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President Begrudgingly Acknowledges Coal

In a move that set social media abuzz late last week, President Obama changed his campaign’s website to include a reference to clean coal technology. According to a report from the Washington Times, “Under the heading ‘President’ Obama’s approach to energy independence,’ an entire section on the campaign website was altered from ‘fuel efficiency’ to ‘clean coal.’ The sections now appear as: oil, natural gas, clean coal, biofuels, wind, solar and nuclear.”

Earlier last week, the president’s language on energy issues came under fire from a number of members of Congress, including Rep. Ed Whitfield (KY) and Sen. Rob Portman (OH).

“This administration has been openly in the business of putting coal out of business,” Whitfield said. “And for the president to run around talking about an ‘all of the above’ energy policy, even on his campaign website, and to not mention coal as an important energy sector is unbelievable to me.”

Portman added that the president is “out of touch [with Ohio’s] needs.”

While an administration spokesperson countered that the president has consistently supported clean coal technology, recent EPA regulations such as Utility MACT, the Cross-State Air Pollution Rule (CSAPR), and greenhouse gas restrictions tell a different story. Such regulations have forced the closure of a number of coal-fired power plants and threaten to shutter dozens more, causing many to wonder when the president will deliver on his campaign promise to truly support an all-of-the-above approach to American energy. [Watch this video that chronicles the difference between the president’s campaign talk in 2008 and his administration’s current stance on coal-fired generation.]

“Adding a section to his campaign website is a feeble step toward putting all of America’s energy sources on the table, but it is certainly welcome,” said PACE Executive Director Lance Brown. “Unfortunately, words don’t keep America’s lights on and factories running.”

According to a recent report by ALEC, The Utility MACT rule alone could require retrofits at 753 power generating units, forcing the early retirement of up to 15 gigawatts of generation capacity at a cost of up to $170 billion to energy customers and the loss of more than one million U.S. jobs.

TVA’s New Watts Bar Nuclear Unit Moves Ahead

On April 26^th, the Board of Directors of the Tennessee Valley Authority approved the continuation of construction of a second unit at the power provider’s Watts Bar Nuclear Plant. The project, originally approved by the Board in 2007, has experienced construction challenges that will delay its completion from a target date of 2013 until December of 2015. When complete, the new nuclear unit will put as much as 1,100 MW on the grid.

TVA officials told PACE that it became evident about nine months ago that the initial 2007 estimates on cost and time requirements for Watts Bar Unit 2 needed recalibrating. Not only were logistical construction issues disrupting the installment of the new nuclear unit [the latest unit is being installed next to an operating nuclear reactor], but initial cost estimates were also proving unreliable. In response, TVA leadership called on two independent groups to provide new estimates for the completion of Watts Bar, resulting in additional estimated costs somewhere between $1.5 billion and $2 billion. The new total cost of Watts Bar Unit 2 is expected to be about $4.2 billion.

TVA Chairman William Sansom put it bluntly in a written statement, “No one likes to miss the mark and that is what happened at Watts Bar Unit 2. We now know the original estimates in 2007 were incomplete and the execution was inadequate. I know; I was there.”

While construction delays and cost overruns are never welcome, there are some reasons to feel good about the developments at Watts Bar. First, the new unit will be among the first in the nation to come online since the Fukushima incident in Japan. The current delays mean that engineers and regulators have additional time to incorporate lessons from that disaster and ensure that best practices in nuclear unit construction are being utilized. Second, the delays will present no danger to TVA’s power supply, as demand for electricity has remained relatively stable in the current economic condition. The 1,100 MW provided by Watts Bar Unit 2 will be needed more in coming years than they are now. Finally, as we understand it, the cost overruns are likely to have little to no impact on power rates due to long-term financing of the additional costs.

Even with the additional costs, the truth is that Watts Bar Unit 2 will remain one of the most highly productive, least expensive power options for TVA planners when it comes online. That’s because nuclear plants, like coal and other fossil technology plants, are capable of running nearly all of the time and generating close to their nameplate capacity with little exception. Rain or shine. Day and night. It’s the kind of steady, on-demand power production that other competing energy sources can’t provide at any price. And as soon as the fuel is loaded at Watts Bar Unit 2, Bellefonte Nuclear Plant will begin its approved completion, eventually adding another 1,260 MW of nameplate capacity.

