investing in america’s electric future

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Investing in America’s Electric Future. Morry Markowitz Group Director, External Affairs New Mexico Utility Shareholders Alliance October 7, 2009. Demand for Electricity Is Projected to Increase 27% by 2030. Annual Electricity Use in the Typical U.S. Home Has Increased 60% Since 1970. - PowerPoint PPT Presentation

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  • Investing in Americas Electric FutureMorry MarkowitzGroup Director, External Affairs

    New Mexico Utility Shareholders AllianceOctober 7, 2009

  • Demand for Electricity Is Projected to Increase 27% by 2030*

  • *Annual Electricity Use in the Typical U.S. Home Has Increased 60% Since 1970Average Annual Kilowatt-hour Sold Per Residential Customer

  • *Electricity Growth Is LinkedTo U.S. Economic Growth

  • The Costs of Meeting Future Demand

  • *Investments in GenerationInefficient, older power plants will be retired; new plants built.240 gigawatts (GW) of new capacity will be needed by 2030.*New capacity costs likely will be in excess of $400 billion.

    *Source: Energy Information Administration

  • *Transmission InvestmentsNearly $75 billion will have been invested between 2000 and 2010.Customers will benefit from newer technologies and reliability.Transmission InvestmentsBy Shareholder-Owned Electric Utilities

  • *Environmental Compliance CostsFrom 2002-2005, the electric power industry spent at least $21 billion on compliance with federal environmental laws; state and local rules drive costs even higher.EPA estimates that two rulemakingsthe Clean Air Interstate Rule and the Clean Air Mercury Rulewill cost electric utilities and their customers almost $50 billion from 2007 to 2025.*The research, design, development and deployment of new technologies needed to reduce greenhouse gas (GHG) emissions will require additional investments.

    * CAMR is currently being resolved in the courts; compliance costs could rise under alternative regulatory regimes

  • The Role of Energy Efficiency

  • *Energy-Efficiency and DSM Programs Are Making a DifferenceBetween 1989 and 2007, electric company demand-side management (DSM) programs saved 929 billion kilowatthours (kWh) of electricityenough to power 83 million average U.S. homes for one year. These savings are equal to the annual electricity output of 147 baseload power plants [rated at 800 megawatts (MW) each and operating at a 90% capacity factor].Electric utilities have spent nearly $35 billion on DSM programs from 1989-2007.

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  • The Role of RenewablesBenefits and Challenges

  • Benefits of RenewablesHelp promote fuel diversityProduce minimal environmental impactLargely free of carbon dioxide emissionsLow or no fuel costs

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  • Challenges Facing RenewablesHigh initial capital costsGeographic limitationsVariable natureTransmission availability and costFrequent expiration of production tax creditEnvironmental and aesthetic challenges (NIMBY)

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  • What AboutClimate Change?

  • *EEI supports legislative proposals in Congress to reduce GHG emissions that: Sets targets and timetables for greenhouse gas emissions reductions that are reasonable and achievable to help prevent sharp increases in electricity prices;Allocates emissions allowances to the electricity sector for a transitional period;Includes a price collar, or upper and lower limits on the price of emissions allowances; andPromotes energy efficiency, renewable energy, new nuclear generation, and new advanced coal generation technologies with carbon capture and storage.* The full text of the EEI climate change principles is available at www.eei.org.Industry Climate Change Principles

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    Addressing climate change requires an aggressive and sustained commitment to a full set of technologies, including:EfficiencyRenewablesClean coal technologiesCarbon capture and storageNuclearPlug-in hybrid electric vehiclesWhat Will It Take?

  • EIA Base Case 2008EIA Base Case 2007CO2 ReductionsWhats Technically Feasible?**Achieving all targets is very aggressive, but potentially feasible

    TechnologyEIA 2008 ReferenceTargetEfficiencyLoad Growth ~ +1.05%/yrLoad Growth ~ +0.75%/yrRenewables55 GWe by 2030100 GWe by 2030Nuclear Generation15 GWe by 203064 GWe by 2030Advanced Coal GenerationNo Heat Rate Improvement for Existing Plants40% New Plant Efficiency by 202020301-3% Heat Rate Improvement for 130 GWe Existing Plants46% New Plant Efficiency by 2020; 49% in 2030CCS NoneWidely Deployed After 2020PHEVNone10% of New Light-Duty Vehicle Sales by 2017; 33% by 2030 DER< 0.1% of Base Load in 20305% of Base Load in 2030

  • *Auctioning Allowances Would Sharply Increase Costs to Customers

  • The Dividend Tax Rate Reduction

  • Dividend Tax Rate ReductionCurrently at 15%, set to expire at the end of 2010.Vital to shareholders and the industry.Proposals by President Obama and Senator Max Baucus (D-MT) would cap rate at 20%. ($200K for individuals, $250K for families)Majority of shareholders would remain at 15%.EEI and AGA coalition to support keeping dividend tax rate low. Visit www.defendmydividend.org .Sign up today!

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