Familiar Cautionary Tale Unfolding at Mt. Tom

Mar 7, 2013 by  | Bio |  Leave a Comment

Mount Tom power plant in Holyoke, MA.

A familiar story appears to be unfolding at the Mt. Tom coal plant in Holyoke, Massachusetts. According to recently released documents, the owner submitted what is known as a Dynamic Delist Bid with ISO New England (ISO-NE), the operator of the New England electricity system and markets, and ISO-NE accepted the bid.

This means that during the 2016-2017 capacity commitment period the plant will not be obligated to run and will not receive any capacity payments. The plant could still run and be paid for the electricity it makes, but the act of de-listing means that Mt. Tom’s owner thinks there is a significant chance it will not be economic for the plant to run during that year.

This is not surprising given the sharp decline in how often the plant has been running over the past few years:

This news is particularly significant for two reasons:

  • First, submitting a de-list bid to leave the market for one year has been the first step on the path to retirement for two other coal-fired plants in Massachusetts, Somerset Station and Salem Harbor Station;
  • and Second, the fact that ISO-NE accepted the de-list bid means that it determined that Mt. Tom can exit the capacity market for that timeframe without any impact on reliability. That’s a good indication that Mt. Tom could permanently retire without impacting the system, although some additional analysis would need to be done.

Although this is welcome news, because it means the end of a long legacy of pollution, it is not surprising. Even Brayton Point, New England’s largest power plant is facing desperate financial circumstances. Coal-fired power plants have been faltering across the country over the last two years, and CLF, Coal Free Massachusetts and local allies have been warning that Mt. Tom is not only a polluting, outdated relic but that it is also an unprofitable, unstable source of revenue for the City of Holyoke and that now is the time to plan for a cleaner, brighter future.

A task force created to examine the issue of retiring, demolishing, and eventually redeveloping the sites of aging coal-fired power plants in the Commonwealth will be visiting Holyoke on March 6 for a meeting with ISO-NE and a tour of the Mt. Tom plant.  CLF and its local allies are urging the task force to open this meeting to the public and to solicit more public input on the process.  Thus far, although meetings have been open to the public, there has been little effort to engage local community members.  Engaging the public is critical to an open, fair, transparent process that will create results that the entire community can get behind.

 

 

Why Should New England Subsidize Large-scale Canadian Hydropower?

Feb 26, 2013 by  | Bio |  2 Comment »

(photo credit: Jack Zalium/flickr)

Get ready: long-simmering chatter among lobbyists and officials in state houses and administrative agencies is about to become a loud, insistent chorus proclaiming that New England needs to give Canadian hydropower financial incentives so that our region can meet renewable energy and climate goals. This policy change would be a wrong turn for a region that is trying to build a truly clean energy future.

As we’ve been discussing for several years now, Québec and other eastern Canadian provinces are eager to increase power exports to New England, including through proposed transmission projects like Northern Pass. Our neighbors to the north have developed and are building more power than they need, and, until New England power prices began their historic decline, the economic motivation for increasing exports was clear: Canadian utilities like Hydro-Québec could sell power to customers in New England and the northeastern U.S. at much higher prices than their own domestic customers are paying. Profits from existing exports to the United States were and remain a major contributor to those utilities’ bottom lines, and they saw and planned to take advantage of a major opportunity to increase profits with new transmission capacity and newly developed hydropower facilities.

The economics behind this long-term Canadian strategy are increasingly in question. Following on the heels of recent technical analysis questioning the strategy’s underpinnings, the most recent projections from the U.S. Energy Information Administration show that total U.S. imports of all energy and electricity in particular are slated to decline over the next fifteen years, with electricity imports never again to achieve the peak level of imports seen in 2012. Given the availability of U.S.-based energy supplies at lower long-term prices, especially natural gas but also wind and other renewable sources, there will be less market demand in the U.S. for Canadian power. These projections reflect a very different reality from the prevailing expectations in 2008, when Hydro-Québec’s strategic plan and the Northern Pass proposal were taking shape. In a research note published last week, Stéphane Marione of Canada’s National Bank Financial warned that “none of the Canadian energy-producing provinces can ignore the profound changes that are taking place in the U.S.”

