Energy policy in Tennessee

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Energy policy in Tennessee
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Quick facts
Energy department: Tennessee Department of Environment & Conservation[1]
State population: 6.5 million
Per capita income: $37,678
Energy consumption
Total energy consumption: 2,201 trillion BTU[2][3]
Per capita energy consumption: 344 million BTU
Energy spending
Total state energy spending: $29,699 million
Per capita energy spending: $4,641
Residential natural gas price: $9.65 per thousand cubic foot
Residential electricity price: 10.01 cents per kWh
See also
Energy on the ballot
Statewide fracking on the ballot
Local fracking on the ballot
Policypedia
Policypedia Energy logo.jpg
Energy Policy Project
Energy policy in the United States
Energy use in the United States
Glossary of energy terms
Energy policy in Tennessee
Fracking in Tennessee

Energy policy in Tennessee depends on geography, natural energy resources, how electricity is generated, how much energy consumers use, politics and the influence of groups such as environmental and industry organizations. Decisions by policymakers, such as state and local governments, utilities and regulatory agencies, affect all citizens economically and environmentally, and are generally geared toward providing reliable, affordable energy. The cost of energy affects not only home heating and electricity bills, and thus disposable income, but also economic growth, including jobs, investment and the cost of doing business in the state.

How energy is produced and consumed also has an impact on the environment and pollution. Energy policy in Tennessee, and many other states, focuses on decreasing emissions and dependence on fossil fuels by increasing energy efficiency and the use of renewable energy. As the infrastructure for producing and delivering renewable energy sources is not as advanced as it is for energy generation from traditional sources, these policies often require subsidies to make the produced energy affordable, and their effects are difficult to measure.

Energy policy involves tradeoffs between providing an affordable, consistent energy supply on the one hand, and limiting pollution and protecting the environment, on the other. How states attempt to balance these two differs between states, and often boils down to costs to consumers versus costs to the environment. This article provides general energy information about the state as the context within which energy policy is made, as well as information about major legislation and public and private groups that play a role in setting energy policy in the state.

See also: Energy policy in the United States for more information on energy policy.
See also: Fracking in Tennessee

Energy overview

State facts

Below are quick facts about Tennessee's energy climate.

Tennessee

  • is a net electricity exporter.
  • has fossil fuels in the form of petroleum, natural gas and coal.
  • has renewable energy in the form of biomass and biofuels, hydropower, wind and solar energy.
  • produced the second greatest amount of hydroelectric energy among any state east of the Mississippi River.
  • does not have a renewable energy mandate, but was an early leader within the Southeast states by having the first major wind farm by 2000.[4]

In Tennessee

  • households consume 33 percent more electricity than the U.S. average.
  • residential electricity consumption ranks in the top five states.
  • electricity is the main source of energy used in home heating.
  • nuclear power made up almost 15 percent and hydroelectric around one-tenth of net electricity generation.
  • transportation and industrial are the largest energy-consuming sectors in the state.[4]

Available energy resources

Tennessee has traditional energy resources in the form of oil, coal and natural gas. However, these resources do not meet the state's demand for energy so Tennessee receives many additional resources. The state’s access to Capline, Colonial and Plantation pipelines, and the Mississippi River gives it easy access for importing oil and natural gas from other states.[4]

Tennessee has renewable energy resources that contributed almost 30 percent of the energy generation in 2011 according to the U.S. Energy Information Administration (EIA). Hydroelectric power is the largest portion of renewable energy production in the state. Tennessee has made continual improvements on large-scale wind farms and is home to one of the largest solar farms in the southeast. It is also seen as a potential leader in biofuel production and is the largest ethanol-generating state in the region. With more than 4.5 million acres of compatible land for farming switchgrass, ethanol production is expected to grow in the future.[4]

Consumption and prices

As shown on the pie chart in 2011, around 28 percent of Tennessee's energy use was for transportation and industrial, and one quarter for residential; the rest was used in commercial buildings--for heating, cooling, lighting and other functions. Most of the energy used in the state is in the form of coal (used primarily for nuclear power generation), followed by petroleum and electricity. Gasoline, used in transportation, accounts for more than one half of the petroleum consumed in the state.[4] Generally the price of gasoline in the state tracks below the national average.[5][6] According to the EIA's February 2014 report, the federal excise tax is 18.40 cents per gallon of gasoline and 24.40 cents per gallon of diesel fuel. In addition to that, Tennessee collects a total tax of 21.4 cents on every gallon of gasoline, gasohol diesel fuel, which ranks it at the 36th highest in the United States.[7][8]

