Murphy’s law10 June 1999
With international opportunities beckoning, a deregulating power industry in the US and the threat of dam removal on the horizon, there is always much to discuss with the president of the National Hydropower Association — as Suzanne Moxon discovered
National by name, national by nature is not true of all trade associations. Mike Murphy, the newly elected president of the national-hydropower-association (NHA) in the US, will not just be focusing on issues which cloud domestic waters in his presidential year. Explaining that his Association follows the international hydro power industry very closely, Murphy said the World Commission on Dams (WCD), as well as international efforts to reduce greenhouse gas emissions, are proving to be focal points. ‘NHA sees hydro power development as essential to any programme that seeks to reduce air emissions from energy production,’ he said. ‘We will remain active in ensuring hydro’s role is recognised in those discussions.
‘We also have a great interest in WCD,’ Murphy continued. ‘We’re not just taking an interest because it is looking at a case study in the US, we are also interested in the standards it is developing, as well as its thoughts about hydro’s compatibility with the environment,’ he added. ‘We’re absolutely convinced that we can apply information from WCD to the domestic scene in the US.’ Murphy believes these recommendations could potentially make it into US policy, as long as they are based on good scientific studies.
As president of the US’s most pro-active hydro power association, one could be forgiven for thinking that international interests are far from Murphy’s mind. But such a blinkered view would be of little benefit in today’s changing world. Even though the Association has an established affiliated council for the development of hydro power internationally (see IWP&DC July 1998, p22), it still keeps an eye on international frontiers. ‘The US has much to learn from all areas of the international industry,’ Murphy said enthusiastically.
‘In the US we are learning about environmental issues every day and, for the first time ever, we’re having to look at the impact of hydro power generation on eels. This may also be an issue in other parts of the world and similar studies may have already been carried out. Rather than have one mind concentrating on an issue in seclusion, it is much better to put our heads together internationally. Someone may have already thought of this, and we can build on it.
‘The thing to remember,’ he added, ‘is that technology is not that different from country to country. We’re all really rather similar.’ International co-operation seems to be the name of the game, and Murphy says the well-established US industry has much to offer the rest of the world. ‘We may be able to offer a lot of help to countries who are just beginning to develop hydro,’ Murphy said, comparing environmental opposition which new international projects can encounter, with the environmental problems that many US schemes have faced in recent years. ‘In the past ten years we have learnt a lot about the societal and environmental implications of hydro power. We have spent a lot of time and money trying to understand issues such as fish and water quality.
‘But the thing to remember is that our projects in the US were built for the right reasons. They were built for the production of clean and renewable energy. And now these projects have other add-itional values, such as rec-reation. This is very important in the US and an entire industry has developed around it. It must not be underestimated that our dams have unbelievable benefits for the public. And this is an issue which should be publicised about other projects worldwide.’ Maintaining the focus on the worldwide scene, the US Hydropower Council for International Development is currently looking to reduce country trade barriers and match US suppliers with hydro power needs. Although Murphy believes there is much to be achieved from US participation in the international hydro power industry, he says it is also a good time for continued involvement in the US. There is the vast issue of relicensing and the significant proportion of hydro power plants which are due for licence renewals. A lot of people and resources will be involved with this. Indeed there are other opportunities, such as improving the current generating potential of existing hydro power facilities.
Focusing on his home industry, Murphy speaks about one of the most contentious issues at present — an issue which has been debated with the US government for the past two years.
In its proposed electricity restructuring bill the Clinton Administration has excluded hydro power from a renewable electricity incentive programme known as the Renewable Portfolio Standard (RPS). This encourages the development of renewable energy resources by mandating that by 2010, 7.5% of electricity sales must comprise generation by wind, solar, biomass and geothermal sources. Murphy finds it difficult to understand the reasoning behind this.
‘We, NHA, find it hard to believe that hydro has not been put in the same category as other renewables. The Clinton Administration differentiates hydro from the others,’ he says. Ironically, Murphy explains, although the government does view hydro as a renewable resource, it has not included it in this proposal. But, he is quick to point out, this is only a proposal which has yet to be approved by Congress, something which could be difficult and time-consuming.
