Talks Run Hot ‘n’ Coal

Nuke Plant Eyed

By Andy Vuong for The Denver Post

WESTMINSTER — Amid growing criticism about its heavy reliance on coal-fired power, the state’s second-largest utility is considering the prospect of building a nuclear power plant in southeastern Colorado.

Tri-State Generation and Transmission Association’s board of directors voted recently to have its staff study nuclear as a possibility for the site in Prowers County near Holly.

The company secured the site and necessary water rights for a plant that could either be coal-fired or nuclear. Tri-State would need a partner on a nuclear plant because of high construction costs. The staff was directed to pursue potential partners.

Right now, coal-fired power plants provide 70 percent of the company’s generation. Going nuclear could blunt some of the criticism about coal’s high carbon emissions, while likely opening up an entirely new battleground.

At Tri-State’s annual meeting at its headquarters in Westminster, board chairman Harold Thompson said the utility is dealing with rising energy costs and a tighter regulatory environment as it prepares for the future.

“We’re at a crossroads here, in more ways than one,” Thompson said.

Environmentalists and some of Tri-State’s member electric co-operatives have questioned its proposal to build two new coal-fired units, at a cost of $3.6 billion, at an existing power plant in Kansas. The concerns come in the face of the nation’s booming green movement and prospects of a carbon tax.

Colorado regulators have zeroed in on the utility since the proposed 1,400-megawatt expansion — in partnership with Sunflower Electric Power Corp. of Hays, Kan. — was shelved because of an air permit denial in October. That ruling by the state of Kansas came over concerns about carbon dioxide emissions. Tri-State and Sunflower have appealed.

Unlike Xcel Energy, Colorado’s largest utility, Tri-State is not rate-regulated by the Colorado Public Utilities Commission. Tri-State sells power to rural electric cooperatives.

The PUC oversees only Tri-State’s construction of new plants or transmission lines in the state. But at the request of PUC chairman Ron Binz, Tri-State has agreed to a public hearing, expected to occur within the next two months, to discuss how the company plans to meet consumer electric needs going forward.

“Part of the logic behind us exploring their resource plan with them is we want to be fully equipped when and if they come before us with a proposal to build a power plant or a transmission line,” Binz said.

Incoming GM to be on hot seat

Tri-State’s backup plan for the Kansas plant is the Prowers County project, dubbed the Colorado Power Project. The company said it secured water rights in 2007 and plans to eventually construct a plant at the site even if the Kansas clean-coal project gains approval.

Tri-State’s incoming general manager Ken Anderson, currently a senior vice president, will be on the hot seat once he takes over in July. He said he is committed to coal because of its relatively low cost, but is open to other sources of power.

“We own coal, we have faith in coal, we know about its reliability,” he said. “It’s still the proper resource decision for the nature of resources that we need.”

The company said it has to continue to rely on coal because its rural customers require a constant load and renewables aren’t suitable for base-load generation and natural gas prices are too volatile.

Tri-State sells wholesale power to 44 member rural utilities in Colorado, Nebraska, New Mexico and Wyoming. Its members serve 1.4 million people, with 62 percent in Colorado.

Tri-State doesn’t answer to shareholders or financial regulators. It is owned by its member cooperatives, which, in turn, are owned by their customers. Each cooperative has a seat on Tri-State’s board.

The wholesale power provider’s detractors have decried its reliance on coal.

“There’s been a lot of concern that these big coal investments are going to turn out to be much more expensive than Tri-State has been saying,” said Ned Farquhar, an official with environmental advocacy group Natural Resources Defense Council. “Coal-plant costs have been going up almost geometrically around the world.”

Forty-two of Tri-State’s members are locked into contracts to buy power from the utility through 2050, and two have contracts through 2040.

The long-term deals restrict members from pursuing alternative power, although Tri-State amended the contracts last year to allow members to buy up to 5 percent of their power from renewable sources.

Wes Perrin, a board member at Tri-State customer San Miguel Power Association, which serves the Telluride area, said the utility should put more efforts into energy- efficiency programs to cut down on usage.

