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Executive Speech

Remarks — Thomas F. Farrell II
Chairman, President and CEO, Dominion
Energy Symposium 2010
Harvard Business School
October 23, 2010

"There Is More Than One Inconvenient Truth"

Good afternoon. I am delighted to be with you. For those of you who listened to the earlier panel discussion, I am sure this is an extra treat. You get me twice in one day.  But then you bill this symposium as “the largest energy focused event at Harvard University,” and I figured it would not hurt to double-down.

Fact is, there is plenty to talk about.

And more to the point – actually, this is exactly the point I want to make this afternoon – we need to talk about energy in better, more informed, more realistic, more constructive ways.

A few caveats, however.

The term “energy” takes up a lot of territory – just about all the territory there is, in fact – and definitions count for something.

Besides, when you enter into a discussion of a large, complex issue, it often helps to define your terms and stay within your area of expertise.

I am privileged to lead a large company that produces and transports electricity. Dominion also operates the nation’s largest natural gas storage system and one of its largest natural gas pipeline systems. 

If you imagine the U.S. shaped as a box, we do business in the northeast corner – from the Midwest to New England, south to Virginia and a portion of North Carolina.

Here in New England, we are the largest supplier of electricity. We operate nuclear and fossil-fired generating stations that constitute a large part of our merchant fleet.

In contrast, in our home state of Virginia, we operate the state’s principal regulated electric utility.

About 55 percent of Dominion’s total electricity production is fossil-fired – using largely coal and natural gas. The rest is emissions-free nuclear power and renewable energy in the form of hydropower, biomass and wind. As a result of this balanced fuel mix, we are in the top third of all U.S. power producers in minimizing carbon intensity, according to the most recent report from the Natural Resources Defense Council.

Speaking of the environment, Dominion is in the midst of a multi-year nearly $4 billion investment program to improve the environmental performance of our fossil stations. When completed in 2015, we will have reduced sulfur dioxide and nitrogen oxide emissions at our regulated coal stations by more than 80 percent, and mercury emissions by nearly 90 percent below what they were in 1998.

Here in New England, where we supply about 20 percent of the region’s electricity, we are achieving similar improvements in environmental quality.  We are investing more than $1 billion on advanced pollution control equipment – including a closed-loop cooling tower system at the Brayton Point fossil station in Somerset, Massachusetts. When completed in 2012, the cooling towers will reduce the amount of water withdrawn from Mt. Hope Bay by more than 90 percent.

All told, Dominion does business in a potential market of 50 million homes and businesses where about 40 percent of the nation’s energy is consumed.

That market includes an astounding array of global high-tech companies – including many headquarters – as well as such undertakings as the Pentagon, the CIA, the world’s largest Naval base, the Navy’s Atlantic Command and the new Homeland Security centers.

Along with our national security establishment and the high-tech sector, our job is to provide reliable and reasonably priced electricity to rural, urban and suburban populations – a responsibility that must be met without fail 24/7, 365 days a year.

So that is who we are.

I mention this to establish the fact that we do not make cars – or trucks, either – though an innovative aspect of the transportation business is about to involve electricity in a rather large way. I will get to that toward the end. 

Generally speaking, however, oil actually has very little influence on the power industry.  As a fuel source, oil-fired generation accounts for only 1 percent of the nation’s electricity production. 

Those who claim that we need to use windmills to reduce our oil imports – you may have seen a commercial or two – are confusing cars and trucks, which run on liquid fuels, with power stations that produce electricity – principally from solid and gaseous fuels.

That is an important distinction to keep in mind. Lumping together transportation and power generation muddles a debate that is already muddled to begin with.

It is bad enough as it is, because our habit on energy issues is to talk past each other, to fall back on time-honored slogans and to reach for illusory remedies.

Such has been the way of things for a long time in this country, and it contributes mightily to the policy failure.

That is, if we had a policy – a national energy policy. Which we do not.

