T. Boone Pickens is holding a town hall meeting on the Pickens Plan tomorrow at Rice University. His presentation, hosted by the James A. Baker III Institute for Public Policy, deserves some hard questions and frank answers. Here are some suggested questions.
- Wind power is an intermittent electricity technology, dependent on when the wind blows to turn the turbine blades, and, on average, currently has only about a 25 percent capacity factor, and, in the best areas, a 35 to 40 percent capacity factor. Wind also currently represents only 1 percent of our electricity generation and 0.3 percent of our energy. Most of the natural-gas fired capacity added since the late 1980s has been combined cycle with much higher capacity factors and availability of 88 percent. How does the Pickens Plan expect to use wind to replace natural gas given the difference in technology, and what form of power will be used as back-up when the wind isn’t blowing?
- Wind facilities are often hundreds of miles away from consumers, and require massive investments in transmission lines to deliver electricity from the facility to the power grid with line losses close to 10 percent, further reducing the energy available. Texas State officials, for example, recently approved a $4.9 billion wind power project that will add more than 2,000 miles of heavy duty transmission lines from wind centers in West Texas to major population hubs in Austin, Dallas-Fort Worth, and Houston, among others, which will result in a $4 a month increase in the electricity bills of each and every Texas consumer. How does the Pickens Plan cover the needed investment in transmission costs, and is this surcharge in the best interests of consumers?
- The U.S. Department of Energy’s Energy Efficiency and Renewable Energy (EERE) report 20% Wind Energy by 2030 (2008) envisioned production that is significantly more than the generation level that the Energy Information Administration is projecting. This would require, according to the DOE, 293 gigawatts of new wind capacity (or over 13,000 megawatts of new wind turbines) each year. This growth level—each and every year—almost equals the total installed wind capacity in the U.S. in 2007. This growth in wind turbine capacity would require siting wind units on publicly owned lands where a large percentage of the development sites are located, continued taxpayer-funded subsidies, the building of power lines to remote areas where wind turbines are located, and the public acceptance of noise and other wind-related effects.  Where is this level of wind investment expected to come from? Will the technology and expertise be available? Will the “not-in-my-back-yard” syndrome affect the public’s acceptance?
- The cost of retrofitting the existing fleets of vehicles to natural gas will cost consumers more either in terms of buying a new vehicle or in converting an existing vehicle. Honda’s costs for a new gas-fired Civic are $6,000 more than its gas-fueled Civic and the costs of converting an existing automobile to natural gas average around $12,000. Are Government mandates that require manufacturers to produce mostly natural gas-fueled vehicles expected to force consumers into buying them? Since less than 1 percent of the current retail service stations have natural gas facilities, who will pay the costs of converting the retail service stations to natural gas? How will consumers react to the fact that half of a natural gas-vehicle’s truck space is needed for the natural gas tank?
- Oil prices have fallen by two-thirds since this summer’s high of $147 per barrel. While this low price is not expected to continue once the world economies rebound, natural gas prices have not fallen by the same amount. According to the Wall Street Journal, wholesale natural gas prices have fallen about 25 percent since the end of 2007, but average residential consumers are paying fractionally more for natural gas this winter than last winter. What price does Pickens foresee for natural gas that would make this a worthwhile transition for the public to make? Also, the U.S. already imports natural gas from Canada via pipeline and from other countries via compressed natural gas. More liquefied natural gas facilities are currently being built reflecting the expectation of more imported natural gas. Some countries, e.g. Russia and Iran, are discussing forming a natural gas cartel. Does Pickens see another “OPEC” forming that would transition the U.S. from importing from an oil cartel to a natural gas cartel?
- There are at least 5 types of subsidies that would make the Pickens plan virtually risk free. These include a Federal Wind Production Tax Credit of $0.02 cents per kilowatt-hour for electricity produced during the first ten years of operation; a Federal income tax incentive consisting of a five-year, double declining balance accelerated depreciation; a Texas franchise break allowing a corporation to deduct the cost of a wind facility from its franchise tax; a Texas Renewable Portfolio Standard and Renewable Energy Credits that require a growing amount of electricity sold in Texas to come from renewable energy; and a Texas mandate that requires transmission capacity to be built and the cost be borne by electric customers. Are these subsidies and mandates needed for Pickens to invest in a 4,000-megawatt wind facility, anticipating a 25-percent return?
 Energy Information Administration (EIA), Monthly Energy Review (MER), Table 1.2, http://www.eia.doe.gov/emeu/mer/pdf/pages/sec1_5.pdf
 DOE, EERE, “20% Wind Energy by 2030”, May 2008, http://www1.eere.energy.gov/windandhydro/pdfs/41869.pdf
 Energy Information Administration, Annual Energy Review 2007
 Wall Street Journal, “Heating Bills Stay High, Frustrating Homeowners”, January 3, 2009, http://online.wsj.com/article/SB123093865371150145.html