On May 5^th, Japan shut down the last of its fifty nuclear reactors. Germany is following the same path. PACE believes that taking energy options off of the table makes our nation less able to pursue the future it wants. For that reason, we support the TVA Board’s decision in the case of Watts Bar Unit 2 and look forward to the project’s completion.

PACE Blasts EPA Politics in Houston Chronicle

The Houston Chronicle yesterday published an opinion piece from PACE entitled “Time for the EPA to Stop Putting Politics Before Facts.” An excerpt from that piece appears below.

It’s not too often that a government agency compares its own tactics to that of the ancient Romans – especially when it comes to the practice of crucifying several residents of a village in order to gain control over its entire population. Yet that is exactly how Environmental Protection Agency Regional Administrator Al Armendariz described his agency’s strategy of targeting oil and gas producers.

Armendariz, who resigned Monday, was the head of the Dallas-based region 6 offices, which is in charge of EPA oversight in Texas and surrounding states. In a discussion two years ago with colleagues that recently surfaced, Armendariz said, “The Romans used to conquer little villages in the Mediterranean. They’d go into a little Turkish town somewhere, they’d find the first five guys they saw and they would crucify them. And then you know that town was really easy to manage for the next few years.”

Armendariz’s rhetoric is not only shocking, it clearly validates what the EPA’s critics have been saying all along about the agency’s attitude toward energy companies.

In fact, in 2009 Armendariz told his colleagues to “find people who are not compliant with the law and you hit them as hard as you can and you make examples out of them.”

It’s time for the agency to stop invoking strategies of the Roman Empire and start working on policies that are appropriate for the 21st century.

Click here to read the full piece in the Houston Chronicle.

What Are Your Six Words For EPA?

As part of its effort to create dialogue with the American people on environmental issues, the U.S. Environmental Protection Agency (EPA) recently launched a project in conjunction with SMITH Magazine called Six Words for the Planet. The project, officially housed at this site, invites all citizens of the world to submit their own six-word essay describing their feelings about Earth.

“Healthier families, cleaner communities, stronger America,” writes EPA Administrator Lisa Jackson in her own six-word offering.

Catalyzing conversation about environmental topics is clearly a good thing for which EPA should be commended, but most people have concerns that go beyond the environment. Many have legitimate concerns about the national economy, our struggle to create and sustain quality jobs, and the affordability of energy for businesses and families. Those are concerns about which EPA needs to hear, especially since the agency is actively pursuing regulations and policies that have a tremendous impact on those issues.

That’s why PACE encourages you to write your own six-word essay to EPA. To do so, simply reply to this email or send a separate email to lance@energyfairness.org. We will publish our favorite responses on the PACE website.

Our own six-word response: “EPA should listen to power consumers.”

Nevada Ratepayers Left Twisting in the Wind

A recent report from Nevada provides a cautionary tale for communities and states that hope to use ratepayer dollars to find experimental energy projects.

NV Energy is a public utility that generates and distributes power for customers in northern and southern Nevada, including greater Las Vegas. As part of the company’s efforts in the renewable energy sector, NV Energy initiated a program called Wind Generations that provides ratepayer-funded rebates to install wind turbines across the state. Across Nevada, 150 such turbines have been installed under the rebate program created by a 2007 act of the state legislature. Most of the rebates for the program are subsidized by customers in northern and rural Nevada who are customers of NV Energy’s sister company. To put it mildly, the $46 million program has fallen short of expectations for some communities.

In March, the Reno Gazette-Journal reported that one turbine that cost the City of Reno $21,000 just to install ended up saving a whopping $4 on the city’s energy bill. In total, Reno officials bought $416,000 worth of turbines that have resulted in a paltry $2,800 in energy savings.

This result was not without warning. Last May, a managing member of Reno’s Clean Energy Center, Rich Hamilton, told the Public Utilities Commission of Nevada that the structure of NV Energy’s program “could allow unscrupulous developers to sell turbines to unsuspecting customers who will not generate electricity from an installed turbine because there is no wind to power the turbine.” Turns out that Hamilton was right, with ratepayers left holding the bag. There were other problems, too.