Montréal, we have a problem. In this new world, the potential market profits from Hydro-Québec’s export strategy are far less compelling. Hydro-Québec may not be able to sell power in New England at the prices it needs to recover the costs of building new transmission like the Northern Pass project and new hydropower projects like the Romaine complex and also return substantial export-driven dividends to the provincial budget.

One possible way that Hydro-Quebec could restore some of these profits is by convincing New England states to increase the price New England customers will pay for Canadian hydropower above the market price. While this may directly contradict the widely held assumption (and marketing claim) that Canadian hydropower is a low-cost power source that is economic without any special incentives, the cognitive dissonance has not prevented Hydro-Québec and Northern Pass developer Northeast Utilities from lobbying New England states to achieve just this goal, an effort CLF has opposed around the region, including in New Hampshire. (Hydro-Québec succeeded several years ago in convincing Vermont to allow its power to count towards a portion of the state’s renewable targets.)

Although the utilities’ lobbying is mostly outside the public view, it is increasingly occurring out in the open, with a direct and urgent new tone. Case in point: Hydro-Québec and Northeast Utilities recently filed comments on Connecticut’s draft energy strategy, which contained some language favoring expansion of Connecticut’s renewable portfolio standard program to include Canadian hydropower, the very policy change that the utilities are seeking. (Incidentally, the final strategy, released last week, made a few changes to the language, and Connecticut is now considering whether and how it might incentivize new imports in a separate study, which is due out soon.) So what did they say?

Hydro-Québec, through its U.S. trading subsidiary HQUS, commented that hydropower should be counted towards meeting Connecticut’s renewable objectives and that its hydropower is less costly than other renewables, but not all power in the marketplace:

HQUS urges Connecticut to recognize Hydro-Québec hydropower as a renewable resource and consider how it might contribute to achieving renewable objectives, as well as other important energy and economic goals. HQUS recognizes that Connecticut has multiple objectives for its renewable programs including to support the development of in-state and in-region resources and emerging technologies. However, if Connecticut’s priority is to maintain its commitment to renewable supply in a cost-effective matter, consideration should be given to the participation of Canadian hydropower. Allowing these resources to contribute to renewable objectives offers a pragmatic way for the state to lower program costs in the near term and, if desired, to extend and increase renewable goals into the future. An approach that values the multiple benefits of Canadian hydropower could also create a market signal necessary in today’s market to promote the infrastructure needed for incremental deliveries into the region for the benefit of all consumers….

Some stakeholders suggest that Hydro-Québec hydropower facilities are “cheap” or low cost to construct. This is incorrect. In fact the cost of building hydropower facilities is significant and generally also requires the construction of new transmission facilities to deliver generator output to load centers, which is also very costly. (Hydro-Québec has also proven successful in the development and construction of transmission facilities to deliver large quantities of electricity over long distances.) However, even with the added cost of transmission to deliver hydropower from Quebec into New England, HQUS estimates its costs to be significantly less than the cost of the delivering equivalent quantities of renewable power from other potential renewable resources in and near New England.

Northeast Utilities, through its Connecticut subsidiary Connecticut Light & Power, commented that hydropower delivered through new transmission projects should get incentives, which would count against the state’s current renewable requirements:

Connecticut has an opportunity to tap into Canadian hydroelectric facilities that are available now or under development, through the development of new transmission infrastructure. A Connecticut RPS market design, which acknowledges that RPS can not only enable new generation, but also support new, clean energy transmission infrastructure could, in this instance, provide for significant Connecticut customer savings….

CL&P believes Connecticut could create a new class of RECs for incremental hydro-electric supply that is delivered over a new transmission interconnection that has been built as an economic project (as opposed to a reliability-based one) which would supplant the need for meeting some portion of Class I RPS requirements….

