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©Stephen Peterson
GETTING PAST THE AGE OF STEAM
The Utah legislature’s Public Utilities and Technology Interim Committee celebrated the 18 th century at its most recent meeting on Wednesday, 19 October 2011. No the representatives and senators weren’t reading the poetry of Alexander Pope, nor the novels of Voltaire. They weren’t wearing wigs and lace jabots or dancing minuets. They were, however, toasting and attempting to prolong the Age of Steam.
Scottish inventor James Watt created a design before the American Revolution (1776) that resulted in the first widely successful coal-fired steam engines. The steam engines built by Watt and many others provided the power that ran the Industrial Revolution and fundamentally changed transportation and industry. Without their pioneering work, the age of electricity would perhaps never have dawned.
Fossil fuels, especially coal, have powered boilers and generated steam for over two hundred years. But coal’s day is over. Not only is the entire coal cycle destructive, from mountain top removal mining that destroys landscapes in Appalachia, through burning coal with its dangerous emissions, to the bulky and toxic coal combustion wastes that result, but it’s not the cheapest form of electricity any longer.
Older coal plants built with no emissions controls might still be able to produce power as cheap as $.025 per kilowatt hour, but new coal plants produce power at a price that’s virtually on par with wind power at between $.04 and $.06 per kilowatt hour.
When the full impact of environmental and public health costs—so-called externalities—are factored in, the true cost of coal soars out of sight. According to a 2011 study led by Dr Paul Epstein, associate director of the Center for Health and the Global Environment at Harvard Medical School, the full costs imposed by the coal production cycle could range from $.09 to as much as $.2689 per kilowatt hour. (This is in addition to the internal costs of generation billed by the utility to customers.)
Please remember that a polite message will change minds better than the most amazing flaming.
Dear Representative Herrod,
In a recent meeting of the Public Utilities and Technology Interim Committee you spoke strongly in favor of electricity from coal. I’m concerned about coal’s impact on public health, air quality, visibility and climate, and I’m worried you’re not seeing the whole picture.
With wind power now closely competing with the cost of new coal-fired power plants, it’s time for Utah to move past fossil fuels and take advantage of our potential for renewable energy not only in wind power but also in solar and geothermal energy.
Wind power now employs more Americans than the coal industry, but Utah risks lagging behind if state policy continues to favor fossil fuels. I encourage you to educate yourself about the full costs of coal and the amazing potential of renewable energy.
Sincerely,
[Your Name]
MORE ABOUT THE MEETING
The full recording of the meeting can be heard on the legislature’s website, http://le.utah.gov/asp/interim/Commit.asp?Year=2011&Com=INTPUT. The transcript of the most telling exchange, with my comments, is below. It occurs several minutes into the meeting. The exchange is between Rep Herrod and Brent Gale, senior vice president, Mid American Energy, the parent company of Rocky Mountain Power.
Rep Chris Herrod
Rocky Mountain Power has given up on trying to even get a coal plant. It’s just not—when you do a cost/benefit analysis—that’s not realistic. And yet coal is by far cheaper than anything else. So, are the cap rates that you’re receiving on your investment in Utah any more than in any other state—I’ve actually heard that we’re less than other states in the amount of return on investment?
Brent Gale, Senior Vice President, Mid American Energy
The return on equity in Utah is comparable to what we receive in other states.
Utah gets between 75% to 85% of its electricity from coal. The major plants are Bonanza, Carbon or Castle Gate, Hunter, Huntington, and IPP. There are three or four additional minor plants. A prudent perspective on this heavy dependence might be that diversification yields benefits.
Herrod
But the only way to keep this trend from going up is instead of building a natural gas plant or a renewable plant, would be to bring a new coal power plant on line, is that correct?
In a few hundred words, Gale does his best below to explain to Herrod that coal is neither the lowest cost nor the lowest risk source of energy. He hits both demand management and generation choices.
Gale
…Let me just explain briefly what we are doing. Because we do have growth, primarily in Wyoming and Utah, we do have to continue to add plant, generating plant, and maintain the plant that we do. We, through a process called integrated resource planning, which Kelly [Francone] mentioned, discuss with all of our states how we propose to meet the load. And that includes, as she indicated, energy efficiency, which I might add when you talk about energy efficiency, most people look at the utility.
And we do offer programs for energy efficiency, and we’re pleased to do that. But in the end it’s us as customers that are responsible for the energy efficiency. That’s really what we’re talking about. And so we encourage that.
We do have programs to reduce demand where we interrupt air conditioners. Both the house and the senate passed a bill a couple of years ago that would have helped, but the governor [Herbert] vetoed that one. But that would have allowed more interruption of the air conditioners which reduces load which reduces our current requirements.
Then we look at what our available supply options are. Currently we don’t believe that it would be feasible to meet the state requirements—and each state requires that we demonstrate that the resources we select are the least cost, adjusted for risk.
And at this point we really can’t definitively quantify what the risks associated with a new coal plant is. As a result we believe certainly not all six of our states would approve a new coal plant. So as we look at our options, our options today are natural gas plants and wind. Wind is the most cost effective of the renewables with the federal production tax credit, which is about two cents per kilowatt hour. That federal production tax credit may lapse at the end of this year. That will significantly change the economics.
Then we make our decisions on that blend of natural gas and renewables—wind—on the basis of what we think comes up with the least cost for our customers adjusted for risk. And that’s what we present and propose for in the integrated resource plan.
And then ultimately we make a decision what we’re going to actually add and then the regulators review that in a rate case. As Kelly indicated, the integrated resource plans—currently in all of our states commissions do not approve them. They simply acknowledge that we made the filing and went through the process. Hopefully that’s helpful, but that’s why we’re not proposing a coal plant.
Herrod
Is it state regulation, or is it federal regulation that’s preventing it? Because the fact of the matter is that with energy costs those that bear the brunt of increases are the poor and the middle class. As one that often gets accused of not caring about the poor or the middle class, when we put these regulations out that specifically hurt that sector that they bear the brunt of it. I know you want to get off the hook, but what’s required for a coal plant? What would the state need to do so we could keep the cheapest energy possible…and get a coal plant in the state?
One of the points Gale doesn’t make is that both natural gas and renewables are more scalable and generally faster to build than coal. Smaller, scalable facilities that tie up less capital are very attractive.
Gale
The key drivers here in terms of a coal plant are the uncertainty associated with both federal and state regulation of emissions from a coal plant.
You hear a lot about carbon, and certainly that’s one of them. As you know from your involvement currently in what the EPA’s doing. There are proposed restrictions on coal ash and coal ash disposal. There are investments that we’re making to reduce mercury and SOx and NOx. And still some uncertainty about the dates on those. All of those have an impact on what a coal unit actually costs in comparison to renewables and natural gas. That uncertainty is what makes it difficult or frankly—in fact impossible for us at this point to quantify exactly what the cost is of a coal plant.
Now we can quantify the costs of putting environmental controls on our coal plants. We have done that. We have twenty-six coal plants. And for all of those coal plants we are adding some environmental controls. For twenty-two of them we’re adding the full suite of environmental controls for SOx, NOx and mercury to keep those plants operating. Because it is lower cost as we have determined it, than to retire those plants and replace them with either gas or renewable plants.
So that’s why we are making those environmental investments. We can quantify the costs of the mercury, SOx and NOx controls, and that’s about 2.7 billion dollars. Over the past couple of years we’ve already spent 1.3 of that 2.7.
Herrod makes a final pitch to establish himself as the most valiant advocate of coal on the committee.
Herrod
We may not be able to help with the federal side, but please let me know the state uncertainty that you have.
Mark Clemens
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