Here is some shocking news: In one week, not one but two Arkansas regulatory agencies issued orders requiring the industries that they monitor to do something wholly in the public interest.
If either commission acted in the same way in almost any state except Arkansas or its sister states of the South it would be unexceptional. But Southern states have rarely done that sort of thing. They're business-friendly, you see, particularly when it comes to the energy industry, a political colossus in the South for a century.
The state Oil and Gas Commission last week ordered all the companies drilling in the shale formations in the north central and southern counties to report in minute detail all the chemicals they use in fracking, the process by which they blast water, chemicals and sand into deep underground rock formations to free the gas. Nearby homeowners often suspect the chemicals are degrading or poisoning their water, which the gas companies naturally deny. This will help people, including the Oil and Gas Commission and state and federal environmental regulators, determine whether that is the case.
Then a day or two later the Public Service Commission issued a sweeping set of orders aimed at driving the big utilities and industries into reducing the consumption of gas and electricity and converting to new technologies that are cleaner, renewable, eventually cheaper and ultimately safer for the country, which has been talking for 40 years about escaping the thrall of foreign oil.
The oil, gas and coal industries, joined by many utilities and big-business groups, frightened most of the Arkansas congressional delegation into opposing a national energy law last year that would produce those results (thank you, Vic Snyder, for standing alone) so it is a bit encouraging that the state utility regulators stood their ground, if only a little.
Neither set of orders ought to be remarkable. Requiring exploration companies to tell people exactly what they are pumping into the earth around the aquifers that supply drinking water and in what quantities ought to be a no-brainer. But Arkansas and Wyoming of the 20-odd states that are producing gas from shale are the only states that have so far required it. It may soon be universal.
The Railroad Commission, the Texas counterpart to the Arkansas commission, was enraged last week when the federal Environmental Protection Agency found that toxic levels of benzene and other chemicals emanating from nearby gas exploration had got into two water wells serving homes and ordered the company to fix it. The Texas state agency debunked the perils of drilling. It will hold a hearing and back the gas companies.
Maybe the Arkansas orders mean that our regulators will be tribunes of the people, not industry, but maybe not.
In a rare burst of progressivism after the Arab oil embargo, the Arkansas legislature enacted the Energy Conservation Act of 1977, which told the PSC to require utilities to improve energy efficiency and conservation and develop renewable energy sources. It took only 33 years for the PSC to get on the ball. It signed 10 orders to accomplish the directives and issued an action guide for overhauling energy use in the next few years.
Electric utilities will be required to take steps to reduce the demand from 2010 kilowatt levels by a fourth of one percent in 2011, half of a percent in 2012 and three-fourths of one percent in 2013. The gas utilities, which the PSC considers to have less leeway for reducing consumption, have smaller targets.
Those are pretty anemic requirements when you look at what some 20 other states have done, but it is far more than any state of the Southeast, from Virginia to Texas, has done.
A few states have far more rigorous requirements and made them long ago. During the oil shock of the 1970s, California instituted much tougher efficiency rules than the Arkansas PSC's last week. For 30 years, a period of immense economic growth before the economic collapse in 2008, per-capita electricity consumption in California remained flat.
The utilities will have to help their residential and commercial customers reduce their energy use. The PSC changed the incentives. A power company's impulse is to increase consumption because that increases profits, and to build new plants because they can earn a return on the investment. Under the new incentives, a utility that helps customers weatherize their homes and businesses or install efficient appliances and equipment can recover the costs on the front end and not wait to recover them with a new rate case.
Large industrial customers, which fought the new rules, will get to opt out of the mandate—this is still an Arkansas agency, after all—but they will have to have plans to reduce their consumption and then prove they did it.
The commission's action plan suggests that it is prepared to go much further to speed the energy future, like accommodating the energy grid to electric and natural-gas-fueled cars. It is still hard to imagine an Arkansas regulator as paladin of the public interest, but this gives hope.