CL&P believes that embracing large scale hydro power delivered on new transmission as a qualified renewable would meet all three of the State’s energy goals:

  • It would be cheaper than other clean energy resources,
  • It is clean with very low lifecycle CO2 emissions, established by independent scientific reviews, and
  • It is reliable, and would lessen the region’s dependence on natural gas for power generation needs.

It’s clear from these comments – and the utilities’ growing campaign to secure changes to New England’s renewable energy policies – that they are looking for subsidies from electric ratepayers to support new hydropower imports into the region. In fact, the Northeast Utilities comments constitute a direct effort to secure ratepayer subsidies for Canadian hydropower transmitted over Northern Pass, something Northeast Utilities repeatedly claimed it would not seek and does not need (e.g., herehere,  and here).* (For the record, they are mischaracterizing the emissions benefits to support their argument for subsidies. But that’s another story, well chronicled in prior posts.) Certainly, Hydro-Québec’s own comments reveal that its power can no longer beat the market on its own.

It’s also clear that, depending on how it is pursued, this kind of policy change threatens to put New England’s renewable energy industry at a deep and unfair disadvantage and to undermine its growth. Even Northeast Utilities, in the comments linked above, acknowledges this risk.

CLF has been clear that more Canadian hydropower could be a good thing for the region under the right conditions. But why should New England customers be forced to pay an above-market price? State renewable portfolio laws are intended to get new renewable projects built here, not to force ratepayers to pay extra to improve the economics of Québec’s new hydropower facilities and specific transmission development plans. That’s why CLF strongly objected to the draft Connecticut strategy’s mention of potential inclusion of Canadian hydropower in Connecticut’s renewable portfolio standard law. You can read our full comments, which address other major Connecticut energy issues as well, here.

It’s not too late for the New England states to get smart about new imports and make sure that new imports only happen, if at all, in cost-effective ways that allow alternative power sources and companies to compete on a level playing field, respect local communities, and provide meaningful economic and environmental benefits, accounted for in fair and open processes. Committing New England residents and businesses to pay above-market prices for Canadian hydropower isn’t one of them.

* from Northern Pass’s website, accessed today:

Providing economic clean energy—without a government subsidy

This will be one of the few—if not the only—renewable energy projects in the region that does not need a government subsidy to move forward. Hydro-Québec can generate and sell the power to us at prices that will compete with the average market prices that are being set today by fossil fuel power plants.

How New Hampshire Can Stay Above Water with PSNH’s Dirty Coal Plants Sinking Fast

Feb 7, 2013 by  | Bio |  Leave a Comment

How are PSNH’s coal plants like Mark Sanchez? (photo credit: flickr/TexKap)

Earlier this week, the Concord Monitor published a must-read editorial addressing PSNH’s future. Much like an earlier widely-printed op-ed on the subject, the editorial correctly describes the PSNH death spiral of escalating costs, fleeing customers, and dirty inefficient power plants kept alive by massive ratepayer subsidies.

The editorial also points out one key reason why PSNH’s argument that its plants are an insurance policy against high natural gas prices is increasingly off the mark: it ignores the damage that those plants do to the climate and to the environment. In 2012, despite not operating for much of the year, PSNH’s plants were nonetheless collectively the single largest source of greenhouse gas emissions in New Hampshire.

As time goes on, PSNH’s “insurance policy” argument only gets more specious. Relying on inflexible power plants that take many hours to start up and shut down is diametrically at odds with the dynamic and advanced electric grid that will help New England move toward a clean energy future and address concerns around the region’s increasing use of natural gas. We know what we need to do: the region needs to reduce energy demand through cost-effective energy efficiency investments, to deploy clean renewable technologies like wind that displace fossil fuel use, and to optimize the rules of the wholesale electric market to ensure smooth operation of the grid. Indeed, regional grid operator ISO New England’s recent market design efforts will almost certainly make poor-performing, inflexible power plants like PSNH’s less competitive, not more.

