Commentary: How Wisconsin regulators ‘tax’ renewable energy

Michael Vickerman's commentary in Midwest Energy News on the recent changes in WI renewable energy. Find the original post here.

Commentary: How Wisconsin regulators ‘tax’ renewable energy

RENEW Wisconsin's Michael Vickerman

Starting next January, the price of purchasing renewable energy voluntarily through monthly utility bills will spike to all-time highs, thanks to recent decisions rendered by the Public Service Commission of Wisconsin (PSCW) on two popular “green pricing” programs.

The thousands of Madison Gas & Electric (MGE) customers participating in the utility’s Green Power Tomorrow program will see their premiums jump from 2.5 cents/kWh to 4 cents/kWh. That’s an increase of 60 percent. To translate this into dollars and cents, an average MGE customer consuming 500 kWh of electricity per month and subscribing at the 100 percent level will pay $90 more in 2013 for the same amount of renewable kWh sold this year.

Residential customers of Milwaukee-based We Energies (WE) will see an even larger percentage increase next year. In that utility’s rate case, the PSCW jacked up the premium paid by Energy for Tomorrow subscribers by nearly 73 percent, from 1.39 cents to 2.4 cents/kWh. Energy for Tomorrow has more than 20,000 subscribers.

Back in 1999, the year both programs were launched, MGE and WE customers paid an extra 3.33 cents and 2.04 cents/kWh, respectively, for the renewable energy they sponsored. Come January 1st, MGE and WE will likely share the dubious distinction of being the only utilities in the country offering renewable energy at a higher rate than they did in the 1990’s. So much for progress.

Adding insult to injury, renewable program subscribers will be subject to general rate increases approved by the PSCW this November. The utilities sought higher rates to recover the costs of retrofitting older coal-fired power stations with modern pollution controls. The fact that the renewable generators leveraged by program participants will never need pollution control retrofits is wholly disregarded in determining the size of the premium.

This is unquestionably a subsidy that flows from program participants to all ratepayers.

How did this happen?
Since 1999, renewable generation costs have tumbled, while productivity has improved.
A frustrated program subscriber might well ask: If base utility rates are going up, and the cost of renewable electricity is declining, why are premiums going up instead of down?

The short answer is that wholesale electricity prices have sagged in recent years, owing to a combination of unsustainably low natural gas prices, stagnant demand, and rapid expansion of wind power displacing higher-cost generation. In contrast, the price of renewable energy procured under long-term contracts held steady. When prices dropped in the wholesale market beginning in late 2008, the gap between system energy and renewable sources widened.

Though accurate, the above explanation is deeply unsatisfying, because the wholesale “market” is concerned about one thing only: the marginal cost of producing electricity into the grid. Nothing else matters, including the expenditures approved by the PSCW to reduce emissions from older generators. Even though retail customers wind up footing the bill for those upgrades, the wholesale market does not treat pollution control retrofits as marginal costs. Not one cent paid by ratepayers for these expenditures is reflected in the prices that renewable generators compete against.

The net effect of this disconnect is to artificially suppress the price of electricity from older and dirtier generators relative to newer and cleaner electricity producers. Real markets factor in the cost of upgrading and replacing capital equipment that manufacture the product bought by customers. What we have instead is an artificial contrivance that sacrifices long-term considerations like clean air, resource diversity and regulatory risk for the short-term reward of low prices.

Indeed, it would be difficult to design a more punitive market structure for renewables than the one we have at present.

‘Swimming up a waterfall’
Pricing renewable energy against a market operating in real time also undermines a valuable attribute of renewable energy, namely its inherent price stability. In this environment, the only way a customer can directly benefit from a fixed-price energy source like solar is to self-generate at his or her premises to reduce consumption of grid-supplied electricity.

In setting the premium size, the PSCW relied on pricing data at a time when the regional wholesale market was near its cyclical bottom. Electricity prices are now edging upward as forward prices of natural gas have rebounded from historic lows earlier this year. It’s a safe bet that wholesale electricity prices will continue to increase in 2013.

This sets up the very real possibility that WE and MGE will collect more revenue than is necessary to cover the cost spread between system energy and the renewable energy supplies servicing their customers. Unfortunately, the next time the base premium for each utility can be adjusted is January 1, 2015.

