Vol. 3, No. 23
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October 1, 2006
Nevada's Online State News Journal
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Big Bonus For Investors
Off The Agenda
Questions Of Power Sources Remain
At PUC Hearings On Coal Fired Plants
by Johnny Gunn
At hearings before the Nevada Public Utilities Commission (PUC) Sierra Pacific Resources has withdrawn a request that would cost utility customers in the state $935 million. The hearings to determine if a new 1500-megawatt coal fired power plant should be built in White Pine County, and for a transmission line to connect the northern tier of counties to the south will continue for some time. The company owns Sierra Pacific Power Company in northern Nevada and Nevada Power Company in the south. The transmission line would connect the two utilities for the first time and the complex in White Pine County would end up costing somewhere around $3.7 billion.
Initially Sierra Pacific Resources wanted an add-on to the request by asking that the Ely Energy Center be considered a critical facility. The two-percent add-on would be specifically for investors, and the amount would total $937 million. The utility is allowed 10.25 percent profit margin, and the add-on would increase the margin beyond that figure. It was pointed out that utility rates in Nevada, particularly in the south are among the highest in the west already. The coal-fired plant is designed to bring lower cost electricity on line to both ends of the state.
The "critical facility" concept may still become reality and if it does it would allow Sierra Pacific Resources to come back to the PUC and ask for that add-on rate increase in the future. By commission rule they could ask for as much as five percent.
The concept of the plant being coal-fired has raised questions among environmental groups and the state's Bureau of Consumer Protection. Coal-fired power plants are among the largest contributors to air pollution and so-called greenhouse gasses such as carbon dioxide. The plants also contribute large amounts of mercury to the atmosphere. Consumer Advocate Eric Witkoski said his office doesn't oppose the project as such but does question whether or not Sierra Pacific Resources has done enough background work on the project. He said in testimony he would like to see a one-year moratorium on the project in order to answer so many questions.
Witkoski pointed out that at least one other company, LS Power, is looking to build a similar plant in Ely and he wondered why Sierra Pacific Resources failed to ask LS Power or any other potential power supplier for proposals so cost estimates could be verified. Sierra Pacific indicated they felt no desire to look into other's costs.
Coal-fired plants have come under increasing opposition, and in California, energy from coal-fired plants cannot be imported. If the transmission line is completed between Ely and Las Vegas, any extra energy could not be exported into either California or Arizona according to Witkoski. Nevada has ample opportunity to use renewable energy resources, by law the utilities are required to reach a minimum level of renewable energy, but are lagging in their efforts. Under the Nevada Portfolio Standard, the two utilities are required to generate or purchase a certain percentage of renewable energy to supply their customers, according to a recent statement from the PUC.
By 2015, renewable energy and energy efficiency measures must account for at least 20 percent of the utilities energy portfolios. A recent purchase agreement between the utilities allowed Nevada Power to be in compliance with the non-solar portion of the portfolio standard for the first time. "With a megawatt here and a kilowatt there, we are starting to see the meaningful development of renewables in our state," said Rebecca Wagner, PUC Commissioner. "While we still have a ways to go, I believe we are on the right track for success."
While the rest of the world, and utilities in this country work on the concept of gasification of coal, Nevada utilities do not. Coal fired power plants are the bane of conservationists, people that live down-wind of coal fired plants have nothing good to say about them, and the only good thing that can be said is that of the fuel sources that are available, that is, not renewable, coal is the cheapest to burn. Nevada Power Company officials claim that newer coal fired technology is such that plants can be considered clean burning. Fossil fuels are simply not clean burning, and extensive equipment must be installed to clean the air of pollutants before it leaves the plant. Many conservationist groups, scientists that study air pollution, and those that deal with greenhouse gasses believe it is coal burning power plants that contribute the most to the much discussed global warming.
There is a process that has been in research and development stages since World War II that many power companies around the country are putting into production, coal gasification. Companies as diverse as General Electric, Texaco, and Shell have been working to make the process economically feasible. Gasification of coal creates hydrogen and carbon dioxide, and that's why the fuel oil companies are interested in the process. Think hydrogen power cells for automobile fuel. It's also the use of hydrogen as a fuel in a power plant that makes for clean burning. The byproduct is water. The collection of the carbon dioxide is also a means of keeping air pollution at absolute minimums. There are markets for the carbon dioxide that is collected. Those markets include the processing of crude oil.
According to a report issued by a group known as Research and Markets (http://www.researchandmarkets.com/reports), "Surging oil and gas prices combined with supply security and environmental concerns are prompting power generators and industrial firms to further develop coal gasification technologies." In the new study Coal Gasification 2005: Roadmap to Commercialization, "the process of breaking down coal into its constituent chemical components prior to combustion will permit the US to more effectively utilize its enormous, low cost coal reserves."
Turning coal into a synthetic gas isn't a new concept according to the latest reports. "Gasification offers one of the most versatile and clean ways to convert the energy contained in coal," the report states. Many companies are interested in the process because of the release of hydrogen, a volatile and yet clean burning element. Mixed with oxygen it simply makes water when ignited.
In a report issued by the Department of Energy (DOE), world energy demand is expected to double over the next several decades. That report can be found at http://www.netl.doe.gov/publications. Besides being an economically viable fuel for power plants, the coal gasification process leads to cleaner air, and Texaco believes, "That enough is known about the science of climate change to merit a serious and constructive response by energy companies and government."
According to many sources as much as 37 percent of the world's electricity is currently generated from coal. The world supply of coal is immense, and it's only the air pollution from burning that makes it detrimental. Texaco's process they say can gasify coal, heavy oil, petroleum coke, and refinery residue. For power plants, the gasification of coal is one more answer to a combination of clean air and lower costs.
According to a study called Waste Coal to Clean Liquid Fuels by WMPI of San Francisco, waste coal is just as good a product for gasification as the highest grade. Conversion of synthesis gas, that is the product of gasification to high-value products such as liquid fuels and chemicals is the desirable end. Liquid fuel in the form of hydrogen and chemicals that can be used in other industrial processes makes even the lowest grade of coal an economically viable product. Sierra Pacific Resources has not released any studies that they may have done or are contemplating doing in the future. This contributes to the high cost of energy in Nevada.
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