16 Feb KUT, Statesman Wrong on Green Power?

With a whole lot of admiration for the very good folks reporting on Austin Energy’s electricity generation plan, 2010-2021 — and at the risk of doing a little damage to these friendships: yesterday’s frontpage headline at the Statesman was outright inflamatory: "Green power has price" (link to article)

That’s way off the mark. Some of us have been trying to convey the message for several months that green power can cost more, depending on timing of investment and total strategy. An important fact, in Sept 2009 the Texas PUC reported that "Wind power had had the effect of lowering electricity prices across the state." In other words, Texas wind was suddenly retailing for less money than coal, previously the lowest cost form of electricity. That trend is expected to continue.

Additionally, on Feb. 4, KUT reported that AE’s generation plan would cost "20% more to reduce CO2 20% by 2020." Also catchy, also too simple.

Here’s some important facts, regarding our electricity bills and future cost increases:

1. Austin Energy is in the red

    > Losing money
    The business has been losing lots of money the last couple of years (nearly $12M in 2009) on unrecouped Transmission costs and is expected to continue losing money until a "transmission rider" is added to our bills, probably in 2013. AE projects losses of $95M in 2015 if this issue is not resolved. That’s regardless of any generation plan.
 
    > Huge workforce turnover
    Check this out, 60+% of AE’s managerial staff is up for retirement (30%+ today); and 35%+ of AE’s total workforce by 2015… Geez!

    See GM Roger Duncan’s "Austin Energy Business Model Presentation to Council from Nov. 4th, here for more info.

2. Austin Energy hasn’t raised base rates since 1994
   
    > Austin Energy really in the red today
    AE is currently responsible for delivering funds to the City in a General Transfer (about $100M this year). The City uses this money to maintain its operations, our parks, police, etc. According to AE’s business model presentation (link again here) current "expenses are growing faster than revenues." So — regardless of any generation plan there’s some catching up to do. AE projects it’ll be $9.3M in the red (overall) by the end of fiscal year 2010, and reminds us that since 2007 they’ve been asking City Council (AE’s board of directors) for a rate increase.

3. Austin Energy’s plan: a gradual bill increase over next 10 years

    > Pollution is becoming expensive.
    In 2009, AE signed on for aprox $225M on SOx pollution reduction equipment; "scrubbers" they’re called. The new equipment is necessary to reduce SOx impacts from Austin’s coal plant. Note that Austin’s plant was one of the top 10 worst emitters of SOx in our entire state (out of over 2,000 industrial complexes surveyed by the TCEQ) 2003-2007.
    Meanwhile, President Obama has made it clear, including statements at his recent State of the Union, that he will to continue working to make dirty energy more expensive than clean energy. This means CO2 costs, primarily. Also new regulations on NOx (likely to be formulated before this Summer).
    CO2 is expected to have some sort of cost attached to it this decade. AE knows its coal plant is one considered 5th worst emitter of CO2 in the state. It only makes sense to "go green" in this sense, in order to avoid future sticker shock. Of course, no one knows when legislation will come online or how much it will cost, but the trend in utilities is to prepare now for these kinds of changes; enable them, even.
    I’ve got lots more on pollution costs here.

4. "Green" costs vs. dirty costs
    Lots on this here.
    And here’s a preview from part 2 of this week’s "Misunderstanding Austin’s Electricity Plan" series — which demonstrates how making a MUCH bigger commitment to green power can save cost less than staying dirty: 
    "Cary Ferchill, chair of Solar Austin, created a generation scenario which shut down Austin’s coal plant — our dirtiest, most toxic, most destructive, and most affordable form of reliable electricity, in the year 2020. The scenario was first run at UT’s LBJ School of Public Affairs before being added to Austin Energy citizen review process last year. The results of this scenario are ground changing: Cary’s "quit coal" generation plan costs less than the current Austin Energy Plan (which keeps the coal plant open). Why? Cary’s plan exchanges variable (and highly volatile) fossil fuel generation costs for a portfolio of cleaner capital costs, i.e. well-timed purchases of solar and energy efficiency equipment. Cary’s plan also assumes geothermal base-load generation comes online in a few years, Austin Energy’s plan assumes biomass becomes more viable as baseload. Both are unknown.
    "The net result? According to Austin Energy’s analysis: Cary’s plan provides a 62% reduction in CO2, tremendously greater local economic investment, and a lower annual cost during each of the next 11 years compared to AE’s plan."

##

Thanks, your comments appreciated – Chris