[Watchdogs] Note the "Cost Factor": "Local solar farm gets powered up" [S...

Thu Nov 11 11:16:43 CST 2010

Coal, natural gas and nuclear plants down for maintenance is planned.  The lack of wind and cloudy days are not.

Coastal wind may be, but the wind farms in Texas have been built out west.

"If you, instead, build some natural gas but hedged with renewables so you don't have to pay the commodity prices when the wind blows and sun shines."  My point exactly - you have to figure in the cost of wind or solar the cost of fossil fuel as a backup.

"And if wind is so expensive compared to conventional power, why are electrical rates in the ERCOT West zone consistently cheaper than elsewhere in the state? " Production tax credits and stranded power make the West zone cheaper.

Mark

From: watchdogs-bounces at pec4u.org [mailto:watchdogs-bounces at pec4u.org] On Behalf Of Andy Wilson
Sent: Thursday, November 11, 2010 10:59 AM
To: watchdogs at pec4u.org
Subject: Re: [Watchdogs] Note the "Cost Factor": "Local solar farm gets powered up" [S...

If there is to be a renewables policy of PEC, it will have to be passed by the board.  We do not have one yet, so any discussion is largely a hypothetical exercise on our part.

I don't think the board has indicated it will be voted on by members, but they will vote on it in public in an open meeting as our duly designated representatives.

As for needing backup, I ask you about backup to conventional generation.  Compare how often wind farms are down due to lack of wind to how often coal, natural gas, and nuclear plants are off for maintenance or breakdown.  They're very similar, so you're talking about something that is equal across classes of power production. Also, wind is a different kind of power-- especially talking about coastal wind which blows especially during peak-- it is balancing load rather than baseload.

But this is why efficiency is the greatest renewable resource-- it never goes down, it never depends on weather, it is always saving power, generating NegaWatts, so thank you for making my point for me about why a robust retrofit and efficiency program is even more important and complimentary to a smart renewables program.

But all other things being equal, if you need peak, balancing power, and you build a natural gas plant, then you just burn that gas whenever you need it and are stuck paying whatever the market dictates you pay for natural gas.  Guess what?  California did this in the 90s and experience some of the most volatile electric prices and reliability issues in the country: Henry Hub historical price trends: http://en.wikipedia.org/wiki/File:Henry_hub_NG_prices.svg  I think we should learn from their mistakes rather than be doomed to repeat their failure.  If you, instead, build some natural gas but hedged with renewables so you don't have to pay the commodity prices when the wind blows and sun shines.

And if wind is so expensive compared to conventional power, why are electrical rates in the ERCOT West zone consistently cheaper than elsewhere in the state?   WIND. Wind that will soon flow into our zones thanks to CREZ lines, cutting our power costs, too.  I really don't understand the knee-jerk reaction to renewables.  It makes power cheaper.  If you can't understand that, then I don't know how to explain it any more simply.

To date, I have never heard articulated a plan for how to deal with the explosive growth in electrical demands from the co-op other than keep doing what we're doing and expecting different results.

As for Ken's argument, "Seems to me that no plant I ever had anything to do with was ever fully depreciated.  Seems to me that the capital investments required for the necessary enhanced environmental protections often approached the total capital investment for the original plants, and the relative economics were often pretty much unchanged over time per unit of output."  Then, by that argument, there simply is no such plant that produces power at 2 cents a kWh.  Regardless, you still have two distinct classes of resources: old generation and new generation. Old is cheaper, but can't be compared to new generation.  Only different types of new generation can be compared to one another as opportunity costs for one another.  This is Economics 101-- and so is this:

Just because you're not "into" hidden costs doesn't mean they don't exist and aren't worth considering. Here's a more technical term for you if you don't like "hidden costs"-- externalities. That's like me saying I'm not "into" capital depreciation or "into" marginal fuel costs.  Externalities exist, and just because you exclude them from your accounting doesn't make them go away, and if you fail to take them into account you are not being honest about the true cost of energy and the market in which it operates.

As for comparing this kind of rational economic analysis that take into account all externalities to socialism, give me a break.  I presented a rationalized accounting of all aspect of power generation, making an argument for why it is fiscally responsible to our members to pursue efficiency and renewables.  If that makes me a socialist, then someone please alert the economists.

As for whether the social responsibility element of the co-op should only be relegated to providing low cost power, then that is a question up for democratic vote, another hallmark of cooperatives over traditional IOUs.  Co-op owner members have elected their board, and they are making those determinations.  If owner-members disagree with those expressions, then they are free to vote for candidates of their choice.  As of now, they have elected this board.

