By Judy Sheahan
March 19, 2001

Whether you're in California experiencing rolling black outs, the Pacific Northwest in the midst of a drought, or a consumer experiencing elevated natural gas and fuel prices, you're effected by energy policy. During MWMA's Annual Meeting, Joe Nipper, Associate Executive Director with the American Public Power Association and Richard Kolodziej, President of the Natural Gas Vehicle Coalition, provided some background about the current energy crisis and discussed pending utility restructuring legislation and efforts to manage supply and pricing issues.

According to Mr. Nipper, the interconnectivity of electrical power grids and the slow response time in adding new generators is at the crux of the energy crisis. " There's only so much electricity generated," said Mr. Nipper, "and we were slow to add new generators, causing negative effects in California, Oregon, Washington and Arizona, including huge price spikes."

The California energy crisis, continued Mr. Nipper, effectively halted the re-structuring and deregulation debate. Originally framed around a states ability to de-regulate and foster competition, the debate switched focus and began to center around the whole sale electrical market. 'Because electricity is interstate by nature, it became a federal commerce issue," he said. Anchoring the de-regulation argument for the government was the fundamental belief in free markets and increased competition and the government's success in de-regulating other industry.

Once the California crisis hit, public debate was shaped by the acknowledgement of the scarcity of supply and the imperfect market structure. More importantly, however, was public skepticism. Most people believed that market manipulation was the cause for the crisis.

Mr. Kolodziej highlighted other energy problems including the United States increased dependence on foreign oil from 33% in 1973 to more than 50% this year with projections of more than 60% by 2010. In addition to the increased dependence on foreign oil, natural gas prices have also experienced a dramatic increase. These factors, according to Mr. Kolodziej, will have a severe impact on local economies as well as municipal budgets and operating costs.

In addition to rising prices, Mr. Kolodziej also highlighted current and future EPA policy changes that may have an impact on energy supplies and costs including particulate standards for diesel engines, meeting National Ambient Air Quality Standards, and climate change issues.