fact checks from Holcomb hearings
February 5, 2008
Folks have had a few questions about facts that have come up in the hearings. (One is – does Maril ever spell-check? Answer: you try typing with your laptop balanced on your knees for two hours in a really uncomfortable chair.)
That said. What has come up – and some of this is taken from the Q&A sessions as well:
Q: Are transmission lines for wind dependent on building new transmission lines for coal?
A: At the SPP meeting that CEP attended a week or two ago (link is to our blog entry) that was not the impression we received. The SPP presentation materials are all linked within that entry so you can look at them if you like, but SPP’s basic message: wind development in OK, TX, and KS is driving current transmission line planning.
SPP’s priorities are to send the wind power east and southeast, to Chicago and Atlanta markets. They are negotiating seams agreements (agreements with other RTOs) to make this happen, because SPP can’t absorb all the wind itself. The western interconnect with Colorado and the West was their lowest priority market to connect to. Also, since then, the SPP board approved a postage stamp method of cost recovery for the area, so transmission development is expected to open up even more in the area.
Q: How far off is emissions regulation – soon or far?
A: Depends who you ask. If you ask banks JP Morgan Chase, Morgan Stanley, and Citigroup – emissions regulation is coming soon enough to start reconsidering financing for coal power plants. If you ask the Bush administration, which is currently involved in good faith negotiations with the international community about a carbon regulation treaty to be implemented by 2010- well. Yeah. Also, according to Pew Climate: “As of mid-July 2007, lawmakers had introduced more than 125 bills, resolutions, and amendments specifically addressing global climate change and greenhouse gas (GHG) emissions.” Presidential candidate John McCain also has his name on one of the most major pieces of that legislation.
So – you decide.
Q: Who will use the electricity from the Holcomb plants?
A: Of Holcomb’s expansion of 1400 MW of electricity, Kansans will only use 15 percent. The rest is planned to be sold out of state.
Q: Is Colorado a market for Kansas coal-fired electricity?
A: Depends who you ask. According to most recent observers, Colorado is taking huge strides toward a low-carbon economy. It has established one of the best Renewable Portfolio Standards (RPS) and net metering statutes in the country, and has attracted the wind giant Vestas to build a manufacturing facility that will provide 400 jobs. The Colorado RPS was passed under a Republican majority in the legislature and a Republican governor. The Democrats now hold both a legislative majority as well as the Governor’s seat, and in 2007 the legislature considered or passed more than a dozen clean energy bills (Governor’s Energy Office).
By the time the Holcomb plant would be completed, it’s hard to say what Colorado’s stance on coal-fired electricity would be. Additionally, a coal-fired power plant in Pueblo, CO, will be completed in 2009. Tri-State (the folks who are contracting with Sunflower to finance and manage the Holcomb plant expansion) is also investigating the possibility of developing another coal-fired power plant in Eastern CO.
Q: What standards do coal plants already have to meet?
A: Lots. Carbon dioxide emissions will be the next in a long list of regulations that the coal-burning utilities face. In the words of the Sunflower official who testified at the hearing today: “We don’t like another regulation, but we are accustomed to it, they come every decade and affect our operations.” (He was speaking in response to a question from Representative Mast, who asked why Sunflower was asking for new regulations of greenhouse gases instead of going after KDHE Secretary Bremby through the courts.) A 2007 Supreme Court decision has already declared that the EPA can regulate greenhouse gases as air pollutants, and federal legislation is expected to soon follow.
Coal-fired power plants emit a host of dangerous pollutants, including arsenic, chromium, mercury, lead, hydrochloric acid, and hydrogen fluoride. Sulfur dioxide and particulate matter are two other air pollutants emitted by coal-fired power plants that are known to cause increased rates of asthma and respiratory problems.
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More fact checks tomorrow, and more live blogging, too – although there is a giant snowstorm predicted. However, we do have four wheel drive.
— Maril Hazlett
Want to know more about climate and energy in the Midwest? Check out www.climateandenergy.org.
Financing coal plants – more news
February 5, 2008
The Wall St Journal story on banks’ reluctance to finance construction of coal plants has spread to NPR. Reuters ran another snippet on the rising price in coal forecasts. The NPR story went deeper into the issue, including a discussion of the “carbon principles” that these banks – Citigroup, Morgan Stanley, and JP Morgan Chase – want utilities to respect. The Principles were negotiated as a compromise over a nine month period, and included talks with major environmental groups like NRDC.
From the Morgan Stanley press release, it sounds as if these Principles are exactly a response to the federal climate of regulatory uncertainty re carbon dioxide. Quotable: “The need for these Principles is driven by the risks faced by the power industry as utilities, independent producers, regulators, lenders and investors deal with the uncertainties around regional and national climate change policy.”
The Principles are:
Energy efficiency. An effective way to limit CO2 emissions is to not produce them. The signatory financial institutions will encourage clients to invest in cost-effective demand reduction, taking into consideration the value of avoided CO2 emissions. We will also encourage regulatory and legislative changes that increase efficiency in electricity consumption including the removal of barriers to investment in cost-effective demand reduction. The institutions will consider demand reduction caused by increased energy efficiency (or other means) as part of the Enhanced Diligence Process and assess its impact on proposed financings of certain new fossil fuel generation.