“These manufacturers, when they gave us the turbines, they said they were designed to be mounted on a parapet at this height, and that’s what we did,” said Jason Geddes, who runs the city of Reno’s renewable energy program. “But when we started getting actual wind flow patterns, we realized their claims were wrong.”

As part of its overall renewable energy effort, Reno is spending $20 million on projects such as solar and wind installations and energy efficiency efforts. In fact, the National Resource Defense Council in 2010 named Reno one of twenty-two “Smarter Cities” in the country when it comes to renewable energy, even praising the city’s installation of wind turbines on top of City Hall as part of its analysis. Spending $21,000 to save $4 doesn’t sound too smart to us.

To their credit, regulatory officials in Nevada are now working to improve the rebate program, hoping to focus ratepayer dollars on wind-rich areas and away from urban centers like Reno. In the meantime, hundreds of thousands of dollars in ratepayer funds have been squandered on projects that were doomed to fail. Nevada appears to be learning from its failures. The question is will others learn from Nevada?

The $4 Hamster

After returning recently from a birthday party sleepover, my pre-teen daughter raved about the two new pets her friend owned: dwarf hamsters. They were so small and cuddly, she reasoned, leading inexorably to the dreaded question “Can we buy one?” The answer was, of course, no. After emotional tactics failed, she tried an economic approach. “But they are only four dollars,” she replied. I was still not convinced.

The problem with hamsters is this. It takes more than buying a hamster to own a hamster. At a minimum, you need a cage, a wheel inside that cage, and ways for the animal to eat and drink, not to mention the daily maintenance of owning a living, breathing pet. A dwarf hamster might cost four dollars, but owning one costs a lot more.

It is puzzling why the same logic hasn’t dawned on solar power companies who are crying foul over a failed bill in Georgia. If the legislation had passed, solar power providers would have been able to install and finance solar PV systems for electricity customers, selling the power for fixed rates over the life of the contract. That arrangement, however, runs afoul of the state’s 1973 Territorial Act.

A recent article in the Atlanta Journal-Constitution does a good job explaining the politics of what is happening in Georgia, but glosses over the fundamental point that providing power to the public takes more than simply creating an energy source. It requires backup power to serve solar customers when the sun isn’t shining, expensive transmission systems that tie the grid together, and a host of other infrastructure that doesn’t change when a few hundred customers decide to ‘go green.’ Bottom line: you can’t just buy the hamster.

It’s no secret that major power providers didn’t like the proposal. Why would they? As a spokesman for Georgia Power explained, “So our revenues go down, and our fixed costs remain the same.” Consider, too, that almost all utilities have renewable energy initiatives that make financial sense on their terms and that distribute costs equitably among their customers. It’s easy to see why utilities large and small would oppose the bill.

The better question is ‘Why shouldn’t electricity customers like the proposal?’ The answer is simple. The rest of us, the ones who don’t choose to finance $30,000 for solar panels, pay more for the fixed costs of our utility. As power customers of a regulated utility, the high cost of maintaining a system of generation and transmission is built into our power rates. The money comes from somewhere. In the case of Hawaii, the proliferation of solar meant as much as $10 more per month for customers who couldn’t afford to install solar.

There’s nothing wrong with wanting to use solar power, just like there is nothing wrong with wanting a dwarf hamster (or two in my daughter’s case). But let’s not kid ourselves. Beyond the warm and fuzzy feeling that both provide is a toll that someone has to pay. In other words, get a hamster if you want. Just don’t ask me to buy the cage.

PACE in National Journal: Time to Listen to Americans

This week, the National Journal asked its group of energy and environment experts a seminal question about energy politics: “Is President Obama’s effort in the last several weeks to tout his administration’s commitment to energy production and to streamline energy infrastructure all talk–or is it action, too?” As a response, PACE Executive Director Lance Brown offered the following piece. [View the response online here]

It is no novelty that politicians often employ promising rhetoric that fails to deliver. In some sense, we have come to expect our presidents to disregard major election initiatives and goals once they inhabit the Oval Office. President Obama, though, at least on energy issues, has been a man of action, showing his commitment to revolutionizing American energy through subsidy programs, executive orders, and EPA regulations. The problem, though, is that might be the bad news.