For at least a century now, fossil fuels have been the default resource option for most utilities. Against this institutional bias, switching to renewable energy is akin to swimming upstream. But given how far backward the PSCW bent to accommodate utilities’ continued reliance on coal and natural gas, quite a few renewable energy subscribers may balk at the prospect of swimming up a waterfall.

In fairness to MGE and WE, the price hikes approved by the PSCW went well beyond the incremental increases proposed by the two utilities. That’s because the agency relies solely on the wholesale “market” metric described above that filters out all societal benefits from the equation. To the agency, renewables are another source of electrons that deserve no special consideration. And, in reaching its decision, the PSCW disregarded the potential impact that abrupt price hikes might have on customer participation.

Programs outliving their usefulness?
A significant loss in subscribership would be a regrettable outcome if the programs were still viable vehicles for leveraging new sources of renewable energy. Sadly, that is no longer the case.

Earlier this decade, WE and MGE pulled the plug on a popular feature of their programs, specifically the special solar energy buyback rates that were funded with participant dollars. This innovation, which spurred the installation of hundreds of solar electric systems in their territories, succeeded in elevating MGE and WE’s stature while achieving the aims of their participating customers. However, when the utilities eliminated their solar incentives, they also removed the principal rationale for subscribing to their programs.

It seems quite clear that the current crop of voluntary renewable energy programs have outlived their usefulness. They are stagnating under a market structure that distorts and amplifies their true costs as well as a regulatory climate that greatly discounts their benefits to ratepayers. What were once dynamic vehicles for increasing supplies of renewable energy are now little more than feel-good marketing exercises running on autopilot. The value proposition to customers just isn’t there anymore.

There is nothing out there to prevent utilities from revitalizing their green pricing programs and making them useful once again. Such an undertaking, however, would require them to do something they haven’t done before: present an affirmative case for adding more renewables into their energy mix.

To do that effectively, utilities would need to recognize that the fossil energy path leads to a dead-end and that renewables ought to be the default resource option going forward. From that starting point, designing a program in which modest customer premiums actually result in additional supplies of renewable energy should be a simple and straightforward exercise.

It’s the very least a responsible utility should do to reduce the impact of generating electricity on the one planet we are privileged to call home.

Michael Vickerman is program and policy director of RENEW Wisconsin, a sustainable energy advocacy organization. RENEW Wisconsin is a member of RE-AMP, which also publishes Midwest Energy News.

Find the original article post here.

Read more »

India's Blackout Lesson: Coal Failed, Small Solar = Big Results

From a story by Justin Guay, Sierra Club International Program:

Of course they still have to face the problems they have inherited from trying to copy/paste a centralized grid from the West. So what can they do to solve peak problems with the grid they already have in place? Deploy lots and lots of distributed solar and efficiency.

That's because, unlike coal, solar for the most part is available when you need it - during peak hours. Which is why it's great to see States like Gujarat taking the lead in roof top solar programs with the support of the IFC. And efficiency makes the peaks smaller so you need less power in the first place.

The irony here of course is that distributed generation has always been ignored as trivial compared to the real need for a large scale 'modern grid.' That’s because policymakers and commentators lack the imagination to understand the fact that when aggregated, small can be very, very big.

Take the hidden truth behind India's modern grid (as my colleague Jigar Shah points out): it is actually already a distributed system that is largely powered by filthy, costly diesel gen sets. That’s because power outages are so frequent that businesses and wealthy individuals have been forced to pay for this backup generation to ensure power. This is a tremendous opportunity for companies seeking targeted diesel replacement strategies to save people and companies tremendous amounts of money, while providing reliable power.

Read more »

Only 20, not 200, years of coal; we have to move "so fast" to get to 100% renewables

Leslie Glustrom is the featured speaker at RENEW's Energy Policy Summit, January 13, Madison. Read the report that she mentions about 11 minutes into the interview.

Register and get details about the Summit at the Summit Web page.