Jon Stewart – a product of Virginia higher education, I might add – has a way of getting to the heart of our national problems. Not long ago he ran a series of recorded clips from a few of our presidents.

I took notes. I always take notes during “The Daily Show.”

“Let us unite in a major new endeavor that in this bicentennial era we can appropriately call ‘Project Independence.’ ” – Richard M. Nixon, 1973

“We must wage a simultaneous three-front campaign against recession, inflation and energy dependence.” – Gerald Ford, 1975

“Our decision about energy will test the character of the American people, and the ability of the president to govern this nation. This effort will be the moral equivalent of war.” – Jimmy Carter, 1977

“We will continue to support research leading to development of new technologies and more independence from foreign oil.” – Ronald Reagan, 1981

“There is no security for the United States in further dependence on foreign oil.” – George H.W. Bush, 1988

 “We need a long-term energy strategy to maximize conservation and maximize alternative sources of energy.” – Bill Clinton, 2000

“This country can dramatically improve our environment, move beyond a petroleum-based economy, and make our dependence on Middle Eastern oil a thing of the past.” – George W. Bush, 2006

“For decades, we have known the days of cheap and easily accessible oil were numbered.” – Barack Obama, 2010

Over this same nearly forty years, our oil imports have almost doubled.

Now – to me – this suggests a problem.  It tells me that we need to unpack the national energy conversation.

First, allow me a point of personal privilege.  I have an ingrained, deep-seated, personal bias:  The numbers must add up.

The ethos of our industry is grounded in the physics of engineering.  It is a brutally empirical business.  I strongly suspect that we have some incurable romantics at Dominion – but we keep a close eye on them.

I believe – and this is the basis of my remarks today – that we will never do more than react to circumstances – piecemeal, incrementally and often inconsistently – unless we establish a realistic, factual basis for discussing our choices. 

We do not have that right now, and it shows. There is no national energy policy. We react. We adjust. We hyperventilate. But it all occurs within the framework of the immediate.

In fact, we have never had a national energy policy – except perhaps during World War II, when the policy was simple:  rationing.

Still, like Thomas Jefferson, whose boyhood home is just a few miles down the road from my own home, I am an optimist. Even when there was ample evidence to the contrary, Jefferson always believed that reason could rule. And so do I.

Reason tells us that there are many inconvenient truths about the way we generate electricity and use power in the U.S. 

Here are three right off the top – three big ones:

(1) We like the lights on.

(2) Folks really do not know or understand what keeps the lights on.

(3) What little we do know, we do not like.

Let’s start with the first inconvenient truth:  We like the lights on.

We like the lights on so much that every time the barometer drops my pulse increases.

Service interruptions are not incidental to our customers; they are often traumatic.

This describes a simple and elemental truth:  We like what electricity does for us, we want more of it – and, by the way, so does the rest of the world.

For the first time in our national history, Americans are spending more on electronics than they are on durable goods.

They are spending more on iPads and flat-screen televisions – and less on furniture and lawn mowers.

In 1980, the average U.S. household had just three consumer electronic products – three. Today, it has about 25. How many do you have?

The U.S. government gives us these numbers. They were recently reported in The Wall Street Journal.

But the numbers also appear in the form of electricity demand on our control room computer screens.

The Journal cited the buying choices of one 27-year-old man who, over the past year or so, spent about $8,000 on new electronics – including Apple’s iPhone 4, a MacBook Pro, an iPad and an iPod.

He also bought a Blu-ray video player and a $2,000 stereo system.

Do you think he thought about the electric power implications of his purchases?   Not very likely.

Almost no one ever does. Americans take their power for granted.

They assume it is reliable.

They assume it is low cost.

No surprise there. Many Americans pay substantially more for their cell phone or cable TV service than they do for their electricity.

You know it worked out this way on purpose. Utilities have done precisely what the public has asked us to do.

Americans want power safe, cheap, abundant and – most important – ON – all the time. 

And, in order to comply – to make it reliable – utilities made massive investments in generation and transmission infrastructure.

