• WisBusiness

Thilly: Outgoing head of WPPI Energy sees bright future for clean energy
1/10/2011

By Brian E. Clark
For WisBusiness.com

High unemployment may have bumped concern about the environment and worries about climate change off the front pages.

But Roy Thilly, president of Sun Prairie-based WPPI Energy and former co-chair of the Governor’s Global Warming Task Force, says he believes interest in clean energy remains strong and will rebound with the economy.

“And as that happens, the climate change issue will again become front and center because there is such a strong scientific consensus that it would be imprudent not to take action,” said Thilly during an interview covering his 30-year tenure in the power industry.

“So I think we’ll see something, whether it is cap and trade with a new name or a tax, I really can’t say. Whatever the policy is, it will push us to much heavier reliance on conservation and efficiency.”

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Thilly will retire Feb. 1 and be replaced by Michigan Electric Cooperative Association CEO Michael Peters. Thilly, an attorney who helped lay the groundwork for creating WPPI in the late 1970s, will remain on staff through the end of February.

The WPPI, originally known as Wisconsin Public Power Inc., has 51 customer-owned member utilities in the Badger State, Michigan and Iowa. It was created as the first municipal electric company in Wisconsin, a bulk-power electric utility owned by cities and villages.

Today, WPPI owns three gas-fired plants, portions of three large coal-fired facilities, and some wind generation towers. Combined, they produce about half WPPI’s power needs.

Thilly, who has headed WPPI since 1992, said change has been the norm for the power industry since the cooperative was created.

“In the early part, the push was to get ownership of transmission and get access to the transmission system. That was a major challenge because if you can’t get on the wires (you can't buy) from a variety of parties or locate generation in different places. So that was a huge undertaking.”

In the 1990s, the challenge facing the state was the move to deregulation.

“Wisconsin was wise to reject that,” he said. “Most of the states that went in that direction, particularly California, experienced some pretty significant problems.”

In the latter part of that decade, this state had reliability difficulties with inadequate generation. That was resolved, he said, through a robust construction program that resulted in new power plants and transmission towers.

“And then most recently,” he said, “the challenge has been environmental, particularly climate change and gradually moving to more reliance on clean energy sources and lowering the carbon content of our (energy) supply.

“If you believe, as I do, that there will ultimately be a cost associated with carbon generation, and required reductions, getting ready for that is a really important challenge for a state that is pretty heavily dependent on coal.”

But Thilly does not expect a carbon tax or cap and trade program any time soon because of changes in Washington and nagging high unemployment.

Eventually, though, there will be a push toward a greater reliance on conservation and efficiency, he said. Stopping the significant and costly waste in energy will be a priority, he predicts. And there will be much greater use of renewable sources such as solar, wind, biomass “and probably a resurgence of nuclear.”

Though disappointed that legislation resulting from the global warming task force was not enacted by the Legislature, Thilly said he believes the 14 months he and many others spent on the effort was worth the time and energy.

He said many observers were surprised that the committee was able to agree on 60 policy recommendations.

“The most important ones had consensus,” he said. “We lost a couple of votes at the very end, but we had a much stronger degree of agreement than people expected."

If the economy had not been in such rough shape, he believes the climate change legislation might have passed. Even though the task force had achieved a great deal of consensus, he said the polarization in the Legislature – a byproduct of a rough election year – helped doom passage.

“Unfortunately, no one built a bipartisan consensus around the bill,” he said. “It was the times and the economy.”

Thilly said he is convinced that clean energy will bring jobs and the growth to the state. Though some decry the cost of renewables, he said price for natural gas and other conventional energy sources will rise significantly with a stronger economy, which will make wind, for example, a better buy.

Before the recession hit, the price for wind power was not far off other sources, he said.

“It was pretty close and when you can lock in a wind contract with no change in price for 20 years and no fuel costs, it’s not a bad hedge. I think it will depend upon energy prices rebounding in the wholesale energy markets. Which they will, for two reasons:

“One is that demand will increase as the economy rebounds and that will push prices up. And two, you will see a number of coal plants retired, the ones that are 50 and 60 years old and face environmental regulations on mercury, (sulfur dioxide) and (nitrogen oxides). Those costs are hard to justify installing retrofits on really old plants.

“So if you take those plants out of the energy markets and demand goes up at the same time, you will see energy prices increase and renewables will become competitive again.”

Though wind is the least expensive renewable now, he sees the biggest advances will come in the solar field over the next two decades.

“We are already starting to see it,” he said. “Prices have come down on solar significantly and as they come down further, you’ll see them incorporated in buildings on a much more routine basis.”

In addition, he said interest in nuclear energy is rising.

“Nuclear is clearly going to be an alternative,” he said. “The real questions with nuclear are the cost and the degree of public opposition. What we saw on the task force was that gut-level opposition to nuclear has decreased.

“People have to balance how to lower carbon emissions with their concern about what happens to nuclear fuel after it is used.”

Though retirement is right around the corner and he plans to spend more time in his Door County vacation home, Thilly said he will remain involved in the energy field.

“I plan to stay out of assisted living for a while,” mused the former Peace Corps volunteer, noting that he has been nominated to serve on the North American Electrical Reliability Corp. board. It oversees the reliability of the electrical system in the U.S., Canada and part of Mexico.

He’s also chairing a U.S. Department of Energy committee that is overseeing the planning process for construction of major transmission facilities from the Dakotas to the East Coast.

“When I was college at Columbia University, I was an English major focusing on Elizabethan drama,” he said. “The connection between that and the electric grid is a bit hard to fathom. So you never know what’s going to happen.”
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