Read more »

Coal Critic Coming to Madison to Speak on Effective Renewable Energy Advocacy, January 13, 2012

For immediate release
December 7, 2011

More information
Michael Vickerman
608.255.4044
mvickerman@renewwisconsin.org

Leslie Glustrom, research director of Colorado-based Clean Energy Action, and an unwavering critic of utility reliance on coal for electricity generation, will be the featured speaker at RENEW Wisconsin’s Energy Policy Summit.

The Summit will be held on Friday, January 13, 2012, at the University of Wisconsin-Extension’s Pyle Center located on the UW-Madison campus. Summit attendees will spend the day discussing and selecting renewable energy strategies that make sense in the current political environment in Wisconsin. More information on the Summit can be found on the RENEW Wisconsin website at http://www.renewwisconsin.org.

As research director, Glustrom authored in 2009 an extensively referenced report on U.S. coal supplies titled, “Coal—Cheap and Abundant—Or Is It? Why Americans Should Stop Assuming that the US has a 200-Year Supply of Coal,” available for free at http://www.cleanenergyaction.org.

Since 2009, Glustrom has traveled to numerous states helping them to understand the likely constraints on their coal supplies.
Glustrom’s on-going research illuminates a future in which coal prices will likely continue to escalate, driven by a combination of less accessible coal supplies, increasing demand from Asian countries, and rising diesel fuel costs for hauling coal to distant markets like Wisconsin.

Clean Energy Action is spearheading a campaign to shut down Colorado’s coal-fired power plants and replace them with locally generated renewable electricity.

“Leslie’s experiences with Clean Energy Action can help Wisconsin renewable energy advocates formulate effective strategies for 2012 and beyond,” said Michael Vickerman, executive director of RENEW Wisconsin, a statewide sustainable energy advocacy organization headquartered in Madison.

“Even though Colorado is a coal-producing state, it has adopted some of the most aggressive policies in the country for advancing renewable energy,” said Vickerman. “Colorado’s commitment to clean energy is driving its economy at a time when its coal output is diminishing. For example, Vestas, the world’s largest manufacturer of wind turbines with four plants employing 1,700 people in Colorado, supplied 90 turbines this year to Wisconsin’s largest wind project, the Glacier Hills Wind Park in Columbia County.”

“Leslie will inspire us to reverse the retreat from renewables and retake the initiative going forward,” Vickerman said.

In Boulder, Glustrom was part of the team that led the successful 2010 and 2011 ballot initiatives allowing Boulder to move ahead with plans to municipalize and break away from the long term commitment to coal plants made by their incumbent utility, Xcel Energy.

-- END --

Read more »

Sierra Club issues notice of intent to sue We Energies for coal ash spill

A news release from the Sierra Club:

Madison, Wisconsin - Today, the Sierra Club issued a Notice of Intent to sue We Energies for the October 31 flood of coal ash into Lake Michigan when an old landfill located on the bluff collapsed at a construction site at the company’s Oak Creek coal plant.

“We Energies must be held responsible for the toxic mess at the bottom of Lake Michigan,” explained Jennifer Feyerherm of Sierra Club’s Beyond Coal Campaign. “We Energies has essentially turned Lake Michigan, a national treasure that supplies drinking water to over 10 million people, into a coal ash dump. We Energies filled a ravine next to Lake Michigan with coal ash, and it is that ash that now lies at the bottom of the lake. This was a predicted and preventable disaster.”

A biologist from the Southeastern Wisconsin Planning Commission raised concerns about the structural stability of the bluff when We Energies was planning to develop the site. As construction proceeded, the bluff collapsed, covering the shoreline with an estimated 25,000 cubic yards of coal ash and soil and dumping 2,500 cubic yards of coal ash and soil into the lake.

The Notice of Intent to sue alleges that the pollutants in the coal ash at the bottom of Lake Michigan “pose an imminent and substantial endangerment to human health and the environment.”

Coal ash is the toxic byproduct of burning coal. Heavy metals such as arsenic, mercury, chromium, and molybdenum remain in the ash after coal is burned. These toxic metals are linked to many health effects including cancer, birth defects, kidney damage, and nerve damage. In fact, studies have likened the risk of living near a coal ash site to smoking a pack of cigarettes each day. These toxic metals also put our fragile Great Lakes ecosystem at risk, threatening aquatic habitat and building up in the food chain.

