Last weekend’s first ever Energy Expo, put on by the Vernon County Energy District (VCED) was a high energy event. More than 70 citizens interested in options for conversion to clean and renewable energy for their homes and businesses attended the event held at the Viroqua campus of Western Technical College.

The first session was kicked off by VCED president Alan Buss.

“We formed our energy district because each year $76 million leaves our county through energy expenditures, and we think our community would benefit by keeping those dollars right here in our county,” Buss said.

Buss then introduced the keynote speaker for the event, Nick Hylla, Executive Director of the Midwest Renewable Energy Association and the host of the podcast ‘Rise Up.’

Hylla told a story about how the dreams of various people throughout history had led to the rise of electricity for power, which in turn, allowed for the industrial revolution. One of those dreamers was a man named Nicola Tesla, who had a dream about an electric motor. Tesla wound up being sent to the United States to work with Thomas Edison.

“Tesla told Edison that the future of electricity was in alternating current (AC) versus the direct current (DC) that Edison favored, and as a result, he was fired,” Hylla told the group. “So, Tesla went to work for Westinghouse, who was working to build the U.S. electrical grid using AC electricity, and he wound up building the AC asynchronous motor.”

Hylla explained that the electricity privilege enjoyed by citizens today came about as a result of disruptive technological innovation and a public policy approach. He told the group that Edison along with his assistant Samuel Insull, backed by investment from J.P. Morgan, was responsible for building out the electrical grid in the U.S. – at least in the major urban areas where there were many customers/rate payers to yield a return on the investment.

Hylla told the group that the first electrical utility in the U.S. was actually built by a Fox River Valley paper baron, who had the utility constructed to power his mill and his home.

“The question is, in the social context of the industrial revolution, why didn’t municipal utilities move to own their own systems, and keep the dollars in their own communities?” Hylla said. “For example, in the Canadian province of Quebec, their electrical utility is owned by the government, and generates $38 billion in revenue every year, with a low electrical rate paid by its citizens.”

Vision of a monopoly

Hylla said the reason why is that J.P. Morgan had the notion of the U.S. electrical grid as being a monopoly, similar to the processing of wheat in England. He was joined by Samuel Insull in 1908, who gave a speech and advocated for the U.S. electrical grid to be built by private investors, and the establishment of public boards to create a proxy for competition in the sector.

“Within six years of this speech, the number of municipal utilities in the U.S. shrank from 6,000 to 2,200,” Hylla said. “The real issue was whether or not there was enough public capital available to build out the system without relying on capital from private investors.”

Hylla said for 20 years the U.S. experienced the golden age of expansion of electricity, but then it all came to a screeching halt in the 1920s with the stock market crash and the depression. Out of this came Roosevelt’s ‘Green New Deal’ and the Rural Electrification Administration (REA).

“Through the REA, publicly backed dollars were used to fund cooperative electrical utilities, and build out the rural electrical grid in the U.S.,” Hylla explained. “At the time, 75 percent of the nation’s geography was served by co-op utilities, and 75 percent of the electricity sold was by firms capitalized by private investment in urban areas.”

Interstate regulation

Eventually, the U.S. saw the need for interstate regulation of electrical utilities, and so state public utility regulation bodies were required, and no power companies were allowed to sell electricity across state lines. So, for instance, Alliant Energy operates Wisconsin Power & Light, as well as Interstate Power & Light in Iowa, but it is the same parent company. 

In Wisconsin, we have the Public Service Commission that is involved in protecting the rates for electrical utilities and thus ensuring the companies a return on their investment. The way that energy companies make money in this framework is by building things, and the more those projects cost, the more money they make.

“However, problems developed over time with lack of competition and an increase in energy efficiency and a corresponding decline in energy intensity since about the 1950s,” Hylla explained. “This all came to a head in the 1970s with the Yom Kippur War in the Middle East, when the U.S. backed Israel and the Arab nations cut off supply of oil to the U.S. It is unknown at this point what kind of volatility could result from the current conflict in the Middle East.”

Hylla said what this ushered in was lots of energy innovation and helped to foster greater competition in the energy sector. This ultimately resulted in the Public Utilities Regulatory Policies Act of 1978 (PURPA). This was a federal law enacted in response to the oil embargo and gas crises of the 1970s to, among other things, encourage and promote electricity conservation, sensible rates for electricity consumers, and the diversification of domestic energy resources.

