United States should be pursuing. Amory Lovins' strong advocacy of decentralized solar energy is well known (6). It is impossible to know for certain today what the ultimate outcome will be. Thus it is extremely important to have a government energy policy that fosters efficient energy utilization and permits us to keep our energy market options open. Energy policies need to be rational and predictable. Energy consumers and producers need to be able to plan their energy production and consumption patterns. For this to occur, the less government interference in the energy market, the better. Each government intervention builds new political constituencies supporting further market rigidities and impediments. We need to maintain market pricing of our energy resources, as market prices reflect the economic reality of available supplies and energy demanded. In this regard, I seriously question whether, for example, a federally subsidized program for synthetic fuels will be a cost effective use of the taxpayers' money. That money seemingly would be better spent on research and development and demonstration projects in a broad range of energy producing and consuming technologies rather than primarily on synfuels. Moreover, a government synfuels program could lock the country into higher oil and energy prices than otherwise would be the case to protect these new higher cost synthetic energy sources. In a similar vein, the amount of revenue the government collects from the windfall profits tax and state severance taxes that ultimately winds up producing additional energy supplies remains to be seen. Given different political views on spending this revenue, less will be available for energy development. And for government energy tax revenue that is spent on energy development, it is less likely to produce cost effective energy supplies than if spent by the private sector. The domestic energy marketplace has still not fully adjusted to the OPEC oil price increases of 1973/1974 — let alone those of 1979/80. Additional conservation and production potential even at 1974 OPEC prices still remains. It takes time to adjust, and the government needs to let the market work to make that adjustment. This is equally true in the electricity generating sector as it is in oil, gas, and coal. State regulatory commissions generally do not price electricity at its incremental cost. Residential electricity consumption has been subsidized at the expense of conservation, which has led to substantial and costly excess generating capacity and financial hardships for certain utilities. These politices need to gradually change. More competition needs to be induced into regulated utility monopolies. State utility regulatory policies should not hinder the implementation of decentralized energy technologies, be they cogeneration, solar, or other, where these are cost effective. Although increased decentralized electricity generation does reduce the market for centralized electricity generation, these electricity sources must be allowed to compete (as must utilities) in the provision of decentralized electricity supplies. Neither centralized nor decentralized electricity generation is most cost effective for every region. Flexibility must be maintained so that the consumer can make the most cost effective choice over time. It has also been suggested recently that utilities compete on an energy services basis with other energy suppliers. That is, each could offer to provide some range of services at an agreed upon price, and then would seek to fill that demand at the least cost (4). Although the precise details remain to be worked out, this concept would seem to get around a major market stumbling block — lack of consumer information. At present, the energy consumer probably has little idea which energy source is “least cost,” particularly when the capital costs of converting from one fuel to
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