What I hear more and more from this Watchdog group is the following, and it seems extremely short-sighted and contradictory:  We disapprove of the economic stewardship of the co-op under the Fuelberg days, but support completely his vision for how we get our power.  If you wanted fossil fuels and the risk associated with it, Bernie (his high paid lobbyists, his cohorts at TEC, TAM, TxOGA, etc,) was your guy.
On Thu, Nov 11, 2010 at 8:47 AM, Milton Hawkins <milton.hawkins at gmail.com<mailto:milton.hawkins at gmail.com>> wrote:
Friends,

Andy writes: "So what is the job and mission of PEC? Co-ops can differ from profit-driven utilities in being more socially responsible, based on a democratic vote of our members, which is what we will have once we have a proposal from the board and a free and fair vote in public."  (my emphasis)

This is news to me!  Are we getting a proposal from the Board regarding renewables that we are going to be allowed to vote on?  When is this to happen, and in what form?  (This Board hadn't even gotten the proposed Bylaws on the web site as part of the November Board Packet the last time I looked, which was five minutes ago.)

Milton

On Thu, Nov 11, 2010 at 7:49 AM, Williams, Mark (San Antonio) <Mark.Williams at valero.com<mailto:Mark.Williams at valero.com>> wrote:
For full disclosure,  I am the one preaching about generational theft.

Talking about hidden costs, wind power and solar need fossil fuel to back them up with the wind stops blowing and the sun is blocked by clouds.  So you cannot look at just the cost for building a wind or solar farm.  You need to include the backup power source.

It does not matter if it is a cloudy or windless day, fossil fuel can produce the lowest full cost electricity.

Mark "Preacher of Generational Theft" Williams

From: watchdogs-bounces at pec4u.org<mailto:watchdogs-bounces at pec4u.org> [mailto:watchdogs-bounces at pec4u.org<mailto:watchdogs-bounces at pec4u.org>] On Behalf Of Andy Wilson
Sent: Thursday, November 11, 2010 1:41 AM
To: TEXAS66 at aol.com<mailto:TEXAS66 at aol.com>
Cc: watchdogs at pec4u.org<mailto:watchdogs at pec4u.org>
Subject: Re: [Watchdogs] Note the "Cost Factor": "Local solar farm gets powered up" [S...

8 times the cost?  You're comparing apples and oranges:  new generation to plants that are already paid off.   They're completely different animals and it's intellectually dishonest and morally scurrilous to conflate the two.  If you want to make a real comparison, then you're comparing cost estimates for Sun Edison (16 cents) to cost estimates for new coal, such as Spruce II, at 12-14 cents.  There, the difference IS marginal.  And with the responses to RFP's I saw promising to deliver solar for 12-14 cents, the cost is THE SAME.

But you're right-- what is the job and mission of PEC?  According to the principles of co-operatives, it is not only to provide power for lowest possible cost but also to consider the sustainable development of the communities whom they serve. http://www.ica.coop/coop/principles.html

And so I ask, at what price "lowest cost"? In fact, lowest cost is a misnomer: by some calculations, the hidden costs of coal due to health impacts alone would increase its price 3-5 cents / kWh.  So should we buy more of our power from a coal plant like Fayette, which, while cheap on paper now, faces major cost increases in the next 1-3 years, and has been linked to increased asthma in our communities, the Fayette plant alone being linked to over 60 early deaths annually by Physicians for Social Responsibility:  http://www.nap.edu/openbook.php?record_id=12794&page=1 http://www.ucsusa.org/clean_energy/technology_and_impacts/impacts/the-hidden-cost-of-fossil.html   So coal is not only rife with hidden costs, ts actual costs are too high.

And natural gas is no picnic either, with our friends who live up over the Barnett Shale being able to light their tap water on fire, and emissions being linked to not only asthma, but also a cancer cluster.  All of these hidden costs add up, some of which are born by us directly, and others which affect our neighbors.

A few weeks back, someone was preaching about how "immoral" it was to burden a future generation with debt.  How much more immoral is it to ask not only our own co-op members but our neighbors around the state to bear these huge hidden costs, all in the name of "cheap" electric bills?

So what is the job and mission of PEC? Co-ops can differ from profit-driven utilities in being more socially responsible, based on a democratic vote of our members, which is what we will have once we have a proposal from the board and a free and fair vote in public.  We have a different business model from an investor owned utility, and far from being "a research facility", we can learn from other co-ops that have adopted wildly successful programs and merely do the same. I support that as an owner-member, as do most of my neighbors, which is what we voted for when we voted for these current board members.
On Wed, Nov 10, 2010 at 11:53 PM, <TEXAS66 at aol.com<mailto:TEXAS66 at aol.com>> wrote:
Thank you Andy.  I don't consider eight-times the cost to be "marginal".  Nonetheless, the issue here is what is the job and mission of the PEC?  Frankly, I really don't care what political spin is on anybody's mind, the PEC which we own to whom we pay for electricity is supposed to deliver (not generate) electricity to us members for the lowest-possible cost.  The PEC is not a research facility.  The PEC can't do job 1 efficiently now.  Unless and until they can, don't count on my support or endorsement of so-called renewables.