‘The primary reason why hydro has been excluded from the RPS is that it is an established technology,’ says Murphy. ‘The other renewables are emerging technologies which do not provide the percentage of power that hydro does. It is merely a policy which means the Administration wants to encourage emerging technologies to make them more mainstream, although it does not want to actually discourage hydro.’ The thinking behind hydro’s exclusion is that as it currently accounts for 11% of energy in the US it will consume a large amount of the RPS incentives, not leaving much available for the other renewables. ‘But,’ Murphy said, ‘the problem from our perspective is that with such a limited policy it has the potential to hurt hydro, reducing the amount of power generated from it. Amongst other things, from a clean air perspective, it means that no one will gain.’ NHA says it urgently needs the government to reconsider hydro. ‘Yes it is already an evolved technology,’ Murphy admits, ‘but hydro power just cannot afford to lose ground in today’s competitive marketplace.’ With deregulation and increased competition in the power industry, end-users of power will become more educated about where their electricity comes from. One of Murphy’s fears is that hydro may consequently, through the RPS, be mis-labelled as not being renewable. ‘There is a fear that this perception may exist amongst those who do not know about the benefits of hydro power,’ NHA’s president added. ‘We do not want this to happen.’
Focusing on customers, Murphy went on to discuss another matter which is close to his own heart — the sale of hydro power facilities. Observers of the US industry will have noticed how many generating plants have recently been sold on to new owners. Murphy explains why.
‘This increased sale of hydro power is an effort to increase customer choice,’ he said. ‘It is not a question of one company not wanting its hydro any more, and another wanting to buy it, it is to do with policy choices. States and the federal government are moving away from franchised monopoly electric utilities to create competitive generation. This is what the customer wants. You can purchase power at a competitive price which leads to a swell in demand.
‘Some state legislators now require utilities to sell their generating assets to unaffiliated companies who want to purchase them. This happened at Central Maine Power, where I used to work. The company was told that it had to become a distribution company and must sell its generating assets, including hydro power.’ Murphy explains how having hydro in the energy sale package commands a higher price due to its renewable nature, its perceived future value and the market segment it gives the buyer. Such sales are admittedly a good opportunity for those who want to become large scale generators, but companies which have to sell their assets have mixed feelings about it.
‘It is sad,’ Murphy admitted. ‘We’ve had to say goodbye to hydro which was here at the very beginning of the company. We have been stewarding the river and generating hydroelectricity for over a century. Hydro power is Central Maine Power’s history.’
The great dam removal debate is never far from the US hydro power industry’s mind. At last year’s NHA conference, when Murphy’s predecessor John Devine accepted the presidential title, the decommissioning of Edwards dam in Maine was the topic of much conversation. This year the US Army Corps of Engineers’ report on the Snake river was preying on the industry’s mind.
In a US$22M study the Army Corps is examining whether breaching the Snake dams will help endangered fish species. The report is not due out until later this year and it is up to Congress to make any final decisions.
‘We do understand that potentially not every dam is a good dam,’ Murphy said when asked about the imminent report, ‘but you do need great caution when dealing with dam removal. You have to be sure that you will achieve what you want to achieve when taking the dam out.
‘Those who advocate dam removal do not understand the implications. What about all the ancillary benefits of the dam? What about irrigation and recreation, let alone the power generation? ‘Generally,’ Murphy says, ‘there is not enough scientific evidence to prove that removing dams is beneficial to the environment. You need to think about the end goal and the impacts beyond the immediate issue, such as endangered fish. The question must be asked: do you just want to remove a dam or do you want to improve the environment?’ Hydro’s future
Looking ahead to his forthcoming year as president, Murphy gave his thoughts on the new millennium, specifically the Y2K bug. ‘NHA polled its members, who represent the majority of hydroelectric generators in the US,’ he explained. ‘We found that large utilities with automated plants have clearly addressed the issue. They have action plans in place. For smaller generators who are not automated but have mechanically operated plants, Y2K is less of a problem for them as they rely on fewer, if any, computers. In general we have found that people are addressing the issue.’ So what does Murphy think will confront the industry once the hydro generators have turned over into the next millennium? ‘My anticipation is that in a competitive generating environment power customers will become more educated about the energy they purchase and where it comes from. I believe that this will create a new meaning for hydro power. Customers will understand how important hydro is to them and will really appreciate it as a reliable source of instant power. Ultimately,’ Murphy predicts, ‘with deregulation there will be more choice for more educated customers who will choose hydro.’ And what are the NHA president’s hopes for the forthcoming year? ‘I want to make hydro power a household renewable name,’ he said without hesitation. ‘I want people to look at a hydro project and understand its benefits. We have to ensure that hydro remains a great asset as, after all, it is a great legacy to leave our children.’