We Must Be Mindful Of Political Agendas That Cause Energy Price Volatility For Consumers

Late last year, President Biden exercised his wartime authority under the Defense Production Act (DPA) to bolster heat pump manufacturing in the name of energy efficiency. The long-standing DPA grants the president broad authority to mobilize certain industries in the interest of national security.

Signed into law by President Truman in 1950, the DPA has roots going back to the first and second War Powers Acts of the early 1940’s. They collectively grant the president broad powers to mobilize federal agencies and compel businesses to take government contracts for purposes of fighting the war.

Increasingly, Presidents have tested the boundaries of the DPA’s intended national defense realm. President Clinton invoked the act in 2000 to secure gas and electricity production during California’s energy shortage crisis. President Trump invoked the act during the pandemic to secure ventilators and respirators, as well as to combat poultry, beef, eggs, and pork production shortages.

Biden’s DPA action provides $169 million in emergency funding for companies to construct factories to build heat pumps; the administration argues “climate-friendly” energy meets the threshold of advancing national security. Heat pumps function much like an air conditioner by cooling a home by absorbing heat inside and releasing it outside. Unlike an air conditioner, they can reverse the process in winter by transferring heat inside a home without the need of a furnace.

We shouldn’t be afraid to pursue or promote alternative and potentially more efficient technologies while Americans are grappling with increased energy costs and utility bills. But we should be concerned when the government places their thumb on the economic scales to advance one energy source or technology over others. We should be even more skeptical when any president uses wartime emergency powers to advance those policy agendas in the name of national defense.

Some hope to simplify the matter as a debate about the dangers of climate change, or even whether climate change is real. But the real debate and threat arises when issues like climate change are amplified and weaponized in a manner where the means justify the policy end. For too long activists have waged war on America’s abundant natural resources and fossil fuels to expedite religion-like policy objectives. President Biden has stated that climate change is the “ultimate threat to humanity,” invoking charged language typically reserved to characterize genuine threats to our national security. With that guiding mindset, is there anything that can’t be justified to neutralize the threat?

The Biden Administration has taken many actions to satisfy these activists. In 2021, President Biden blocked the Keystone XL pipeline project, intended to displace foreign sources of crude oil and secure America’s energy independence. Last year, the Administration was forced to publicly throttle back a Department of Energy regulatory proposal that would have set unrealistic energy consumption limits for gas stoves and gas appliances, ultimately making these appliances financially unviable. More recently, Biden’s Justice Department supported the city of Berkeley and their ban on gas stove installations in new construction. Luckily, the 9th Circuit was wise enough to strike down Berkeley’s ban.

Here in Arizona, the Corporation Commission prevailed in a legal challenge filed by the Sierra Club, which has aggressively opposed the development of new natural gas generation units, despite our state’s drastic need for reliable and powerful dispatchable generation. Others in Arizona have been trying to block the Resolution Copper Mine in Superior, which would provide enough copper to supply 25 percent of the world’s demand for the next 40 years. Ironically, this same copper will desperately be needed to supply a rapid transition to renewable energy and greater adoption of electric vehicles, particularly when China has traditionally controlled 90% of the EV battery supply chain.

President Biden announced a goal of having at least 50% of all new vehicle sales be electric by 2030. Meanwhile, the Ford Motor Company, the fifth largest car manufacturer in the world, announced that they lost $1.3 billion in its EV division during the third quarter last year. That’s a loss of over $60,000 for each of the manufacturer’s EVs it sold during that same period. Mercedes, Ford, VW, Toyota, and even Apple have all scaled back their EV related investments and deployments as some auto manufacturing experts predict EVs will reach a maximum market share of 30% of the market.

The great electrification of our grid will require hundreds of thousands of miles of new transmission lines as well as a dramatic increase in new generation resources. We should all welcome a much needed transition to a more reliable, cost effective, and cleaner grid. In fact, one area where President Biden and I likely agree is that energy security is national security. But the President should be exercising his authority and his powers to pursue a more balanced approach that recognizes the realities of our economy and our grid, while embracing America’s massive global energy advantage with our abundant natural resources. Particularly when the U.S. Strategic Petroleum Reserve hovers around its lowest stockpiled levels in roughly 40 years.

There’s a battle in this country over who is in charge of grid reliability. Unfortunately, many of the calls for the great energy transition are part of a well-coordinated marketing campaign to justify massive government spending on alternative energy. And expensive energy is the enemy of the most vulnerable members of society who can least afford their electric rates to continue to climb.

Billionaire Michael Bloomberg has committed $1 billion to groups like Sierra Club and Earthjustice as part of a coordinated campaign to transform the countries transition away from fossil fuels, with the goal to “shut down every last U.S. coal plant,” and “slash gas plant capacity in half, and block all new gas plants.” That’s 40% of the country’s total electricity production. Imagine if Vladimir Putin or Xi Jinping declared they were going to shut down 40% of the United States’ electricity production and cripple our domestic energy. Leadership would see this as a direct threat and attack on our national security. Yet, this is exactly what is happening under the guise of climate change.

As an elected regulator for Arizona utilities, I am technology and fuel agnostic. I care about adopting the most cost-efficient and reliable energy sources to protect the ratepayer and strengthen the integrity of our electric grid. Unfortunately, this Administration is assisting well-funded outside groups in pushing policy objectives that pose real threats to the reliability and resiliency of our most important network.

We are engulfed in this struggle during an unprecedented era where energy and natural resources are political pawns in a larger policy battle over the generation sources of the future. Unfortunately, customer affordability and grid reliability are often secondary considerations.

We must make the transition in a methodical, balanced, and cost-effective manner. However, we must also be mindful of external forces and political agendas that purposely cause chaos and usher in price volatility, tilting the economic scales to achieve policy objectives at the cost of consumers. In the end, these short-sighted decisions lessen competition, restrict supply, and only further enrich the investors, energy companies, and actual threats to domestic security who welcome the onslaught.

Kevin Thompson was elected as a member of the Arizona Corporation Commission in 2022. He previously served as a member of the Mesa City Council for eight years, representing the fastest-growing area of the city.