“There are more than 2,000 toxic coal ash sites in the U.S. polluting our air and water, and now there is a new one on the bottom of Lake Michigan,” noted Melissa Warner, a volunteer leader with the Sierra Club that lives south of the coal ash dump. “My family’s drinking water comes from the lake. We Energies must clean up its mess and prevent any disaster like this from happening again.”

To date, there has been little information available to the local community about where the coal ash in the lake is going, what it will take to clean it up, and when the cleanup might be completed. Today’s Notice of Intent to sue is the first step in legal action against We Energies to force the company to clean up the toxic coal ash.

Ever since the TVA coal ash disaster in 2008, the Environmental Protection Agency has been trying to enact national protections to stop this kind of disastrous spill from happening.

“Communities here in Wisconsin and across the nation remain at risk and unprotected,” concluded Feyerherm. “The burning of coal is a public health menace. This spill is yet another illustration that as long as we are still mining and burning coal, our families and communities are paying the price.”

More posts on the spill and utilities.

Read more »

We Energies' coal ash spill dumps toxins into Lake Michigan

A news release issued by Clean Wisconsin:

November 1, 2011

Contact:
Katie Nekola
Clean Wisconsin
608.212.8751(cell)

MILWAUKEE — Monday’s bluff collapse at We Energies’ Oak Creek coal plant sent a substantial amount of coal ash into Lake Michigan. Coal ash is a dangerous byproduct of burning coal to make electricity, yet has potentially toxic health effects if it enters our groundwater.

“We Energies said in an update on its website today that coal ash is ‘not a hazardous material,’” says Katie Nekola, attorney for Clean Wisconsin, “but that is far from true. The fact is, coal ash contains chemicals and compounds that are dangerous to human health. This disaster proves that we need better regulation of coal ash and that the public deserves the right to know what’s in their drinking water.”

Coal ash contains 24 known pollutants, some of which, according to the National Resource Council, are toxic even in minuscule quantities. Those toxins include: arsenic, boron, cadmium, chromium, hexavalent chromium, lead, mercury, and dioxins, along with other chemicals and compounds.

These toxins can cause serious health problems including cancers, central nervous system damage, and blood and kidney disorders. Coal ash dump ponds and landfills are often unlined, and arsenic, lead, mercury and cadmium can leach into local drinking water. One Environmental Protection Agency (EPA) study found that residents living near unlined ash ponds run a risk of cancer from arsenic contamination that is 2,000 times greater than the EPA's threshold for acceptable risk. At Oak Creek, the coal ash came from a decades-old, closed coal ash landfill. This spill comes at a time when Congress is considering limiting EPA's authority to regulate coal ash as a hazardous waste.

“This landslide poured toxic materials directly into Lake Michigan, which 10 million people rely on for drinking water,” said Nekola. “Area residents should insist that We Energies and state regulators ensure the safety of their water supplies as soon as possible.”

###

Read more »

Bluff collapse at power plant sends dirt, coal ash into Lake Michigan

From an article by Meg Jones and Don Behm in the Milwaukee Journal Sentinel:

Oak Creek - A large section of bluff collapsed Monday next to the We Energies Oak Creek Power Plant, sending dirt, coal ash and mud cascading into the shoreline next to Lake Michigan and dumping a pickup truck, dredging equipment, soil and other debris into the lake.

There were no injuries, and the incident did not affect power output from the plant.

When the section of bluff collapsed and slid from a terraced area at the top of a hill down to the lake, Oak Creek Acting Fire Chief Tom Rosandich said, it left behind a debris field that stretched 120 yards long and 50 to 80 yards wide at the bottom.

Aerial images show a trailer and storage units holding construction equipment tumbled like Tonka toy trucks and were swept along with the falling bluff in a river of dirt that ended in the water.

"This is definitely a freak accident," U.S. Coast Guard Lt. j.g. Brian Dykenssaid.

As a company hired by We Energies began cleanup in Lake Michigan, the utility confirmed that coal ash was part of the debris.

"Based on our land use records it is probable that some of the material that washed into the lake is coal ash," We Energies spokesman Barry McNulty said. "We believe that was something that was used to fill the ravine area in that site during the 1950s. That's a practice that was discontinued several decades ago."