“I don’t think they share the concerns that the rest of us do about the harmful effects of carbon, although they understand it,” Perrin said.

Several initiatives undertaken

J.M. Shafer, Tri-State’s outgoing general manager, noted several initiatives that the utility is undertaking on the renewable front. Among them:

• Considering bids this year for up to 100 megawatts of renewable power. The company received 46 proposals, and a decision will probably come in the third quarter.

• Partnering in a proposed concentrating solar power project in New Mexico.

• Joining the National Renewable Cooperative Organization as a founding member to focus on the development and deployment of renewable energy by electric cooperatives.

Tri-State is required by Colorado law to boost its renewable generation to 10 percent by 2020.

Shafer, 64, and Anderson, 48, said the main factor the company considers when deciding on a new generation source is cost. Despite criticism to the contrary, Shafer said Tri-State factors in the possibility of a carbon tax into its cost projections.

Asked for specifics, the company was vague, stating that it uses a carbon tax estimate of anywhere from $5 to $50 per ton, and beyond.

“If it ever reaches a point where coal becomes more expensive than some other resource, that will be our recommendation,” said Shafer.

Nuclear could be a possibility

That’s where nuclear could be a possibility because maintenance and fuel costs have dropped an estimated 30 percent since 1995. Also, nuclear plants emit little, if any, greenhouse gas.

But nuclear plants are expensive to build, far exceeding the construction costs of traditional coal and natural-gas-fired plants. The price tag on a 1,000-megawatt nuclear plant is estimated at roughly $2 billion. And it could take a decade or more to go through the necessary permitting process and complete construction.

Concerns also exist over the proper storage of nuclear waste and the safety hazards of using radioactive materials to generate power. Nuclear power plants generate 20 percent of the nation’s power, but no new nuclear plant has come online in the U.S. in more than a decade.

Colorado’s only nuclear plant, Fort St. Vrain in Weld County, shut down in the 1990s because of operational problems.

Told of Tri-State’s plan to consider nuclear power, Perrin, an energy consultant, said he was “conflicted.”

“I see the benefits of it, and I see the dangers of it,” he said.

He said a nuclear plant faces a stiff uphill battle, but added, “We know that carbon is our biggest problem right now, and it wins that race.”

Andy Vuong: 303-954-1209 oravuong@denverpost.com

Read more:Talk runs hot ‘n’ coal – The Denver Posthttp://www.denverpost.com/search/ci_8818169#ixzz0yUGpleba

By Shelley DuBois for CNNMoney.com

FORTUNE — Coal has always been cheap and dirty. And the dirty part was justifiable because it was so cheap. Now, gas prices are dropping, threatening coal’s dominance in the North American energy market. Which means gas could take over before coal gets a chance to clean up its act.

Natural gas dropped in price last week, trading at under $4 per million British thermal units-the unit used to measure energy output. The price is competitive with coal on a Btu basis, David L. Goldwyn of the U.S. Department of State announced last week.

Coal is still cheaper at $2.25 per million Btu in 2010, according to the U.S. Energy Information Administration. Even so, the coal market is starting to feel the burn from gas on its heels.

Coal stocks are down, across the board. Bloomberg recently reportedthat the largest U.S. coal producer, Peabody Energy Corp., fell 5.2 %, to $40.96. The second biggest producer, Arch Coal Inc., fell 5.9 % to $21.08. Massey Energy Co., the largest Central Appalachia coal producer, plunged $1.40, or 4.6 percent, to $28.75.

So if natural gas is accessible, cheap, clean, and getting cleaner, should the government keep spending billions on clean coal?

So far, the government has tried to spearhead projects to demonstrate that coal plants capturing carbon can compete with traditional plants. But the flagship federal clean coal project, FutureGen, has mutated since it started in 2003, and had to be completely resuscitated after being scrapped in 2008.

The latest holdup with FutureGen 2.0 is that the project will retrofit a current coal plant as opposed to building a new one, and it will be in a different location than previously planned. The project was going to cost $1.1 billion under the latest plan, but could change depending on a recent quirk in finding a location to store the captured carbon.

