White House Chronicle

News Analysis With a Sense of Humor

Misadventures of Howard Hughes Can Teach Electric Utilities

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By Llewellyn King

Howard Hughes, a pioneer in movie making and aviation (which informed his cantilevered underwire bra design for actress Jane Russell), was blindsided by disruptive technology. Electric utilities might want to heed Hughes’s history as they deal with future shock.

Hughes believed that his 1930 silent movie “Hell’s Angels” — which has some of the finest flying sequences ever shot — could make it even as the age of talkies was dawning. But he was in error; he had remake the movie with a sound track at huge expense.

Something similar happened to Hughes with the H-4 Hercules, the giant, wooden flying boat — nicknamed the “Spruce Goose” by the press — which he built during World War II. Eight reciprocating engines were no match for the potential offered on the horizon by jet engines. And spruce was no match for the superior aluminum alloys that had been developed during the war.

Leaders in the electric utility industry know full well that times are changing. But are they making brilliant silent movies when the talkies are around the corner, so to speak?

Dealing with change is especially hard for utilities because they are in a real-time business. The juice must flow 24-7, which means the new has to integrate seamlessly with the old. Shutting down to retool, as Hughes did with “Hell’s Angels,” is not an option.

Yet in the 46 years that I’ve been writing about the utility industry, I’ve never seen such upheaval, ergo such challenges. There is no aspect of the industry which isn’t beset by technology at the gate: computing and artificial intelligence; drones for line surveillance and security; 3D printing (additive manufacturing) for repairs; superior data from smart meters; and aggressive growth from competitors on the roof – in the form of solar panels — and in the marketplace.

But, to my mind, the most-daunting challenge facing the industry is flat or declining electric demand. For investor-owned utilities, which provide 80 percent of the nation’s electricity, this challenge, this reality has been masked by the good performance of their stocks on Wall Street, which owes a lot to low interest rates and volatility in the market, not to the long-term prospects for investor-owned companies. For now, it is the utility paradox.

The industry, through the Edison Electric Institute, has built a superb lobbying arm that can seek legislative remedies for its troubles — as it did when dividends were under attack. But there are no legislative fixes for an industry in market turmoil, abetted by technological disruption.

There is more hope for relief from regulators. Increasingly, the industry is focused on state commissions: it wants relief from the downside of rooftop solar; relief from intrusive and misleading marketers of solar products; and, above all, protection of the grid’s existing infrastructure.

Additionally, not all technology is disruptive. Utility solar farms are an economic and technological success. Storage is attracting innovators and may yet get a breakthrough. There is the hope that new load may come through electric vehicles — although growth there could be stunted by cheap oil. It behooves the industry to push for better recharging, particularly inductive charging, and to advertise more electric consumption as a remedy for air pollution from the automobile tailpipe.

In 1974, I worked with the then chairman of the Atomic Energy Commission, the late Dixy Lee Ray, on an energy study for President Richard Nixon. The study advocated more electrification of transportation – and we had railroads in mind first and foremost. The United States has a few miles of electrified railway in the Midwest and the Amtrak corridor from Washington to Boston – far less electrified railway than other developed countries.

The railroads got away from the electric utilities, and they won’t be corralled now. But there is a powerful environmental and social case for electrifying cars; creating a moral imperative to drive electric, if refueling is solved — and I don’t mean hanging an extension cord out the kitchen window. South Korea has buses that refuel through induction-charging plates at bus stops; smaller batteries, frequent charging.

It will be a lot easier for utilities to argue for regulatory relief to protect their social and shareholder responsibilities if they are extending their social value. — For InsideSources

The Joy of the Private Car

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The U.S. Chamber of Commerce said Wednesday it will attempt to do what a string of economists and urban planners couldn’t: persuade the Congress to raise the federal gasoline tax to pay for better roads. — The Wall Street Journal

For all the problems that automobiles bring in society, they are wondrous things. They are, in a way, emblems of freedom. Surely private, discreet mobility is nearly beyond price?

There’s a price and a high one at that: pollution, congestion, sprawl, accident lethality and the geopolitics of oil. But oh, the joy of turning the key and heading to a highway; free, anonymous and among your own things (or your own mess, to be precise), listening to your choice of music–your life briefly in your control.

So far, the joys of the personal car have mysteriously evaded the attention of major poets and composers. Maybe it’s because cars bring joy equally to the proletariat and to the elite.

The primary differentiation between vehicles is not aesthetic but financial. A neat car, like a Bentley or a Maybach, costs money, lots of it, compared to, say, a Ford Focus. Yet their function is identical: they move us around.

Just four times in the 100-plus-year history of the automobile has a truly classless–in the sense that blue jeans are classless–car appeared on the streets. These were vehicles driven by the wealthy and the lowly with equal enthusiasm. They were the Ford Model T, the Ford A, the Volkswagen Beetle and the Morris Minor. All were owned and driven across the social spectrum.

It is an American conceit to believe that our love affair with the automobile is unique. It isn’t: It’s as universal as love itself. The poorest Indian dreams of abandoning the bullock cart for the automobile and even Europeans, who are well served with public transportation, love their cars.

One of the first consequences of Irish prosperity was that Dublin became a traffic jam. The Irish folk song goes, In Dublin’s fair city where the girls are so pretty/ I once met a girl named sweet Molly Malone/and she wheeled her wheel barrow/ through the streets broad and narrow/
singing cockles and mussels alive alive oh. Well, Molly would have a hell of a job in today’s traffic.

