Later this week the news that we have been warning our customers about for the last couple of months will finally become official -- TVA will announce that the cost of electric power in Glasgow will again increase sharply on October 1. I am still forecasting something in the 15% range. Of course, everyone will be upset over this announcement, but what no one will likely mention is that another increase of this magnitude is likely to occur again on January 1, 2009. Instead of quoting what this increase will cost some imaginary "average" homeowner, let's just make it easier. Drag out your most recent electric bill and look at the electricity portion of the bill. Add 15% to that cost and you will see the sort of impact this is going to have on your budget.

The real shame about this is that the regular person, who is already challenged by the rapidly increasing cost of everything they need to survive, had little, if anything, to do with the real causes for these rapid increases in the cost of electric power. While it is true that TVA is facing upward pressure on their rates due to drought conditions that have limited their hydroelectric power capacity and sharp increases in the cost of coal and natural gas (both items that they purchase and burn to produce electricity), the real cause of this pain is a wholesale rate policy that has existed for the last twenty years. This rate structure has given the signal to everyone that there is an infinite supply of energy and that we should use all of it that we possibly could.

Additionally, TVA's economic development team has continued to pursue new development and has begged new industries to locate in the TVA region, even when they knew that they did not have the native generation capacity to serve those new loads. As a result, each new celebration for the announcement of a new factory locating in the region has been followed by a frenzy of telephone calls to TVA's neighbors in which TVA's power supply planning folks had to make deals to purchase energy from those neighbors to serve the new factory. The really nutty thing about that is the fact that TVA has had to pay much more for the energy purchased from those neighbors than what they are charging the new factories for that energy. Most thinking folks would see that such a "buy high - sell low" philosophy will not work without the rest of the existing customers being willing to pay more so the new loads can be subsidized. When December and January roll around, and you are staggered by the bill for the electricity you are using, try to remember how good you are supposed to feel about the new Toyota plant in Mississippi and the recently announced Volkswagen plant which is locating in Chattanooga. You are helping purchase the electric power for them!

It is too late now, but if only our leadership could have read this article back in 1990, and if they had the guts to follow its advice, we could be living in an energy "garden of eden" by now. It is a shame, because, as a result of a lack of leadership and our lack of demanding it, we are now about to be cast out of paradise, doomed to walk in the equivalent of energy purgatory for the foreseeable future. As I have said before, the energy cost options look more promising in Glasgow than those of most of the other TVA cities, but even here, things are going to get worse before they start getting better.

Over the last few years the cost of electric power from TVA (via the Glasgow EPB) increased about 35%. Now it appears that, over the next six months, that cost will go up again by staggering amounts (as this is written TVA has not given us the final bad news, but it is likely that we will see an increase of something like 15% on October 1 and something very similar again on January 1, 2009) over the next six months. Add this to the stress we are already experiencing at the gas pumps and the crisis many of you will feel this winter as you see the unbelievable natural gas bills and the result is a gut-wrenching fear unlike anything we have ever seen before. In fact, it would not be going too far to say that it is now okay to go ahead and panic!

We have talked about the reasons for these dramatic increases several times before in this very blog. Drought in east Tennessee is drastically reducing the amount of cheap hydroelectric power TVA can produce. Increases in the cost of diesel fuel makes transporting coal from the mines to the coal-fired generation units much more expensive and that is driving up the cost of coal. China and India are using staggering amounts of coal and diesel fuel in their zeal to make cheap consumer goods for us to purchase at Wal Mart, and that is driving up the cost of both of those fuel sources. We hate to have this fact shoved in our faces, but the real culprit in these increases in the cost of all forms of energy is the way we live our lives. We use too much energy each and every day. In other words, we have found the enemy, and he is us.

As a Glasgow resident and a customer of the EPB you have something going for you that folks who buy their electric power elsewhere do not have . . . yet. For the last twenty years we have been developing a broadband network that touches each and every home and business in our community. For just as many years we have been planning to use that network to help our population use electricity in a totally different manner than the way we have taken for granted over the last eighty years. Even though our efforts have been discounted and ignored by TVA and the other elements of the electric power business in our country for most of those twenty years, it seems that the dawn is beginning to break over our landscape of ideas about infotricity.

Infotricity is a term we coined many years ago and it is meant to identify electric power, combined with a robust broadband network, as a totally different product. Electricity is something your home and business has been running on forever, but the decisions about how much and when it is used have been handed off to major appliances for the last several decades. Those appliances; air conditioners, water heaters, freezers, refrigerators, dishwashers, washing machines, clothes dryers, etc., have developed a very disturbing habit. They tend to wind up all running at the same time on hot afternoons like the ones outside right now. When they all get together and run at the same time it creates a demand for electricity that has a sharp spike (we call it a peak demand) that lasts from about 1:00 p.m. to about 7:00 p.m. on summer days. It is that peak demand that all power generation systems struggle to meet. Those peaks cause the most coal and natural gas to be burned. Those peak demands are the root cause for most of the large cost increases we are seeing for electricity.

