December 2008 Archives

Even though there is no open seat on the Federal Energy Regulatory Commission currently, lunch-table chatter in Washington continues to focus on the next likely candidate to join this crucial agency in an Obama administration. And the name gaining most of the traction lately is Iowa regulator John Norris, a Democrat.

FERC Commissioner Jon Wellinghoff is considered by many in the Washington energy community to be the clear front-runner to chair FERC once Obama settles into the White House. Wellinghoff, a Democrat, would take over for Chairman Joseph Kelliher, a Republican originally tapped for the commission and chairmanship by President Bush.

The Tennessee Valley Authority's coal ash spill, besides lending more life to the clean-coal wars, will almost certainly move the issue of handling coal combustion products much further up the Environmental Protection Agency's list than it would have been.

Environmentalists and the utility industry have been fighting for a long time over the rules for so-called CCP disposal. Early this year the Utility Solid Waste Activities Group told EPA that environmental groups' call for regulation under the hazardous-waste title of the Resource Conservation and Recovery Act was unnecessary.

Lest we forget what a free country we live in: The Tennessee Valley Authority's coal-ash disaster last week had at least two law firms, maybe more, immediately inviting plaintiffs from victims.

Kennedy & Madonna, Robert F. Kennedy Jr.'s firm, and Levin Papantonio Thomas Mitchell Echsner & Proctor said they had joined to investigate the spill and would pursue claims for property owners. That was the first thing that came up December 26 when one googled ''TVA coal ash spill.'' Lots of legal action seems inevitable. There is also going to be a bunch of repercussion for the coal industry that it does not need right now.

Already there's been a word-war of unprecedented vigor going on in public about what the future of coal should be. Clean coal versus there's-no-such-thing-as-clean-coal. It is played out on television, in newspapers, on the web and on giant billboards in the Washington Metro system. It's not light-hearted.

Getting too big for their britches? No, just too big for their meeting venues. Now both wind and solar power industries have outgrown their convention spaces.

In August, the American Wind Energy Association announced with regret and delight at the same time -- how could one help it? -- that its 2009 conference was too big for Minneapolis, where it had been planned since 2006.

After expressing thanks to local officials, AWEA said an ''unprecedented explosion in demand'' for exhibitor space and hotel rooms exceeded the entire exhibition space in the city's convention center. AWEA ended up moving its event to Chicago.

Today, the solar industry associations made a similar announcement.

Call it the Gorat's Factor, since it may be considered pocket money that Warren Buffett spends at his favorite steakhouse in Omaha.

In 2002, a number of once fairly high-flying merchant power firms had their wings clipped by ratings agencies and investors who had lost confidence in their energy trading prowess. A number of firms, including Mirant, Dynegy, Reliant Resources and Williams saw their credit ratings decline, and their stock prices plummet. Mirant did eventually go into bankruptcy. Dynegy held on, barely. Reliant and Williams? Well, they turned to Warren Buffett and borrowed money that bought them some time.

The FutureGen Alliance has not given up hope for its Mattoon, Illinois, power plant with a carbon capture and storage system. Far, far from it. Whether the plant will get the federal money it feels was pulled out from under it isn't apparent yet, but there could be reason for hope.

In anger after the Department of Energy withdrew its promise of money to share the cost of the project, the organizers and state and local groups mobilized a tremendous effort in the state to raise money and popular support. Last week it closed on the sale of 400 acres near Mattoon, bought with funds raised by both the alliance and Coles Together, a county economic development organization. Also last week, the Illinois Department of Commerce and Economic Opportunity announced results of tests it said confirmed that FutureGen's carbon dioxide output can be absorbed in a thick layer of porous rock and kept in place securely by a layer of non-porous cap rock.

France's Brice Lalonde, for whom activism in the face of the establishment has been a way of life, is participating in the international talks on global warming as his country's lead negotiator. But even as he does it, he says, ''I feel frustrated as we negotiate, because the problem is getting worse.''