Energy consumption in Tennessee
TN energy consumption chart.png

Legend[9]
     Transportation       Residential     Industrial       Commercial
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Comparisons tables

See also: State Energy Rankings to compare all 50 states

The table below compares Tennessee's consumption and spending for energy, as well as prices for gas and electricity, and carbon emissions to those of South Carolina, which has similar population, resources and consumption needs because of climate and geography. Also given are the U.S. averages and the state rankings. All rankings are from highest to lowest, so, for example:

  • Tennessee's rank of 18th in carbon emissions means that carbon emissions are higher in Tennessee than in South Carolina, which has a ranking of 26th.
  • Likewise, per capita income in South Carolina is lower than the national average, and lower than in Tennessee, which at 35th ranks 14 places ahead of South Carolina’s ranking of 49th in per capita income.
  • These two states are very similarly placed in the slightly above average on population, per capita consumption and per capita spending. Per capita energy consumption in Tennessee (at 20th) is slightly lower than in South Carolina(at 19th), but per capita spending in South Carolina is similar since it ranks 24th to Tennessee's ranking of 22nd.

The lower price of electricity in Tennessee may be due to the fact that there is no renewable portfolio standard (RPS) set. Although Tennessee uses mostly coal to generate electricity, nuclear and hydroelectric make up more of the resources for electricity generation together. Some studies claim that coal is becoming more expensive because it is being so heavily regulated, due to its carbon emissions.[10][11]

Consumption and Expenditures Comparisons Summary
Type TennesseeSouth CarolinaU.S. Figures
FigureU.S. Rank*FigureU.S. Rank*Totals
Population6.5 million174.8 million24313.9 million
Per Capita Income Average$37,67835$34,26649$42,693
Total Consumption$2,201 trillion BTU151,610 trillion BTU2297,301 quadrillion BTU
Per Capita Energy Consumption344 million BTU20345 million BTU19312 million BTU
Total Spending on Energy$29,699 million15$21,175 million25$1,394,088 million
Per Capita Spending on Energy$4,64122$4,53124$4,474
Price of Residential Natural Gas, dollar per thousand cubic feet$9.6530$11.3019$12.48
Price of Electricity, cents per kWh10.014011.852012.31
Total Carbon Dioxide Emissions, million metric tons (2010)107.11884265,631
*Rank is from highest to lowest.

Electricity heats a majority of homes in Tennessee. Natural gas is the next most common home heating source and is found in 33.4 percent of homes.

Consumption of energy for heating homes in Tennessee
Source Tennessee 2011 U.S. average 2011
Natural gas 33.4% 49.5%
Fuel oil .0.5% 6.5%
Electricity 59.0% 35.4%
Liquid Petroleum Gases (LPG) 4.5% 5%
Other/none 2.6% 3.6%

Production and transmission

Tennessee produced more than 500 trillion BTU of energy in 2011. Almost 60 percent came from nuclear, just over 6 percent came from biofuels and 9 percent from coal, natural gas and crude oil. The remaining 30 percent came from what the U.S. Energy Information Administration classifies as 'other,' which is "assumed to equal consumption of all renewable energies except biofuels."[12]

Energy production by type in Tennessee, 2011
Type Amount Generated
(trillion BTU)
% of State % of USA
Crude oil 1.4 0.28% 0.01%
Natural gas 5.7 1.13% 0.02%
Coal 38.6 7.62% 0.17%
Nuclear 281.7 55.63% 3.41%
Biofuels 31.3 6.18% 1.63%
Other 147.8 29.19% 2.07%

Less than half of the electricity produced in Tennessee came from coal in 2013. Coal is shipped into Tennessee by railroad and river barge from Wyoming, Colorado, Illinois, Kentucky and West Virginia. Nuclear power provides about one third of the state's electricity and is produced at the Sequoyah and Watts Bar nuclear plants. Watts Bar is the newest and began operating in 1996. In 2015 an additional reactor for Watts Bar 2 will be added.[4]