It has been a good bargain for all concerned.  Cheap, reliable electric power transformed America. Better – indeed – far better than anywhere else in the world.

We created a $14 trillion economy based on the ability simply to reach out and hit the switch and have the lights come on – inexpensively.

Energy gave us what we know. How we live. How we work. Our sense of what is possible.

It took roughly half a dozen generations of Americans – over a century –and a vast amount of capital – to get us to this point.

A mere three generations ago Americans were still working on rural electrification – your grandparents.

Consider the South, which includes our service territory. Do young people really understand, or have their parents forgotten, that until the Second World War, that region remained economically isolated and undeveloped?

Do they know, or remember, that large sections of the rural South had no access to electricity at all – that the entire Southern economy was hampered by inadequate power resources?

Do they know, or have they forgotten, that only when the South had abundant and affordable electricity was it able to attract large-scale manufacturing and the jobs that went with it?  Think of the political and demographic changes that have resulted from that investment.

As this example reminds us – given the essential life force that electricity represents in our lives and the economy we rely upon, you would think that we would want to be careful and thoughtful about how we use it and provide for it, right?

Yet, we know for a fact – and this is inconvenient truth No. 2 – that our customers have only a vague understanding of what it takes to generate, transmit and distribute electric power.

So, do you know what keeps the lights on?  I confess that when I joined Dominion 15 years ago, I had very little idea.

The answer is … water, mostly. The pressure created by vaporized water turns power turbines – which then turn magnets around a coil, just like you learned in high school physics.

The trick is to vaporize the water.

It takes heat. On a vast scale. And fuel to make the heat. Generally, the easiest, cheapest way to do that is with fossil fuels – though at present uranium is the least expensive of all.

This is not about love or some emotional attachment to the past.  It is about availability, results and cost. With fossil fuels you get sufficient heat, at the scale required, inexpensively.

But do Americans really care one way or another?  Increasingly so – certainly a lot more today than they did 10 years ago – and I for one am thankful for that.

But there is still considerable evidence that most consumers view electricity simply as a commodity. In fact, they almost never think about it at all.  How it is generated is of little interest to most Americans.  

The facts of generation – largely removed from public consciousness – make it possible for the next inconvenient truth to flourish and prosper.

Namely, a ready willingness to turn our backs – casually on what keeps us going.

Inconvenient truth No. 3: What keeps the lights on – we do not like.

Let me try to make my point with a home town reference.

In August, when Johnny Damon was thinking about coming back to the Red Sox, there was a wonderful column in The New York Times by Tyler Kepner.

Damon, of course, stayed in Detroit, but at the time Kepner wrote that the “folks at Fenway Park will face the ultimate test of the Jerry Seinfeld Theory that sports fans basically root for laundry.”

According to Seinfeld, “Fans will be so in love with a player, but if he goes to another team, they boo him. This is the same human being in a different shirt – they hate him now.”

The point is that the public mentality when it comes to baseball – or sports, generally – can be a bit ridiculous. Reason does not rule – except, of course, in Boston.

And that is fine, as long as we are talking about sports.

But when serious, complex issues come along – such as energy, an issue that shapes and defines our quality of life – can we afford the same quality of public discourse?

I can give you six words that say, “No, it cannot.” Here they are: “Fossil fuels, bad; renewable energy, good.”

Seldom does the debate get past that simple formulation.

In fact, those few words have gone far toward shaping America’s energy thinking.

The American public loves the idea of renewable energy.

But a disconnect remains between the objects of our affection and what we get in return. 

And that disconnect constantly influences how we examine our choices. Case in point: A front page article last month (September 29, 2010) in The New York Times with the headline, “Ancient Italian Town Now Has Wind at Its Back.” 

You might have seen this already. Did you read all of it?

Big picture right under the masthead. A graceful, familiar landscape. Small town framed against green hillside. Olive groves. Four giant wind turbines.

And, true to Italy, tons of romance. The little village becomes energy independent. A renewable revolution. The very old meets the very new. 

