Meeting the Need for Affordable and Reliable Electricity

by Samuel Wright Bodman
U.S. Secretary of Energy

President George W. Bush has always said the private sector is the key to securing a strong and stable energy sector. I want to affirm our commitment to working with the power-generation, transmission and distribution industry to meet the nation's need for affordable and reliable electricity.

World Energy, v9n2 Read more articles from this issue

The administration's approach to enhanced energy security covers three broad areas: increasing the supply of energy from clean, alternative power sources; improving energy efficiency so we can do more with less; and both upgrading and modernizing our energy infrastructure.

Clean Power Sources

Let me begin with the logical first step: creating the energy sources we need to maintain a healthy, growing economy. The president's Advanced Energy Initiative calls for additional spending – beginning with a 22 percent increase next year – to speed the development of alternative and renewable energy sources. We are focusing on wind and solar power, cellulosic ethanol, lithium ion batteries for use in hybrid-powered vehicles, and hydrogen fuel cells.

The members of the Hydrogen and Fuel Cell Technical Advisory Committee have been selected, and they will soon convene for their first meeting. In accordance with the Energy Policy Act, this committee will give expert, candid advice on the department's activities and will help direct research and programmatic funding. The committee includes representatives of domestic industry, academia, government agencies and environmental groups as well as experts in the area of hydrogen safety. In addition to hydrogen and the other renewable energy sources I mentioned, we are also investing heavily in clean-coal technologies, such as integrated gasification and combined cycle. Next year we will spend $54 million on the FutureGen initiative to build a demonstration plant incorporating the most advanced clean-coal burning and carbon-sequestration technologies. I have been encouraged by the display of public enthusiasm for this power project, as seven states have suggested 12 possible sites as the locale for this prototype plant.

Along with alternative and renewable fuels, we believe emissions-free nuclear power must be part of the solution to this nation's energy challenges. The Department of Energy (DOE) is making its case to Congress for an initial $250 million in funding for the Global Nuclear Energy Partnership (GNEP), which is an international effort to develop new recycling technologies for spent nuclear fuel. The new technology developed under GNEP could minimize proliferation risks and future permanent waste storage concerns, and also help to supply urgently needed sources of affordable electricity in the developing world.

We are also moving forward briskly with our Standby Support program of federal risk insurance for the first companies that commit to ending our 30-year hiatus in building new nuclear power plants in the United States.

The program, which was authorized by the Energy Policy Act, will provide as much as $2 billion in insurance against the costs of delays for the builders of the first six new plants that are added to our generating fleet.

At the same time, we are moving ahead with another requirement of the Energy Policy Act: the loan guaranty program for new clean-energy projects, including new clean-coal and nuclear power plants. We are creating a Loan Guaranty Office within the department with initial funding of $2.7 million. The chief financial officer of the DOE will monitor the program so that the proper financial discipline will be brought to bear on our project evaluations.

Improving Efficiency

All these investments in clean energy will keep our economy growing and will help protect our environment. One of the best ways for helping the environment, of course, is by improving our energy efficiency.

In the wake of Hurricane Katrina last year, the DOE answered the president's call to conserve energy by sending out teams of experts to advise federal facilities that are big users of natural gas and electricity on how they can operate more efficiently.

The DOE's teams have visited 34 federal sites and identified potential annual savings of 970 billion Btu of natural gas and 184 billion Btu of electricity. That equals 10 percent of the energy used at these sites and could save taxpayers $10 million in annual utility costs. We are also making broader use of the Energy Savings Performance Contracts that were reauthorized by the Energy Policy Act. The contracts allow federal agencies to reap the benefits of lower utility costs through capital improvements paid for by contractors, rather than from public funds. I believe they represent a win-win proposition for taxpayers.

Through our Energy Savings Assessments program, we are also working with 200 of the most energy-intensive manufacturing plants in the United States to help them cut their energy costs and natural gas consumption.

The 61 audits completed so far identified ways to reduce natural gas use by over 20 trillion Btu per year – that's enough to heat 300,000 homes – and deliver the plant operators nearly $200 million in annual savings.

Even with these successes, however, improving energy efficiency is not something government can achieve on its own. That is why I am looking forward to working with our counterparts at the Environmental Protection Agency and leadership teams from the private sector to develop a public-private partnership approach that will encourage electric and gas utilities to deliver greater energy efficiency.

Upgrading Infrastructure

Power generation and energy efficiency are both critical, of course. But neither will do us much good if we can't reliably get energy to the consumers who need it.

One of our most important goals is to make certain our electrical infrastructure is strong enough to reliably and efficiently accommodate the nation's growing demand for power. It is true that immediate causes of the blackout that hit the Northeast, the Midwest and Canada so hard three years ago were operator errors. But it is also true that our transmission and distribution system hasn't kept pace with two other factors putting an increasing strain on the grid: producers' capacity to generate power and customers' desire to consume it.

To reduce the risk of future disruptions, and to reduce consumers' electricity bills, the entire system must be upgraded and woven together. This effort of modernizing and expanding the infrastructure will require focused and sustained collaboration among planners, regulators, other government officials and industry.

