It’s been a great year for CLF — and a great year on CLF Scoop. We’ve had lots of great posts by our advocates, staff and volunteers. See below for the most read 10 blog posts published in 2012.
Protest at Salem Harbor Power Plant. Courtesy of Robert Visser / Greenpeace.
This week the Conservation Law Foundation (CLF) and HealthLink secured an Order from the US District Court in Massachusetts requiring Salem Harbor power plant owner Dominion to shut down all four units at the 60-year-old coal-fired power plant by 2014. In bringing a clear end to the prolonged decline of Salem Harbor Station, this settlement ushers in a new era of clean air, clean water and clean energy for the community of Salem, MA, and for New England as a whole.
The court’s order is based on a settlement with Dominion to avoid CLF’s 2010 lawsuit alleging violations of the Clean Air Act from going to trial. The terms of the settlement, which can be found here, ensure that:
Units 1 and 2 at the plant must retire (indeed are retired) by December 31, 2011; Unit 3 by June 2014;
Dominion may not repower the retired coal-burning units, even if a buyer for the power was to come forward;
Neither Dominion, nor any successor, may use coal as fuel for generating electricity on that site in the future;
Dominion must fund projects of at least $275,000 to reduce air pollution in Salem and surrounding municipalities that have been impacted by the plant’s emissions.
The settlement, and the legal actions which led to it, provide a template to force plant shutdowns as changing market conditions, public health concerns and cleaner energy alternatives push the nation’s fleet of old, polluting dinosaurs to the brink. What makes this outcome unique is that, as part of its advocacy strategy, CLF filed a successful protest at the Federal Energy Regulatory Commission in Washington DC which effectively prevented Dominion from collecting above market costs for operating this aging and inefficient power plant. This first-ever ruling by FERC is in stark contrast to coal power plant retirements in other areas of the country which were brought about by agreements to pay (i.e., compensate) plant owners for shutting down their plants. In the case of Salem Harbor Station, retirement resulted from legal action to deny the plant’s owner compensation and cost-recovery by ratepayers.
A little background: Most of the nation’s coal-burning fleet, were designed, constructed and began operation in the 1950’s and 60’s. More than 60% of them have been operating for 40 years or more, meaning that they are now beyond their useful design lives. This is the case for all of New England’s remaining plants, which generally were built more than 50 years ago. In addition to the excess pollution and inordinate adverse impact these plants impose to public health and the environment, they are finding it difficult to compete with newer, cleaner and more efficient power producing technology. In the market, the day of reckoning has arrived. New England’s coal-fired power plants are losing their shirts. They are rarely asked to run by ISO-New England, the operator of our regional electricity system, because their power is more costly (i.e., out-of-market) than the region’s cleaner and more efficient power generating fleet.
So why don’t they all retire? Unfortunately, there are several factors that can, in many instances, complicate matters. For Salem Harbor Station: system reliability (i.e., keeping the lights on). Because these plants were built so long ago, and unfortunately in close proximity to population centers where demand for power is greatest, the system was designed assuming that electricity is being generated at these locations. Thus, removing electricity generation from these sites can create reliability risks at times of peak electricity consumption. This was the case for Salem Harbor. Try as we might (including NStar’s recent $400 million transmission upgrade in the North Shore), when ISO-NE modeled worst case conditions, it still found that Salem Harbor was needed for reliability and consequently required ratepayers to pay to maintain Salem Harbor, even though its power was far more expensive to produce than more modern plants. To break this logjam, CLF filed a protest at FERC claiming that ratepayers were getting bilked (in legalese: paying rates that were unjust and unreasonable) and that a small investment to develop a reliability alternative for the plant would save the ratepayers money and would safeguard public health.
FERC agreed — at least with the money part (as FERC is a financial, not environmental regulatory agency). Its December 2010 order granting CLF’s protest compelled ISO-NE and the region’s electricity market participants to expedite the process for developing reliability alternatives for Salem Harbor’s expensive power (in utility parlance, to replace its “reliability function”). Shortly thereafter, ISO-NE crafted a new plan that will keep the lights on at reasonable cost to customers, while also creating a more flexible, reliable grid.
The new plan calls for simple and relatively inexpensive electric transmission line upgrades that will meet the area’s reliability needs without Salem Harbor Station and allow for the deployment of newer and cleaner energy resources like energy efficiency, conservation and renewables such as wind and solar. As soon as the plan was approved in May of 2011, the die was cast and Salem Harbor’s retirement became imminent. To its credit, the very next day Dominion announced that the plant would be shut down. As we all know, corporation’s make decisions based primarily on economics; once FERC denied them the above-market rates they had been collecting for years to maintain the plant, Dominion was compelled to retire the plant. Couple that with the prospect of major expenditures for pollution upgrades that would result from CLF and Healthlink’s lawsuit, there was only one rational outcome. Good-bye Salem Harbor station. Next up (or should I say, down): Mt. Tom, Brayton Point, both of which are uneconomic and facing the end of the road.
