March 26, 1970
Page 9591
ELECTRIC POWER AND THE ENVIRONMENT
Mr. MUSKIE. Mr. President, one example of the concern throughout the Nation for our environment has been the difficulties experienced by the electric utility industry in finding acceptable sites for their new generating plants and for transmission line rights-of-way. The Intergovernmental Power Coordination and Environmental Protection Act (S. 7242), which I introduced and which has been the subject of hearings in Washington, D.C. and in the field, would provide a rational means to resolve the conflict between two significant national objectives: adequate electric energy to meet the Nation's demands and the protection of the environment.
We cannot permit this problem to go unattended and unresolved. The likelihood of "brownouts" this coming summer, similar to those experienced last summer and even during the periods of peak demand for electric energy during the winter, makes it evident that this problem cannot be ignored without risking drastic consequences.
The New York Times of Sunday, March 1, contained a perceptive article by Mr. Gene Smith entitled "Utilities Damned at Any Location." Mr. Smith has summed up the dilemma in a very few paragraphs. I ask unanimous consent that his article be printed in the RECORD in order that his analysis may be read by those concerned about this situation.
In his article, Mr. Smith refers to a speech made by Lee C. White, the former Chairman of the Federal Power Commission, setting forth a number of specific suggestions to be considered by utility executives in undertaking to meet this challenge. An editorial from Electrical World for February 23, 1970, a publication widely read in the electric utility industry, comments favorably on Mr. White's suggestions and commends them to the attention of utility executives throughout the country. I, too, believe that Mr. White's suggestions are worthy of examination and ask unanimous consent that the text of his speech, which contained the nine-point proposal, and the editorial from Electrical World also be printed in the RECORD.
There being no objection, the items were ordered to be printed in the RECORD, as follows:
[From the New York Times, Mar. 1, 1970]
UTILITIES DAMNED AT ANY LOCATION
(By Gene Smith)
Like frustrated apartment seekers, electric utilities are having trouble these days finding a place to live.
Or, as the January issue of Resources, the Magazine Inc., headlined a recent article: "Power– Yes; Power Plants – No."
The utilities have reached the point where they seemingly have no place to turn. Power demand doubles at a rate slightly faster than every 10 years but utilities are opposed by certain groups if they try to situate plants in cities, by others if they seek sites in the suburbs or wilderness areas and by still others if they try to locate near vital water supplies.
Several developments of recent weeks point up the problems of finding sites for power plants, whether nuclear, fossil-fueled (coal, oil or gas) or hydro:
The New York City Council has before it a proposed law regarding nuclear reactors. It reads in part: "No person, corporation, association, institution, college or university shall conduct an industry, occupation, business, profession, training program, demonstration or experiment, educational or otherwise, requiring the use of a nuclear reactor in the city."
Northeast Utilities announced last Wednesday that it might build a giant pumped storage power plant at one of two sites in the Lower Berkshires on either side of the Connecticut-Massachusetts border. The utility asked governmental and citizens groups to participate in feasibility studies.
Conservationists immediately indicated their opposition to any plants in the area.
Speakers at a recent briefing on a national energy policy suggested that maybe the time had come for electric utilities to slow down on their salesmanship "at least until we can catch up and develop power-supply technology that will minimize environmental concerns."
Federal Governmental officials have urged the creation of regional or national regulatory groups to pass on potential power-plant sites, and several states have already established such bodies with varying degrees of power.
Congressional leaders have called for a moratorium on all nuclear-plant construction, while the California Environmental Quality Study Council wants to give top priority to nuclear plants to eliminate future air pollution.
Obviously, the solution lies somewhere between these extremes, and the more progressive utility leaders recognize this. Lelan F. Sillin Jr., president and chief executive officer of Northeast Utilities, explained last week that he would use the same approach for future nuclear and fossil-fueled plants that he unveiled last Wednesday at Salisbury, Conn. He described it as an "open planning concept" and acknowledged that it had such drawbacks as the possibility of escalating land values by disclosing well in advance exact sites for power projects.