The Environmental Protection Agency is in the process of developing stricter regulations of coal ash following a 2008 Tennessee coal ash pond washout that created a devastating environmental disaster.

Read more »

Wind project holds down utility's costs by$12 million, coal pushes them higher

From an article by Tom Content in the Milwaukee Journal Sentinel:

We Energies customers could see a small increase in electric bills in 2012 linked to the higher price of coal and other power plant fuels expected next year, the company said Wednesday.

The state's largest utility filed a plan with the state Public Service Commission that said costs linked to power plant fuels are projected to rise by about $50 million in 2012.

The utility wants to delay an increase in non-fuel rates until 2013. Whenever that increase hits customers' bills, it would result in a hike of about 6%, the utility projects.

Under the utility's plan, rates would rise in 2012 only because of power plant fuel prices, and the bottom line for customers would be an overall 2012 increase of less than 1%.

Residential customers would see a 0.7% increase, adding 77 cents a month for a typical residential customer now paying $104.90 a month for electricity, utility spokesman Brian Manthey said. Business customers would see increases of about 1% to 1.1%. . . .

The higher price of coal is projected to lead to $28 million in higher costs next year, including the price of the fuel itself and cost to deliver it by train to Wisconsin. Other increases include $10 million for power it buys from the Point Beach nuclear plant and about $8 million for natural gas.

Offsetting these increases somewhat is the state's newest and largest wind farm, set to open late this year. Generation from the Glacier Hills Wind Park would decrease 2012 fuel costs by more than $12 million, We Energies said.

Read more »

Valley plant could switch to gas

From an article by Tom Content in the Milwaukee Journal Sentinel:

We Energies plans to take initial steps toward converting its Milwaukee coal-fired power plant to burn natural gas, the utility's chairman told shareholders Thursday.

The Milwaukee utility has been under pressure to address air pollution from the power plant located south of downtown in the Menomonee River Valley.

To comply with new federal pollution rules, the utility has been studying whether to convert the plant to natural gas or to add environmental controls that could allow it to continue burning coal.

"We believe we will need to convert the plant from coal to natural gas," Chairman and Chief Executive Gale Klappa told shareholders at Wisconsin Energy Corp.'s annual meeting at Concordia University Wisconsin in Mequon.

We Energies will file an application with the state Public Service Commission in the second half of this year for an initial project that would be needed for that conversion to take place.

"That first step would be to put in a larger natural gas pipeline that could . . . supply natural gas to that facility," Klappa said. "That will be a significant project. It will require PSC approval, it will require City of Milwaukee approval, and it will require us to update a 1949 natural gas line that runs through the area."

Klappa did not announce a timeline for converting the plant from coal to gas. Utility spokesman Brian Manthey said the utility needs to ensure it has the approval and the ability to supply gas to the power plant before it makes a final decision.

"The (Cleaner Valley) coalition encourages We Energies to move as quickly as possible," said the Rev. Willie Brisco, president of Milwaukee Inner City Congregations Allied for Hope. "People's lives are impacted by Milwaukee's dirty air each and every day."

Built in the late 1960s, the Valley plant is the utility's only major coal-fired plant in Wisconsin that lacks modern pollution controls. A much smaller coal plant in Wauwatosa provides steam to businesses at the Milwaukee County Grounds.

Environmental groups and a consortium of other groups in the Milwaukee area formed the Cleaner Valley Coalition to urge the utility to clean up the plant. In addition, the Sierra Club and Clean Wisconsin challenged an air pollution permit for Valley, saying it doesn't go far enough to protect public health.

"We're very happy to hear that they're taking a step in the right direction," said Emily Miota of the Sierra Club. "The biggest concern now is that they move quickly to make this happen."

Read more »

National energy policy needed to reduce reliance on fossil fuels

From an editorial in the Milwaukee Journal Sentinel:

This Earth Day falls a year and a day after one of the worst environmental disasters to hit the United States. The explosion of BP's Deepwater Horizon oil rig took the lives of 11 rig workers and released 206 million gallons of oil into the Gulf of Mexico.

What have we done with the lessons learned in that year? Not so much.

Still missing: a comprehensive energy policy that would significantly reduce the consumption of fossil fuels and place more reliance on alternative or renewable fuels.