While President Obama seems to say all of the right things – increasing domestic energy production and pursuing cleaner air – he hasn’t always done a good job of listening to Americans. The public says they want less reliance on foreign oil, and the administration talks about alternative fuels rather than securing the flow of oil from Canada into the U.S. Now, under election year pressure, the administration alters its trajectory to at least partially support the project. It clearly will take more than words to stabilize gas prices, if that is possible at all.

But is the President listening to the public on electricity policy, the proverbial elephant in the room of American energy? The President has listened to Americans say consistently that they support clean air initiatives, interpreting that support as a mandate to engage the EPA in total warfare against the fossil fuels industry. But who doesn’t support clean air? And do those polled understand that major emissions like NOx and SO2 have decreased more than 65% in the past two decades, while electricity generation has increased by half? Has the president considered whether Americans support diversity of energy resources, as well as power affordability and grid reliability? Most Americans do.

The administration has clearly chosen a “more than words” approach to the electricity sector, issuing a flurry of regulations such as Utility MACT and CSAPR that make it more difficult to use coal, our nation’s most abundant energy resource. Just this week, the administration announced that it is proceeding with its greenhouse gas rule for new coal-fired power plants. This proposed regulation essentially signals the end of new coal-fired generation plants in the U.S., with the exception of plants using carbon capture technology. The regulation represents a high-water mark for EPA’s regulatory overreach, potentially affecting the long-term stability of American energy production and having ripple effects across the industrial sector.

Likewise, Utility MACT is another regulation that the administration should amend significantly. Much like the new greenhouse gas rule, Utility MACT threatens the nation’s core energy infrastructure and thus the economy. As Steve Miller, the President and CEO of the American Coalition for Clean Coal Electricity, noted in a recent statement, “The EPA’s heavy-handed regulations are forcing coal plants across the country to close, which will result in job losses, higher electricity prices and a less reliable electric grid. In many communities, shuttering these plants will also result in fewer local tax dollars, hurting schools and other public services.”

If the president is listening on these issues, it isn’t to the right people. Many of the administration’s actions have run counter to the goals of FERC (the body that was established to monitor problems with reliability), not to mention economists and state leadership. Just last month, 221 members of the House asked the Obama administration to halt its new greenhouse gas regulation. Why? Because the Obama administration’s regulatory actions are making America’s power sector weaker, more costly, and less robust.

Leaf through the myriad regulations released by the EPA in the past three years and you will realize that American businesses and families are dealing with enough words. What they really want is a direction that makes sense, that protects them from higher energy prices and uses the resources we have to keep our nation strong and great. The good news is that they can have all of that, if the president will only allow them to have it.

PACE in National Journal: The Energy Policy Debate We Should Have

Last week, the National Journal asked its group of energy and environment experts to size up Senator Jeff Bingaman’s plan for a Clean Energy Standard (CES). As a response, PACE Executive Director Lance Brown offered the following piece. To view the response from PACE and others online, click here.

In terms of moving toward an American energy future that emphasizes reliability and practicality, Senator Jeff Bingaman’s introduction of a new CES bill would seem to be a step in the right direction. While the specifics of the proposal are sure to change, a broad standard that includes a wider range of energy technologies, as opposed to earlier, more restrictive versions of renewable portfolio standards, provides significantly less sticker shock to the American electricity consumer.

The problem is a debate on clean energy, as opposed to a debate on renewable energy, is one that should have been had in earnest two years ago. Instead, in an effort to push politically popular technologies such as solar and wind, the congressional energy debate seemed to overlook technologies with much greater practical importance for America’s long-term energy future. This includes emission-free nuclear power, a technology made commercially viable by our nation that provides a key piece to the energy puzzle; fossil fuel technologies that have made coal-fired power production exponentially cleaner in the past twenty years, with the possibility through carbon capture of making even greater gains; and hydropower, an often overlooked technology that is capable of adding significant megawatts to the grid with little to no environmental impact.