The government established the Clean Coal Power Initiative in 2002 to try to partner with industry and push clean coal technology. So far, the intiative has completed 3 of the 18 total projects, 7 of which have been terminated. The choppy, drawn-out start to FutureGen hasn’t helped the U.S. clean coal industry either.

These projects need to kick into gear fast, if coal is going to compete with gas. Gas is especially threatening to coal because it’s a local fuel — it’s not economical to transport it over vast distances in large pipelines like oil. But natural gas could provide energy relatively close to power plants, just like coal does now.

TVA replacing coal with gas

In both new projects and business expansions, power producers have also already started choosing gas over coal. A company called American Municipal Power Inc. planned to build a coal-fired plant on the Ohio River last year. In early August, the company announced that it would build a 600-megawatt gas-fired plant in that location instead. NRG Energy (NRG,Fortune 500) signed a $1.9 billion deal to buy five power plants in California from the Blackstone Group. Four out of the five plants will burn gas.

Also, the Tennessee Valley Authority announced last week that it was going to idle nine coal-fired generating units at three plants, starting in 2011. The TVA plans to build natural gas generators to replace several of the coal-fired units.

As dirty as coal is, people do have reservations about the environmental impacts of producing more gas, especially from shale sources. Namely, there’s concern that extracting gas from shale could contaminate groundwater with drilling fluids.

But if regulators snap into place to oversee the United State’s copious shale gas reserves, then coal will really be in trouble. Coal won’t just be able to rely on being cheap anymore, it will have to be clean too. And yet, if natural gas stays cheap, it will still become increasingly difficult to make the economic or political case to keep throwing clean money after dirty coal.

Company that gave up on coal-fired power plant for southern Ohio now plans natural gas plant

From Canadian Business Online

COLUMBUS, Ohio (AP) – A power company plans to build a natural gas-fired plant in southern Ohio on a site where it scrapped plans for a plant using coal.

Columbus-based American Municipal Power Inc. on Monday said its new project would build a 600-megawatt gas plant on the Ohio River in Meigs County. The coal-fired plant would have been larger, generating 1,000 megawatts.

AMP needs approval from more than 80 cities it supplies with power in six states.

The company gave up on the coal-fired plant last fall.

An environmental group that opposed the coal plant says it won’t object to the gas plant. Another critic of the earlier plan says it’s still studying the new project.

Gov. Ted Strickland says it will create more than 500 construction jobs and 28 permanent ones.

OPINION: Pennsylvania’s energy future needs a better source than coal

By Don Goldstein for the York Dispatch

The Senate leadership recently announced it didn’t have enough votes to bring a climate and energy bill to the floor for a vote before Congress’ August recess. Whether the Senate takes up the legislation later is anybody’s guess.

The House of Representatives passed comprehensive legislation more than a year ago. The Senate is gridlocked, due in part to pressure from the oil and coal industries. Big Coal in particular is loath to see a cap on carbon emissions, given that coal-fired power plants are responsible for a third of those releases.

Coal industry-paid lobbyists and ads have targeted Pennsylvanians, with our critical votes in Congress and deep roots in the coal economy, using two arguments for the energy status quo.

First is the claim that un-capped coal is cheap. But ads claiming coal power plants provide the lowest-cost electricity conveniently leave out the huge costs that are not reflected in the price of that power. The public health costs alone are staggering – over $60 billion per year, according to a study commissioned by the National Research Council.

Coal-fired electricity is responsible for 70 percent of the nation’s sulfur dioxide, 33 percent of nitrogen oxide and 23 percent of particulate matter (soot) emissions, according to the Environmental Protection Agency. Substantially reducing these emissions would prevent millions of missed work and school days, tens of thousands of heart attacks and hospital visits, and 14,000 to 36,000 premature deaths from causes like heart and lung disease annually.

A recent National Academy of Sciences study of coal plant emissions in 2005 found that four of the nation’s 10 deadliest plants are in Pennsylvania and four others are just upwind, in Ohio. After decades of delay, some of the state’s coal plants have since installed or are installing air pollution controls to reduce pollutants, but others continue to operate without modern controls. While newer and modified coal plants emit fewer conventional pollutants, new and old plants alike emit enormous amounts of carbon dioxide, the primary heat-trapping gas that causes global warming – another “cost” Big Coal would rather not discuss.

