How Government Over-Regulation Fuels the Energy Crisis
Scott Fallon, Policy Analyst, July, 2001
Washington is facing a severe energy shortage. The primary cause is lack of generating capacity. Put simply, supply has not kept up with demand. In the past decade Washington’s population has grown enormously, yet our energy producing-capacity has failed to keep pace. The state-level Energy Facilities Site Evaluation Council (EFSEC) has played a major regulatory role in preventing the creation of enough energy production to keep up with the state’s growing needs.
According to its authorizing statute, EFSEC is charged to “seek courses of action that will balance the increasing demands for energy facility location and operation in conjunction with the broad interests of the public.” This includes the responsibility “to provide abundant energy at reasonable cost.”
Submitting an application to EFSEC costs $25,000. Because of a myriad of additional charges, total direct costs to the applicant can exceed $350,000 and the permitting process can last more than three years. Business people around the state can understand the opportunity cost of three years lost production.
Despite all the expense and effort involved, EFSEC has been remarkably ineffective. In the thirty-one years since it was established not a single plant under EFSEC review has been built.
In January 1999 Sumas Energy 2, Inc. proposed a 660 megawatt (MW) natural gas powered electric generation plant (Sumas 2). The proposed plant would generate enough power to supply half-a-million homes, significantly relieving our power crunch. After more than two years of study EFSEC turned down the proposal. The Sumas 2 proposal met all federal and state pollution regulations. Yet EFSEC fell back on subjective considerations in voting for rejection and further took into account global warming considerations without legal mandate or scientific support.
To avoid a future regulatory crisis like the Sumas 2 situation, state policymakers should consider streamlining the complex energy regulatory process and remedy EFSEC’s obstructionist role by adopting the following policy recommendations.
- The threshold for plants which fall under EFSEC’s purview should be increased to 1,000 MW or more.
- EFSEC’s rulemaking authority should be limited to protecting Washington power consumers from arbitrary politicized rulings by the agency.
- The governor or the legislature should convene a task force to:
- Examine current environmental regulations to ensure they are based on solid science and exist only where truly necessary.
- Ensure that other regulatory bodies throughout the state are correctly implementing the law and not inventing rules based on subjective opinions.
- Because there is no legal mandate or agreed scientific consensus, a power plant’s effects on global warming should not be a consideration in siting of the new facility.
Viable, clean plants which can significantly enhance quality of life in Washington without degrading the environment are being rejected, or worse, never even proposed because of EFSEC’s actions. The results of the current power plant siting process are higher energy prices and recurring energy shortages. Common sense reforms will help return state energy policy to its primary responsibility: providing abundant, affordable power balanced with reasonable safeguards for the environment.