Natural gas production levels in Tennessee are among the lowest states in the nation. Natural gas is supplied mainly by several interstate pipelines and comes mainly from Oklahoma, Texas, Louisiana, Kansas and Canada. Interstate pipeline companies move natural gas from the production area to local utilities and through to other states. The Tennessee Regulatory Authority (TRA) regulates the rates the multiple companies charge, the services they provide to the local distribution centers (LDCs) and the construction of new pipelines.[4]

Where electricity comes from in Tennessee[13]
Type Amount generated (MWh) % of state** % of U.S.**
Petroleum-fired 6,000 0.12% 0.02%
Natural gas-fired 207,000 3.98% 0.02%
Coal-fired 2,234,000 42.99% 0.13%
Nuclear 1,894,000 36.44% 0.24%
Hydroelectric 764,000 14.7% 0.24%
Other renewables 92,000 1.77% 0.05%
Total net electricity generation 5,197,000 100% 0.13%
**Note: Because the U.S. Energy Information Administration (EIA) does not include all of a state's energy production in these figures, the EIA totals do not equal 100 percent. Instead, we have generated our own percentages.

In Tennessee there are four electric utilities that are regulated by the Tennessee Regulatory Authority (TRA). They also regulate six gas utility companies.[14] Most of the coal used in electricity generation is shipped into Tennessee by rail from West Virginia, Texas, South Carolina, Kentucky and Tennessee. Multiple interstate transmission pipelines supply the state's natural gas and petroleum needs.[4]

Energy policy

Policy Issues

The lower price of electricity in Tennessee may result from the fact that the state does not have a Renewable Portfolio Standard (RPS). Some studies claim that higher electricity prices are in part the result of RPS that mandate a minimum amount of renewable energy (which is more expensive than coal or natural gas) be used for generating electricity.[15][16][17]

See also: Fracking in Tennessee

Energy policy is made, executed and influenced by many organizations, both public and private, and is codified in the laws and regulations of the state. Each state’s energy policy involves tradeoffs in which energy production and prices are weighed against environmental concerns and efficiency. Tennessee was an early leader among the states in developing energy efficiency and renewable energy use. It has not enacted a RPS that would require investor-owned utilities and electric cooperatives to obtain a minimum percentage of the electricity sold to customers to come from renewable energy resources. Although it does not have a renewable energy portfolio Tennessee has building energy codes, energy requirements for agencies and a solar easement policy. Tennessee developed the state's first wind farm in 2000. The farm increased its wind generating capacity from 2-megawatts in 2000 to 29 megawatts by 2011. Tennessee also has a large solar farm, one of the biggest in the Southeast. It also leads the Southeast with the largest ethanol-producing capacities. Switchgrass is suitable to make cellulosic ethanol, which covers over 4.5 million acres of the state.

The American Council for an Energy Efficient Economy (ACEEE) is a nonprofit and nonpartisan organization dedicated to improving energy efficiency policy in the United States. Each year, they rank each state by their energy efficiency policies. Tennessee ranked 31st on the Energy Efficiency Scorecard produced by the American Council for an Energy-Efficient Economy.[18] There are differing estimates about the economic impact of these mandates in terms of costs that may affect prices and jobs, as well as the impact on the environment and pollution. Thus, for example, there are many new studies of what is called the "rebound effect" which refers to the fact that "some of the theoretically estimated gains in energy efficiency will be eroded as consumers consume additional goods and services."[19][20]