The truth is that no American energy future exists without contributions from some combination of these sources. To keep pace with energy demand while maintaining the reliability and price that consumers deserve, the answer can’t simply be ‘all of the above’; it must be ‘more of the above.’

Today, without a CES, the first major development in American nuclear power is taking place in east Georgia with the construction of two units at Plant Vogtle. Soon, the Tennessee Valley Authority will commence completion of its long-mothballed Bellefonte Nuclear Plant in north Alabama. Without legislation incentivizing or demanding it, our nation might have taken its first steps toward a nuclear renaissance. Meanwhile, environmental controls have drastically reduced major emissions from our most abundant energy resource, coal, with major emissions down more than 65% from twenty years ago. Carbon capture technology, in only its very early stages, could reduce those figures far more.

Without a CES, efforts are being made across the country to develop new hydropower technologies. PACE recently visited with Free Flow Power, a firm pioneering underwater hydropower technology for use in the Mississippi River. Because of its energy source, this project promises clean power with reliability greater than other renewables such as wind and solar. In other words, the marketplace is actively developing solutions to tomorrow’s energy landscape, without the hands of Congress guiding the way.

Aside from refocusing the debate on more practical solutions, a CES is superior to earlier proposals such as RPS in another important way: it creates fewer regional disparities in energy resources. Earlier versions of portfolio mandates accounted poorly for regional energy resources, creating clear winners and losers depending on geography. At the least, a well-designed CES would be broad enough to allow multiple solutions to the same problem, rather than trying to turn the rest of the U.S. into California.

If the debate generated by a CES is to be an honest one, it must be a factual one. It must be a debate that acknowledges that American energy has become remarkably cleaner in the past twenty years; that the marketplace, not government mandates, are driving today’s ingenuity in the energy sector; that consumer cost and grid reliability are not of less concern than environmental goals; and that no sensible energy policy moves us forward by leaving nuclear and fossil fuels behind.

Counting the Cost of Georgia’s Solar Bill

The Georgia Legislature is currently considering Senate Bill 459, a piece of legislation dealing with solar power’s introduction to the grid. The following is a letter submitted by PACE to select media in Georgia.

While scripture admonishes us to “count the cost” before we undertake a large project, the same is true when considering a piece of legislation. In the case of Senate Bill 459, a piece of legislation dealing with solar power, the true cost of the bill’s consequences could end up hurting most electricity customers in Georgia.

Today, Georgians are free to install solar and wind power capacity for their own use at their discretion. For those who can afford them, such “off-the-grid” installations can reduce power bills without disrupting the operation of the power grid that serves all of us. In other words, under current law, the decisions of some when it comes to renewable energy don’t affect the rest of us.

The proposed law changes that by allowing private developers of renewable energy to provide renewable energy, primarily solar power, to customers of their choosing. These new installations would be much larger than a simple residential rooftop solar array. And financed by a private third-party developer, their solar energy offerings would offer many a way to use solar power without the high capital cost (many thousands of dollars in most cases) of buying and installing solar panels themselves. Sounds good, right?

But let’s remember Luke 14:28, which asks, “For which of you, intending to build a tower, sits not down first, and counts the cost, whether he have sufficient to finish it?” Or in this case, are lawmakers considering who will actually pay for the proposal? Are they counting the cost to electricity customers?

The fatal flaw of the proposal is that it requires regulated power providers to basically treat the new renewable installations as their own, tying them into the grid, installing the transmission lines they need, and accounting for all of the consequences for when the sun doesn’t shine. Who pays for all of these added costs? All power customers will, meaning that Georgians unable or unwilling to pay the cost for solar will be coughing up more on their power bill for those who do. Doesn’t sound so good anymore, does it?

We’ve seen a similar situation already in the United States where subsidies have had unintended consequences. In Hawaii, a select group of power customers have saved themselves about $7.4 million in electricity costs by installing solar panels. While the savings was certainly good for them, the millions of dollars in lost revenue to their regulated utility would have been used to pay for a number of fixed costs. To make up for the shortfall, Hawaiian Electric is now being forced to raise its rates between half-a-cent and 1.7 cents per kilowatt/hour. That’s about $10 per month per customer on the high end.

