Saturday, December 08, 2007

The Real Reason They Want Coal

If customers ultimately pay the costs for electric power, there really isn't any greater financial risk to some power companies with either coal-fired power or truly clean power.

I just read that the Nevada Public Utilities Commission (PUC) will allow Sierra Pacific to pass expenses onto customers of a carbon tax, the inflation (etc.) costs of coal, and the costs of building a carbon sequestration facility (if they ever build it). We already know that the coal industry won't have to pay for the health care of people their coal-fired power plants make sick. So, its no wonder Sierra Pacific thinks coal is a good idea. They're not going to get stuck paying for any of the negatives. They don't have to pay the real-world costs. However (and this a very important however), the same is also true about clean, sustainable power generation.

So... why should Sierra Pacific care? If the customers ultimately pay, no matter how the power is generated; then why not just do the right thing? Sierra Pacific has no competition in Las Vegas and Reno. The State guarantees they'll make a profit on the electricity they sell. So, why does it matter?

A utility should want cost stability. In fact, that's been the power companies' argument. They want to “diversify” their portfolio. So, why don't they want to “diversify” into a power generation method that has only fixed costs. Now that's cost stability.

Hey, those Sierra Pacific executives have to breath the air too. They have to deal with the devastation of global warming too. What is the only real reason they might even consider coal-fired power? Maybe this whole coal-fired power thing isn't about being prudent at all. Maybe this is about maximizing short-term profits.

We've seen this before. Those who can manipulate the supply, can manipulate the price – can get filthy rich (at the expense of their customers). We've seen this with natural gas. We've seen this with gasoline... Fossil fuels are prone to price manipulation.

Doesn't anyone remember the California power shortages in 2000? There was no real shortage of fuel. The generation facilities have been adequate since then. And alternative power played essentially no role in the shortages.

The way I remember 2000 is that the rolling blackouts were contrived. The power companies shut down their generators at critical times. They wanted to limit supplies, and therefore artificially raise prices. It might have worked if their business partners, Enron, hadn't worked the scheme against them. Enron pricing practically ran Nevada Power and Sierra Pacific out of business. But, Enron couldn't have created the shortages on their own.

I've heard rumors that Nevada Power stopped stocking needed spare parts before 2000. Hey, maybe they just didn't have the money to keep their plants running reliably. But, then again, they were partners with Pacific Gas and Electric at the Mojave coal plant near Laughlin. That's right; Nevada Power and PG&E were business partners in a power plant that supplied power to California during the power shortages. Did Sierra Pacific know about the coming shortages – and participate? I would suspect so. Would they try it again? I would suspect so.

It just may be that the reason Sierra Pacific wants these coal-fired power plants so bad is because they intend to manipulate the market. If the price of coal rises, the price of power will have to rise also. The real question is; how much? As Greg Palast says; “In confusion is profit.”

The Nevada PUC was recently here in Ely to present their side of the Sierra Pacific coal-fired power plant story. It became quite obvious right away whose side the PUC is on. Their presentation may has well have been written by Sierra Pacific. For example; they stated that windmills kill birds (a dubious claim), while they never even mentioned any health effects of coal-fired pollution to humans (a huge oversight). Maybe some in the commission are looking forward to the revolving door of well paid jobs with Sierra Pacific soon? My point is; don't expect the Public Utilities Commission to protect the public any more. I doubt there is any real regulation of power prices in Nevada.

So, if the PUC won't protect us from unreasonable price hikes; what's to keep Sierra Pacific from raising prices? Simple; they can't raise prices if they don't have an excuse. They don't have an excuse if their costs don't change... Everyone knows the price of sunlight doesn't change. It will always be free.

Why would Sierra Pacific want to generate power so dirty we wouldn't want to buy it? The day is at hand when the well-off can just generate their own clean power. Why would the power companies want to push them away? And how are the power companies going to make up for the lost customers? Their only option is to raise prices on the only customers they'll have left; the poor.

This is crazy to me. Coal-fired power is simply a bad long-term investment. Everyone in the industry knows that those coal industry projections of supply are inflated. The National Academy of Sciences has told us so. Is it that Sierra Pacific management doesn't care about the future? Hey, by the time the company goes broke for relying on antiquated technology, they'll be retired. But they'll make a mint until then...

This is not a long-term strategy. Coal-fired power is a get rich quick scheme, with no regard for the future.


Now for some good news: The third Intermountain Power Project unit near Delta, Utah has been put on hold at least through the coming decade.


tonyrobin said...

Hi Rick,
Somehow I came across you own pages, and I didnt realise just how involved you are in this COAL power station thing. I have read your latest, and as you say its all about greed, There is a lot of money to be made by those who mine the coal and those who burn it, and of course the "politicians" who are in the pockets of the business people. I truely believe that coal will still have a future in the USA whatever happens. Its not just in your state, its right across the country. BIG BIG MISTAKE. Coal is abundant and cheap, now, but as oil reserves dwindle the price of coal will go up 2, 3, 4 times todays price, perhaps even more. I am not familiar with Nevada state, is there no water for hydro schemes. Perhaps the wide open spaces could be used for solar power, or why not wind power, or am I perhaps being a bit naiv. I live in Sweden, we have exchanged mail on the site. As you may know, we have hydro and nuclear for our energy supply. When the oil crisis came in around1970, we decided to build both nuclear and hydro. We can still expand the hydro schemes at least 100%, and plans are for doing so. Its one thing to have beautiful mountain areas, but, energy is important. We do not use coal, oil or gas for our energy production. We even have CHP plants, every city town and large village has one. They provide 50% of the buildings in Sweden with heat and cooling, and electricity for the grid. The fuel they use is industry, forest waste, and ALL our household rubbish. NO household rubbish is tipped at landfill sites, since a good few years back. CHP plants here in the Nordic countries emit only 5% of what coal power stations emit, thats about 45lbs CO2/Mwh.
Have a nice day

George Robinson

tonyrobin said...

The REAL reason as to why they want coal. It is because it is cheap, today. Perhaps in 5 or 10 or 20 yrs time the price of coal could be 5 or 10 times what it is today. Even the price of gasoline or petrol as we call it over here, could go up from todays $3 a gallon to $6 or$10 a gallon, because IT WILL. Changing from coal for energy production WILL NOT cause the economy to stagnate or go into recession, I know thats what the politicians are telling you, but its not true. They are telling you lies, blatant lies. There is a small country, you may "call it" a US state with a 9 million population. This small country has since 1990 reduce its already very low emissions by a further 9% yet at the same time increased their GDP by 44%, and still they dont use fossil fuels for energy production.