Mr. Sillin said it was "quite apparent that we've got to improve the process for siting (power plants)." He added that in the past the lowest possible cost, which included straight-line routing of high voltage power lines, was the chief criterion.
"This is a step beyond the unilateral decision," he went on. "We are seeking a truly cooperative approach . . . one that will avoid the 'climate of crisis.'
"It sort of seems to me that we've lost the art of communications. We intend to bend over backwards to establish a quality of credibility and hope we can do it this way rather than in a climate of polarized views." Mr. Sillin added.
The New York State Atomic and Space Development Authority expects to spend most of its time during the next 15 months finding sites for future nuclear-power plants. Under the state's electric power program, the Authority is authorized to select and acquire sites and to make them available as needed to electric power generating organizations through leases or other contractual agreements.
CONSIDERATION INVOLVED
James G. Cline, general manager, indicated that the key criteria would take into consideration thermal effects, nuclear safeguards, power growth and grid needs, esthetics and actual land usage, including how best to integrate facilities into the environment.
He explained his group realized that there were "certain places where power plants belong, just as there are certain places where they don't belong." He emphasized that all alternative sites would be considered in the process of eliminating for the best locations.
Governor Rockefeller has proposed additional legislation aimed at establishing "a procedure for resolving questions relating to the location of major utility facilities without undue delay."
LUCE URGES REVISION
Charles F. Luce, chairman and chief executive officer of the Consolidated Edison Company, has called for a complete revision of state laws on the licensing of power plants and transmission lines. He has repeatedly urged the creation of one single regulatory agency that would make engineering, economic and environment decisions in consultation with state and local agencies interested in the outcome of licensing procedures.
Maryland has threatened a moratorium on nuclear plants if the Federal Government doesn't institute a crash program to study potential hazards.
Oregon and Washington have established advisory and coordinating committees aimed at the control of power plant sites.
Senator Edmund S. Muskie, Democrat of Maine, has introduced a bill that calls for resolving power plant siting on a regional level and providing a means for coordinating Federal, state and local group responsibilities for all the maintenance of reliable power supplies. Mr. Luce indicated he felt this would only add another level of regulation to the already overcrowded procedures.
Lee C. White, former chairman of the Federal Power Commission, recently outlined a nine-point plan for utilities faced with growing environmental problems. Chief among his points were:
Break away from the traditional approach of keeping long-range plans super secret. Give the earliest possible advice on plans to all state and local agencies that might have a hand in planning. Consider for nomination to boards of directors persons identified with the conservation movement. Name a company official responsible for environmental matters.
"Come very quickly to grips with the environmental crisis that faces you . . . The question is getting a little more attention in Congress these days, but I do not believe that, if I were managing a utility, I would wait for that particular salvation," Mr. White concluded.
REMARKS BY LEE C. WHITE, SEMER, WHITE & JACOBSEN,
BEFORE THE ANNUAL MEETING OF THE MISSOURI BASIN SYSTEMS GROUP, DENVER, COL., FEBRUARY 4, 1970
Every competent, or even semi-competent, speech writer has an all-purpose speech entitled "The Industry is at the Crossroads." Today the electric utilities industry – and that term includes every segment of the industry – is truly facing a future unrecognizable in terms of the past and even the present. I am not as close today as I was 6 months ago to the specifics of the problems facing the industry, and I can't even claim that my remoteness has necessarily given me new breadth or better perspective, but this has never deterred me in the past from expressing my views; and, having come this far, it is difficult for me to conceive of any force that could prevent me from expressing them now.
Not necessarily in the order of importance, I see the following problem areas and would like to discuss each of them in turn: financing and rates; the need for greater coordinated planning and operations; the commitment to nuclear energy; the need for greater research efforts; and the environmental crisis.
