Energy Guest Column: Competition in energy brings innovation

Independent power producers drive innovation, deploy private capital and assume risks so utility ratepayers don’t have to, writes Robert Kahn.

By Robert Kahn

Lots of luminaries claim they’re for “all of the above” in sources of electricity. It’s a political cliché, which means everything – and nothing. Jeffrey Ball, a political journalist refers to the phrase as a “bromide.” It certainly isn’t a policy.

The Northwest & Intermountain Power Producers Coalition (NIPPC) brings a different perspective to electricity policy. We are agnostic about technology but care deeply about who owns and operates power plants.

Nearly 40 percent of the West’s power capacity is “independent.” The label refers to private businesses, which develop power plants and sell the electricity they generate at wholesale. NIPPC represents independent power producers (IPPs) who drive innovation, deploy private capital and assume risks so utility ratepayers don’t have to. NIPPC companies bring competition to the power sector.

While competition is as American as apple pie, most people don’t associate it with electric power. They should, especially since utility monopolies regularly waste your money.

Portland General Electric’s latest power plant, a 440-megawatt combined cycle, gas-fired unit called “Carty” is months behind schedule. It is also nearly 30 percent over budget. Observers expect the utility to ask the OPUC for forgiveness of much of the $160 million in cost overruns. If the utility had contracted with an IPP for the power it needs, PGE wouldn’t need to lean on ratepayers for a single cent.

A Washington State public utility consortium wasted over $3 million pursuing a wind farm the U.S. Fish & Wildlife Service deemed dangerous to the Marbled Murrelet, an endangered seabird. An IPP wind farm developer, several ridges away, secured its federal permit by virtue of conscientious siting and thoughtful mitigation.

The essential difference between IPPs and utilities is this: private developers spend their own money; not surprisingly they’re more careful than the utilities who spend yours.

The technology that’s turned the world upside down, “fracking,” was invented, commercialized and deployed by private industry. And entrepreneurs midwifed the deployment of wind and solar energy technologies even as they tapped into their share of federal and state incentives.

Government neither needs to or should pick “winners.” When it tries to, we get Solyndra, the failed solar technology, Boeing’s doomed wind turbine, or FutureGen, the $1.1 billion federally sponsored “clean coal” fiasco. When it comes to wasting taxpayer dollars, every technology has its horror story.

We need government to enact over-arching policies pointing toward ends society wants. If we’re serious about de-carbonizing the power sector, we need a national carbon tax to spur private investment in energy efficiency, further deployment of renewable energy and justify the value of out-of-market nuclear power.

Robert Kahn, Ed.D. has worked in energy since the early 1980s. He has served as the executive director of the Northwest & Intermountain Power Producers Coalition, the region’s advocate for competition in the power sector since the group was founded in 2002. A graduate of Colgate University and the University of Massachusetts where he received his doctorate, Kahn is a resident of Mercer Island, Washington.