There has been some improvement. Cleanup efforts continue, but most of the mess has been removed or has disappeared through evaporation or microbes. The disaster was extensive, but the damage turned out not to be quite as devastating as some expected (although not all of the victims have received full compensation and some effects will certainly linger).

Beaches are open again. Commercial and recreational fishing is back in action. Deep water drilling is probably safer than it was before the explosion; the federal government's inspection program is tougher and more independent.

But critics say this all could happen again - that, in fact, another disaster is inevitable. That's the risk of drilling in ocean waters. The feds recently approved the 10th deepwater drilling permit since the disaster.

Some of that is necessary in the short term. But in the long term, relying on fossil fuels is unsustainable.

Read more »

How coal stacks up against wind

Madison Peak Oil Group listserve subscribers are debating coal vs. wind. To join the debate, drop an email to madisonpeakoil-subscribe@yahoogroups.com.

Read more »

Environmental groups challenge Valley plant's air pollution permit

From an article by Tom Content in the Milwaukee Journal Sentinel:

A new air pollution permit issued by state regulators for the coal-fired power plant near downtown Milwaukee doesn't go far enough to protect public health, environmental groups said Thursday as they filed challenges to the permit.

We Energies' Valley plant doesn't have modern controls to reduce emissions linked to soot, smog and respiratory health problems.

The state Department of Natural Resources recently issued a permit for the plant to keep operating without installing more controls.

Sierra Club and Clean Wisconsin, backed by the Cleaner Valley Coalition, filed petitions with the U.S. Environmental Protection Agency and the DNR seeking changes to the permit. The DNR filing seeks a contested case hearing before an administrative law judge.

In light of new EPA standards, the Milwaukee utility is continuing to evaluate whether to add controls to the plant or switch the plant from burning coal to burning natural gas.

A decision on changes for the Valley plant, which provides steam to heat and cool downtown Milwaukee buildings, is expected this year.

"It's great that they're deciding. We need a decision now because Milwaukee air quality is bad now. And we're hoping they'll make the right decision and move away from coal because it's just going to get more expensive to continue to burn coal," said Jennifer Feyerherm of the Sierra Club's Beyond Coal campaign. "There are so many people living by that plant, and coal is too dirty to burn amid that many people."

Read more »

We Energies ponders Valley plant's future

From an article by Thomas Content in the Milwaukeee Journal Sentinel:

Stricter EPA pollution rules leading to changes

We Energies managers expect to decide this year how the utility will clean up the Menomonee Valley power plant to comply with new environmental rules.

The Milwaukee power company is studying whether to add pollution controls at the downtown plant or to convert the plant to burn natural gas.

A coalition of health and environmental groups plans a petition drive calling on the company to make changes more rapidly.

The Valley plant has come under fire because it is the only large utility plant the company operates in Wisconsin that hasn't been outfitted with state-of-the-art pollution scrubbers or shut down.

As part of a federal court settlement resolving alleged violations of the Clean Air Act, the state's largest utility has added pollution controls to power plants in Oak Creek and Pleasant Prairie, and converted its oldest coal plant in Port Washington to burn natural gas.

The Cleaner Valley Coalition has expanded its coalition with the addition of the Milwaukee Inner-City Congregations Allied for Hope and the Wisconsin Interfaith Power & Light coalition, among others. Other members include the Black Health Coalition of Wisconsin, the Milwaukee Latino Health Coalition, Midwest Environmental Advocates, Sierra Club and Clean Wisconsin.

"We are demanding We Energies to clean up its mess and the Environmental Protection Agency to hold We Energies accountable to meet modern and protective health standards," said Virginia Zerpa, leader of the Cleaner Valley Coalition.

Read more »

Colorado regulators vote for Xcel to shut 6 coal-fired plants

From an article by Mark Jaffe in the Denver Post:

The Colorado Public Utilities Commission voted Monday to shut six aging Front Range coal-fired power units and allow Xcel Energy to replace them with a new $530 million gas-fired plant.

Pollution controls, with a $340 million price tag, also were approved for the coal-burning Pawnee plant near Brush and the Hayden plant.

The commission still must decide what to do with the largest coal-burning plant in the Denver area — the Cherokee 4 unit.