Major legislation

  • Biodiesel and Ethanol Retail Requirements in Tennessee mandates that 99 percent of biodiesel blend stock must be biodiesel and must meet certain American Society for Testing and Materials specifications. The biodiesel made available for public use may not exceed 20 percent biodiesel (B20), and blends of biodiesel containing greater than 5 percent biodiesel (B5) must be labeled at the pump. Ethanol blends must also be labeled accordingly, such as E85, for 85 percent ethanol alcohol and 15 percent gas.[21]
  • 'Energy Star Procurement Requirement for Agencies (2009) requires all future appliances purchased by state agencies that are used for lighting, equipment and heating and cooling systems to be qualified under Energy Star when available.[22]
  • The Petroleum Products and Alternative Fuels Tax Law of Tennessee pertains to all natural gas and/or biofuel projects. It requires permit applications for compressed natural gas (CNG), petroleum products and/or alternative fuel suppliers. Suppliers are authorized to collect and remit taxes on these alternative fuels.[23]
  • Alternative Fuel and Fuel-Efficient Vehicle Acquisition and Use Requirements in Tennessee mandates that a minimum of 25 percent of newly purchased motor vehicles in designated ozone non-attainment areas be natural gas vehicles (NGVs) or hybrid electric vehicles (HEVs). These requirements are expected from the Tennessee Department of General Services. If these vehicles are not available, the department can satisfy the requirement by purchasing a conventional gasoline vehicle with an average fuel economy of 25 miles per gallon or more. All state agencies should strive to use ethanol and biodiesel in the state-owned vehicles whenever available and support the biofueling development and infrastructures.[24]
  • The goal of the Tennessee Clean Energy Future Act of 2009 was to ensure safe, reliable, clean and affordable energy. Included in this policy are clean-energy jobs, and financial commitments to new solar energy and electric vehicles. Among the changes it made to energy policy were: requirements for Tennessee to lead by example through managing buildings and vehicles; increasing clean-energy technology tax credits; distributing funding for low-income homes and weatherization; and creating statewide residential building construction requirement.[25]
Policypedia
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State energy policy

State fracking policy

Energy policy terms

Fracking in the U.S.

Energy use in the U.S.

Energy policy in the U.S.

State environmental policy


See also
Local fracking on the ballot

Statewide fracking on the ballot

Government agencies and committees

  • The Tennessee Regulatory Authority (TRA), is an independent regulatory agency which has been regulating Tennessee's investor-owned utilities since 1996. The authority balances a transition into a more competitive utility environment while keeping the public interest in mind. The types of utilities that are regulated include electric, natural gas, water, combined water and sewer utilities, telephone companies and methane gas companies. More than 500 public utilities are under the agency's jurisdiction. Most of these must obtain TRA approval before they set new rates; issue stocks or bonds; or undertake major construction projects, such as water wells, power plants or transmission lines. The TRA is composed of an executive director and four part-time directors who decide the cases brought to the PSC for changes in utility operations, rates and for construction projects. Directors are appointed by the governor and confirmed by the state senate.[28]
  • The Department of Environment and Conservation (TDEC) houses the state's energy programs, sustainable practices and other conservation programs. The TDEC is dedicated to improving and protecting Tennessee's natural resources. They support the balance of protecting human health and the environment while still increasing economic development and quality of life in the state. The department plants to reach these goals through outreach, education and advocating for state and federal environmental laws.[29][30]
  • The Department of Environment and Conservation is responsible for improving the state's water, air and land quality. The Tennessee Commissioner of Environment & Conservation manages the department. The department is responsible for regulating air pollution, water pollution, solid and hazardous waste, radiological health issues, underground storage tanks, water supply, and groundwater. Additionally, the department is responsible for managing 54 state parks and 82 state natural areas, and provides support and assistance to local governments.[31][32]

Major organizations

  • The Center for Renewable Carbon (CRC) at the University of Tennessee Institute of Agriculture (UTIA) is a group that combines the Office of Bioenergy Programs, the Forest Products Center, the Carbon Sequestration Program and the Sun Grant Initiative. Together they consolidate research, outreach programs and teaching in relation to biomaterials processing and bioenergy production. Not only are they working statewide, but also internationally, with the University of Salzburg and BOKU University in Austria.[33][34]
  • The Tennessee Solar Energy Association is a charter member of the larger society, American Solar Energy Society (ASES). The group is driven to educating Tennesseans about the various benefits and uses of solar energy. Invited educators in the association include policy makers, professionals, educators, business people and environmental citizens of Tennessee.[35]
  • Socially Equal Energy Efficient Development (SEEED) is a non-profit group that focuses on helping Knoxville's low-income urban young people obtain lasting careers in the growing energy sector of the economy. Participants include 16 to 28-year olds from low-income households. Students must apply and be accepted into the program. A 90-day pre-apprenticeship will follow that will educate them, provide mentoring and community service opportunities. Most students start college, a job, or an internship after the 90-day period.[36]
  • The Tennessee Energy Education Initiative is supported by the Tennessee Department of Environment and Conservation Office of Energy Programs, Pathway Lending and other statewide energy resource providers. The organization seeks to help Tennessee use its natural energy resources efficiently through training, tools and events that help connect communities to the right information, experiences, expertise and available funding and fiscal incentives for energy conservation.[37]