But only when you get to page 4 do you get a picture of the necessary economics: namely, high electricity costs melded to big subsidies.

And not until the last column do you discover that this energy-independent town is not using its own wind-generated power, but selling the electricity it makes into the national grid.

The town’s residents, the story says, “do not use the electricity it produces directly because relying entirely on local wind energy could leave the town vulnerable to blackouts during periods of calm.”

That happens to be – not a small, inconsequential detail. 

Italy is no exception. I am going to mention a couple of recent books today – maybe I should hand out a syllabus?

There is one by David MacKay, a physics professor at Cambridge – the other Cambridge. A year ago he was appointed Chief Scientific Advisor to the U.K. Department of Energy and Climate Change.

The book is focused on the United Kingdom and is called Sustainable Energy: Without the Hot Air.

I highly recommend it. Do I agree with everything he says? No, but there is a first-rate mind at work here. He disciplines his approach with a bias I share, in that he argues we need “numbers, not adjectives.”

Dr. MacKay is strong on renewables. He assumes people want a future less reliant on fossil fuels. But alternative energy sources have to add up against consumption – and he insists on tracking how people actually behave and react.

On that score, he has a clever little list:   His words:

Geothermal: Too immature!

Wave energy: Too expensive!

Deep offshore wind: Not near my radar!

Shallow offshore wind: Not near my birds!

Biomass (food, biofuel, wood, etc.): Not in my countryside!

Photovoltaic farm: Too expensive!

Wind: Not in my back yard!

Professor MacKay specifically refers to British attitudes, and he does not mean to be discouraging.

He is simply pointing out that “green ambitions” and “social reality” often run into each other.

That has been Virginia’s experience with the development of wind farms. Come down to the Appalachian ridges of Virginia and I will introduce you to the folks there. 

You will be struck by the bond they have formed – at least on this one subject – with the people of Nantucket.

Of course, broad change of any kind – in Italy, the United Kingdom, in Massachusetts, or in Virginia – invariably will inspire resistance. That is in the natural order of things.

Factor in the natural order of democracy – which bars us from ignoring public opinion – at least for an extended period – and you see that we are not merely troubling ourselves with picky details.

There are any number of other inconvenient truths, not the least of which is the potential for renewable energy sources to fill the gaps created by less reliance on fossil fuels.

I refer you to another new book – take notes, this will be on the final exam – from the University of Chicago Press. It is called The Powers That Be.

It is written by a geologist – Scott Montgomery – and he says that “the idea that [renewables] will run a major part of the world, especially in a mere decade or two is fantasy.”

He is right.

In nearly all instances, renewable sources of energy are “in addition to” not “in place of” fossil fuels. 

According to Cambridge Energy Research Associates, nearly every country that installs wind turbines backs them up with natural gas-fired generators.  They have to – for reasons of reliability.  The wind blows according to the whims of Mother Nature – not human demand.

I am sure you saw the announcement last week that Google intends to lay a transmission cable in the Atlantic from New Jersey to Virginia.  They estimate that over a 20-year period the line will support up to 6,000 megawatts of electricity.  Sounds like a lot.  Game changer?  Google does it again?  Those savvy internet guys solving the problem? 

Not exactly.  Renewable energy sources have a fundamental problem with scale.  Today – not accounting for 20 years of expected growth – today – our nation has about 1.1 million megawatts of installed generating capacity.  So 6,000 megawatts of new renewable capacity would represent only about one half of 1 percent of the total. 

The region these offshore wind farms would serve has about 170,000 megawatts of installed capacity – meaning these potential developments would account for only about three percent of the regional total.  IF you include the U.S. government’s estimate for capacity needs in 2035 – which is 205,000 new megawatts – you can see that 6,000 megawatts of capacity is less than a drop in the ocean.

So – does that mean we should not build them?  No, of course not.  It means we need to be realistic when we talk about what renewable energy can accomplish.
 
It is also worth noting that renewables feed on land.

