Saturday, May 13, 2006

Conservatives properly challanged on energy statments.

A proper challange put forward by Mr. Allan Dane, electrical engineer.

Mr. Jean,

Your speaches were full of "we're going to do...." but you never said how you are going to do any of the things you plan to do in regard to Kyoto. Until you tell us how you are going to do anything I cannot believe anything you say.

I am a senior. I was born in Alberta in October 1932. I have worked in Alberta, B.C., Ontario, and Quebec. In the USA I have worked in Pennsylvania, Michigan, and in North Carolina.

Mr. Jean I am an Electrical Engineer. In fact, I have an M.Sc. from the University of Alberta in that discipline. I know a little bit about electrical energy. Some of the transmission lines that I have helped to design are presently operating in Iran, Turkey, and Saudi Arabia, in many States of the USA, and in Canada.

Mr. Jean, when you are a consulting engineer you need to have a knowledge of the economic factors that constrain the activities of your client. You and your colleagues in the present Alberta Government do not appear to have significant understanding of those factors so I have very grave doubts that you will be able to accomplish significant effect to diminish the climate change that is already occurring in Alberta.

Oh, I forgot to mention that I was an independent consultant for six months to TransAlta Utilities....

First of all competition in the electric utility industry cannot be beneficial to society.

There cannot be significant "positive elasticity of demand" in that industry. In fact, there is slight negative elasticity of demand in that industry and I am prepared to give you proof of this statement. Even some economists do not know this fact. The electric utility industry throughout North America is dominated by economies of scale.

If you attempt to force electric utilities to compete with each other there will be increased risk that one or more of them will fail. Consequently the lending institutions would be forced to demand higher interest rates to protect themselves against the risk to the loans they make to the electric utilities.

In the 1980's a typical electric utility in the USA had about $1 million invested for each employee on the payroll and the interest rate charged on new debentures in 1984 was typically 20% per annum. If you want to debate with me, I'll name about 5 electric utilities that I know were forced to seek protection from their creditors.

Mr. Jean, the majority of those utilities had nuclear powerplants under construction at that time and could not complete construction. Perhaps you, Mr. Jean, can understand where this is leading but, just to make sure that you do, the Enron affair has not helped in any respect. Several electric utilities have gross deficiencies in generation capacity. Among these are the following: "FIRST ENERGY", San Diego Gas and Electric, Southern California Edison, Pacific Gas and Electric.

As you know, starting on August 14, 2003, there was a wide-spread power blackout of Ontario, New York, and Ohio. As a consequence of this blackout, a new group, calling itself the National Electric Reliability Council was formed. This NERC, not to be confused with the FERC, which is a part of the USA Department of Energy, consists of all of the electric utilities of North America. Do not ask me how this NERC managed to suck all of the utilities of Canada into itself: I cannot answer that question!

In the first half of 2004 the NERC issued a report in which they estimated that North America likely would need 70 gigawatts of new generation by 2013 and likely would have 68.2 gigawatts of new generation available at that time. Frankly, I believe that the NERC is "low-balling" the need of new generation and "high-balling" the expectations of availability.

Typically the cost of decent-efficiency steam powerplants in 1992 was about $1 per watt of generation capacity. For every dollar spent on generation typically the electric utility spends an equal amount on each of transmission and distribution. Thus, if North America has 68.2 gigawatts of new generation available in 2013 there is going to be an expenditure of at least $200 billions of 1992-dollars. What makes me extremely doubtful that this expenditure will be made??? The USA Federal deficit is about $700 billion and likely to be the same until the American people kick Mr. Bush out of the White House.

In the early 1980's the Japanese financial institutions were willing to loan the USA Treasury the money needed. One does not hear that they are ready to do so now. Therefore the only way that the US Federal deficit can be financed is by inflation. The Canadian dollar is appreciating against the US dollar.... Fifteen years ago, the Canadian dollar was worth 63 cents USA: today it is worth roughly 95 cents USA. Much of that appreciation is due to the MacMurray Tar Sands, a very severe source of atmospheric contamination....

Other factors that persuade me that the 68.2 gigawatts will not be available by 2013 are first that no new nuclear powerplants have been started in the USA since 1979 and that it takes ten years from "GET" to "GO" to construct a new nuclear powerplant.

Dream all you want Mr. Jean! There will be a very serious shortage of reasonably-priced electric power in California by 2013, probably several years before since the USA is only talking of constructing new nuclear powerplants now, in 2006: none have been granted permits as of this date.

What does this mean for Canada??? We will be required to supply increasing amounts of synthetic petroleum so that the Americans can burn it in combustion turbines to produce electric energy and global warming will increase thereby.

I repeat: you are very long on what you will do but very short on how you will do it so you are not believable!

To the other members of the debate, please send copies of this email letter to other members of your caucus!

Allan Dane, M.Sc.(EE)

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