Financing and Rates. – The electric utility industry, which is already the nation's number one industry in capital investment, at somewhere near $100 billion, is estimated to require an additional capital investment of $350 billion by 1990, and this is occurring at a time when interest rates on utility bonds are between 8½ and 9 percent. An industry that prided itself on the fact that while the cost of living was rising steadily, rates for electricity were relatively constant and, if anything, had experienced a decline, is apparently moving into an era of sharply rising rates. I am no longer faced with the problem of determining what rates should be allowed, but I have considerable sympathy for those who must. The nation's regulatory bodies are now staring at hundreds of millions of dollars in proposed rate increases. Their obligation – to fix fair rates which will enable the utilities to secure the necessary funds to finance their required expansion and yet at the lowest cost to the consumer consistent with that requirement – is indeed a monumental assignment, and especially difficult will it be to perform the task reasonably and without undue delay. I hope that the individual states will provide adequate funds for staffing their regulatory bodies and that they will attract to those commissions men of vision, experience, and competence to protect the public interest. At this point, let me indicate my enthusiastic support for the action of Governor Rockefeller of New York in designating my predecessor at the Federal Power Commission to be Chairman of the New York Public Service Commission – simultaneously I should express my great pleasure that Mr. Swidler accepted the assignment. As opportunities to fill their important positions occur, I hope the appointing authorities will find the best possible candidates, especially at this time when the responsibilities are greater than ever before and where the tasks are probably more difficult than ever before.
An even more complicated aspect of rate making has begun to attract attention, and this is the structuring of rates. It has been suggested that rates should be tailored to assist the economically disadvantaged, not only because of their need to have vital utilities service, but perhaps because they are bearing an inordinate share of the rate burden, in that a greater investment in facilities is required to serve suburban areas than the more densely settled inner city. It also has been noted recently that, if we are approaching a period in our national life when there will not be sufficient energy to meet all demands, it may make sense to conserve energy by reversing the normal pattern and charging higher rates for that amount of energy used over the minimum required for the most essential services. This is not the time and place to discuss these problems in detail – and, frankly, I don't know what the answers are, but suffice it to say that this is the type of issue that must be identified and resolved by those with regulatory responsibilities.
The Need for Greater Coordinated Planning and Operations. – Improved coordination in planning and operations by electric utilities is just about universally accepted as a laudable objective; but, quite candidly, we have had a little difficulty in getting from here to there. In some sections of the country, for example the Pacific Northwest, considerable progress has been made toward this end. Elsewhere, problems such as the tensions that have existed between different forms of ownership have impeded efforts to achieve that level of cooperation that is essential to a nation that is heavily dependent upon electric energy. In my view, one of the outstanding contributions of the Federal Power Commission during the 1960's was to get the various segments of the electric utility industry to focus on their common needs and problems and to put aside the natural rivalries and tensions that have existed between the different forms of ownership through the decades. Unfortunately, this has not been uniform throughout the country.
As you know better than I, in the upper Midwest there have been some severe problems in achieving the accord and understanding that is essential to the mutual strength of all of the systems serving all of the people of the area. Electrons do not run around wearing little tags saying "produced by investor-owned utility" or "produced by a cooperatively-owned utility" or "produced by a municipally-owned system." While serving in the government I recommended legislation which would have required regional coordinating councils and authorized the FPC to approve the method of operating them. This recommendation was made with full recognition of the fact that it is difficult to legislate cooperation. I hope the fact Congress has not acted on that recommendation will not encourage utilities to hang back, but rather will serve as a prod to achieving the required level of coordination on a voluntary basis. I hope, too, that the developing regional councils will respond affirmatively to the FPC's very courteous "request" in its revised order on voluntary interconnection and coordination by power systems to permit participation by FPC and state regulatory commission staff on a non-voting basis "in their principal meetings, and upon occasion, as may be requested by the Commission's Chief, Bureau of Power, in important technical meetings."
I do not hold to the view expressed by some that the inevitable solution to the bulk power supply problem is the establishment of only 12 or 15 bulk supply corporations operating in the United States. This is certainly an approach, but there are other appropriate and legitimate methods, and none is more promising than true regional coordination.