These are rough estimates, but wind power requires about 45 times as much real estate to produce a comparable amount of power as a nuclear station.

Some estimates on the transmission requirements for wind-generated power alone run up to 40,000 miles of giant, new lines that – some say – mar the horizon.

Now, some of these problems could be overcome with commercial-scale electricity storage – if such technology existed.

Unfortunately, we have not yet figured out how to store electricity nearly as well as the way Mother Nature stores energy in coal, natural gas and uranium – and we are not even close after 100 years of trying very hard.

Another book – my final text for the day – is called Power Hungry by Robert Bryce, who describes himself as an “industrial-strength journalist.”

Bryce points out, “The idea of a large-scale storage facility for electricity is something akin to cold fusion or the perpetual-motion machine:  wonderful ideas, but existing only in the imagination.”

As it stands, power is the ultimate “just in time” business, where energy losses occur at every stage in the process. It has to be used as it is created.  That is a fundamental fact that we cannot wish away.

These are physical facts. Not all sources of electric generation are equal.

This is not to say that our relative capacity for producing power is locked in. You look at the advancements in renewable energy technology and you cannot help but be impressed.

But, still, the actual contribution to what we need to fulfill the prime directive – keep the lights on – remains small. Very small.

Now, there is another response to this and it usually arrives in a one-word package: “conservation.”  Stop using so much power.

It is a laudable goal. You can always turn things off.

But as a practical matter, for most consumers, electricity is too cheap to save.

No doubt that will change. The emergence of smart grid technology has that potential.

In a car, for instance, the speedometer is located where you can see it. It is right there in front of you and, presumably, affects the pressure you apply on the accelerator.

Smart metering holds promise for achieving a similar effect on household energy use. It puts eyeballs into the equation. People will see what they are using, as they use it.

And, in theory, consumers will be more prudent about consumption.  In theory.

Here is another inconvenient truth – No. 5, if you are keeping track – the futility of pursuing energy independence in a world that is increasingly interdependent, with energy markets becoming ever more competitive and global in their scope.  

Take the notion that America can – and should – achieve energy independence and liberate itself from foreign sources of energy.

It is an unattainable goal.  It contradicts the reality of today’s global economy and a $5-trillion-a-year global energy industry in which the U.S. is the largest consumer and the third largest producer.

If anything, we can expect energy markets to integrate further as the global demand for energy grows and new energy supplies become more difficult to find and more expensive to produce. 

Here in the U.S., coal accounts for about half of all the power we produce. It will remain the principal fuel for electricity production for the foreseeable future – both here and abroad.

World coal consumption, about 6.7 billion tons in 2006, is set to reach about 10 billion tons this year – a nearly 50 percent increase in just four years.  Coal simply is not about to disappear from the generation of electricity. 

In fact, according to Peabody Energy, the world’s largest private coal company, the global coal industry is in the early stages of a long-term “supercycle” led by China and India that will last for decades and will require more than 1 billion tons of additional coal production worldwide.

China produces about 70 percent of its electricity from coal, while the United States deploys 90 percent of the coal it consumes – some 14 percent of the world total – in electricity production.

My point is this – the use of coal will continue – and so will our efforts to improve its environmental performance.  The most serious pollutants from coal can be removed and properly disposed, safely re-used or stored.   It can be done and many are doing it.  Dominion has made tremendous progress in cleaning the air and water, and we will continue to do so. 

I do not mean to imply that coal is a perfectly fine fuel and we should just quit worrying about it.   I do not believe that nor espouse it here. It has significant social costs.   But the hard, cold fact is – we cannot wish it away.  We need to be honest with each other as we discuss the future.  It will take more than one generation to transition to a cleaner electric fleet – that is, if we had an energy policy to achieve it – which we do not.

In any case, we need to recognize that the rest of the world is coming on – and they are coming on fast – some 2 billion people – one-third of the people on the earth – are without electric power today.

And, they intend to get it. Just ask them.

Professor MacKay points to another inconvenient truth – No. 6 – that is – “little counts for little.”