-- Ken Rigsbee

In a message dated 11/10/2010 11:09:39 P.M. Central Standard Time, andy.citizen at gmail.com<mailto:andy.citizen at gmail.com> writes:
Just FYI, we did a series of TPIA requests on the responses to this RFP-- CPS paid a premium and there were SEVERAL companies that came in with much lower bids.  And if you want to listen to what the guys at TAM have to say about how to run our co-op, those are the exact same guys in bed with TEC, Feulberg, etc.  Their spin does not have the actual best interests of co-op members in mind.

Yes, renewables are marginally more expensive-- for now.

As I've previously said, the costs of coal are going up.  Even without a price on carbon, new standards for smog and acid rain will cause coal to become more expensive.  I've previously said prices for natural gas are going up-- let me correct myself:  the price for NG now are at almost historical lows.  While they are not going up now, they have no place to go BUT up.  And given the volatility NG prices showed, say, in 2008, it is not something we want to build the fiscal soundness of the co-op on.  Continuing to back only coal and gas for our electrical production may mean low rates for you today but serious problems for rates in the future.

Renewables provide a hedge against rising prices, volatility, and future regulation.  We can look at the market forecasts and see that renewable energy is the future.  Even Barry Smitherman, conservative chair of the PUC, has said he doesn't want to be a coal plant in East Texas when the CREZ transmission lines are finished in the next two years.  Why?  Because wind is already cost-competitive with standard generation and solar has just become competitive with nuclear.  This is why Golden Spread Co-op just purchased a portion of wind farm outside Amarillo: http://amarillo.com/news/local-news/2010-10-02/co-op-buys-wind-project

The purchase and construction come at a good time, said Hornaday.

"There's a lull in the industry, so they got good terms," he said. "It's a smart move in the long run to do this now."

The Golden Spread facility will complement the 168 megawatt Antelope Station natural gas project the company is building near Abernathy. The generators at that plant will provide power much of the time, but will also be able to start in less than 10 minutes, are energy efficient and use virtually no water, providing a supplement to the intermittent generation from the wind ranch, Schwirtz said.

Besides providing renewable energy, the wind farm should benefit Golden Spread members by hedging against potentially high natural gas costs and future carbon and renewable energy legislation and regulation, according to a news release.

And if you would all bother to read the stuff Mike Sloan writes rather than just reference it, you would know that renewables and efficiency have been the downward cost drivers in Austin while coal and traditional generation have been the things busting their budgets.

Rather than engaging in meaningless speculation, let's wait and see what the proposals are for efficiency and renewables program so we can discuss those actual proposals rather than the straw man of what is going on in other places, like, say, Virginia, where they have neither the wind nor sun resources that we do.  That's comparing apples and oranges.

~~Andy Wilson
On Wed, Nov 10, 2010 at 9:01 PM, Milton Hawkins <milton.hawkins at gmail.com<mailto:milton.hawkins at gmail.com>> wrote:
Local solar farm gets powered up<http://www.mysanantonio.com/livinggreensa/local_solar_farm_gets_powered_up_107014183.html?showFullArticle=y>
>From the article:

The cost factor

Electricity generated by solar-photovoltaic technology today costs five times as much to produce as coal-fired energy, according to Bloomberg New Energy Finance.

While CPS won't release the price it will pay for Blue Wing power, sources say the utility will pay about 16 cents per kilowatt hour under the deal with SunEdison. Coal power costs the utility 1 to 2 cents per kilowatt hour for plants that are paid off; that jumps to between 7 and 11 cents if the cost of the plant is included.

Solar is costly even compared with other renewable sources, especially wind, which is narrowing the price gap with fossil fuels. The Energy Information Administration predicts that by 2016, photovoltaic power on average will remain more than twice as expensive as wind-generated. . . .

Some still wary

The Texas Association of Manufacturers, which opposed another 2009 bill to establish minimum levels of energy from renewable sources, says it supports "properly structured incentives." But the group remains wary.

"We have concerns with energy projects that are based on government mandates and are ultimately funded by captive ratepayers," executive director Luke Bellsnyder said in a statement. "Projects that are only financially possible because the costs will be passed on to customers - through above-market rates - are not a good deal for consumers and businesses."
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