Monday, November 21, 2011

It's Time to Transition

By Ken Toole, President, The Policy Institute

It’s time Montana makes a transition away from coal power. Our existing coal plants are aging. In the next five to 10 years we face some decisions about what path we will take to the future. Refurbishing old plants is an expensive and short-term solution. Alternatively, building new coal plants is expensive and risky. Other states facing the same issue are more and more turning away from coal power.
But in Montana coal is king, wielding tremendous power in the political arena. We’ve all heard the arguments the proponents of coal power make. “It’s affordable, it’s reliable, and it’s clean, so let’s use it.”

So what’s not to like?

Let’s start with the idea that coal power is affordable. A report from the Public Service Commission shows Colstrip 4 power has cost us $67.84 per megawatt hour. That is a very high rate. This old plant usually provides us with around 25 percent of our power. A contract with PPL provides about another 25 percent of our power at $52.15 per megawatt hour. PPL’s price includes hydro-power along with coal. It is a safe assumption that PPL’s price averages the two together and that the operational cost of producing hydro-power is much less than burning coal.

Compare those prices with some of the other sources of power here in Montana. The Judith Gap wind farm has delivered power at $46.56 per megawatt hour. This price includes the “integration service” required by wind power and comes around 30 percent lower than Colstrip 4. The cheapest power we get is from energy conservation programs. Conservation costs less than $15 per megawatt hour saved, less than a quarter of the price of Colstrip 4.

So now let’s turn to the reliability arguments of the coal industry. Obviously, the total price is related to how much power is produced. Colstrip generating units 1 and 2 are about 35 years old and Colstrip generating units 3 and 4 are about 25 years old. We know that Colstrip 4 has had significant “outages” since it was brought into our rates and those have contributed to higher costs. Some argue that these outages are unique circumstances. But the fact is that old machines break down and these are old machines. Continuing to rely on these old power plants means the likelihood of outages increases and the need for expensive repairs and retrofits is a certainty. Consumers pay either way.

Then, of course, there is the pollution problem. Coal plants emit toxins which cause a variety of maladies from asthma to hair loss. They use massive amounts of water and they produce a poisonous sludge which must be controlled and processed. The coal mines which feed the Colstrip plants affect the ground water and disturb the landscape requiring large expenditures on reclamation. And there is the carbon issue. The evidence continues to mount that our continued reliance on fossil fuels is having profound impacts on the planet. I’ll leave it to history to judge the inaction of politicians and rhetoric of pseudo-scientists who deny the impacts of carbon on our climate.

Meanwhile, the nation’s coal fleet is aging. Utilities across the country are facing decisions. They can spend massive amounts of money refurbishing old plants. They can try to find financing for new coal plants which incorporate unproven and expensive technologies such as carbon sequestration. Or they can begin the gradual transition to a fleet of new power sources that are cleaner, more reliable and much more affordable over the long run. More and more those utilities are starting a transition away from coal toward renewable power sources like wind and solar.

In Montana we do not have a very good record of making wise decisions about our energy path. We’re still suffering from electric deregulation. We often fall for the pitch from hucksters and charlatans. I can just hear it now. “Pssst, hey buddy, I’ve got a real deal on a coal plant for ya. It’s cheap, it’s clean and it will last forever.” In the transmission away from old fossil fuel technology, Montana has a real opportunity to be a leader, but not if we stick with the technology of the past and our political habit of buying a pig in a poke.