Business Matters

A ten-part series on resolving Washington's anti-business climate

"We will do everything in our power to guarantee a thriving, environmentally-sustainable business climate." – Governor Gary Locke –

Part 1: Harnessing new energy

Once known for its abundant energy supply, Washington has now fallen into an energy crisis largely of its own making. While the government deregulation scheme in California served as the catalyst for our current energy woes, our failure to develop and improve our energy infrastructure sealed our fate.

Governor Gary Locke boasts that,

". . . before this energy crisis began, state and local authorities had already approved six new gas-fired electricity plants to be built by private companies that could have provided 3,000 megawatts of power – enough for more than two cities each the size of Seattle – had they been built. The state did its part. But it was the companies that chose to delay construction and invest their money in such things as dot coms and the stock market. . . . It was not we who decided not to build the plants, it was the companies for business reasons."

Though state officials claim they did their part to address our energy problems, Locke’s assessment that businesses are to blame for our shortage begs the question: How did Washington’s anti-business climate contribute to the crisis?

A simple study of basic economics shows that companies would be lining up to take advantage of the state’s newly issued permits for energy plant construction if it was profitable to do so. The demand is clearly there, but Washington’s punitive regulations and lack of a coherent statewide energy policy deter companies that might otherwise produce the supply we need.

During the last year, the price of energy has skyrocketed from a low of $16 per megawatt hour to as high as $5,000 per megawatt hour. Individuals and businesses in our state are projected to spend $10 billion on energy related expenses this year. Yet, despite this staggering sum, the only energy policy Washington can speak of is aimed at installing price controls, not addressing imminent future energy needs.

With Washington relying on hydro-electric power for up to 75% of its energy supply, the current drought and environmental restrictions on dam spilling (fish protection) have dramatically reduced the availability of energy.

Further complicating Washington’s energy outlook are previous energy agreements with California. Washington has been (and currently is) selling energy to California during the summer months with the understanding that California will sell power back to the state during the winter months. This agreement is not likely to materialize due to California’s energy crunch, which may leave us in a bind come winter.

Our energy shortage is hard on businesses and individuals. According to the Washington State Office of Trade and Economic Development, ". . . Washington’s economy is based on the advantages of low cost power, becoming an average-cost state could mean economic dislocations and adjustments."

Already Washington’s aluminum industry has essentially ceased production, even closing some plants permanently. The aerospace industry is also facing increased energy costs of 50% to 95%. Boeing must now decide between relocating its production plants to another state or absorbing the increase in energy costs to maintain its share of the aerospace market. Pulp, paper, and lumber firms have also had to curtail production, eliminating nearly 1,000 jobs.

While energy conservation is part of the solution, it is not the whole solution. The only way to reverse skyrocketing energy prices is to increase production and supply. There are plenty of energy supply sources, and it is up to the state to step out of the way and let companies come in and tap them. Five clear energy sources exist:

1. Geothermal: It is believed that between 400 to 3,900 megawatts could be obtained through geothermal resources in our state. We should be exploring this untapped energy supply and studying the impact and opportunities for geothermal energy plant construction. Estimated cost: 4.9 to 7.3 cents per kilowatt-hour.
2. Increased Hydro-power: Through new hydro-power projects and the expansion of current projects, approximately 170 megawatts can be secured for the state’s energy needs. Estimated cost: 1 to 6.5 cents per kilowatt-hour.
3. Landfill gas recovery: An estimated 125 megawatts can be secured by powering fuel-generators with the methane gas produced by decaying landfill materials. Estimated cost: 3.1 cents per kilowatt-hour. >Burning mixed wood: Wood residue from industrial byproducts can be burned to provide an estimated 300 megawatts. Estimated cost: 4 to 5 cents per kilowatt-hour.
4. Nuclear: The most obvious source of significant base-load energy is the 800 pound gorilla no one wants to talk about: nuclear energy. The megawatt potential of nuclear energy is massive, and any new technology that taps into this source should address public concerns about safety and environmental preservation. Estimated cost: 4.3 cents per kilowatt-hour.

These five energy sources are capable of meeting our future energy needs. But, as Governor Locke has pointed out, simply granting permits will not guarantee production. The state must encourage production by addressing the current anti-business practices that deter companies from tapping these resources. Our state’s excessive regulations and lack of a coherent statewide energy plan reduce the value of these permits to less than the paper they’re printed on. Our lights will continue to flicker, and may burn out, if our Governor and state lawmakers do not take decisive action to address the core problem of our energy crisis.

This is part one in a ten-part series on resolving Washington’s anti-business climate.

Contact: Jason Mercier, Deputy Communications Director, (360) 956-3482 or jmercier@effwa.org

Intro | Part 2 | Part 3 | Part 4 | Part 5 | Part 6 | Part 7 | Part 8 | Part 9 | Part 10

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org