"Cherokee 4 is the largest source of air pollution in the Denver area, and it needs to be shut," said John Nielson, energy-program director for the environmental-policy group Western Resource Advocates.

The closures, which will occur between 2011 and 2017, are part of Xcel's proposal to meet the state Clean Air- Clean Jobs Act, which seeks to cut nitrogen-oxide pollution by 70 to 80 percent.

Xcel would receive accelerated cost recovery for the investments in a comprehensive plan to cut pollution under the law.

The state is out of compliance with federal clean-air health standards and has to submit a plan next year to the Environmental Protection Agency showing steps to cut pollution.

Read more »

Wisconsin Cannot Afford to Ignore Rising Coal Prices

For immediate release
December 1, 2010

More information
RENEW Wisconsin
Michael Vickerman
608.255.4044
mvickerman@renewwisconsin.org

Wisconsin Cannot Afford to Ignore Rising Coal Prices

Long-considered an inexpensive and reliable fuel source, coal has become subject to market and regulatory pressures that threaten to make it an expensive and risky way to generate electricity, according to national news reports and pertinent utility filings with the Wisconsin Public Service Commission (PSC).

“The expectation of continued increases in coal prices reinforces the value of relying on Wisconsin’s own energy resources. If there’s an effort to find savings for utility customers, the logical move would be to shutter antiquated coal plants before they become more of a liability,” said Michael Vickerman, Executive Director of RENEW Wisconsin, a statewide, nonprofit renewable energy advocacy organization.

A key driver behind coal’s rising cost is China, which has moved from an exporter to an importer of coal. The New York Times (NYT) reported last week that Chinese coal imports will hit all-time highs for November and December of this year. Some of this coal is coming from Wyoming’s Powder River Basin, the coal field that also supplies many Wisconsin power plants.¹

In the New York Times story, an executive from Peabody Energy, the world’s largest private coal company, predicted that his company will send larger and larger quantities of coal to China in the coming years.

Further adding to the upward price pressure on coal is the rising cost of diesel fuel. The PSC has estimated that half of the delivered cost of coal in Wisconsin is attributable to rail shipment, that is highly sensitive to the price of diesel fuel, which sells for 38 cents more per gallon than it did a year ago, according to the U.S. Energy Information Administration.² Tom Whipple, editor of the Peak Oil Review, expects diesel fuel supplies to tighten in 2011 as a consequence of flat production volumes and increasing demand from Asia.³ This phenomenon could affect Wisconsin electric utility rates as early as January 2011, according to Vickerman.

We Energies’ coal costs have escalated by $57 million, of which transportation costs account for almost $33 million, according to the utility’s most recent rate filing with the PSC. On top of that, We Energies expects to pay an additional $8 million in oil surcharge costs.4

Click to continue

Read more »

Pollution is harmful; cleanup is overdue

From a column by Francisco Enriquez in the Milwaukee Journal Sentinel:

A cloud of soot engulfed Milwaukee recently, with particle pollution levels so high that the Department of Natural Resources issued four days of advisories and watches that warned children, older adults and people with asthma, bronchitis and heart or lung disease to pay close attention to their symptoms. On days when air pollution levels are high, more people suffer from more frequent, more severe and more deadly asthma attacks, heart attacks and strokes.

As a pediatrician on the near south side of Milwaukee, I am deeply concerned about the effects of breathing polluted air. Some of my patients' medical conditions get much worse when they are exposed to an environment that is loaded with irritants and noxious chemicals. Access to health care and medication can lead to improvement, but if they are to heal, then cleaning our polluted environment is paramount.

Where does this pollution come from? In Milwaukee, We Energies' Valley power plant, operating without modern pollution controls, is the single largest source of particle pollutants. Sitting in the Menomonee Valley among some of the most densely populated communities in the state, the stacks are neighbors to some 24,000 people who live within a mile of the plant. The pollution from the plant contributes to violations of health standards that are set to protect public health. Cleanup of the Valley coal plant is long overdue.

Read more »

DNR schedules hearing on Valley plant permit

From a blog post by Tom Content on JSonline:

An air emissions permit to operate the Valley power plant in Milwaukee should be renewed, the state Department of Natural Resources has concluded.