Renewable and low carbon distributed energy technologies. Renewable energy and low carbon distributed energy technologies hold considerable promise for meeting the electricity needs of the US while also leveraging American technology and creating jobs. We will encourage clients to invest in cost-effective renewables and distributed technologies, taking into consideration the value of avoided CO2 emissions. We will also encourage legislative and regulatory changes that remove barriers to, and promote such investments (including related investments in infrastructure and equipment needed to support the connection of renewable sources to the system). We will consider production increases from renewable and low carbon generation as part of the Enhanced Diligence process and assess their impact on proposed financings of certain new fossil fuel generation.
Conventional and advanced generation. In addition to cost effective energy efficiency, renewables and low carbon distributed generation, investments in conventional or advanced generating facilities will be needed to supply reliable electric power to the US market. This may include power from natural gas, coal and nuclear technologies. Due to evolving climate policy, investing in CO2-emitting fossil fuel generation entails uncertain financial, regulatory and certain environmental liability risks. It is the purpose of the Enhanced Diligence process to assess and reflect these risks in the financing considerations for certain fossil fuel generation. We will encourage regulatory and legislative changes that facilitate carbon capture and storage (CCS) to further reduce CO2 emissions from the electric sector.
My impression – policy does a whole lot of talking, but money does a whole lot of the walking.
— Maril Hazlett
Want to know more about climate and energy in the Midwest? Check out www.climateandenergy.org.
DAY 2, in the House – CEP blogging live from the Holcomb/ energy bill (HB 2711) hearing
February 5, 2008
(This post will be updated throughout the morning. Hit your refresh button occasionally to check for new info.)
Hi all. Maril here. Eileen to my right, Nancy to my left (or somewhere). Let’s boogie. If you want to refer the text of the bill as we go along, click here. If you want to refer to Gov. Sebelius’s response to the legislation, click here. If you want to see our record of yesterday’s testimony, click here.
The proceedings begin at 9:00 straight up.
9:04- um. no they don’t.
9:05
Chairman Holmes opens the meeting. Talks a little bit about the handouts for today.
Earnie Lehman, Midwest Energy
Point: these plants are necessary to provide cheap coal electricity to western KS. Major lack of new baseload alternatives in KS. Holcomb essential to meeting these needs for all western KS. In 2005 residential customers in western KS paid 34.2% more than eastern. Commercial paid more than 42%. Etc. Midwest also has only six customers per mile of line. Their customers do practice energy efficiency and use less than KCPL/ Westar customers. Their income per household is also comparatively less v. KCPL/ Westar service areas, so they have less money to pay for energy. They are also comparatively older overall.
Midwest is trying to find energy to serve its customers. By end of 2008 Midwest Energy will have 25 MW of wind energy, which will be 16% retail of its peak load. They aren’t big enough to get other power – cheap coal power – on their own. Sunflower is the only one who will provide them baseload power, so far. Thay are looking at coal-fired in Arkansas, OK, and NE, but they want to stay in state.
Re gas: worried about electric generation from natural gas. Worried about this trend. Not sound policy, since natural gas prices are higher in the summer than they used to be.
Mac McLenna, Tri-State
Tri-state has 44 members. Their mission in life is to serve customers with low-priced electricity, and they need new baseload resources. They got involved in Holcomb because Sunflower responded to the RFP, in effect recruiting TriState to come to KS. Tr-sState co-owns many facilities with electric cooperative.
Why KS? (1) Time. Previously Sunflower got permit in KS, and economics were well defined, Holcomb had good workforce, rails, etc., good pre-existing facility – and, they thought, there was regulatory certainty in Kansas. Now it’s a mess after Bremby’s decision.
“Wall St Shows Skepticism Over Coal” – from the Wall St. Journal
February 5, 2008
Before we leap into the crazy bonkers live blogging portion of today, here’s an important article from the venerable Wall Street Journal – which, bless its heart, probably no one is can credibly dismiss as a liberal rag. About 20 very cool folks forwarded me this clipping, and number one on that list is my Dad.
Reprinted in its entirety below:
Wall Street Shows Skepticism Over Coal: Banks Push Utilities To Plan for Impact Of Emissions Caps
By JEFFREY BALL
February 4, 2008; Page A6
Three of Wall Street’s biggest investment banks are set to announce today that they are imposing new environmental standards that will make it harder for companies to get financing to build coal-fired power plants in the U.S.Citigroup Inc., J.P. Morgan Chase & Co. and Morgan Stanley say they have concluded that the U.S. government will cap greenhouse-gas emissions from power plants sometime in the next few years. The banks will require utilities seeking financing for plants before then to prove the plants will be economically viable even under potentially stringent federal caps on carbon dioxide, the main man-made greenhouse gas.
The move shows Wall Street is the latest U.S. business sector that sees some kind of government emissions-capping as inevitable. But it shows disagreement about what to do.
It also marks the latest obstacle to coal, which provides about half of U.S. electricity but emits large amounts of CO2. Citing costs, the U.S. government last week pulled support for a project called FutureGen that many utilities saw as a step toward burning coal cleanly.
The standards, which would apply to all but the smallest plants, result from nine months of negotiations among the three banks and some of the biggest U.S. utilities and environmental groups. The standards could hurt coal-dependent utilities that haven’t begun factoring a future price of CO2 emissions into their planning. But they could help utilities that have.
