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 Ken Silverstein, Editor-in-Chief of EnergyBiz Insider

As President Obama rounds the corner and heads into the second year of his administration, he is discovering what nearly all of his predecessors have — that voters become disenchanted during the midterm and tend to elect more of the opposition.

With that comes the challenge of how to enact what he and his supporters have determined to be the country’s greatest priorities. To that end, Obama has not forsaken the issues to which he got elected. Instead, he has chosen to extend a hand to Republicans and Independents and offer them a chance to influence the course of history.

In his State of the Union Speech, the president continues to endorse the creation of a clean energy economy built on carbon constraints and the expansion of a modern infrastructure that involves new generation and the intelligent utility. But he is also becoming increasingly vocal in his support for new nuclear power plants as well as the development of clean coal technologies and more offshore oil and gas drilling.

“I know there have been questions about whether we can afford such changes in a tough economy; and I know that there are those who disagree with the overwhelming scientific evidence on climate change,” the president intoned. “But even if you doubt the evidence, providing incentives for energy efficiency and clean energy are the right thing to do for our future — because the nation that leads the clean energy economy will be the nation that leads the global economy. And America must be that nation.”

While the president’s more accommodating tone is the result of the loss of his super-majority in the upper chamber that allowed him to avoid filibusters, it is also an extension of what he had said on the campaign trial. Recognizing that the president was first elected as a U.S. senator from Illinois, Obama had been inherently in tune with the coal and nuclear industries there. His earlier trepidation, however, was that his friends on the left were generally not in synch with these causes.

While running for office he became a latent supporter of more oil and gas drilling rights in the Gulf of Mexico — a change-of-heart that occurred at the time of ever-soaring prices and added pressures to find new, domestic energy resources.

By putting nuclear, advanced coal and extra drilling rights atop the agenda, the president has now made his energy bill more appealing to fence-sitting Democrats and moderate Republicans. But with each action comes an equal and opposite one. And now he must worry whether the liberal wing of his party will stay with him.

“We continue to believe that passing cap and trade legislation this year will be a very steep uphill battle; however we’ll be watching closely as alternative ‘hybrid’ approaches for pricing carbon are discussed,” says Whitney Stanco, energy policy analyst for Concept Capital’s Washington Research Group.

Practical Path

Beyond the political realities, the president also faces the practical ones. Today’s energy mix is no secret: The preponderance comes from coal, nuclear and natural gas. The renewables sector, hydro power included, accounts for around 8 percent. Diversification is a must, given that energy producers will be spread thin as developing nations demand ever-increasing fuels to run their economies.

What then? The president’s supporters are heartened by his firm stance to usher in the New Energy Economy whereby more of the nation’s resources are going to research and to build more wind and solar plants. But this movement has gotten ensnared not just in Washington politics but also in mainstream economics. And while the president says that climate change is a national priority, the odds of passing a bill this year are now reduced.

That would give the advantage to natural gas, at least as a bridge until the country can cost-effectively produce and use more sustainable fuels. It’s particularly true given that the older coal plants are nearing retirement and as the demand for energy will eventually resume. This, then, would require easing the drilling restrictions in areas now forbidden.

“Obama’s corporate colors have been showing for some time but now they are on full display,” says Linda Gunter, with Beyond Nuclear a national environmental advocacy group. “How he can see oil, coal and nuclear as compatible with climate change is breathtaking.”

The president’s task of holding together a coalition that can pass a comprehensive energy bill is noticeably difficult. More than likely, he will have to pare down his aspirations and focus on those elements that have broad backing.

As such, the funding and tax breaks provided to green energy will continue. But more concessions will be made to the fossil fuel industries, giving increasing leeway to coal producers that invest in best-available technologies and to gas shale developers who have access to rich deposits around the country.

While recession has chipped away at energy demand, it is still expected to rise at 1.5 percent a year. The ultimate objective is to meet that challenge with the cleanest possible fuel sources. Getting there is a national goal but it will require compromise.

“We can and we must forge a practical path that will address the country’s immediate economic needs while laying the foundation for a clean, cost-effective, low-carbon energy future,” says Eileen Claussen, president of the Pew Center on Global Climate Change.

That process presents opportunity: to jumpstart the American economy by advancing modern energy technologies. That’s the foundation of the president’s message and one that has not waned during this midterm transition.

By David Roberts
Grist.org

The Climate and Energy Project of The Land Institute (CEP) is actually taking the long view on energy policy.  They are not concerned with only one utility service area, one fuel source, or one economic sector.  They are analyzing best practices regarding energy policy from around the country.  Here’s an illustration from one of their recent papers:

The energy policy GPACE supports would continue to move Kansas toward currently accepted goals for electricity production by 2020, as illustrated by CEP.

• Maximize energy efficiency statewide – per already accepted goals – for both supply and demand side systems.
• Maximize Kansas wind energy production and integration – per already accepted goals – and based upon production not just nameplate capacity.
• Develop Kansas natural gas resources to firm wind and meet peak demand.
• Maintain existing coal-fired capacity, and back down outdated facilities as they reach the end of their operational lifespan with renewable energy production, native natural gas, and energy efficiency.
• No new investment in increasingly costly coal plants until national regulatory and economic picture is clear, and so called “clean coal” technologies are proven or abandoned.
• Maintain existing nuclear capacity, but no costly new nuclear plants until national regulatory and economic picture is clear.

The CEP illustration reflects the goals already embraced by Kansas utilities, not a shift in policy – unless that course is further hijacked by efforts like the proposed new coal plants.

GPACE believes there is much to gain for Kansas if we aggressively develop our native renewable energy resources and energy efficiency in the coming decade.  Once we have maximized those options, and once the national policy regarding climate and carbon is more certain, the questions about using coal and nuclear energy to produce electricity can and must be addressed.

Download a more detailed PDF of this document here.