Category — State Energy Issues

“Ultimately, New York’s RPS will cost ratepayers billions of dollars to support the construction of new generation. And if the state continues to rely on wind as the dominate resource, more turbines will be necessary to make up for low capacity factors. The program is up for review again in 2013. It’s time for the PSC to remove the rose-colored glasses and acknowledge the program for what it is: Regulatory Capture at its finest.“

Tens of thousands of acres across New York State have been transformed into sprawling electric generating facilities. Specifically, some 18 industrial wind complexes house nearly 1,000 towering wind turbines that consume the landscape and threaten otherwise pristine communities.

Now, consider that another 1,500 giant towers will need to be erected by 2015 in order to satisfy the state’s 30% renewable energy mandate.

New York’s Renewable Portfolio Standard (RPS) can be credited with most of the wind development in the state. Officials insist the policy has helped New York diversify its energy resources and will ultimately lower electricity prices but such claims are more rhetoric than real.

New York’s RPS has already exceeded original budget projections, it’s current renewable targets are unrealistic, and claims that prices will drop are predicated on a flawed understanding of how the New York wholesale power market operates.

Background

New York first enacted its renewable energy mandate in 2004 through regulations adopted by the Public Service Commission (PSC). At the time, about 19.3% percent of electricity retailed in the state was derived from renewable resources, with the vast majority coming from large-scale hydroelectric facilities upstate and in Canada. The PSC ordered the state reach a 25% renewables target by 2013 which meant an incremental increase of 10.0 million megawatt hours (MWh) from projects built after 2003. [Read more →]

“Regulators who don’t approve smart stuff are by elimination reducing themselves to certificators of dumb stuff. When nuclear optimism peaked, backers said that its power would be “too cheap to meter.” The bill for the smart grid is turning out to be too confusing to meter, but like in the nuclear heyday, the momentum is irresistible.”

I have some kind words for the California Public Utilities Commission’s Division of Ratepayer Advocates (DRA), its in-house department charged with representing small consumers in rate proceedings.

DRA has long been agnostic about the benefits of smart meters. But with the release of “Case Study of Smart Meter System Deployment: Recommendations for Ensuring Ratepayer Benefits,” the issue of high costs relative to benefits is on the table.

Better late than never.

Complexity Unbound

DRA’s lightly redacted public version analyzes the gap between anticipation and reality in Southern California Edison’s “Advanced Metering Infrastructure” (AMI or SmartConnect) rollout program.

The numbers are interesting, but DRA’s big point is that the CPUC has hardly any idea about what it does or doesn’t know amid the hyper complexity of smart meter costs and benefits. [Read more →]

[Editor's Note: This post concludes a two-part series on counter-productive regulation passed in the name of addressing man-made climate change.]

In Part One yesterday, I summarized the recent research by U.C. Berkeley researcher Margaret Taylor, which found that cap-and-trade programs (CTP) impede technological innovation. Not only do they stifle future technological improvements, CTP often erase past improvements.

California’s Global Warming Solutions Act (AB32) and the Air Resources Board’s implementation of that law to date provide a sobering example of the Taylor Thesis.

California Improvements before Cap-and-Trade

California is the only state insisting on implementing economy wide cap-and-trade. The climate impact, if the programs (unrealistic) goals are achieved, are miniscule. Nonetheless, the program is to start later this year, according to the California Air Resources Board (CARB). Not acknowledged by these uber-bureaucrats, California has the third BEST carbon intensity in the U.S., according to the Congressional Research Service.

The carbon intensity of the U.S. is only a quarter of China’s and is well below the average of the world. Every ton of cement California imports from Arizona, every basket of fruit the U.S. imports from Chile, and every techno-gadget we import from Asia, in other words, result in a net increase of emissions, compared to our producing those things here at home. [Read more →]

[Ed. note: Previous posts at MasterResource have documented the landowner and budgetary problems of the Competitive Renewable Energy Zone (CREZ) transmission line.]