Again, he is talking about the U.K., but it applies to the developed world generally. It certainly applies to the U.S.

He says, “Have no illusions. To achieve our goal of getting off fossil fuels … reductions in demand and increases in supply must be big. Don’t be distracted by the myth that ‘every little bit helps.’ If everyone does a little, we’ll achieve only a little. We must do a lot. What’s required are big changes in demand and in supply.”

That is about right. He says little adjustments here and there tend to miss the larger reality of what has to be changed.

Such as when we set carbon emissions goals.

For instance, last year the White House announced its goal to slash U.S. greenhouse gas emissions by the year 2020 by 14 percent below 2005 levels, and then by 83 percent below 2005 levels by the year 2050. That is about the same as the Kyoto goals.  Ever wondered why folks never state an actual amount of carbon emissions – but use a convoluted reduction formula instead?

We need to put this in historical perspective to understand what it means. What it means is – returning to the days of Warren Harding, Calvin Coolidge and Herbert Hoover – that is when the world last produced that level of human-related carbon emissions. 

We are talking about the decade of the 1920s – nearly 100 years ago – when, according to the U.S. Bureau of the Census, only about half of the nation’s non-farm homes had electricity and less than 2 percent of farm homes were electrified.

Who had air conditioning?

No one.

Who had a computer?

No one.

Who had a flat-screen TV and a Blu-ray player? 

No one.

Who had a cell phone or a BlackBerry, or an iPod, or an iPad?

No one.

How many data centers were there in the world?

Zero.

Talk about an inconvenient truth.

So, does this make me a climate change denier?

Absolutely not.

What it means is – we need to be honest with ourselves and not get lured down a dead end with simplistic, unworkable remedies.

We must have a plan that adds up – a plan that truly reflects how we live and work, a plan that takes into account our reliance on electricity and the fuel sources we need to keep the lights on.

I was struck the other day by something written by Tom Friedman – the economist gifted with a knack for capturing inconvenient truths.

He applauded the Obama administration – as do I – for advancing eight “Energy Innovation Hubs”:   smart grid, solar electricity, carbon capture and storage, and other exciting possibilities.

The broader idea behind these hubs, as explained by Energy Secretary Chu, is to “capture the same spirit” that produced radar and the first nuclear bomb. End the incrementalism.  Push the boundaries. Change the game.

Without necessarily buying into all the specifics, I admire and support the mindset… that we need to do things that are commensurate with the task at hand.  Let us liberate ourselves, if you will, and think big.

So how might we unpack the energy conversation and ignite our national will?

What forums could be created to lift and improve the public debate?

What actions could we take to confront tired, existing assumptions and, as Friedman puts it, “help unlock and scale everything that America knows?”

Well, for starters, brace yourself – I know this is one recommendation destined to inspire groans – but we need something in the way of a national commission.

It could resemble BRAC – the Base Realignment and Closure Commission – a process that tackles controversial, politically unattractive choices about military facilities – and still gets results.

I come from a state with one of the heaviest concentrations of military facilities in America. If you want to see a public official make a face, just say “BRAC.”

Yet, the process gets results. Not perfection. Results.

Results are good.

The commission could be presidential or congressional or both.

It just needs to work!

We will need the energy community and environmental constituents, as well as federal and state regulators.  We will need minds like yours.  We have to get them all at the table because we have to stop making energy and environmental decisions in a vacuum.

Whoever participates has to arrive prepared to compromise. It will never fly otherwise.

We have to achieve a long-range plan – looking out a minimum of 10 years – 20 is probably better – so that we can arrange the necessary capital and permits.

Obviously, the plan would have to have a national perspective, with a firm grasp of global realities.

It would ask the right questions and address the options we have for confronting climate change and bringing about a low-carbon economy.

It would inventory energy demand, present and projected, based on what is real and measureable.

It would show the significance and cost of each available approach.

It would catalog the transmission network we need to build in order to realize the desired growth in renewable energy projects.

It would ask the right questions and would not flinch.

