EXECUTIVE SUMMARY Interagency Task Force Final Report I. Introduction Supporting documents to the President's October 8 address to a joint session of Congress specified that: a schedule should be established to reduce utility a list of actions should be developed to ensure In order to implement the President's October 8 initiative and to provide supporting analysis for the President's State of the Union energy proposals, Federal Energy Administration has coordinated the efforts of an interagency task force to examine alternative strategies for saving oil in the utility sector. This report consolidates work done by the Atomic Energy Commission, Department of Interior, Environmental Protection Agency, Federal Power Commission and, Office of Management and Budget. The attached report includes an analysis of five measures to save oil and identifies the oil savings, associated costs, and constraints under alternative policy options. Particular emphasis has been accorded to measuring the impact on the oil savings objective of those initiatives proposed by the President in the State of the Union Message. The most significant legislative proposals which affect the outcome of this analysis are 1) amendments to the Clean Air Act (CAA), and 2) financial reform measures designed to alleviate utility cash flow problems which are inhibiting investment. Without any action to reduce utility demand, oil use in. the utility sector will rise from its present level of 1.5 million barrels per day to nearly 1.8 million barrels per day by 1980. In order to facilitate analysis, the oil saving measures have been combined into a base case and two alternative strategies. This methodology permits an examination of not only the potential oil savings to be derived under the set of existing policies (base case), but also to analyze the potential for increased oil and dollar savings resulting from initiatives undertaken through new Executive and legislative actions. BASE CASE Continue to use mandatory authority to order No savings from new oil-fired plants since no Coal-to-oil conversions prevented under existing No nuclear plant acceleration to supplement oil STRATEGY I O ESECA amended to eliminate environmental regional ESECA amended to allow FEA to prohibit use of Coal-to-oil switching prevented under existing Accelerated nuclear construction of 13,500 megawatts of capacity by 1980 and increased nuclear capacity utilization. *Energy Supply and Environmental Coordination Act of 1974. III. STRATEGY II O ESECA amended to eliminate regional limitation ESECA amended to allow FEA to prohibit use of Coal-to-oil switching prevented under current Accelerated nuclear construction of 24,600 megawatts by 1980 and increased nuclear capacity utilization. Analysis of Alternatives and Course of Action A. Analysis of Alternatives The schedule of potential oil savings associated with each of the strategies is shown in Figure 1. The Base Case would reduce oil demands by 380,000 bbls/day. The adoption of Strategy I nearly doubles oil savings to 750,000 bbls/day in 1980. Strategy II would add another 200,000 bbls/day in 1980 from added conversions to coal in existing power plants and a 5-year acceleration of nuclear power plant installation schedules. Table I presents summary economic impact data for the three strategies. All strategies would result in a cost reduction per barrel of oil saved. Under Strategy II, the capital costs nearly double due largely to the costs of accelerating nuclear power plant construction. |