Climate and energy

Reprinted in full from the Salina Journal:

By DUANE SCHRAG

The telling item in Rep. Carl Holmes’ PowerPoint presentation wasn’t prominent.

It was just a simple statement on the sixth slide of the chairman of the Kansas Electric Transmission Authority’s presentation at the Kansas Wind and Renewable Energy Conference two months ago.

Among the forces that created KETA was the desire to increase the state’s “ability to import and export fossil-fueled generation.”

That was telling, because beneath the rhetoric about wind turbines and coal-fired power plants, carbon dioxide and global warming — beneath that frequently impassioned debate is the oft-overlooked role power lines play in determining what ultimately happens.

That might seem too obvious to mention. Everyone knows that a generating plant, whether fueled by nuclear fission or coal or the wind, is useless without lines to deliver that electricity to customers.

Nor is it surprising that because no two generating plants are identical, the cost of power can vary considerably. The cheapest power is in highest demand.

But what is less widely understood is that because the grid is imperfect, utilities frequently cannot supply customers with the cheapest power available. When existing plants are underutilized, new ones are built sooner.

Ever since the state of Kansas blocked the construction of two, new 700 megawatt coal-fired power plants in Holcomb a year ago, proponents have insisted that Kansas “needs” more power. Or, more particularly, that Kansas needs more baseload power.

But rarely addressed is the question of why that is: How much power does Kansas have, how much is potentially available both in the state and in the region, and is all the available power being used now.

And what does the grid have to do with all that?

Rebuilding an aging line

Sometime in 2009, construction crews will start rebuilding the aging 115,000 volt line — it was built in 1931 — that runs from McPherson to Salina, and adding one rated at 345,000 volts. The upgrade will increase almost tenfold the lines’ ability to deliver power almost.

“That line is no longer reliable,” said Doug Sturbenz, chief operating officer at Westar Energy. “The life on those is normally 40 years. The whole purpose of this is to improve the reliability and lower our cost.”

But how does an upgrade like that lower costs to consumers?

The cost of generating electricity varies somewhat according to the age and condition of the plant, but varies dramatically according to the fuel. In its 2007 annual report, Westar reported the fuel cost of generating one kilowatt-hour of electricity: 0.45 cents worth of nuclear fuel, 1.39 cents worth of coal, and 6.77 cents worth of natural gas.

(Wind, as always, remains free.)

Although Westar is allowed to pass fuel costs on to consumers, it still tries to use its cheapest power first. Not surprisingly, the nuclear goes first. In 2007, Wolf Creek ran flat out, virtually nonstop: it generated 96 percent of its theoretical maximum, the equivalent of a one-hour break every day.

Westar’s coal plants were busy, but they weren’t operated nearly as intensively — they generated about 76 percent of their rated capacity. (By contrast, Sunflower’s coal-fired plant at Holcomb generated more than 93 percent of its capacity.)

The rest had to come from either Westar’s own natural gas-fired generation, or from outside sources.

Westar says that because transmission lines between the cheapest source and customers are filled, it routinely has to use more expensive generation instead.

“On that end of our system, during the summer those lines get loaded up nearly every day,” Sturbenz said.

How much can be saved?

But just how much that costs customers — or, to put it differently, how much savings Westar will see if the bottleneck is eliminated — isn’t entirely clear.

The Southwest Power Pool manages the grid in Kansas, Oklahoma and portions of five surrounding states. It has authority to order upgrades to the grid if it deems they are necessary to maintain reliability, and it signs off on improvements intended to improve efficiency (typically referred to as economic improvements).

The power pool’s rule-of-thumb for economic upgrades is that the savings over the first 10 years must equal or exceed the improvement costs. In an engineering report released in February 2006 that examined congestion in the power pool’s footprint, the it calculated that upgrading the Wichita-to-Hutchinson-to-Salina line would cost $68 million, and produce savings of $5.4 million a year. Over 10 years, when future value discounts are applied, the savings are barely half the project cost.

One year later, the power pool came out with another study, this showing that over 10 years, the project’s savings would be slightly higher, 63 percent of the cost.

