The Kansas City Star reports: Electric bills are poised to soar for customers of utilities building coal-fired power plants. Coal-based electric utility executive responds: We're moving forward regardless of what you namby-pamby, cheap-energy-loving hippies think.* Michael Dworkin then raises the obvious question: You've got to ask: "Do you think we have reached a point where it economically doesn't make sense?" It will be interesting to see how this affects the Sunflower Electric debate, since the state does now seem to be getting beyond the false belief that coal is cheap. *Italicized text implied but entirely fabricated by the author.
Florida Power & Light is fairly notorious as a utility that embraces competition so long as it doesn't happen in their service territory. On the regulatory side, they have worked pretty hard to make sure that no one can build power in their state except themselves. But on the unregulated side, their sister company FPL Energy has been one of the leading installers of wind turbines. (Not coincidentally, you will find that they tend not to do projects anywhere near Florida. Mind the hand that feeds you ... ) Needless to say, there are some conflicts there. Which have recently come back to bite them.
Last January, Rep. Ed Markey (D-Mass.) convened hearings on the ways allocation of CO2 permits under a cap-and-trade system will impact power prices and utility profit margins. The short version, drawn from the evidence of Kyoto and other systems that have given credits away for free, is that while free allocations lower power prices in theory, in reality prices rise just as much as they would otherwise -- but they increase margins for exempt generators (i.e., coal plants). Indeed, one of the great criticisms of the Kyoto Protocol has been that it has directly led to increased profits for Europe's old coal plants. Since then, there has been a growing chorus from (coal-heavy elements within) the electric sector arguing that utility regulations compel them to pass along any operating savings to the rate payers -- and therefore, that free allocations really do ensure lower power costs. (See here for more details on the "pass-throughs" innate to modern utility regulation.) So on the one hand, we have the paper trail from Kyoto, and on the other hand, we have what would appear to be a pretty robust theory based on modern utility law. Who's right? The short version: facts on the ground trump theory. The longer version is below the fold.
More details on the new, really-really-expensive AEP coal plant in West Virginia. It seems like just yesterday that I wrote that the 17 percent rate increase announced by AEP would not be the last one, given the cost of this plant. Two days later, here they come. Specifically, "Customers could start paying as early as next year with rate hikes starting at $1 per month in 2009 and eventually climbing to $7.70 per month. AEP customers could pay nearly $160 million during construction and $116.23 million per year after that to fund the new plant." And why do we need those rates? Because this plant will be "the single most expensive utility project in the state's history." And why do we need the coal plant? Because ... [drum roll] ... coal is cheap! Full story from Greenwire ($ub. req'd) below the fold.
See if you can connect the dots. First this, from Greenwire ($ub. req'd): West Virginia regulators have approved American Electric Power's plan to build a $2.3 billion clean coal plant. Appalachian Power Co., a subsidiary of Ohio-based AEP, received approval for the project Thursday from the Public Service Commission. Regulators say the 629-megawatt Integrated Gasification Combined Cycle plant is needed to help AEP meet demand for electricity.
I have nothing pithy to add to this story, but only because the inanity of the quotes is so hard to top. From Restructuring Today ($ub req'd) (my emphasis on the good bits):
Chapter 1, courtesy of our friends at Greenwire ($ub req'd): The coal industry is spending tens of millions of dollars to cement support among members of Congress and the top presidential candidates in an effort to fight critics of coal-fired power and is also appealing directly to the voters those politicians need. Why, you ask? Turn to Chapter 2, this time from The New York Times: "Stymied in their plans to build coal-burning power plants, American utilities are turning to natural gas to meet expected growth in demand ..." Excepts from both are below the fold. Stay tuned for Chapter 3 ...
Synapse Energy Economics has recently put together a report for NRDC that ought to be required reading for anyone who objects to dirty or expensive power (e.g., coal-fired, central station power). The report, entitled "The Risks of Participating in the AMPGS Coal Plant" (PDF), is ostensibly only about a specific 960MW plant that AMP wants to build in Ohio. But their report speaks volumes about the larger economic and environmental challenges to coal-fired central station power, and provides a wealth of hard data to those who (admittedly, like me) believe that we have vastly cheaper and cleaner options to serve our growing power needs. It is also notable for its self-restraint, arguing against the plant in purely economic rather than moral terms. For this reason among others, it ought to be mandatory reading for any environmentalist looking for a framework to support cleaner power.
This ($ub req'd) just in from Captain Environmental Compassion, Bush adviser James Connaughton: Bush is serious about climate change. Seriously! Surprised? Read on, for excerpts from this newsflash ...