Chu expressingtheir support for local
decision-making. I want to thank Reps. Doris Matsui and Dan Lungren
fortheir continued support. To date, the DOE is resolute in
pressing forward despite the lack of congressional approval and
over the protests of the federal power marketing
administrationcustomers across the West.
SMUD has enjoyed a very good working relationship with the
Department of Energy and we havegreat respect for Secretary Chu;
however, this proposal is ill-conceived, poorly scoped and looksto
be a solution in search of a problem. It has significant negative
ramifications for SMUDcustomers. The federal government needs to
better understand how the system currently worksand why, before it
sets out to change it. It also needs to be responsive to the
congressionaldelegation from the West as well as the local
governing bodies that are elected and directlyaccountable to the
communities they serve.
Copyright The Sacramento Bee. All rights reserved.
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John DiStasio is the general manager and CEO of the Sacramento
Municipal Utility District.
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