By comparison, our plans for infotricity will chop the top off of those peak electricity power demands by using our broadband network to break up the habits of the appliances to work at the same time. Instead of the cheap thermostat that today controls your water heater, air conditioner, freezer, and refrigerator, we can use IP (Internet Protocol) commands to tame these appliances and turn their cacophony into a symphony!

Here is how it might work. Once our high speed network is connected to your home and when the home is retrofitted with new IP-based controls for the air conditioning, heating, water heating, etc., we could work with you to establish your temperature limits and living style and put all of that information into a server that is assigned the task of orchestrating the delivery of infotricity to your home. Then, every day as TVA determines what their mix of available generation is and what the likely temperature extremes for their service areas is going to be, their generation folks would transmit information to these “infotricity servers” which would, in turn, organize the temperature targets for your home and your appliances such that they do not contribute to TVA’s peak demand. The result might be that your home is “precooled” to a temperature cooler than normal in the morning while power demand is low so that your home can coast through the afternoon longer, and get a little warmer than you would normally like, in the pursuit of a flatter demand for power. As far as your other appliances go, well, so long as you have hot water when you want it and cold milk in your refrigerator, you really don’t care when the heating and cooling occurred, and infotricity would exploit that reality. In addition you would likely have additional reminders that you need to try to reduce your energy demand during peak periods. There will likely be a reminder in your email, information scrolling across your television screen, a red/green indicator near your washer and dryer, etc. All of this will be focused at reminding you that infotricity is far less expensive than electricity and that you need to participate by cutting back your consumption during the peak times.

Technology like this will allow TVA to offset the construction of new power plants made of concrete and steel and fueled with coal, natural gas, or enriched uranium with virtual power plants made of fiber optic cables and IP addressable appliances and fueled with a flow of bits, bytes, and intelligence. In effect, even though your home will not look any different, if you participate in this new world of infotricity, you will have a piece of a massive infotricity generator in your home. The technology, coupled with your willingness to respond to signals, will form the basis for the cleanest and most sustainable method ever devised for the generation of electric power. This is an earthshaking (maybe an earth-saving) idea and, the really cool thing is, it has been developed right here in Glasgow. We are optimistic that TVA is about to start working closely with us to further our development of this idea such that it begins to provide real power to their generation fleet within a couple of years.

These same ideas will work for businesses and industrial customers just as well as they will work at our homes. The secret to better living through infotricity is in learning how to use energy during the hours when it is abundant and less during the hours when it is in short supply. It is really just that simple. This is also the only way that electric cars will ever really fit into our total energy solution. Electric cars are a great idea so long as we can make sure that folks are not trying to charge them during the hours of peak demand. If plug-in cars arrive and if we are not prepared to charge them with infotricity, they will only compound our energy problem instead of improving it. But, once again, Glasgow is in a perfect position to take advantage of this technology when it is available.

In summary, things are bad, but not as bad here. We have ignored the simple fact that all energy resources are finite and we have been doing that for many years. While we have been ignoring facts, the population of the world has doubled and a lot of the new residents have decided they want to use their share of our energy resources as well. Now we have to pay more to keep them from using the energy we Americans had come to see as exclusively ours. Most communities find themselves virtually helpless to do anything about this situation, but Glasgow has been planning for this problem for twenty years. While we cannot tell you to relax and not worry about it, we can tell you that we have ideas and plans, and you are going to have options. These options will not be painless and they will not allow us to continue to be oblivious to reality, but they do give us hope for a sustainable energy future that is better than many of our neighbors can expect, at least for a while.

If you purchase your electric power from the Glasgow EPB, or any other utility that sells TVA power, your cost of electric power will be going up over ten percent on April 1. This latest increase will mean that the cost of electricity in our region has gone up 33% in the last five years. While the local newspaper already trumpeted this simple information to you as a giant headline, this post will explore the underlying reasons for the escalating cost of electric power in our region. You will note that it has alarming parallels to the same increases we have seen in the cost of gasoline and our intake of calories in our food.

TVA explains that these increases flow from our steadily increasing appetite for more electric power, and a steadily decreasing flow of water into their reservoirs that they can convert to electric power. From the most simplistic point of view, this reasoning is correct. However, a bit of digging unearths some shocking artifacts that go a long way toward explaining where we got this tremendous appetite for electric power and why TVA is unable to produce enough to satisfy our lust for electrons. Just like our present tendency to overeat and become obese, we are doing the same thing relative to energy consumption, but we are being driven to eat poorly by a food industry that is convincing us to do so by lacing nearly everything we eat with high fructose corn syrup, and we are becoming energy hogs at the hands of a wholesale energy supplier that employs a rate structure that also drives us to pig out.

These large cost increases for electricity are being implemented because, if we continue to grow our demand for electric power at our present rate, TVA will need to build several new generating units, including nuclear power plants, over the next few years. They need this new generation because, during about four or five hours a day in the winter and summer, TVA sells us more electricity than they have the capacity to produce. That’s right, they cannot make all of the power we are using! So, they are going out on the open market and paying whatever they must to purchase power for our demands during those peak times. Recent drought has just made this problem much worse. Electricity made by spinning turbines at dams as the water drains from a lake into a river is the least expensive and least environmentally damaging power we can make. When the lakes do not have enough water in them to do this, TVA must replace that power with extremely expensive power from a neighbor, if that neighbor has extra power to sell.