The Commitment to Nuclear Energy. – There is, of course, something stimulating about people in a technical industry operating in the outer reaches of technology. Undoubtedly, some electric utilities have committed themselves to nuclear energy plants only for the prestige associated with the new technology. Those whose operations and locations (that is nearness to conventional fossil fuels) permit have apparently hedged their bets by ordering conventional facilities at the same time they are sticking their toes in the nuclear bathtub. The remarkable delays in getting nuclear units on the line (particularly the very large units); the increase in cost per installed kilowatt of capacity over the quoted prices of only a few years ago; the continuing concern about both thermal pollution and potential radioactive emissions have all conspired to slow down the pell-mell rush for nuclear contracts that existed in 1967 and 1968. Recent announcements of new contracts indicate that there has been a slight quickening of the pace that nuclear is creeping back up from a very difficult 1969. The Atomic Industrial Forum predicted last week that there would be a 50 percent increase in nuclear plant orders in 1970 over 1969. I do not advocate the barring of nuclear plants or a slowdown by the industry in the purchasing of such plants, but certainly any utility management has the greatest obligation to satisfy itself that the decision to go nuclear not be made without the most exhaustive assessment of both the benefits and the disadvantages of such a course.
The Need for Greater Research Efforts. – It has become standard fare for the people in government to criticize the electric utility industry for the relatively meager contribution it has made in research and development. In my view, the reason is quite evident: Simply stated, the criticism is valid.
The FPC recently released its compilation of Statistics for Privately Owned Electric Utilities in the United States for 1968. It reveals that the approximately 200 investor-owned utilities spent less than $39 million, or about 2/10 of 1 percent of revenues, on research and development in 1968 either directly by the utility or in support of outside organizations. In the same year, expenses for advertising and other sales expenses were over $273 million. I do not have comparable figures for the municipally and cooperatively-owned systems, but I doubt that they would look much better.
The unwillingness of the industry to finance an experimental magneto hydrodynamics (MHD) plant is, in my view, inexcusable. It has always mystified me that, as important and as financially strong as the electric utility industry is, it has left so much of the research and development to the manufacturers of electrical equipment. Basic human behavior would suggest that the organization performing the research will resolve any differences or questions of emphasis in favor of its own needs, not someone else's. The Federal Power Commission has sought to encourage research by utilities; its most recent action being a rule proposed last week which would permit expenditures for research not only to be an operating expense, but a part of the utility's rate base. Although the objective is certainly commendable, I personally have a little trouble with the concept of including the research and development expenses as part of the rate base. However, I am confident the matter will be thoroughly argued before the Commission before it reaches a decision on the question.
The point, rather simply, is that the consuming public has the right to expect a greater research effort by the industry, especially in the light of the environment problems it faces.
The Environmental Crisis. – Undeniably, the major problem facing electric utilities throughout the country is the sharply increased concern about the environment. This problem, which manifested itself a few years ago in sporadic outbursts, has now risen to the point where it is designated by President Nixon as perhaps the most important domestic problem facing the nation.
Although a whole host of us lesser lights may get a little charge out of digging copies of our own brilliant analyses of these problems out of our files and can point with pride to our vision of years ago, the significant factor is that today there is legitimate and vigorous competition among our top political leaders for preeminence in the field of preserving and protecting our environment. This, as I see it, is all to the good.
What it means, however, is that the problems associated with selecting generating sites and transmission line rights of way constitute one very prominent, visible, and definable chunk of the total environmental problem. Because of its character, this particular chunk will certainly continue to have a great deal of attention focused on it.
Prior to leaving the Federal Power Commission, I predicted that within 2 years – that is by May 1971 – the utility industry would be asking Washington for assistance to help it cut through the growing stalemate between those who have the responsibility to meet the steadily increasing power needs of the nation and those who are deeply concerned about the impact of such industrial growth on the environment. I have a hunch that that particular prediction will prove to be a little better than the political predictions I have been making during the past few years.