Propping up outdated physical assets – with high fixed maintenance costs – in the hopes that they will someday become competitive again is not “insurance.” It’s the kind of backward thinking that no competent manager or economist would endorse.

As a matter of policy, PSNH’s strategy enacts the classic economic mistake of “throwing good money after bad” by placing too much emphasis on “sunk costs,” an unfortunately common problem that James Surowiecki recently discussed in The New Yorker in describing the irrationality of sports teams’ commitments to ineffective players, like the Jets’ Mark Sanchez, after years of poor performance and bloated salaries.

At least sports teams suffer the consequences of their choices – they lose. With guaranteed profit and regulator-approved rates to recover its costs, PSNH and its parent Northeast Utilities have continued to win, even after a decade or more of terrible investment decisions. Unless of course PSNH can be made to pay for the mess it has created.

The key paragraph of the Concord Monitor’s editorial argues precisely this same point:

[L]awmakers must ensure that the lion’s share of the loss is incurred by investors in PSNH’s parent company, Northeast Utilities, not by New Hampshire ratepayers. That includes the huge cost of the mercury scrubber. It was investors, after all, who gambled that it made sense to spend hundreds of millions of dollars to keep an old coal plant running. They could have said no. So it’s investors who should lose if that gamble doesn’t pay off.

As PSNH looks for opportunities to spread its costs to the New Hampshire businesses and households that have escaped PSNH’s high rates, this is timely advice for New Hampshire policymakers. They should heed it.

Super Bowl Outage and Vermont Yankee

Feb 5, 2013 by  | Bio |  Leave a Comment

Keeping the lights on shouldn’t be this difficult. The response by Entergy to the outage at the Super Bowl is very reminiscent of the responses by Entergy to the many problems at its Vermont Yankee nuclear plant. It boils down to a piece of equipment failed and the power went out. A repeated problem at Vermont Yankee has been equipment failures – from cooling tower collapses to leaking pipes.

Sure problems happen, but c’mon. Enough already. The problem is that the same company that can’t keep the lights on for the Super Bowl is also challenged to keep its nuclear fleet running smoothly.

Even without news of the Super Bowl outage, UBS issued another report  about the shaky financial future of Vermont Yankee. The report states:

We continue to believe Entergy is likely to decommission at least one of its units, such as Vermont Yankee, in 2013. We anticipate the process of decommissioning will become of greater importance to Entergy shareholders, as concerns around shareholder-financed contributions to decommissioning funds continue to garner concern.”

The financial outlook looks bleak. Meanwhile, next week hearings begin at the Vermont Public Service Board about Vermont Yankee’s future. Entergy has money to keep four law firms employed working on the case. That money would be better spent closing the plant and cleaning up the site.

Tar Sands in Vermont? No Way!

Jan 29, 2013 by  | Bio |  1 Comment »

photo courtesy of someones.life @ flickr.com

I joined with residents of Vermont’s Northeast Kingdom today and fellow environmental colleagues to protect Vermont from the devastation of tar sands oil.

We filed a legal action to ensure Vermonters have a say over any proposal to move tar sands through Vermont. See press release here.

The request asks that the increasingly imminent proposal to move tar sands through an existing Northeast Kingdom pipeline be subject to state land use (Act 250) review. See request here.

Tar sands oil poses unique risks to the many natural treasures of the Northeast Kingdom and also imposes extreme climate change risks.

Tar sands oil is a gritty tar-like substance that produces far more emissions than conventional oil. The vastness of the tar sands reserves in Western Canada means that using tar sands oil delays efforts to move towards cleaner energy supplies, and sends us backwards on climate change.

As James Hansen, a leading climate scientist has said, the exploitation of tar sands on mass will be, “game over” for the climate.

Already there are requests to move tar sands east from Alberta to Montreal. The only realistic way to move it beyond Montreal to the deep ports it needs for transportation is through the Portland Montreal Pipeline which passes through Vermont.

There has already been one spill in this old pipeline in Vermont. A spill of tar sands oil – which is much harder to clean up – would be devastating.