“All the energy auctions now focus on solar and wind, and nuclear and coal don’t sell because energy from those sources is more expensive,” Hylla explained. “In the 2000s, because of vast increases in energy efficiency, the economic justification of using private investment capital to fund development in the energy sector really fell apart because there is really no need to build anything, and governments had an increasing interest in regulating energy prices so they aren’t a drag on economic productivity.”

Hylla said that the suppliers of electricity had basically overbuilt to manage erratic demand for electricity. He said that in Wisconsin, the Focus on Energy (FOE) program had been passed in exchange for getting rid of the idea of ‘Integrated Resources Planning’ forecasting. This is basically just a proxy for competition in the marketplace.

State legislation

“In recent years, Governor Evers has called for a tripling of the FOE budget, but it will not happen in a GOP-controlled legislature,” Hylla said. “After increasing the FOE budget, the next biggest priority would be to bring back Integrated Resource Planning.”

In response to volatility in the fuel market and concerns over generating capacity, many states in the 1980s began requiring electricutilities to undertake Integrated Resource Planning (IRP). Utilities were directed to examine both their energy demand and supply.and identify any risks that could prevent them from meeting their customers’ long-term energy needs at reasonable costs. Typically, an IRP requires the utility to conduct load forecasting as well as demand-side, supply-side, integration and risk analyses.

An IRP is a planning tool– it is neither a metric nor a measure to achieve particular goals. The basic IRP incorporates the following criteria:

• Reliability

• System demand

• System growth

• Fossil and renewable energy resources

• Base-load and peaking generation

• Strategies to enhance energy security

• Energy efficiency policies and programs

• Applicable federal and state laws/policies

• Strategies to minimize costs for customers.

Federal legislation

Hylla said that recent positive legislation to invest in the vast majority of working people in the U.S. had come about after another massive tax give away of $10 trillion during the COVID pandemic to prop up Wall Street. Those positive legislative items include theBipartisan Infrastructure Law, the CHIPS Act, and the Inflation Reduction Act (IRA).

“The IRA calls for $500 billion in spending over the next 10 years, and constitutes an amazing opportunity to move toward a clean energy economy,” Hylla said. “The question of whether we can achieve this transition is less a technology problem than it is a socio-political problem – the technology we need is available or in development.”

According to the U.S. Department of Treasury, the IRA will promote the transition to a clean energy economy in three broad ways:

First, the Inflation Reduction Act provides targeted incentives to drive investment and create opportunity in communities across the country. The Inflation Reduction Act’s clean energy tax incentives were designed to further this approach and provide place-based bonuses for investing in low-income communities and communities that have historically depended on the fossil fuel industry for jobs or been harmed by pollution.

Second, the Inflation Reduction Act encourages clean energy project developers to meet strong labor standards, so that workers benefit from the clean energy economy they are helping to build. The Inflation Reduction Act’s climate and clean energy tax incentives have the potential to drive investment that will support more than one million jobs in energy and related manufacturing sectors over the coming decade.

Third, the Inflation Reduction Act will lower the costs of energy-saving property improvements and rooftop solar installation, saving working families and small businesses money on their monthly utility bills and empowering families and businesses to shield themselves from volatile fossil fuel energy prices.

Household energy costs are a significant burden for many families and small businesses across the country. And when events like Russia’s unprovoked and illegal invasion of Ukraine cause a fossil fuel energy price spike, low- and moderate-income families are often the hardest hit. 

Small businesses likewise face pressure as volatile energy prices eat into their profits. As the clean energy economy is expanded, a typical family will save hundreds of dollars per year on their energy bills, and small businesses will be able to take advantage of programs to cut their energy costs by improving energy efficiency in their facilities.

Opportunities/providers

The IRA has produced vast amounts of funding opportunities for private citizens and small businesses to protect themselves from volatility in energy markets and help to mitigate the greater impacts of climate chaos.

The best opportunities in Wisconsin are available through the Focus on Energy program. More information can be found about these opportunities at: https://focusonenergy.com/

To help make sense of these opportunities, trusted community partners like the Vernon County Energy District, the worker-owned Ethos Green Power Cooperative, and Sleepy Hollow Motors can be tremendous resources for local citizens.

To learn more, go to:

• Vernon County Energy District, https://www.vced.energy/

• Ethos Green Power, https://www.ethos.green/

• Sleepy Hollow Motors, https://www.sleepyhollowauto.com/.