The industry’s second claim is that capping carbon and moving toward cleaner energy sources would cripple Pennsylvania’s economy. It is true that from the mid-1800s until now, coal powered our factories, warmed our homes and kept our trains running. But today there are only 8,000 direct coal-mining jobs in Pennsylvania, amounting to 0.14 percent of our state workforce. While coal still provides the bulk of our economy’s power needs, entrepreneurship and innovation across the state and nation are rapidly making cleaner alternatives more available and cost-effective. Should we tie those jobs to a dirty, 19th century technology, or help affected workers and communities play a positive role in our 21st century energy transition?

In addition, doing nothing could impose serious long-term costs on many aspects of our state economy. According to a Union of Concerned Scientists report, “Climate Change in Pennsylvania,” if emissions continue unabated, by mid-century temperatures will likely exceed 90 degrees for 50 to 60 days in the summer in much of southwest Pennsylvania. Prized hardwoods, including black cherry, sugar maple and American beech, likely would decline or even vanish. Snowmobiling and skiing would become pastimes of the past. Yields of native Concord grapes, sweet corn and a number of apple varieties likely would decrease considerably as temperatures rose and pests became more virulent.

A strong climate bill – that would cut air pollution, make polluters pay for their emissions and provide incentives for businesses to develop cleaner ways to produce energy – would stimulate renewable power and the ancillary businesses already springing up across our state.

Pennsylvania has the manufacturing know-how to become a world leader in clean energy production. From Erie to Philadelphia, innovative companies are moving to supply the clean-energy economy with wind power, castings and gears for wind turbines themselves, “smart grid” power system controls, clean diesel locomotives and much more.

Foreign capital is being drawn in. The Spanish wind-energy company Gamesa has invested $84 million in Philadelphia, siting two manufacturing facilities and two offices in the state and creating nearly 1,000 jobs. More recently, the German company Flabeg chose Allegheny County for its first U.S. solar-mirror production facility, expected to provide 300 new jobs.

In arguing against climate legislation, the coal companies create a false choice – between a do-nothing path and abandoning coal. Coal will unavoidably be a big piece of our energy portfolio to start. But our goal must be ultimately to leave as much of it in the ground as possible. That may not be good for the coal companies. But it will be good for the American environment and economy, which is to say the American family and worker. We owe our children nothing less.

- Don Goldstein is a professor of economics at Allegheny College in Meadville.

From PowerGenWorldwide.com

11 May 2010– Exelon Power will retire Unit 2 at both the Cromby and Eddystone cosl-fired power plants in Pennsylvania sooner than previously announced because of a revised analysis from the PJM Interconnection.

PJM’s analysis showed that transmission system upgrades can be completed sooner than the original analysis indicated, which will allow the coal-fired units to retire earlier.

PJM determined that Cromby must remain in operation until Dec. 31, 2011, almost a year earlier than planned. The Eddystone unit can remain in operation until Dec. 31, 2012, a full year earlier, to support transmission system reliability.

Exelon announced in 2009 would retire the two units for economic reasons, but agreed to extend operations for system reliability reasons.

From the American Natural Gas Alliance

Michigan-based municipal utility Traverse City Light & Power has put off plans to replace a coal-fired power plant with a biomass project, and is instead eyeing plans to build a natural gas-fueled plant Bloomberg reports .

The original plans called for the facility to burn wood (biomass) to help Traverse City Light & Power meet a goal of supplying 30 percent of their electricity requirements with renewable energy by 2020. The utility’s board will revisit those plans in July to discuss the shift in direction and to re- evaluate its strategic goals, the Traverse City Record- Eagle reports .

“We’ve listened to many of our ratepayers tell us they don’t know enough about biomass and some have suggested they are more comfortable with natural gas as a power generation resource,” said Chairman Mike Coco.  A utility-commissioned survey released in April 2010 revealed that more than 53 percent of local resident and business respondents supported the natural gas project.