Our filing requests that any plans to use the pipeline for tar sands oil be reviewed though Vermont’s land use development law – Act 250 – to protect our land, water and air resources threatened by this dirty fuel .

The Time is Right for Affordable Heat

Jan 17, 2013 by  | Bio |  Leave a Comment

Vermont is poised to take a big bite out of the high cost and pollution of heating our homes and businesses. Slashing a full one-quarter of both lies within our reach.

Over the past decade, the cost Vermonters pay for staying warm has more than doubled. This strains our pocketbooks, our environment, our health and our security. Watching our dollars go up in smoke drains our economy.

What can we do? Building on the enormous success of our electric efficiency efforts, we can improve the heating efficiency of our homes and businesses in a similar manner. While some efforts have begun, most of the savings opportunity remains on the table. Throughout Vermont, heating efficiency has saved the average homeowner about $1,000 a year.  (See a recent editorial here).

A new report of Vermont’s Thermal Efficiency Task Force provides a strong roadmap for jumpstarting heating efficiency and renewable heat for our homes and businesses. The Task Force recommendations show how Vermont can stretch its heating dollars farther and provide over $1.4 billion in direct savings. That’s $1.4 billion that is not going up in smoke, literally leaking out of our homes and businesses.

Affordable heat means lowering bills. Every year Vermont struggles to fund low income heating assistance (LIHEAP). With affordable heat, Vermont can reduce the funds needed and can use LIHEAP dollars to help more Vermonters. Cutting fuel use by one-quarter means that for every four homes that are weatherized, help is available for one additional family.

Affordable heat reduces pollution. Every gallon of fossil fuel we don’t burn means less pollution. Whether we are adding solar to our roofs or insulating/weatherizing our homes we leave a lasting positive legacy for our children by taking seriously our responsibility to tackle climate change and reduce pollution.

The long and short of it is that Vermont — and Vermonters — can’t afford to keep wasting energy, wasting money and wasting clean air. Vermont’s commitment to affordable heat is our ticket to more comfortable homes and businesses, and a thriving and affordable clean energy economy.

The Dicey Economics of Hosting a Nuclear Plant

Jan 16, 2013 by  | Bio |  1 Comment »

photo courtesy of topher76@flickr.com

This past week has shown Vermont first-hand the high cost of nuclear power. Hosting a plant in your state is clearly a high-stakes bargain.

Vermont went to Court in Manhattan this week before a three judge panel at the United States Court of Appeals. (Read more here and here). It had fifteen minutes for its lawyer to explain to the judges why the decision of the District Court blocking the actions of the Vermont Legislature should be reversed. A tough task.

With clarity and nimbleness, Vermont proved it was up to the task. Its lawyer, Attorney David Frederick, an experienced appellate lawyer who argued a case last week before the United States Supreme Court, explained that Vermont has every right to determine Vermont Yankee’s fate. And doing so does not impinge on the federal government’s oversight of radiological issues.

In a nutshell, there were three points.

First the United States Supreme Court case from 1983 that let stand a California law enacting a moratorium on nuclear plants would allow the Vermont law. If a state can ban all nuclear plants, it can certainly allow the Legislature to determine the fate of one plant.

Second, the lease on Vermont Yankee expired and like a landlord, Vermont can simply refuse to renew the lease. Period. Any tenant knows this. Vermont is hosting this plant and can say it wants the property used for another purpose.

Third, Vermont has huge skin in the game and economic exposure from Vermont Yankee. If Entergy, the owner of Vermont Yankee, goes bankrupt or simply chooses to walk away, Vermonters are left holding the bag for what Conservation Law Foundation has described as the nuclear equivalent of junk car in its backyard. This possibility is more likely following recent reports that Vermont Yankee is not pulling its weight and that Entergy would be better off closing the plant.

The stakes are high. Apart from hosting this plant, Entergy is seeking to recoup over $4 million in legal fees, and now has four law firms working to push every legal angle possible. Times change. When Vermont first approved the Vermont Yankee facility in the 1970s, there was a hearing for three days before the Vermont Public Service Board. Clearly nuclear power and hosting plants is more expensive and time consuming than ever.