In any event, it is worth noting that Mr. Charles Luce, Chairman of the Board of the Consolidated Edison Company of New York, in a speech to the Association of the Bar of the City of New York a couple of months ago, expressed the view that the State of New York should adopt legislation vesting in one state agency the authority to cut through the complex of issues that is preventing Con Ed from constructing the facilities necessary to meet its projected load growth. I do not know that I favor individual state legislation, but certainly the situation cannot continue as it has without a very severe danger that we will find ourselves without adequate power.
It is perfectly evident that the dialogue between the environmentalists and utilities is beginning to shift. The utilities are no longer being asked, "why don't you locate your plant in a site other than the one that you have selected?" The question being asked today is, "can you justify the construction of an additional plant anywhere?" In short, the public is beginning to challenge the basic assumption upon which the electric utilities have operated in the past 85 years, namely, that not only must the utility meet every request for power, but it was appropriate and desirable for it to promote increased consumption of electric energy. Today there are a very few voices in the wilderness questioning this basis precept. Tomorrow there will be additional voices, and the day after that, a veritable chorus.
Realistically, we will continue to increase our consumption of electricity in the United States, and those of you who bear the responsibility for seeing to it that there is an adequate supply must, in my view, very quickly come to grips with the environmental crisis that faces you. The problems generally are more intense in the congested areas along the eastern and western seacoasts; but, if the problem has not come to your system yet, you can take bets on its doing so and you can also predict that it will come faster than perhaps you wanted it to. The point is that time is exceedingly short, and I would strongly encourage each of the systems, individually and on a joint basis, to analyze these problems and begin to provide workable solutions.
Let me offer for your consideration, in a very sketchy way, some approaches that occur to me to hold some hope. As I have indicated, I would tread the legislative path. The question is getting a little bit more attention in Congress these days, but I do not believe that, if I were managing a utility, I would wait for that particular salvation. I offer you the following suggestions:
1. Break away from the traditional approach of keeping long-range plans for construction of generating and transmission facilities super secret – even though controversy will be engendered by revealing them, recent experience indicates there is just as much controversy if you reveal your plans the day before construction is to commence.
2. Recognize the legitimacy of the people's concern for and interest in our environment – certainly there are some environmentalists and conservationists who are so extreme in their positions that accommodation with those positions is impossible, but that is not to suggest that the great bulk of concerned people do not appreciate the need to develop acceptable accommodations between the need for power and the negative environmental by-products.
3. Encourage the various societies, associations, and organizations in your service area who are concerned with environmental matters to come together in a voluntary grouping so that your engineers and design people can work with them on an early and constructive basis – you may even find their contribution to be helpful and they may afford protection against spontaneous and less qualified critics.
4. Provide formal recognition of your concern for the environment by designating an assistant manager or a vice president for environmental matters – this not only will indicate organization concern, but will serve to channel injuries and advice to the appropriate office.
5. Additional recognition can come through appointment to your Board of Directors of local or national personalities identified with the conservation movement – their knowledge, understanding and familiarity with issues and people can be a positive force in the decision-making process.
6. Develop working relationships with those elements of universities in your service area devoted to environmental matters – where such disciplines are already established, you can use the benefits of their research and knowledge of local factors, and where they do not exist or are weak, try to help them achieve the capability of providing the soundest analytical foundation for decision-makers.
7. Give the earliest possible advice on system plans to all appropriate state and local agencies, including zoning authorities, pollution abatement agencies, regulatory bodies, aesthetic, historical, and scenic preservation agencies, as well as governors, mayors, county commissioners and other elected officials – they will increasingly feel the intense interest (and even heat) from the public and are entitled to be fully and promptly informed.
8. Examine your research budgets to see whether a greater effort is possible, particularly in such environment-protecting fields as more economical undergrounding of transmission lines, treatment of fuels before use, removal of pollutants after combustion – technological progress got us into some of these difficult environmental problems; we should be able to use some of our creativity and ingenuity to resolve those problems.