He and Neal Lane, a former director of science and technology in the Clinton White House and now a professor of physics at Rice University, noted Monday that the experts have over the past number of years been discussing ''a low-range'' warming trend, in roughly the 2-degrees-Celsius range over roughly the next 100 years. In an event at the James Baker Institute at Rice Monday, Lane said the ''frightening thing'' was that even at the low range the Earth's climate could reach ''the tipping point.''

The decision by MidAmerican Holdings, owned by Warren Buffett's Berkshire Hathaway, to invest $230 million in a Chinese battery manufacturer as the global financial system melted down in September looked all the wiser Monday.

BYD, a Shenzhen-based battery company turned auto maker, this morning rolled out the first hybrid electric vehicle for sale in China's retail market, beating both US and Japanese car companies to the punch.

While the biodigester on an Oregon farm isn’t going to produce as much natural gas as, say, a developed Haynesville shale well in Texas, every little bit counts.

NW Natural is partnering with the Bonneville Environmental Foundation and Threemile Canyon Farms, LLC to build a first-of-its-kind biodigester at Boardman, Oregon, the Washington State-based utility said Friday. The design, patented by J-U-B ENGINEERS, of Kennewick, Washington, will mark the first phase in a multiphase project and employs a technology that could be implemented at farms of all sizes throughout the region.

Transformation has already happened in one way in the power industry: The conversation is entirely different from what it was even a year ago, even six months ago. The talk is of transformation by smart grid, distributed power, renewable energy and thousand-mile transmission lines. Less talked about, but a subject of attention, is power storage. Talk about transformational.

Joseph Kelliher, chairman of the Federal Energy Regulatory Commission, remarked to our colleague Craig Cano in an interview that a breakthrough in storage "would really transform the whole industry." Depending on how big a breakthrough it was, it would indeed change perhaps the most fundamental fact that sets power apart from every other commodity on the planet: the fact that it cannot be stored.

The European Union's compromise agreement today on greenhouse-gas emissions strategy could reverberate in the US when Congress and the Obama administration put together a plan for this country. The big move in Brussels was giving in to coal-heavy Eastern European countries' demand that some carbon dioxide emission allowances be allocated free at first, and not only auctioned, as the European Commission's original proposal had called for. Auctions will be phased in instead.

The auction-only strategy is high on many policymakers' lists here in the US. The phase-in is high on many coal-burning states' lists.

Well, nothing's as simple as it seems.

Here we had been looking forward to a season's worth of entertainment from America's clean-coal interest group, and behold! -- it's already gone. Thursday I posted a link to an amazing holiday-song feature at the American Coalition for Clean Coal Electricity's web site. Today the link is dead. Joe Lucas, who blogs for the group at behindtheplug.americaspower.org, explained the decision to pull it came after media attention.

Many of us in the industry are not immune to the inevitable 'natural gas' jokes best suited to a five-year-old's sense of humor. But 'natural gas' is no laughing matter for the Environmental Protection Agency, which reportedly has proposed charging farmers and ranchers an annual fee for livestock that produce excessive greenhouse gases.

We're a little late to this party, but in case you've missed it: the most astonishing entertainment morsel for those of us interested in coal, clean coal, climate change, energy policy, ... just about anything, really.

The American Coalition for Clean Coal Electricity has holiday cheer for all. At its America's Power site, it has built an animated show featuring joyful little lumps of coal, on which the site visitor can place hats or scarves.

Spending for green jobs can provide fast-acting relief for the economy. Energy-efficiency measures can provide an intermediate-term cure. But electricity demand is going to grow beyond these measures.

Spending now to incentivize big new-world infrastructure investments would be ''tantamount to transplant surgery -- last-resort, high-cost, high-risk interventions'' with "long lead times and many pitfalls." This according to one of the witnesses at Senator Jeff Bingaman's hearing on economic stimulus ideas.