Natural gas is a clean and highly efficient form of energy. It is twice as clean as coal when it comes to carbon emissions. It also produces 80 percent fewer NOx emissions than coal power and virtually no sulfur dioxide, mercury or particulate pollution. In fact, a study released last week by MIT, titled “The Future of Natural Gas” suggests that by decommissioning older, less efficient coal plants, the U.S. can quickly and substantially reduce the amount of carbon and other harmful pollutants from entering the atmosphere.

Natural gas also is extremely reliable and provides the essential back-up critical for renewables in electric power production – key to helping Michigan meet its renewable portfolio standard, which requires utilities to derive 10 percent of their power from renewable energy sources by 2015.

Our nation’s vast domestic supplies of natural gas—including new findings in Michigan –significantly change the energy game in the U.S. Last June, the Potential Gas Committee reported the U.S. has 35 percent more recoverable natural gas than thought before. That’s the highest resource total ever reported by the organization in its 44 years. Our nation’s abundance of shale gas also continues to be a major player in helping keep residential rates for consumers affordable.

Like Traverse City Light & Power, more and more utilities are looking to natural gas as a clean, abundant and reliable choice to meet our nation’s energy needs. Natural gas is a smart choice. It’s also the natural choice for utilities across the country – as they stand on the front lines of reducing our environmental footprint and progressing our clean-energy future.

By Matthew L. Wald of The New York Times

The electricity market is in the doldrums, but the market for new generating stations that use natural gas is going strong, industry experts say. Why? Because gas is beginning to replace coal, according to Randy H. Zwirn, president of the Siemens Power Generation Group.

On Monday, Siemens is announcing [pdf] that it has won contracts to supply five new high-efficiency gas plants to Progress Energy at two sites in North Carolina that have old coal-fired generators. It is also replacing old gas-fired plants in Florida.

The H.F. Lee Energy Complex, near Goldsboro, has three coal-fired generators that began operating in 1951, 1952 and 1962. The three coal-fired generators at the Sutton plant, near Wilmington, went into service in 1954, 1955 and 1972.

The six plants are among 11 that Progress owns in North Carolina that do not have sulfur scrubbers. The company has said it will eventually close all 11.

“I think they came to the conclusion with all the uncertainty, and the likelihood that the rules for pollutants like mercury, sulfur dioxide and nitrogen oxides will be further tightened, it’s not worth spending hundreds of millions of dollars on the back end” of an old power plant, Mr. Zwirn said. What is more, he said, in the decades that a new plant would run, there is a possibility that restrictions will be imposed on carbon dioxide emissions.

Per kilowatt-hour generated, the new gas-fired generators will reduce carbon dioxide emissions by 60 percent and nitrogen oxides by 95 percent from levels produced by their coal-fired predecessors. Nearly 100 percent of sulfur dioxides will be eliminated, and all of the mercury, Siemens said.

The company said it was also providing six gas turbine generators to Florida Power & Light, which will use them to replace generators at Riviera Beach and Cape Canaveral that can burn oil or gas. The old generators date from the 1960’s, and the new ones will produce far more electricity per cubic foot of gas burned, Siemens said, reducing emissions of carbon dioxide and gases at the same time.

For most of the past 50 years, utilities have had to decide what to build to meet the growth in load. Yet Siemens says it is building natural gas projects in places that are not expected to need any new capacity until 2018 or 2020, suggesting that many of its projects are intended to replace, not supplement, existing generators.

Many of these plants take only two years or so to build. If they are replacing an old plant that already has land zoned for industrial use and access to the grid and to cooling water, the process is relatively swift.

A few big coal plants are still under construction around the country, and Siemens builds equipment that will be used in some of them. But Mr. Zwirn said that, looking forward, “I don’t know of any negotiations we have currently going on for new coal plants.’’

“Load growth is currently not the driver for new capacity additions,’’ he said. Even in advance of potential legislation limiting emissions of carbon dioxide, he said, “I think we’re beginning to experience the beginning of a fleet restructuring here in the U.S. that’s driven by regulation.’’