The cost of building transmission for expensive wind power in Texas is coming in nearly 40 percent higher than initially promised. Instead of $4.9 billion, as estimated in 2008, the transmission lines are now expected to cost $6.8 billion, according to a report prepared by the RS&H infrastructure consulting firm for the Texas Public Utility Commission.  This amounts to approximately $800 per household in the state, or at least $5 per month per ratepayer.

Cost Gaming

The report states several factors caused the initial underestimate of transmission line construction costs. For example, the initial estimate assumed transmission lines would be built in direct, straight lines from point to point. However, the new report notes transmission lines must often follow roads, fences, terrain features, or property lines instead of direct lines between two connecting points.

The initial cost estimates also failed to account for inflation and financing costs on loans to build the transmission lines.

The report warns the final price tag could rise still higher by the time the project reaches its estimated December 2013 completion date.

More Intervention; Good Money after Bad

The $800 per-household expenditure is merely the cost of building the transmission lines. Wind power is more expensive to produce than conventional power sources, so Texas consumers will also pay electricity premiums every year.

“This is the kind of situation that only happens when government mandates a technology that is not very useful and it’s too expensive for the market,” said Sterling Burnett, a senior fellow with the Dallas-based National Center for Policy Analysis. [Read more →]

Texas Gov. Rick Perry is swimming upstream in his quest for the Republican nomination for President of the United States, primarily from his weak performances during several debates. To improve his odds, last Friday he gave his first policy speech, titled Energizing American Jobs and Security.

Energy is that important. And it is a breath of fresh air that Perry’s analysis and prescription is 180 degrees from President Obama’s government-knows-best approach to energy and energy/environment.

Four Objectives

The Governor’s plan focused on four objectives that promise economic growth and numerous jobs in America. In Perry’s words:

• “First, we will open several American oil and gas fields for exploration that are currently off limits because of political considerations.”
• “It is equally important that we take a second step: eliminate activist regulations already on the books and under consideration by the Obama Administration.”
• “The third part of my plan is to reform the bureaucracy, in particular the EPA, so that it focuses on regional and cross-state issues, providing scientific research, as well as environmental analysis and cost-comparison studies to support state environmental organizations. We will return greater regulatory authority to the states to manage air and water quality rather than imposing one-size-fits-all federal rules.”
• “The fourth component of my plan is to level the competitive playing field among all energy producers. As the governor of the nation’s leading producer of wind energy, I clearly believe there is an important role for green sources of energy as a part of our generation mix. The fact is, every energy producer receives incentives and subsidies that cost taxpayers and distort the marketplace.”

He finished his address by stating that his plan is focused to “Make what Americans buy, buy what Americans make, and sell it to the world.”

I agree with these proposals. In particular, getting rid of all energy subsidies and tax incentives across the boardwill allow the market to direct the allocation of resources to energy sources that are profitable without government intervention. [Read more →]

“What will we do when the wind turbines die? Will there be a ‘deconstruction tax’ placed on fossil fuels, oil, gas, and coal taking the blame for driving wind turbines into retirement?”

Former Governor of Vermont, Jim Douglas, says that wind turbines are the “wrong choice” for the famous ridgelines and natural beauty. Annette Smith, Executive Director of Vermonters for a Clean Environment (read her op-ed below), says “it’s not too late,” to examine the facets of building mammoth turbines in one of the most beautiful natural areas of America.

These new, important voices indicate that politically correct wind energy is creating a backlash in Vermont, as elsewhere.

Lifecycle Analysis

What is actually involved in the construction of huge turbines is often not thought of, unless, as Ms. Smith suggests, you are forced by proximity and imminence to consider the “engagement.”

There is the transportation of huge parts (usually manufactured elsewhere such as in China or Denmark), parts that are often toxic (carbon fibers in the blades that cannot be recycled). Or consider the rare earth elements in the magnets, also highly dangerous, created out of and transported with oil and gas, lubricated with oil and petroleum products, mired in massive plugs of cement. Consider also how natural sites are dynamited for turbine sites, how forests are ripped up, and the social costs for those near the taxpayer-dependent activity.