9. Publicize in every legitimate way actions taken by your system that demonstrate your sensitivity to the environmental problems – to the extent the electric utility industry intensifies its efforts to meet these challenges and so advises the consuming public, it will receive improved understanding and acceptance.
Conclusion. – Earlier I referred to the rivalries and tensions that have continued to exist between the various segments of the electric utility industry. In a very real sense I can see some progress being made in improved cooperation between the segments of the industry – I only wish that it were uniformly good across the country. It occurs to me, however, that one highly legitimate form of competition between the consumer-owned segments of the industry and the investor-owned utilities might be a contest to see which major group can first develop the means of responding to the nation's heightened interest in the environment and indeed some of the other problems that have been discussed today. The temptation to an old government employee such as myself to preach is very nearly irresistible. Thus, I would like to conclude with one observation that will be at least controversial and probably offensive: utilities that are owned by their customers tend to believe that their hearts and their deeds must, because of that fact, be pure – may I respectfully suggest that this is not necessarily true. As managers with the responsibility to meet all the legitimate needs of your customers who also happen to own your systems, you have a special duty and opportunity to provide leadership for the great industry of which you are a significant part.
[From Electrical World, Feb. 23, 1970]
NINE SUGGESTIONS FROM AN OLD PRO
Rarely less than forthright in speaking his mind on utility industry issues when he was chairman of the Federal Power Commission, Lee C. White appears no less candid in his present role as private citizen. We found real wisdom in nine suggestions he offered utility management earlier this month for coping with the environmental crisis, in an address before a utility group in Denver. These were his suggestions:
1. Break away from the traditional approach of keeping long-rang plans for construction of generating and transmission facilities super secret – even though controversy will be engendered by revealing them. There is just as much controversy if you reveal them the day before construction begins.
2. Recognize the legitimacy of the people's concern for and interest in our environment. Certainly some environmentalists are extreme in their positions, but the great bulk of concerned people appreciate the need to develop acceptable accommodations between the need for power and the negative environmental byproducts.
3. Encourage the various societies, associations, and organizations in your service area who are concerned with environmental matters to come together in a voluntary grouping so that your engineers and design people can work with them on an early and constructive basis.
4. Provide formal recognition of your concern for the environment by designating an assistant manager or vice president for environmental matters. This will indicate organizational concern, and channel inquiries and advice to the appropriate office.
5. Additional recognition can come through appointment to your board of directors of local or national personalities identified with the conservation movement. Their knowledge, understanding, and familiarity with issues and people can be a positive force in the decision-making process.
6. Develop working relationships with those elements of universities in your area devoted to environmental matters. Where such disciplines are already established you can use the benefits of their research – and where they are weak try to help them achieve capability.
7. Give the earliest possible advice on system plans to all appropriate state and local agencies, including zoning authorities, pollution-abatement agencies, regulatory bodies, and aesthetic, historical, and scenic-preservation agencies, as well as governors, mayors, and county commissioners. They feel the intense interest (even heat) from the public, and are entitled to be fully and promptly informed.
8. Examine your research budgets to see whether a greater effort is possible, particularly in such environment-protecting fields as more economical undergrounding of transmission lines, treatment of fuels before use, removal of pollutants after combustion. Technological progress got us into some of these difficult environmental problems; we should be able to use some of our creativity and ingenuity to resolve them.
9. Publicize in every legitimate way actions that demonstrate your sensitivity to environmental problems. To the extent that the electric utility industry intensifies its efforts to meet these challenges and so advises the consuming public, it will receive improved understanding and acceptance.
For those who must bear the responsibility for seeing to it that there is an adequate supply of electricity in the United States, White had one more bit of advice:
"Come very quickly to grips with the environmental crisis that faces you . . The question is getting a little more attention in Congress these days, but I do not believe that, if I were managing a utility, I would wait for that particular salvation."
This is very sound counsel.