By Ken Silverstein of the EnergyBiz Insider

Google is searching for answers. This time it is using its weight to find energy-related solutions and specifically in the renewable realm. To this end, it has invested nearly $39 million in two wind farms that will generate 170 megawatts of electricity in North Dakota that are owned by NextEra Energy, Inc.

Google is not just a do-gooder. It’s a ravenous consumer of electricity and it must find a way to become more efficient and cleaner. By placing its bets on green energy, it is attempting to understand how it works and to help create economies of scale so that it can be cost-effectively generated. The mere fact that the money is coming from its for-profit arm and not its philanthropic division indicates that it is serious.

“We’ve been looking at investments in renewable energy projects, like the one we just signed, that can accelerate the deployment of the latest clean energy technology while providing attractive returns to Google and more capital for developers to build additional projects,” writes Rick Needham, Google’s green business operations manager, in his blog.

In Google’s case, it operates hundreds of thousands of servers that use tons of electricity. Most of that energy comes from the nearest power plants, which are often coal-fired. As the global leader in internet technologies, the search engine says that it can do better.

Google’s quest to go green got its formal start in 2007. That’s when the company announced its strategic aim to develop electricity from renewable sources that would ultimately become cheaper than that produced from coal. The enterprise has since spent millions on research and development as well as related investments in green energy. It says that it expects positive returns from those endeavors.

The basic building blocks are already in place. It has gained the experience constructing and designing large-scale data centers. The same lessons apply when it comes to expanding the use of renewable energy, it says, noting that the primary technologies are now available. They just need investment so that they can size up.

Meantime, Google.org, the company’s non-profit division, has stakes in eSolar, which specializes in solar thermal power and which has shown the potential to produce utility-scale solar power. It also has an investment in Makani Power, which is building high-altitude wind energy technologies that try to better harness powerful breezes.

“If we meet this goal and large-scale renewable deployments are cheaper than coal, the world will have the option to meet a substantial portion of electricity needs from renewable sources and significantly reduce carbon emissions,” says Google Co-founder Larry Page. “We expect this would be a good business for us as well.”

Betting Averages

The company has set a goal of becoming carbon neutral. Most recently it joined several other high profile enterprises and environmental organizations in urging global policy makers to formally adopt such constraints. One of the key methods it has espoused is giving consumers the tools they need to see their energy consumption in real or near time. That would reduce energy usage by 15 percent, Google says.

It has therefore developed an online tool called PowerMeter that can be provided through a local utility. The online search engine’s desire is to provide critical information to users. For example, it says that if just half of all American citizens cut their energy use by 10 percent, carbon reductions would equate taking 8 million cars off the road.

To do so, Google says that state public utility commissioners must facilitate the development of intelligent utilities. That involves the replacing of 40 million older meters with digitized ones that permit utilities to communicate with their customers. Likewise, it applauds federal lawmakers for allocating $4.5 billion to those new technologies.

At the same time, it is focused on reducing dependence on coal-fired power, which supplies about 40 percent of all electric generation on a global basis. The company, which attributes man-made global warming to coal plants, says that it wants to help spark the green revolution.

“We want to add something that moves these efforts toward even cheaper technologies a bit more quickly,” says Dr. Larry Brilliant, executive director of Google.org. “Usual investment criteria may not deliver the super low-cost, clean, renewable energy soon enough to avoid the worst effects of climate change.”

To be sure, some critics say that Google is getting into areas that are outside of its core competency. And that’s not in the best interest of its shareholders, who expect the company to build a better search engine and not solve all the world’s problems. By maximizing profit, the logic is that it is creating jobs and prosperity that can far exceed anything it might try as a side venture.

Google, though, has a mission to uphold — that of a 21st Century enterprise focused on leveraging information. If arming consumers with the knowledge as to how they are using energy will encourage them to use less or demand cleaner resources, then it would fall within the company fold.

By being good citizens, they are endearing themselves to their own corporate families and to the communities where they serve. In turn, they are validating their corporate images and adding value. Others are also cognizant and notably GE that is using its “eco-imagination” campaign while the world’s largest institutional investor, CalPERS, says that its socially-minded investments are enhancing returns.