That finding, concerning an air emissions permit first issued in 1998, will be the subject of a DNR public hearing Thursday in Milwaukee.

Environmental groups sued the DNR this summer in Dane County Circuit Court because it had not issued an updated permit for the project.

That suit is now on hold while DNR proceeds with work on the air permit.

The Sierra Club and Clean Wisconsin, joined by several other groups, are seeking that DNR become more aggressive in requiring less pollution to be emitted by the We Energies plant, located in the Menomonee River Valley.

The Journal Sentinel reported this summer that the plant is allowed to operate under more lenient standards in part because of its age and in part because it wasn’t required to install modern pollution controls at a time when We Energies was moving forward to install those controls at other, larger power plants.

Read more »

Deep Down: Mountain top-removal coal mining

A free film showing by MPTV, November 4 at 6:30 p.m. at Discovery World, 500 N. Harbor Dr., Milwaukee:

Deep in the Appalachian mountains of eastern Kentucky, Beverly May and Terry Ratliff find themselves at the center of a contentious community battle over a proposed mountaintop removal coal mine.

Read more »

Report: We Energies landfills likely source of groundwater contamination

From an article by Christine Won in the Racine Journal Times:

CALEDONIA - A report released Thursday by environmental groups points to We Energies coal ash landfills as the likely source of the groundwater contamination that has left several residents without drinking water for the past year.

Almost 40 coal ash dump sites in 21 states, including Wisconsin, are contaminating groundwater or surface water with toxic metals like arsenic, mercury or lead, according to a report by the Enviromental Integrity Project, Earthjustice and the Sierra Club.

The Oak Creek power plant, which has one active and two closed coal ash landfills, was named as having private wells in the area contaminated by molybdenum and boron.

We Energies spokesman Barry McNulty called the report "incomplete" and "flawed," drawn up in a time crunch to meet an agenda of getting it out before the U.S. Environmental Public Agency hearings on the coal ash rule begin nationwide Monday.

For the first time the EPA is proposing a coal ash regulation and considering two possible options at its hearings. One is to regulate as special wastes for disposal in landfills or surface impoundments and another to regulate as non-hazardous wastes.

We Energies has maintained that its coal ash sites cannot be the contaminant source because the natural groundwater in the bedrock aquifer, where most of the contaminated well water comes from, flows toward the northeast, toward the power plant.

Russell Boulding, a freelance environmental consultant who owns Boulding Soil-Water Consultant out of Bloomington, Ind., said he drew his conclusion in the report that the coal ash landfills are the most likely source for the groundwater contamination in the plant vicinity based on collected data patterns and high levels of molybdenum found within a concentrated area of the landfills. Boulding added the bedrock aquifer is a fractured system, where groundwater flow doesn't always follow the general trend, especially if water is pumped.

A dozen private drinking water wells within 1,500 feet of the coal ash landfills were found to exceed the state groundwater standards for molybdenum and boron, 40 and 960 micrograms per liter, respectively, according to the report.

Read more »

Doing it cleaner

From an editorial in the Milwaukee Journal Sentinel:

We Energies' Valley power plant is a vital link serving the region's energy needs. That doesn't mean it can't run cleaner.

We Energies' coal-fired Valley power plant isn't going anywhere anytime soon. Nor should it. The plant - about a mile south of downtown Milwaukee in the Menomonee River Valley - meets a vital need in the utility's energy network and plays a unique role among power plants by producing steam to heat many downtown buildings, helping to keep heating costs stable.

But it is time to clean up the plant and bring it into the 21st century. We Energies is working on that, but anything the utility can do to expedite the process would be helpful. What that will mean is either switching to a new kind of fuel - natural gas - or adding equipment to the plant to clean up its emissions. Both would cost money, and ratepayers will have to pick up the cost.

The utility needs to figure out which is the better option and look for ways to mitigate the cost, but improving air quality is essential to public health and economic development. It's worth some cost.

As a recent article by Thomas Content and Lee Bergquist made clear, Valley is a plant with a problem. It is We Energies' oldest power plant that lacks modern emission controls. It thus adds to air pollution in the Milwaukee area, a region with air quality challenges.

Read more »