Expect a short (12–15 year) life span for the turbines, not the 25 years the industry purports. Imagine when the subsidies dry up how the turbines will be left to rot in the sun, still a hazard for birds and bats.

The question must be asked: What will we do when the wind turbines die? Will there be a ‘deconstruction tax’ placed on fossil fuels, oil, gas, and coal taking the blame for driving wind turbines into retirement?

‘Turbine Sacrifice’

The incredible destructive power of Industrial Wind has been long submerged into cozy green language, and false promises. It is the result of fast and very clever social marketing for over 30 years. The fact is, that “turbine sacrifice” (those creatures and landscapes destined for destruction in a radius of some say 10 miles) is a common feature of our relationships with this industry. But now people are saying, Whoa. [Read more →]

“He has been a stalwart in defense of wind energy in this state — no question about it.”

- Paul Sadler, executive director of the Wind Coalition, quoted in Kate Galbraith, “As Governor, Perry Backed Wind, Gas and Coal,” New York Times, August 21, 2011, p. 21A.

Texas curtailed electricity customers this Wednesday in the face of abnormally high temperatures and insufficient capacity. And as is to be expected this time of year, windpower is producing at its yearly lows–on Wednesday, about 9 percent of capacity (880 MW out of nearly 10,000 MW capacity), down from 18 percent earlier in the week.

As Texas revs up mothballed plants, one can only imagine how much state-of-the-art, high-utilization capacity the state could have ‘bought’ instead of wind power, which produces most of its juice when it is not needed.

CREZ Transmission Project

New transmission to rescue wind power that cannot reach the cities? That introduces another problem–wildly uneconomic costs where good money has been thrown after bad.

The Competitive Renewable Energy Zones (CREZ) line, authorized in 2005, began at just under $5 billion and is now estimated to cost $6.8 billion upon completion in 2013. This bill comes to $270 for every Texas citizen—man, woman, and child—and counting.

Governor Rick Perry has a lot to do with the project. According to Texas’s State Energy Conservation Office: [Read more →]

Seven Southeastern states have rejected renewable energy mandates and/or voluntary alternative energy quotas on electric companies: Louisiana, Alabama, Arkansas, Georgia, Kentucky, Mississippi, South Carolina and Tennessee. (North Carolina is another story, requiring a 10% share for renewables and mandated efficiency savings by 2018.)

The good news for the seven states is not only that unnecessary costs have been avoided during the political boom of ‘green’ energy. The benefit is also that artificial bubble jobs are not on a death watch as they are in other states that now face ‘green’-energy retrenchment.

Bad Wind

William Yeatman, an energy policy analyst for the Competitive Enterprise Institute, contends that Southeastern states do not have as much renewable energy potential as the rest of the country. “The Southeast has the lowest wind energy potential of all regions, and wind is the energy source that is used to achieve virtually all renewable electricity mandates in the U.S.”

However, Yeatman says that even though the Southeast has limited renewable energy potential, that does not mean renewable energy mandates are a good idea in the Northwest, Northeast or the Southwest. Rather, “It is to say that renewable energy is even more uneconomical in the southeast than in the rest of the country.”

Louisiana’s Politically Clean Energy

Robert Bradley of the Institute for Energy Research affirms that, “It is a competitive advantage that Louisiana is energy clean when it comes to politically forced energies.” [Read more →]

Joke: ‘When is an environmentalist not an environmentalist? …. When it comes to windpower.’

[This press release from August 10th is reproduced in its entirety. A description of the sponsoring organizations follows.]

The North-American Platform Against Windpower (NA-PAW) objects to the passing of the “Power NY Act” on August 8th. Also known as “Article X”, this law reverses decades of democratic rights in New York State.

Municipalities no longer have the power to veto harmful projects targeting their constituencies. Albany bureaucrats will decide where energy and other industrial projects are to be built, and the people will have to bite the bullet.