Google is not betting the farm. It’s just making investments in key technologies that most recently include two wind farms. That’s capital that the company says will help facilitate the renewable energy movement.

By Gary Lamphier of The Edmonton Journal

If we need fossil fuels, let’s burn the cleanest one

EDMONTON – If the worst oil spill in U.S. history isn’t enough to make natural gas America’s new fuel of choice, I suspect nothing will.

For years, Texas oil tycoon T. Boone Pickens, among others, has argued that natural gas offers the best solution — economically and environmentally — for meeting America’s energy needs.

It’s cheap, it’s cleaner burning than coal or oil, and with the recent development of massive new U.S. shale gas reserves, America is literally drowning in the stuff.

Now, with gooey oil slicks and tar balls threatening to devastate beaches, fisheries and marshlands from Louisiana to the Florida Panhandle, BP has just given the natural gas industry the kind of big-time promo money can’t buy.

Even before the Deepwater Horizon rig blew up and sank on April 20, killing 11 crew members and leaving inky crude gushing from the floor of the Gulf of Mexico, the case for greater use of natural gas was a no-brainer.

By using more compressed natural-gas fuel at the pumps, and by gradually switching America’s 650 coal-fired electric power plants over to natural gas, Washington could in one decisive step address an array of vexing policy issues.

It could limit foreign-oil imports (notably from unfriendly states in the Middle East); shrink its massive trade deficit — now running at nearly $470 billion US on an annualized basis; reduce the need for more of the risky, deepsea drilling ventures that set the stage for the BP oil disaster; and create jobs for at least some of the 15 million Americans who are still out of work.

The downside? Gas prices fluctuate, just like oil prices. But the abundance of new shale gas supplies would seem to mitigate against a repeat of the rapid spikes we’ve seen in recent years.

The eco crowd isn’t keen on natural gas either. Why? Because it’s a fossil fuel. That makes it evil.

The greenies believe the world must transition to renewables now, without delay. I think that’s pure fantasy. Not only would it be ludicrously expensive, it would create a whole new level of instability within an already unstable global economy.

Which brings us back to natural gas. It’s a real-world solution that can be implemented now. It’s not perfect. But then, nothing is.

“Natural gas is not a permanent or complete solution to imported oil. It is a bridge fuel to slash our oil dependence while buying us time to develop new technologies that will ultimately replace fossil transportation fuels,” argued Pickens in the so-called “Pickens Plan” he developed a couple of years ago.

“Natural gas is the critical puzzle piece that will help us to keep more of the $350 to $450 billion we spend on imported oil every year at home, where it can power our economy and pay for our investments in wind energy, a smart grid and energy efficiency,” he said.

“The Pickens Plan is a bridge to the future — a blueprint to reduce foreign oil dependence by harnessing domestic energy alternatives, and to buy us time to develop even greater new technologies.”

If anything, those words ring truer now than they did two years ago. Despite all the media hype around renewables such as solar and wind, they still generate only a tiny fraction of the world’s electrical power. The same goes for electric vehicles, which remain largely at the neophyte stage.

Like it or not, it’s clearer than ever that the world will depend on fossil fuels to power its vehicles, power plants and industrial infrastructure for at least a generation to come. Given that, it makes more sense to encourage a switch to the cleanest-burning, most plentiful fossil fuel while we’re waiting for nirvana to arrive.

Will it happen? I haven’t the foggiest idea.

But some Wall Street analysts are using the BP disaster, and the resulting curbs on new offshore drilling in the U.S., to reinforce the argument for natural gas.

“Since the spill, investor attention has turned to the (approximately) 60 per cent of remaining U.S. oil production — or 5.4 million barrels per day — that lies onshore as new regulatory risks and uncertainty plague offshore (drilling programs),” note Credit Suisse analysts Jonathan Wolff and Anish Patel, in a report this week.

“The moratorium and resulting project delays will indeed tighten forward supply balances, thereby inflating (future year) oil pricing and benefiting onshore oil-weight exploration and production companies,” they say.