As I said in a joint press statement with Healthlink (found here), “This outcome sends a signal to coal plant operators everywhere that they cannot avoid costs through noncompliance with the Clean Air Act. These obsolete plants that either have decided not to invest in technology upgrades or are retrofitting at ratepayers’ expense are doomed: they are staring down the barrel of cheaper and cleaner alternatives to their dirty power and public and regulatory pressure to safeguard human health. When these plants can no longer get away with breaking the law as a way to stave off economic collapse, I predict we will see a wave of shutdowns across the country.”
The history of Salem Harbor Station is both long and tortured (recall then-Governor Romney standing at the gates of the plant in 2003 and saying that the plant was killing people). Despite its bleak financials and unjustifiable damage to public health and the environment, Salem Harbor Station continued to operate and pollute for a decade or more beyond when it should have succumbed to age and obsolescence.
Shanna Cleveland, staff attorney at CLF said, “The Court’s Order coupled with our successful FERC protest have finally put an end to a half century of toxic and lethal air pollution from Salem Harbor Station. The very factors that have been propping the power plant up for years beyond its useful life – cheap coal, lax environmental oversight, and overdue reliability planning – have been pulled out from under it.”
Salem News columnist Brian Watson presents a powerful case for moving forward with development of a wind turbine on Winter Island in Salem Harbor. We can only hope that the good citizens of Salem, who are looking at a major transition as the coal fired power plant in their midst retires, will pay attention to his words and follow the leadership of Mayor Kim Driscoll, who has identified this project as (among other things) an important source of revenue for the City. As the Mayor notes on Facebook regarding Watson’s column on the subject:
. . . While Brian doesn’t mention this in his piece, revenues from the proposed turbine will also directly help reduce the City’s +$1m annual electric bill, cutting those costs nearly in half and saving taxpayers substantial $.
Here is the basic situation: Dominion has “de-listed” the Salem Harbor Power Plant in the upcoming “Forward Capacity Auction”. This means that it is virtually certain that in the 2012-2013 period that the plant will not be obligated to run and will not received capacity payments that power plants receive when they have such an obligation. While the plant could still run and be paid for the electricity it made the act of de-listing means that the owner of the plant thinks there is a significant chance it will not be running during that year. If, however, ISO-NE, finds that one (or more) of the power generating units at the plant are “needed for reliability” then Dominion would receive payments set at the level of the “de-list bids” submitted this year.
Here is the dispute: ISO-NE argued that Dominion had set the amount of its “de-list bids” to high. Dominion had calculated those bids assuming that all pollution control equipment put into the plant would have to be depreciated (basically paid off) within three years. ISO-NE argued that this was inappropriate. Local newspapers took note of this dispute.
CLF, and the Massachusetts Attorney Generals office, agreed with ISO-NE that Dominion’s bids were inappropriate. CLF, pressing beyond the polite wording of ISO-NE’s filing, argued that the only appropriate circumstance for the “super-accelerated depreciation” being sought by Dominion would be appropriate only if Dominion were proposing to permanently de-list the plant. The absurdity of Dominion’s position was highlighted by the fact that it was contradicted by public statements of its own spokesman in a local newspaper.
The Mass. AG, supported by CLF, also raised concerns about the lack of public disclosure of key information about the plant and the lack of auditing of the representations that plant owners like Dominion made to ISO-NE.
FERC, in the order resolving the dispute, accepted the basic logic that ISO-NE and CLF presented, requiring use of the longer depreciation period proposed by ISO-NE. FERC stated that it could not consider converting a de-list bid from being one-year to permanent at this point in the process – which is essentially a moot point as CLF floated that as an idea that would only apply if the shorter depreciation period was accepted, which it was not. Also, FERC did not squarely address the issues of public disclosure and auditing, relying on earlier decisions that will be continued to be criticized.
But in the end this was squarely a defeat for Dominion: their bluff of calculating costs as if the plant was shutting down, but not actually committing to do so, was called.
These battles will continue. The likely next dispute will center around “reliability” as all of these numbers games are meaningless if ISO-NE recognizes that the improved transmission system, new generation and rising amounts of energy efficiency and “demand response” (slashing energy use at peak hours during the summer) means that the plant can retire without causing any shortages in the regional electricity system. They are very close to doing so (having found that other nearby plants can safely retire) and are likely to reach the right result here – although it might take some encouragement.