You see, no electricity customer lives on an island, even if you do live in Hawaii. The same is true in Georgia. Even customers who buy solar energy remain connected to the grid, taking advantage of services and infrastructure for which they won’t fully pay. In other words, those who can’t afford or don’t want solar power will pick up the slack.

Tripling Hawaii’s residential solar capacity sounded like a good idea, but it was too good to be true. Leaders in that state obviously didn’t count the cost. Georgia lawmakers should avoid making the same mistake with this proposed legislation. Very few voters will be happy paying higher power bills.

Budget Good Opportunity for Debate

After much anticipation, President Obama last week unveiled his 2013 budget proposal. Among other line items in the $3.8 trillion plan, the president recommended $27.2 billion in spending on energy initiatives, $2.27 billion of which would fund the Department of Energy’s Office of Energy Efficiency and Renewable Energy. This is almost 10% of the total energy budget.

The federal budgetary process presents a rare opportunity for the President and his administration to craft smart energy policy that is in the best interest of power consumers. But does the 2013 budget proposal do that? The answer, in our opinion, is both yes and no.

First, let’s give the president credit where it is due. The 2013 budget supports advanced manufacturing in the U.S. with $290 million for research and development that will help create more efficient industrial processes and materials. Clearly, a renaissance in American manufacturing will be at the center of our national economic recovery. The budget also provides $5 billion to extend the so-called 48c tax credit that spurs technology development in areas such as smart grid technology, energy storage technology, CO2 capture and sequestration, and energy conservation. These are important pieces to building our American future.

Often overlooked in the energy conversation, using electricity more wisely is perhaps the most important step we can make toward becoming more energy secure. That’s why PACE is pleased to see an 80% increase in dollars aimed at programs to promote energy efficiency in commercial buildings and industries. Empowering homeowners to use energy more wisely is also part of the energy equation, and the president’s budget helps make that happen.

It is also important that we enforce the environmental laws we do have, as opposed to creating new and costly layers of regulation. PACE has argued, for example, that nearly all of the so-called benefits calculated by EPA for its Utility MACT rule are actually the product of existing air rules and are not related to mercury reduction at all. That’s why we are pleased to see that states will receive a 10% hike in funding for enforcement of federal environmental rules. By enforcing the rules on the books, states can continue to achieve the sharp declines in emissions we have witnessed over the past two decades.

Now for the bad news. Sadly, in the wake of continued deficits and lingering unemployment, the president plans to continue subsidizing the wind energy industry at a cost of 2.2¢ per kilowatt-hour of electricity. The president also continues to fund a plan with the Department of Interior to build more renewable energy projects on public lands, with a stated goal of 11,000 gigawatts of capacity by the end of 2013. Both of these spending initiatives, in our opinion, continue to invest public dollars in energy sources that are neither reliable nor affordable, rather than allow those technologies to compete on their own merit. Both wind and solar energy are capable of offering much to America’s energy future, but funding those projects with private capital, rather than public subsidy, is a safeguard that will help ensure that those projects are financially viable ventures and not political boondoggles.

The president’s budget also includes increased funding for efforts to reduce greenhouse gas emissions. Likely to be part of this strategy is an effort by EPA to regulate greenhouse gases from the energy sector, an initiative supported legally by a 2007 Supreme Court ruling in Massachusetts v EPA. This means that the EPA, for the first time in its history, could begin regulating carbon dioxide as a harmful pollutant. Groups across the nation, including the Georgia Tea Party, have argued that this effort exceeds the purview of EPA and poses great economic risk by raising electricity rates and endangering the reliability of U.S. power.

While the president’s budget is far from perfect, we believe that it provides a platform for robust debate about our national energy priorities. Will we, for example, choose to cultivate market conditions in which the best energy sources compete to prove their worth to consumers? Or will we predetermine the winners and losers of tomorrow’s energy future through aggressive subsidies for only some and heavy regulation for others? These are questions that deserve debate and beg for answers. Let’s hope we get both soon.

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