A few day later Westar filed its application for a siting permit for the transmission line upgrade, and included testimony from its own consultant who estimated the savings to Westar customers over 10 years would be $87 million; other testimony in the case put the cost of the project at $98 million.

When asked why the project was approved if the benefits during the first 10 years don’t exceed the costs, Westar officials suggested that isn’t an appropriate measure of the project’s worth.

“The life of a transmission line is much longer than 10 years,” said Kelly Harrison, vice president of transmission, in an e-mail. “Typically a line will last 50 to 70 years, so the 10-year analysis is conservative.”

It was long overdue

Even though Southwest Power Pool’s studies showed the project didn’t meet the 10-year cost/benefit test, the project was frequently described as being long overdue.

KETA, in its 2007 annual report, described the project as being “sorely needed.”

Yet the direct benefits to Westar customers — the savings realized because grid improvements would allow Westar to supply the cheapest power available — would be incrementally small. According to Westar’s own consultant, the direct savings accrued over 10 years would be $27 million. To put that into perspective: last year Westar sold about $1,200 million worth of electricity to its retail customers, and another $380 million to wholesale customers.

Most of the savings — $60 million over 10 years — would be realized because the new lines make it easier to import and export power.

All of which raises the question: if the project provides one of the state’s most “sorely needed” transmission upgrades but lowers the cost of electricity to Westar customers by just a fraction of a percent, how exactly is congestion measured?

What yardstick is used to define the degree of congestion, and what is the current number for Westar customers? For Kansas? For the power pool’s region?

Utility officials and regulators are tight-lipped about the figures. The Kansas Corporation Commission, which regulates utilities, could not provide any numbers. Nor would Westar. Nor would Southwest Power Pool, which acts as the master power traffic cop and has by far the most comprehensive view of how much power is delivered, which sections are saturated, which are not.

Whom will it serve?

What seems clear is that most of the new transmission being proposed is not to serve Kansas customers, now or in the immediate future.

Take the project that has variously been called the X-Plan, or the V-Plan. There are two competing proposals to build a 765,000 volt line that would run from Wichita to Spearville. ITC Great Plains, which is planning to build a new high-voltage line from Spearville to Axtell, Neb., is one of the players; Westar, which wants to partner with Electric Transmission America, also wants to build part or all of the line.

How much power can a 765,000 volt line carry?

“It’s almost impossible to overload the line,” said Westar’s Harrison.

Westar couldn’t do it alone. If all of the company’s generation — 6,200 megawatts — were fired up at the same time, run full-bore, and the power dumped over a 765,000 volt line, it would be about three-fourths full.

One of these lines, if operated at capacity for a year, could carry 73 million megawatt-hours of electricity, more power than the entire states of Kansas and Nebraska used in 2007.

If one of these extra-high voltage lines seems like overkill for western Kansas, which has been losing population, consider the level of interest in wind farms: so far in 2008 alone, in Kansas alone, developers have asked the power pool to evaluate a total of 7,700 MW of wind-powered generation.

Within the power pool’s footprint, the total in 2008 is 28,000 MW. That brings the total for 2007 and 2008 under study in the power pool to 41,000 MW, which is nearly the total amount of power consumed on the hottest summer days.

It would take several extra-high voltage lines to carry even a small fraction of that.

All of this potential power comes on top of an existing surplus. According to the power pool’s annual report on its market, demand on its grid last year peaked on Aug. 14, at 42,600 megawatts. Existing capacity totals 56,700 megawatts.

Exporting the wind

That’s a lot of surplus, the report notes.

“The initial examination of the amount of generation reveals a resource margin that would appear to allow for a significant increase in load without requiring construction of new generation to maintain reliability,” says the report, which was released in April 2008. “However, the economics of electricity generation, not just growth in demand, drives interest in constructing new generation … Among the (31,142 MW) active generation interconnection requests, 76.5 percent of the capacity is for wind projects, while coal accounts for 8.7 percent and natural gas accounts for the remaining 14.8 percent.”

If, as Rep. Holmes, R-Liberal, said in his presentation, the ability to import and export “fossil-fueled” generation was one of the forces that led to the creation of KETA, it would appear that the export of wind-fueled generation has become the dominant force.