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Chester: We’re Analyzing Coal Plant Alternatives

Granholm’s green jobs plan will cut need for new power

April 21, 2009 | By Glenn Puit
Great Lakes Bulletin News Service

Sierra Club
  Students from Northern Michigan University traveled to Lansing last year to urge state lawmakers to “Move Beyond Coal.”
Last week, in Bay City, the Michigan Department of Environmental Quality held public hearings on the last of the four new coal-fired power plants that utilities want to build in communities around the state.

From Marquette and Rogers City to Holland and Bay City, the utilities are pushing hard to bring new coal power to Michigan. Their drive, however, is meeting strong resistance from local and statewide citizens groups concerned about coal-burning’s public health and environmental issues.

But many coal opponents are raising another objection, based on their concern about the future of the state’s energy economy. They question whether Michigan will be able to fully catch the rising, nationwide wave of clean-energy jobs if utilities sticks to their current energy strategy—building more coal plants. They point out that utilities in some states, including Colorado, are abandoning that strategy and turning to energy efficiency and cleaner energy sources that not only to cut costs and pollution, but also foster more green-collar jobs--from heavy construction to handyman work.

Last week’s hearings, about the 930 MW coal plant that Consumers Energy wants to build along the Saginaw River, kept the controversy about the state’s energy future at a full boil—and not just in the packed hearing room, where, on the first night of the hearings, some supporters of the plant repeatedly heckled people who told MDEQ officials that they opposed the plant.

The next night, according to eyewitnesses, the atmosphere was much calmer, and far more people spoke against the plant than for it. But the controversy continues in Lansing, where the state’s two largest utilities spend heavily lobbying lawmakers and funding election campaigns.

At the center of the debate is Governor Jennifer Granholm, who in February ordered the MDEQ to perform an alternatives analysis for each proposed coal plant. Those analyses will determines whether there’s a need for the additional power—and whether burning coal is the best way to provide it.

The governor’s order attracted the attention of state Attorney General Mike Cox, who declared that it was illegal. Then, when that attempt to stop the new process failed, 72 state representatives tried; they sent a letter to the governor denouncing the order and urging her to drop it.

But both Ms. Granholm and MDEQ Director Steve Chester remain unmoved, however, and the alternatives analysis is now underway not only for the Bay City plant, but also for the three plants that had already faced public hearings. The agency continues to accept written comments about the Bay City plant, officially known as the Karn-Weadock Generating Station, until May 6.

New Things to Consider
In an interview with the Great Lakes Bulletin News Service, Mr. Chester confirmed that he was determined to follow what he says is the law on the matter.

“The director of the DEQ is able to exercise his authority under federal or state law to order an alternatives analysis,” he told the news service, pointing out that Attorney General Cox did not question his agency’s authority—just the governor’s directive—in the matter.

“As a result,” Mr. Chester said, “we put the companies proposing new coal plants on notice that the DEQ has decided to exercise its authority under the federal Clean Air Act and our state air rules to require them to do an alternatives analysis. There is no formula; it is a matter of discretion.”

Given the sweeping changes in energy policy now proposed at the federal and state level, clean-energy advocates say that the new coal plant proposals could fail their “alternatives analysis,” which can consider a proposed plant’s economics.

Two weeks ago, at the federal level, for example, two U.S. congressmen introduced a “cap and trade” bill for controlling CO2 emissions—a profuse byproduct of burning coal—that could make new coal power pricier than it already is. And last week the U.S. Environmental Protection Agency launched a rule-making process for CO2 that could have the same effect.

Meanwhile, at the state level, the governor’s recent energy initiatives, which are designed to spark the growth of thousands of new clean-energy jobs, could also make it more difficult for utilities to prove they need more power and that coal is the best way to provide it. Ms. Granholm’s initiatives will facilitate weatherizing tens of thousands of homes and businesses, installing small-scale solar panels and wind turbines on rooftops and in backyards—and greatly reducing statewide demand for electricity.

A Big Challenge
Mr. Chester acknowledged that his agency has its hands full. It is simultaneously processing permits for four new coal plants and climbing a very steep learning curve.

“The challenge has been that we have not had any new coal plant applications in over 20 years in Michigan,” he said, “so this is very challenging for us, and it has taken a lot of time and resources.”

He added that including a regulatory regime for CO2—the most prolific climate-changing gas—is also daunting.

“For climate change and CO2 regulation, there aren’t any real established standards, and we are in a time of incredibly rapid change on the issue of CO2 regulation,” Mr. Chester said. He added that his department would seek further guidance from the federal government on future carbon regulations and their impact on Michigan’s environmental policy.

And he said that Governor Granholm’s order for an alternatives analysis for the coal plants also means taking a closer look at the proposals’ financial costs. While MDEQ focuses on assessing the environmental and health effects of each of the four plants’ emissions, the Michigan Public Service Commission will perform a cost analysis on each plant. MDEQ will then determine which is the better choice, considering both environmental and economic factors: clean-energy alternatives, including energy efficiency and renewable energy sources such as wind turbines, solar panels, and geothermal power, or coal.

Mr. Chester agreed that the MDEQ is in large part navigating new waters, and that his department and MPSC are looking at some very large numbers.

For example, in analyzing the Bay City plant, the state must determine whether its cost—which Consumers says will be at least $2 billion, and which its customers will cover through higher rates—is worth it, while MPSC must make sure that the state has enough electricity.

Less Demand, More Choices
Consumers spokesman Dan Bishop said that Consumers is also simultaneously working towards energy efficiency and using more renewable energy. He pointed out that about 4 percent of his company’s power supply now comes from renewable sources, including hydroelectric, wind, and biomass, and that more is on the way.

Mr. Bishop said that his firm wants to construct hundreds of wind turbines on 36,000 acres of farmland in Mason and Tuscola Counties. When the wind blows, the turbines would provide almost as much power as the proposed Bay City coal plant—about 900 MW.

But the company continues to maintain that it will still need its proposed Bay City coal plant at the time of its scheduled completion, in 2017.

Yet clean-energy advocates opposed to building a new Bay City plant continue to insist that there is simply no need for the massive, carbon-spewing project.

One of those advocates, Anne Woiwode, director of the Michigan Chapter of the Sierra Club, pointed to one energy-producing facility nearby that could assist in meeting Consumers’ need for new power. It is one that Consumers has not mentioned during the debate over its coal plant: a natural gas-fired "peaker" power plant--one that runs only on the hottest days, when company needs extra power. Such plants are well known for emitting far fewer pollutants than coal plants, including absolutely no mercury and significantly less CO2 per kilowatt.

Utilities traditionally prefer not to operate peakers unless they have to, because natural gas has been very expensive over recent years. But that has apparently changed; new drilling techniques have tapped into huge gas reservoirs that were hard to reach before.

Combined with falling demand, the supply of natural gas has risen sharply, and its prices has fallen by more than half over the past year.

Ms. Woidwode said it would make far more sense for Consumers to turn to natural gas, not coal, if it truly believes it will need more new, fossil-fueled “base load” electricity in the near future.

But, Ms. Woiwode said, efficiency is still the best way to avoid spending billions of dollars for a new coal plant. She pointed out that the MPSC has already recognized this, and yet basic energy conservation measures have yet to be implemented in the state.

The Michigan Department of Environmental Quality is accepting written comments about Consumers Energy’s proposed new coal plant, including comments about the need for its power and whether burning coal would be the best way to provide it, until May 6. Glenn Puit, a veteran investigative reporter, is a policy specialist at the Michigan Land Use Institute. Reach him at glenn@mlui.org.

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