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In an exclusive SCIENTECH PowerHitters interview, Keith Stamm, President and 
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May 11, 2001

Bush Energy Plan Expected Next Week; 
Nuclear Power, Eminent Domain Emerge as Key Elements  

By Will McNamara
Director, Electric Industry Analysis 

[IMAGE]With California struggling through yet another round of rolling 
blackouts this week and reportedly its thirty-ninth issuance of a Stage 3 
emergency warning since January, the Bush administration is putting the 
finishing touches on its much-awaited energy strategy. A national energy 
plan, which is the culmination of nearly three months of meetings by a task 
force led by Vice President Dick Cheney, is scheduled to be announced by 
President Bush sometime next week. Even before being released, the plan is 
surrounded by controversy and criticism that the Bush administration remains 
too focused on long-term solutions and has not provided any immediate fixes 
to national energy problems that are most extremely illustrated by the power 
crisis in California. 

Analysis: As noted, the Bush administration won't officially release its 
energy plan until next week. However, based on recent statements made by both 
the president and the vice president, we already have a good indication of 
the broad strokes of the plan. Since January, it has been expected that 
President Bush will unveil an energy plan that strongly encourages 
exploration for domestic oil and natural gas. The administration's position 
on conservation efforts and renewable energy as long-term solutions to the 
nation's power needs is less clear, as both Bush and Vice President Cheney 
have made rather inconsistent statements regarding these issues (conservation 
in particular). Yet perhaps the most controversial elements of the plan are 
the administration's expected positions on nuclear energy and the right of 
the federal government to usurp state authority and mandate the placement of 
new electric transmission power lines. 

As noted, for several months it has been anticipated that President Bush will 
allot more funding for exploration efforts than renewable energy or 
conservation efforts (see my IssueAlert from 3/25/01 for more information on 
this). Despite the fact that this position has been intensely criticized, it 
is important to note that the president has not indicated that these 
approaches will not have a role in his administration's strategy. In fact, 
recent word from the administration is that at least conservation will 
receive a "major emphasis" in the plan. However, at the same time, the 
president has stated publicly that the nation can't "conserve its way to 
energy independence." Vice President Cheney echoed this sentiment by 
remarking that conservation "is not a sufficient basis for a sound, 
comprehensive energy policy."  

In addition, realistically, renewable energy sources only account for about 2 
percent of the total energy supply. Cheney claims that even if renewable 
sources were tripled over the next 20 years, they would only account for 6 
percent of the nation's total energy mix. Consequently, although conservation 
and renewables will be included in the imminent energy plan, the Bush 
administration is clearly focused on other solutions that it believes are 
more realistic. We will have to wait until the plan is released to adequately 
assess the extent to which conservation and renewable energy will be 
supported by the Bush administration.  

Perhaps more interesting at this time are two controversial components of the 
forthcoming energy plan that have emerged this week. First, a key element of 
the Bush administration's plan will be the expansion of energy 
infrastructures to deliver power across the nation. Specifically, it is 
becoming increasingly clear that the energy task force led by Vice President 
Cheney will recommend that Energy Secretary Spencer Abraham draw up 
legislation that allows for FERC to assume control over private property to 
accelerate the construction of transmission power lines. The task force 
believes that the lack of transmission capacity is one of the key causal 
factors of the California energy shortage and concerns about power supply in 
other areas of the country. In other words, in addition to California's 
in-state power supply deficiency, power from outside the state cannot be 
easily imported due to clogged infrastructure. A deficient transmission 
system is also a major factor in potential power problems facing New York 
City this summer. 

FERC already has what is known as "eminent domain authority" over the siting 
of natural-gas pipelines, which typically are underground and therefore do 
not spark much public resistance. The construction of new power lines, 
however, is a contentious issue. New lines are often blocked due to the "not 
in my backyard" (NIMBY) syndrome. In addition, state governments presently 
regulate the construction of new transmission lines and have been reticent to 
relinquish this control to the federal government. In addition, many states 
view the eminent domain policy as an invasion of home rules and a violation 
of homeowners' rights. If, as expected, the Bush energy plan extends eminent 
domain to FERC for electric transmission lines, then the commission would be 
given the authority to force private landowners to allow new power lines to 
be built on their land. The government typically compensates property owners 
for the seizure of their land, but this has not appeased state governments in 
their opposition to the rule.  

Once the land is taken from private owners, utilities (and not the 
government) would be given ownership of the land and allowed to build the new 
lines. This is something that utilities as a group have requested for some 
time, as presently they face multiple local and state regulatory obstacles 
whenever they seek to build new lines.  

In interviews this week, Cheney admitted that eminent domain would be 
addressed in the energy task plan, but has not specified what the plan would 
propose. However, the vice president did acknowledge that the key issue to be 
addressed is whether or not the federal government should have the same 
authority on electrical lines as it already has on gas lines.  

In the second controversial element of the forthcoming energy plan, Cheney 
also revealed in recent interviews that nuclear power will factor in rather 
significantly to the task force's proposals. On May 8, in an exclusive 
interview with CNN, Cheney said that the answers to the nation's energy woes 
lie in increasing the supply of energy sources, including giving nuclear 
power "a fresh look." Given the high prices of natural gas, Cheney has argued 
that from an economic standpoint, now is a good time for nuclear power to 
re-emerge. In addition, in the CNN interview the vice president pointed to 
the fact that nuclear power is recognized as a "safe technology that doesn't 
emit any carbon dioxide at all." The only significant problem that Cheney 
sees with nuclear power is the nuclear "waste piling up at reactors all over 
the country." Consequently, although the vice president supports an increase 
in the nation's reliance on nuclear power, he also supports the use of a 
national, permanent repository that can be developed for nuclear waste. Yucca 
Mountain, located in Nevada, is being tested as a suitable site for a spent 
nuclear fuel and high-level radioactive waste repository. Experts throughout 
the world agree that the most feasible and safe method for disposing of 
highly radioactive materials is to store them deep underground. 

Moreover, when the Bush administration's energy plan is officially released 
next week, it will be interesting to see the specific proposals that the 
Cheney task force offers. In the meantime, the plan is already generating a 
great deal of controversy as some Republicans worry about political fallout 
from the administration's previous reluctance to intervene and repair 
problems in California. Constituents across the country increasingly are 
voicing concerns about pervasive power problems, although California and New 
York appear to be the only two areas with real worries. Given the growing 
sense of anxiety about the energy problems and its impact on the nation's 
economy, it is feared that the lack of any clear short-term solutions will 
soon spark an intense round of finger-pointing that could impact future 
elections. Rising gasoline prices and predictions for summer blackouts beyond 
California are only raising the heat on this red-hot debate. 

Cheney himself admits that the energy plan has become a "political debate," 
in addition to being a discussion about policy. For months, it was clear that 
the Bush administration and FERC preferred to let California solve its own 
problems. But after months of rolling blackouts, the bankruptcy of Pacific 
Gas and Electric Co., and projections for severe summer problems, 
California's problem has now become President Bush's problem. The bottom line 
is that an enormous amount of political credibility is riding on the 
forthcoming energy plan, in addition to the fact that the nation will be 
eagerly looking for the Bush administration to offer reliable solutions to 
the increasing power problems.  

An archive list of previous IssueAlerts is available at
www.scientech.com

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