You or I would look at this capacity shortage and make some quick and simple decisions. One thing is certain, we would not be trying to convince anyone to use more power! However, TVA still chooses to live in some alternate reality which ignores this shortage of capacity and still pays industries to add more electric demand (through a program they call Enhanced Growth Credit Program), and their odd responses to a shortage of generating capacity certainly don’t stop there.

Anyone who has to pay their electricity bill at home has a good idea how much electricity it takes to heat and cool a big box retail store. These mega stores also have mega appetites for energy. So, if you were short on energy, almost anyone (at least anyone with a firm grasp on reality who was in the energy business) would look at these sorts of buildings and decide to discourage them by charging more for the massive amounts of energy these buildings require. But, as a TVA distributor, we are forced to charge these gigantic customers less per kWh than what we charge a regular small corner deli or gasoline station! Heck, they even pay less per kWh than you and I pay at our homes. That means we (when I say “we” that means you and me) are subsidizing these massive retail businesses who, in turn, extract massive amounts of money from our community, by charging them less per kWh for electricity than what we charge a small local entrepreneur who struggles to compete with one of these behemoths. We do that even though the small business presents much less of a burden on the electric system than the big business. Shaking your head yet? Well, read on, you haven’t even started getting to the really crazy stuff.

At meeting after meeting, where TVA calls together the power distributors to give us the bad news about another rate increase, they methodically display slides which depict the staggering growth of electrical demand and the growing shortage of their capacity to produce that amount of power. They clearly need more money to purchase more power to tide them over until they can build, get this, possibly $18 billion worth of new nuclear and other generation units over the next ten years. There is always great wringing of hands and gnashing of teeth, combined with promises to develop new methods, rates, and technologies to help lower the growth of energy usage in our region, but at the same time, look at what is going on in north Mississippi for an example that makes you wonder if they will ever be serious about working to reduce the growth of energy demand.

Just over a year ago Toyota announced that they would build a huge new production facility just outside Tupelo, an area also served by TVA. True to form for all such announcements over the last twenty years, the state of Mississippi, at the urging of throngs of “economic development” professionals, offered “incentives” for Toyota to locate the plant there which will cost the people of Mississippi roughly $200,000 per job created. But wait, there is more. Since TVA is already unable to generate enough electricity to serve its existing customers, they will need to build an additional amount of generation (something north of 25 megawatts of capacity will be needed according to published reports, but this number is likely to be several times this size when the total impact of this facility is finally known)to serve this facility. The cost of adding another 25 megawatts of nuclear generation capacity will be about $75 million. So, if we add that “incentive” to the $200,000 already granted by the people of Mississippi, we are up to about $240,000 per job created! The really bad thing about the additional $40,000 per job is that the people of Mississippi are not exclusively funding that incentive. WE are their partners in that one. The additional cost of this new generation will become part of what each of us in the TVA region will pay in additional future increases to our cost of electricity. While I am certain that those two thousand new Toyota employees in Mississippi will appreciate our kindness, I am not certain that any of us really want to make that donation! Personally, if I were a potential employee in Tupelo I would rather have the $240,000 than the job. At any rate, I do not like being forced to make donations to Toyota, a company that is already doing fine without me, and this is just one of many such projects we are attempting to land even though we don't have the capacity to serve them.

Do you see the parallels now? Decades of relatively cheap oil resulted in our attraction to gas-guzzling trucks and SUV’s and an addiction to food which has traveled more extensively than most of those who consume it. Now we are becoming very sorry for our addiction. Similarly, cheap electric power coupled with confused leaders, who think the only way to measure success is by counting the number of ceremonial shovels they have used in breaking ground for another new building to house an industry they just attracted by giving away the farm, combined to create our record breaking demand for electric power. Now that mistake is haunting us as well.

It is true that your cost of electric power is going up again on April 1 and much of the reason for the continued increase in the cost of electricity is because of our increased demand for power. But most of that increased demand is not a result of your personal wasteful ways. True, you have likely added a refrigerator or a DVD player over the years, but you are allowing those appliances to run during that peak afternoon time in the summer and early morning time during the winter because you have not been told not to do so. Rather, our rates have been telling you to use all you want, whenever you want to use it, and that line of reasoning has been faulted since its inception. Our real problems with lack of generating capacity come from the ridiculous kinds of messages we have been sending big-box retail store developers and the ingenious moves like the one we are making just outside Tupelo, Mississippi where we are going to sell power we do not have, at a rate below what it costs us to deliver that power, to a company that requires neither to be successful. You can buy all of the compact florescent light bulbs you want but those are drips in the ocean compared to the waste which flows from our leadership’s predilection to constant growth.

Meanwhile, your donations to the antiquated principle of all growth is good will go up sharply in April. That is a date certain. The date when TVA will finally start offering real alternatives and incentives to encourage us to reduce our energy usage during peak times is still to be determined.