When Britain opened its beltway around London–known as the M25 corridor or Orbital–in 1986, so many cars took to the road traffic stopped dead, despite designated speed of 70 mph.

What has happened in western Europe is that driving has become more of a recreational activity, and commuting to work is close to mandatory. London, for example, is the second great city in the world to impose a stiff charge on private cars entering the downtown. The first was Singapore.

Mayor Michael Bloomberg would like to do something similar in New York City, but he faces too many jurisdictions that feed traffic into the city. Other American cities do not have the public transportation infrastructure to be able to contemplate choking them off during the week.

New housing developments everywhere are antithetical to public transportation. The cul-de-sac is hard enough to get a fire truck into, let alone to run buses.

A second problem, after congestion, is where are we going to get the oil to fuel the fleet of cars which is growing exponentially around the world, with most that growth in China and India? That future, for a period of 60 or so years, could be natural gas or electricity–and the smart money is on electricity. The rub is that batteries are not yet up to the task; and today’s gasoline and diesel automobile needs a lot of power for non-motion functions, like air conditioning, lights, power windows, seats and trunks.

Will electric vehicles reach market fast enough? That depends on the thorny issue of geopolitics, religious fanaticism, royal families, and prosperity in India and China.

How to proceed? The government would like to move everything forward, but the Department of Energy is having difficulty getting research and development money out of the door, while local jurisdictions are cutting back on highway funds.

Enter the U.S. Chamber of Commerce with an unlikely proposal for a business group: a fuel tax devoted to transportation solutions. It’s radical, unexpected and comes from an organization with right-of-center clout.

Maybe one day, we’ll again tool down the open road—well, get into a stream of traffic that moves, whether it’s with hydrocarbon or electric fuel. Varoom!  –For Hearst-New York Times Syndicate

 

 

 

 

The Pity of Earth Day–It Brings Out the Crazies

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The trouble with Earth Day, which we mark this week (April 22), is that it has a powerful hold on crazies. Crazies on the left and crazies on the right.

That certainly is not what Sen. Gaylord Nelson had in mind when he inaugurated the first Earth Day in 1970. The senator, and others, hoped that Earth Day would attract a serious examination of the stresses on the Earth. Instead, it seems to attract stressed people.

From the left come the neo-agrarians, the anti-capitalists, the no-growth proselytizers, and the blame-America-first crowd. From the right come the supporters of the Competitive Enterprise Institute, a pro-business phalanx that is in deep denial about man’s impact on the environment, and libertarians who refuse to believe that governments can ever get anything right, or that government standards can be beneficial.

The fact is that a great majority of Americans are deeply concerned about the environment and maintaining the quality of life that has been a hallmark of progress in the 20th and 21st centuries. This majority includes electric utility executives, oil company CEOs, and the trade associations to which these industrial captains belong.

It is notable the extent to which the energy industries have signed onto the concept of global warming and other environmental degradation. They know that their activities often collide directly with the environment and they are, often to the surprise of the environmental community, keen to help. British Petroleum is pouring millions of dollars into solar power and hydrogen. John Hofmeister, president of Shell Oil Company, the U.S. division of Royal Dutch Shell, is retiring early to devote himself to the task of alerting Americans to their energy vulnerability and to the environmental story.

Sure, it took industry a long time to get on the environmental bandwagon. It is the way of industry that it initially resists any innovation that might cost money or involve difficulty. Later it buys television advertising, pointing to its own virtue when it has capitulated.

The introduction of double-hulled oil tankers in domestic waters is a clear example of this: conversion in the face of necessity. After the Exxon Valdez disaster in 1989, the government mandated double-hulling, the tanker industry moaned, and oil spills in domestic waters declined by 70 percent. The cost of double-hulling is balanced out by the lack of payouts for spills. Double-hulling ships, like removing lead from gasoline, introducing the catalytic converter, and banning hydrofluorocarbons in propellants and refrigerants, are major American environmental successes. We led the world.

But if you listen to the critics, you would think that the United States was always on the wrong side of the environmental ledger.

The problem is we live well and we consumer a lot of energy and a lot of goods in our routine lives. There are about 21 gallons of gasoline in a 42-gallon barrel of oil. If you calculate your own daily gasoline usage, you will come up with a pretty frightening number over your lifetime. Likewise, coal burned for lighting, heating and cooling. Residents of New York City, who live on top of each other and do not drive very much, use about half of the energy of suburban households.

For a serious improvement in the environment, just from an energy consumption standpoint, we need to generate electricity by means other than burning fossil fuels (nuclear and wind), introduce more electric-powered public transportation, and substitute electric vehicles for hydrocarbon-powered vehicles. The technology is in sight for all of these. The problem is that the political will is distracted by the pressure groups on the left and the right.

Human impact on the environment can be disastrous or benign, and even beneficial. The towpath along the Chesapeake & Ohio Canal in Washington, D.C. started out as a purely commercial intrusion on a river bank, but now it is a recreational magnet. The dams along the Colorado River have boosted growth in the West, but the river has paid a price. Seattle City Light, the utility that serves the Seattle area, is now carbon-neutral because of the large amount of generation it gets from wind and hydro. There is a debate whether damming rivers is justified; but compared with other ways of producing large quantities of electricity, it is relatively benign.

Farming is an intrusion into nature—a constructive one. The challenge for the Earth Day advocates is to find other constructive intrusions.