In the news

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Tennessee Energy News Feed

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See also

External links

References

  1. National Association of State Energy Officials, "Tennessee," accessed March 9, 2014
  2. These figures come from the U.S. Energy Information Administration State Profiles and Energy Estimates, Tennessee Overview. Statistics for population and per capita income are for the year 2012; consumption and spending estimates are for 2011; and prices are for October 2013. Updated pricing information is available on the state's EIA profile. Prices will be updated on this page biannually.
  3. U.S. Energy Information Administration, "Tennessee Overview," accessed March 2, 2014
  4. 4.0 4.1 4.2 4.3 4.4 4.5 4.6 4.7 U.S. Energy Information Administration, "Tennessee Profile Analysis," December 18, 2013
  5. Gas Buddy, “Historical Gas Charts,” accessed March 2, 2014
  6. To compare current gasoline prices in Tennessee to the U.S averages, go to GasBuddy.com
  7. U.S. Energy Information Administration, "Petroleum Marketing Monthly," February 2014, accessed February 14, 2014
  8. The Tax Foundation, "State Gasoline Tax Rates, 2009-2013," March 21, 2013
  9. This chart depicts the state's energy consumption as reported by the EIA for 2011. Click the image to enlarge.
  10. Institute for Energy Research Study, "The Status of Renewable Electricity Mandates in the States" which found that in 2010 electricity prices in states with RPS were an average of 38 percent higher than in states without RPS, January 2011
  11. GreenBiz, "Why a Coal Guy is Going Green," October 16, 2009
  12. U.S. Energy Information Administration, “State Energy Data System, Production,” accessed February 18, 2014
  13. These figures come from the EIA State Profiles and Energy Estimates U.S Energy Information Administration, "Tennessee Overview," accessed March 1, 2014
  14. Tennessee Regulatory Authority, "Utilities Regulated By The TRA," February 11, 2014
  15. U.S. Energy Information Administration, "Tennessee State Energy Profile," accessed March 2, 2014
  16. Institute for Energy Research, "The Status of Renewable Electricity Mandates in the States," accessed March 9, 2014
  17. Manhattan Institute, "The High Cost of Renewable-Energy Mandates," February 2012
  18. American Council for an Energy-Efficient Economy, "State Energy Efficiency Policy Database," accessed February 27, 2014
  19. International Risk Governance Council, "The Rebound Effect: Implications of Consumer Behavior for Robust Energy Policies," accessed March 3, 2014
  20. Scientific American, "How Bad Is the Rebound from Energy Efficiency Efforts?," May 21, 2013, accessed March 3, 2014
  21. U.S. Department of Energy, "Tennessee Laws and Incentives," accessed March 1, 2014
  22. Database of State Incentives for Renewables & Efficiency, "Energy Star Procurement Requirement for Agencies," accessed March 2, 2014
  23. U.S. Department of Energy, "Petroleum Products and Alternative Fuels Tax Law (Tennessee)," accessed March 2, 2014
  24. U.S. Department of Energy, "Tennessee Laws and Incentives," accessed March 1, 2014
  25. Tennessee Government, "Bredesen Signs Tennessee Clean Energy Future Act," accessed March 2, 2014
  26. Tennessee General Assembly, "Senate Standing Committee Energy, Agriculture and Natural Resources," accessed March 2, 2014
  27. Tennessee General Assembly, "Senate Standing Committee Energy, Agriculture and Natural Resources," accessed March 2, 2014
  28. Tennessee State, "Tennessee Regulatory Authority 2012-2013 Annual Report," accessed March 1, 2013
  29. Tennessee Government, "Sustainable State Government," accessed March 1, 2013
  30. Tennessee Government, "Environment," accessed March 15, 2013
  31. Tennessee Department of Environment and Conservation, "About," access to December 28, 2012
  32. Tennessee Department of Environment and Conservation, "About Us," access December 28, 2012
  33. University of Tennessee Center for Renewable Carbon, "Center for Renewable Carbon Home," accessed March 2, 2014
  34. Tennessee Solar Energy Association, "International Collaborations: Austria," accessed March 2, 2014
  35. Tennessee Solar Energy Association, "Home," accessed March 2, 2014
  36. Socially Equal Energy Efficient Development, "Home," accessed March 2, 2014
  37. Tennessee Energy Education Initiative, "Home," accessed March 2, 2014