“But what about those seemingly forgotten domestic gas shale producers? As the U.S. looks to reduce its dependence on foreign oil while easing the burden on the inherently higher risk deepwater Gulf of Mexico, domestic shale gas should emerge as a key solution to bolster energy security. Natural gas also offers a cleaner, lower-risk solution to bridge the gap to a broader alternative energy platform.”

T. Boone Pickens couldn’t have said it better himself.

EPA Joins Others Who Say Better Options Exist than Planned Facility in Clark County

By Scott Sloan of the Lexington Herald-Leader

In a letter last month to the U.S. Army Corps of Engineers, the federal Environmental Protection Agency raised concerns over East Kentucky Power Cooperative’s proposed coal-fired power plant in Clark County.

It’s the latest in mounting criticism that has plagued the long-discussed plant, which was effectively placed on hold earlier this year by the cooperative, though leaders say they still intend to go forward and build it after assessing the co-op’s finances.

In the letter, which was obtained and released by a number of environmental groups that have long opposed the plant, the EPA objects to the cooperative’s proposed coal technology to power the plant and noted other more environmentally friendly options including natural gas.

The EPA’s Heinz J. Mueller, chief of the National Environmental Policy Act program office, wrote that other options might cost more than the cooperative’s favored coal-fired design, but the “EPA does not believe that the cost differential justifies selection of a power plant design that would generate substantively greater emissions.”

Mueller’s comments came as part of an environmental study that is being done by the Army Corps of Engineers for the plant, which would provide power for 150,000 homes. The co-op produces power for its 16 member co-ops that in turn service more than 500,000 homes, farms and businesses throughout Central and Eastern Kentucky.

Mueller noted, too, that renewable energy sources such as wind and solar could allow the cooperative to “reduce or even eliminate the need” to build a new power plant for its electric load.

That echoes what environmental groups, including Kentuckians for the Commonwealth, the Kentucky Environmental Foundation and the Sierra Club, have preached for years. They’ve argued the cooperative, which has struggled to maintain a strong financial condition, would be better off spending money to educate customers about consuming less electricity.

“EPA is right to call out EKPC as failing to justify this expensive, unnecessary coal plant,” Lois Kleffman, a customer of EKPC distribution cooperative Jackson Energy, said in a statement. “There are cleaner, better ways to meet energy demands that won’t force EKPC to saddle its customers with a billion dollars in debt that they’ll be paying off for generations.

“EKPC should stop wasting taxpayers’ and ratepayers’ dollars and start pursuing cleaner options now.”

Cooperative spokesman Nick Comer said the proposed plant is “the most reliable, affordable option” and noted that the state Division for Air Quality has agreed it will meet federal and state air-quality standards.

He also disputed the EPA’s assertion about solar and wind power, saying it would not be reliable enough given “sunshine and wind tend to be very intermittent in this part of the U.S.”

The EPA also expressed concern that “significant portions of the information relied upon” in a draft version of the environmental impact study is outdated, “sometimes 20 years or older,” according to the letter. “For the environmental impacts of the proposal to be adequately evaluated, this information must be updated.”

The cooperative effectively delayed the building of the plant earlier this year when it asked the state Public Service Commission to allow it to withdraw its request for approval of private financing for the project. While East Kentucky Power would have obtained the money from banks and other lenders, such action requires the approval of the three-person commission, which regulates utilities in Kentucky.

The cooperative’s filing stated only that it thinks financial prudence requires that it reassess its immediate need for financing. Comer said later “it was a business decision” and that the cooperative intends to re-file pending the outcome of the reassessment.

Opponents have seized on the cooperative’s financial condition as a reason to stop the costly plant, which at one point was to cost $553 million but now could be as much as $900 million.

The cooperative’s position deteriorated so much that it failed in 2006 to meet one of the financial ratios required by its loan covenants. It lost money during 2004 and 2005 and narrowly had a profit in 2006. It has since applied for and received approval for two rate increases and recently filed for another increase, which would raise the average customer’s bill by $5 to $6 a month.