Says Sherri Lange, NA-PAW’s CEO: “I believe New Yorkers won’t take it lying down. I have faith in the North American spirit: we won’t let politicians take away our freedoms.” Sherri is also founder and president of Toronto Wind Action. She has her own “article x” to fight in Ontario: the Green Energy Act, which equally tramples citizens’ rights.

Wind Favoritism

It is believed Governor Cuomo repealed the right of veto from municipalities so as to impose numerous industrial wind facilities on them. But citizens are increasingly concerned with health issues associated with these industrial installations. Recent peer-reviewed scientific studies have shown that wind turbine syndrome is not imaginary. Infrasound and low-frequency noise emitted by wind turbines cause insomnia, headaches, stress, nausea, and more. This is confirmed by research from Dr Nina Pierpont, and by an epidemiology study by Professor Carl V. Phillips.

There are also concerns regarding the destruction of jobs in tourism, recreational industries, and elsewhere as subsidies increase public deficits, causing taxes to be raised. Other harmful effects include the killing of rare bird species such as eagles and falcons, of migrating birds, and of the very bats that help NY farmers save millions of dollars in pesticides. Water contamination, forest fires and reduced property values are also of concern.

Taxpayer Issue to Begin With

NA-PAW disapproves the un-democratic process which led to the vote of Article X. Citizens were not consulted, yet they will pay a high price for this. Sherri Lange said:

We will fight Article X with determination and with all our heart. North Americans have had enough of the wanton destruction of their great countryside and wilderness by monstrous machines that don’t deliver on promises. Home Rule must come back to New York State and to Ontario.

NA-PAW has received the support of the European Platform Against Windfarms (EPAW). Its CEO, Mark Duchamp, warns that the huge cost of renewable energies is in part responsible for the crisis that is shaking the Euro: “Spain, for instance, is paying €8 billion ($11.3 billion) in subsidies to renewable energy every year. This makes it difficult to contain the national debt, while unemployment won’t come down from 20%. It is truly unsustainable.” [Read more →]

Part I yesterday reviewed in-state electricity generation and power imports required to meet California’s current power demand. Part II today shows how Renewable Energy Credits may be used to meet California’s aggressive renewable energy goals.

Renewable Energy Credits

Renewable Energy Credits (RECs) are the power generation credits that a distribution system can use to meet its renewable portfolio. These RECs come in two flavors—bundled and unbundled. The bundled RECs are the credits that are bought and used within the same distribution system; unbundled RECs are those bought by one distribution system but used in another. These RECs are managed by the Center for Resource Solutions, which also prevents double counting of credits.

Unbundled RECs are particularly interesting, because it means that a distribution system doesn’t need to build renewable energy power plants because the distribution system can simply buy the renewable power that is generated in another distribution system.

Paper Renewables?

This creates significant problems for the exporting distribution system. For example, the Bonneville Power Administration is currently negotiating with California about (in BPA’s words)

potentially significant negative consequences for Northwest and California consumers if decisions about the use of unbundled RECs are made without full consideration of the infrastructure requirements associated with the delivering a reliable, least cost supply of renewable energy to California.

So, what are the consequences? The use of unbundled RECs seems to mean that California could purchase all the renewable power generated by all the windmills that are connected to the California grid.

This is happening right now as California is contracting for wind energy from places as far away as Alberta, Canada. The electricity generated in Alberta, however, will not arrive in California. It is too far away. The only thing that is happening is that Californians are paying for it to meet their renewable portfolio. This seems pretty strange, that Californians are required to pay for a benefit that they don’t get.

The fact that 15 percent of its imports in 2009 are “unspecified” probably means that California intends to purchase enough renewable energy credits to meet its goal. This would mean that it would not need to build any more renewable power generators. It just needs to purchase the power from its neighbors (at the expense of the rate payers in California).

There are three major problems with unbundled RECs: [Read more →]