Big questions.

Are federal agencies structured in a way that promotes the development of a rational, long-term national energy policy?

Or does the totality of this apparatus make it harder, if not impossible, to achieve?

I am just asking.

Do our laws, for instance, instruct federal agencies to develop an acceptable level of environmental protection, balanced with reliable and affordable electricity?

Or do they create a mandate that is inconsistent with social and economic reality – meaning the way we actually live and work?

Ultimately, I believe, we must center our energy policy on the concept of security – the most meaningful principle, as it recognizes the interdependencies, scale and complexity of the energy supply system.

Energy security is rooted in a number of different things: 

Supportive legislation and regulation that provide access to and responsible development of our domestic resource base:  natural gas and oil, both onshore and offshore, as well as coal and uranium.

A modernized, smart power grid – empowering consumers and moving electricity reliably and efficiently to population centers where it is needed most. Here is where conservation may yet have a chance to promote reduced energy demand, lower costs and protect environmental quality.

Robust international relations and trade that help maintain stability and long-term economic growth.

And perhaps most important of all, reliance on the full range of energy sources at our disposal.

Energy diversity is really the key to America’s energy security.  As any decent financial adviser will tell you, the best hedge against a market is a diversified portfolio.   You knew that – even before you came to HBS.  The same is true for energy.

As a nation, we are in no position to pick a few favorite sources of energy and exclude others.  We need to draw on every resource at our disposal – coal, nuclear, oil, natural gas, renewable energy and also more aggressive conservation.

Renewable energy sources – will certainly be an increasingly important part of our energy future. 

They have real environmental advantages, but they are useful only in limited applications, but as I pointed out earlier, they will always remain that way unless we crack the code on storing electricity at a very large scale.  And that technology is nowhere in sight at the moment.

But the potential for it to emerge raises an interesting prospect.

Back to Tom Friedman. The other day he was pointing feverishly to what he called the “game-changer:” The electric car.

The electric car industry could be pivotal. After all, it was the auto industry that laid the foundation for America’s manufacturing middle class.

And what if the notion takes hold that the way to reduce oil dependency is to move toward more electric transportation?

What, indeed?

Obviously, as Friedman points out, the country that replaces gasoline-powered vehicles with electric-powered vehicles – could win a huge advantage.

But reality intrudes a bit here, too. A survey taken last month by the Financial Times finds that three quarters of American and British consumers would consider buying an electric car – but not if it costs more than a conventional one.

Yet the survey offers some encouragement in underlining a growing consumer willingness – mostly based on fuel costs – to consider an electric alternative.

This gets the attention of those of us who make electricity. We are obliged to monitor these shifting attitudes.

Mr. Bryce points out that we have been down this road before – he notes that The New York Times once declared that the electric car, “has long been recognized as the ideal solution because it is cleaner and quieter and much more economical.”

That was in 1911 by the way – a century ago – and we have been working on batteries ever since.

Still, we may be destined to advance back to the future.

If so, we better have the juice – the electricity – to support what would constitute a major shift in consumer preferences.

It all comes back to having a policy in place that realistically assesses how we live and work and prepares us accordingly.
 
I believe we can achieve a balanced and well-designed national energy policy and have a cleaner and more secure energy future. 

But it will not come quickly or cheaply or without a higher degree of candor with the American people.

To sum up, if we have the courage to move from the realm of generalized mythology to the specifics of 21st century reality, we might just succeed in shaping an energy future that is to our liking – instead of letting it shape us.

A national energy policy could emerge with a renewed national conversation.
 
Clearly, the task is daunting – but it is doable. We must outline the choices before us and bring the players together.

Wall Street must help us find and deploy the capital we need to build and modernize our aging energy and electricity infrastructure.

State and federal laws must mirror the new realities, and the new conversation.

The first step is unpacking the conversation and changing how we speak about energy.

I say – let the discussion begin – and I hope you will join in.

Thank you.

NYSE : (April 24, 2014) D 71.52 0.46

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