Vermont is right to begin extracting itself from this nuclear legacy. Unfortunately, that is proving to be not so easy.

You Say ‘Food Waste,’ I Say ‘Renewable Energy’: New DEP Regs Create Pathway for Anaerobic Digestion

Jan 11, 2013 by  | Bio |  1 Comment »

Burying our garbage in landfills is a waste of resources, but it’s also a convenient way to get rid of stuff we don’t need or want. If there were clear alternatives to trashing our resources, would we use them? The Massachusetts Department of Environmental Protection (DEP) believes the answer is yes.

The DEP has finalized new rules that provide a permitting pathway for operations that process source separated materials – stuff like food waste or recyclable plastics that are not mixed with other wastes in the general trash stream. Source separated materials are distinguished from “waste”, so qualifying facilities will not be permitted as solid waste facilities. Previously a facility that sought to collect discarded material for recycling or some other reuse was considered a solid waste facility. This created barriers to the productive use of materials like food waste. The new regulations are a good step toward better management of our discarded materials.

Under the new rules, finalized November 23, DEP has created three size-based categories:

  1. Small facilities (no permit required)
  2. General permit facilities (certain activities permitted by-right)
  3. Facilities that will require a new Recycling, Composting, and Conversion (RCC) permit



The good news is that these rules create a permitting pathway for anaerobic digestion (AD) facilities. AD is a process in which organic material, like food waste, is processed in an airtight container to create a gas similar to natural gas (high in methane). AD facilities can use the gas to fuel energy generators to create electricity and heat that can be used onsite or sold in the energy market.

AD facilities, if properly sited and appropriately operated, offer a win-win by managing food waste and generating a renewable gas for energy production. Rather than putting our food waste into a landfill where it does more harm than good, the energy in the food can be efficiency recovered for productive use.

“But what about composting?” you may be asking. DEP’s goals, as stated in the current draft Solid Waste Master Plan, include diverting 350,000 tons of organic waste per year from landfills. Some of this will be accomplished by AD facilities, but some diversion will be accomplished by composting. The new rules clarify which operations are permitted by DEP and which are permitted by the Department of Agricultural Resources (DAR).

Whether we create high quality fertilizers and soil amendments through composting, or energy and fertilizer through AD, we will be diverting organic material from landfill disposal. DEP’s new rules are a step in the right direction to better manage our resources for economic advantage and environmental gain.

Vermont Yankee – Worth More Dead than Alive

Jan 2, 2013 by  | Bio |  Leave a Comment

Photo courtesy of Andy Hares @ flickr.com

The financial world is waking up to what a drag Vermont Yankee really is. The tired, old and leaking nuclear plant in Vermont is not carrying its weight. Financial analysts report that Vermont Yankee is economically vulnerable and a retirement announcement would boost stock prices for its parent, Entergy.

You can read the UBS Investment Research report “Re-assessing Cash Flows from the Nukes” here. It states:

 

“Notably, we believe both its NY Fitzpatrick and Vermont Yankee plants are at risk of retirement given their small size; while potentially negative to sentiment, an announcement to retire the units would likely drive positive FCF revisions.”

Clearly it is past time to close this plant.

Analysts today dropped the projected price target for Entergy’s stock. They see high debt and little cash coming in. Not good news for any investment.

It is good the financial world is waking up to what Vermonters have known for years. Vermont Yankee is not a good deal. It hasn’t been for years. It is expensive and financially risky. Conservation Law Foundation submitted testimony to the Public Service Board on the lousy economics of allowing Vermont Yankee to continue to operate. It does not have enough money for decommissioning, low energy prices mean it is not making money and any problems would saddle Vermont with big problems. You can read CLF’s testimony here.

These are not problems we need. Nuclear power was once touted as too cheap to meter. That has never been true. Now it is too expensive to even keep operating. Thank goodness financial markets are waking up to this fact.