Several provisions of the Energy Policy Act are aimed at achieving this critical goal. One of the most important is the authority the act grants to the Federal Energy Regulatory Committee (FERC) to approve mandatory reliability standards for the nation's power grid.

I know the North American Electric Reliability Council has applied for designation as the new Electric Reliability Organization, and it kicked off the debate on what standards should apply with a set of 100 specific proposals. I am optimistic that we will have new mandatory reliability standards in place early next year.

Another key provision of Energy Policy Act involves the designation of energy corridors on federal lands in the western states, which the DOE – in conjunction with the departments of Defense, Agriculture and the Interior – will announce in 2007. Recently, the Bureau of Land Management released a map showing the proposed energy corridors being considered. Now, while these corridors are intended to be available to serve future needs, we are also looking at more immediate concerns, such as identifying the most important congestion points in the electricity grid. The DOE has prepared a study listing areas where transmission expansion is currently needed, or will be needed within a few years. This study is based on suggestions provided by many companies. In this study, the DOE also identifies a "short list" of areas where we believe transmission expansion is especially urgent. After the study is published, we expect to enter a period of intensive dialogue with stakeholders about the possible designation of "national interest electric transmission corridors" in relation to the areas on the short list.

Resolving our infrastructure, siting and congestion challenges will require the active cooperation of many parties. Governors and their energy policy advisors, state regulatory agencies and state legislators, as well as city and county officials, will all have important roles to play. In addition, the FERC has been granted "backstop" authority to site interstate electric transmission lines in special circumstances. The purpose of that provision is to help the federal government work with states and localities to resolve siting issues. My hope is that through federal action in the most critical cases, we will stimulate the development of effective, homegrown regional solutions to most of these regional problems.

Strong, and Growing Stronger

The energy challenges we face in the United States are significant, but they are hardly insurmountable. In fact, though we have much work ahead of us, it is also useful to remind ourselves just how strong our energy sector is, and how many advantages we enjoy here in the United States.

President Bush recently asked me to travel to Iraq, and on my trip I will be meeting with my two Iraqi counterparts, the minister of oil and the minister of electricity. They are both new to their jobs as they are members of the new cabinet just formed, and I hope to offer some encouragement and advice.

I know the Iraqis are working to create the laws and policies that will encourage foreign investment and allow them build up their energy resources, which are such a great national asset. The people of Iraq are also working hard to get reliable electricity by building generation capacity closer to metropolitan areas. Such developments will allow them to curtail the sabotage against transmission facilities and provide a steady supply of power to the cities. In fact, one of our specific goals is helping Iraq establish "rapid-repair teams" to fix the damage caused by attacks on their energy infrastructure.

Progress in Iraq will take a great deal of determination and hard work. But from the ashes of Saddam Hussein's tyranny, the Iraqis are succeeding day by day in building a stable, prosperous and democratic nation in the heart of the Middle East.

So let us take heart from their resolve and their dedication. And let us count our blessings, even as we recognize that we also have work to do in building a stronger, more stable and more reliable energy sector here in the United States.

Samuel Wright Bodman was sworn in as the 11th secretary of energy on February 1, 2005, after the U.S. Senate unanimously confirmed him on January 31, 2005. He leads the Department of Energy with a budget in excess of $23 billion and more than 100,000 federal and contractor employees.

Previously, Secretary Bodman served as deputy secretary of the Treasury beginning in February 2004. He also served the George W. Bush administration as deputy secretary of the Department of Commerce beginning in 2001. A financier and executive by trade, with three decades of experience in the private sector, Secretary Bodman was well suited to manage the day-to-day operations of both of these cabinet agencies.

Born in 1938 in Chicago, he graduated in 1961 with a B.S. in chemical engineering from Cornell University. In 1965 he completed his Sc.D. at Massachusetts Institute of Technology (MIT). For the next six years he served as an associate professor of chemical engineering at MIT and began his work in the financial sector as technical director of the American Research and Development Corporation, a pioneer venture capital firm. He and his colleagues provided financial and managerial support to scores of new business enterprises throughout the United States.

From there, Secretary Bodman went to Fidelity Venture Associates, a division of Fidelity Investments. In 1983 he was named president and chief operating officer of Fidelity Investments and a director of the Fidelity Group of Mutual Funds. In 1987 he joined Cabot Corporation, a Boston-based Fortune 300 company with global business activities in specialty chemicals and materials, where he served as chairman, CEO and a director. Over the years, he has been a director of many other publicly owned corporations.

Secretary Bodman has also been active in public service. He is a former director of MIT's School of Engineering Practice and a former member of the MIT Commission on Education. He also served as a member of the Executive and Investment Committees at MIT, a member of the American Academy of Arts and Sciences and a trustee of the Isabella Stewart Gardner Museum and the New England Aquarium.

Secretary Bodman is married to M. Diane Bodman. He has three children, two stepchildren and eight grandchildren.