It might be best to make incremental gains now, energy analyst Kevin Book told Bingaman's Energy and Natural Resources Committee Wednesday. Book, senior vice president at FBR Capital Markets, suggested US spending on "hybrid" measures that improve the energy/environment picture although they do not ''transform'' it.

In these morose economic times, one would imagine that holiday party-deprived executives would clamor to attend a business luncheon for the food alone. But at the Manhattan Institute for Policy Research's luncheon in New York on Tuesday, the main draw for the 200-plus crowd might actually have been the luncheon speaker himself.

Meeting with former Vice President Al Gore today in Chicago, President-elect Barack Obama said he agreed with Gore that, on global warming, ''the time for delay is over, the time for denial is over.'' Climate change offers not only a problem, but also an opportunity, he said, and he plans to address the issue in his economic recovery plans -- creating jobs, redesigning energy use, increasing efficiency, and more.

The Department of Energy's Electricity Advisory Committee is set to put in final form three reports making recommendations about the power industry. One, "Bottling Electricity ..." is about energy storage. A draft version contains some useful information about storage, but it seemed most interesting that if an editor's note is agreed to, the final version may delete reference to a little-known report on the future role that "massive energy storage" will have to play in a big build-out of wind and solar generation.

It could be because the little-known report just seems too negative, in that it projects an absolutely huge cost.

The wish lists have been taking shape.

President-elect Barack Obama said last weekend that the stimulus package due in January should make "down payments on making our economy more energy-efficient." He also said that shaping the stimulus package or packages would not be lobbying-business-as-usual, not pork-barrel politics. Indeed, influential groups' wish lists do seem to indicate that some real energy-efficiency vision is underlying the agendas. But there certainly is lobbying, and lots of it. It would actually be impossible to make the package without groups' input, and that qualifies as lobbying. How much pork-barrel stuff gets through remains to be seen.

Whatever energy items make it into the package, details will be telling.

Columbia Gas of Pennsylvania's campaign to promote gas safety is taking center stage in Moon Township -- literally.

Nearly four years after a residential gas explosion seriously burned an 18-year-old after he returned home from school, the utility has hired an acting troupe from Pittsburgh's Civic Light Orchestra to perform a musical show -- '' I Love Gas'' -- for students across the area. The most recent performance was Friday at Yough Intermediate Middle School.

Politicians from Barack Obama on down have been talking up clean coal technology as a key element of the nation's carbon-constrained energy future. But is there such a thing as clean coal?

Not if you believe a very loud, attention-getting TV commercial that began airing on national cable channels this week.

The so-called "Reality Coalition" -- a group of environmental and conservation groups that includes the Sierra Club and Natural Resources Defense Council -- has launched an aggressive campaign seeking to shoot down the idea that clean coal is an answer to climate change.

The game of speculation about presidential cabinet appointments never gets old in Washington, though it gets pretty tired. Now that many slots have been filled, the mainstream media has gotten around to dropping names of those talked about for Obama's Energy Department. The names are talked about, Al Kamen at the Washington Post reported today, but it is not apparent -- of course -- how meaningful they are. Clearly the real process so far is being held closely by the transition team.

Most of the names mentioned this morning were not new on the speculation circuit, but one of them was different: Ralph Izzo, chief of Public Service Enterprise Group.

On Wednesday, NRG Energy chief David Crane (like many others nowadays) described at least some of what he would like to see in a national energy strategy, and it brought to mind a nagging vocabulary problem. Nomenclature problem. Whatever one might call it.

Ongoing arguments about a national renewables requirement have included spats over including nuclear power, and sometimes energy efficiency measures. Some want to include them in the initiative du jour: renewable energy standard, renewable portfolio standard, energy efficiency standard, clean energy standard. But what if we just jettisoned the awkward terminology altogether. Instead, a ''no-carb'' menu.

As some hope the Environmental Protection Agency will take some action on greenhouse gases, and others hope it will not, an impressively diverse coalition said this week that it had agreed on principles for EPA to use in shaping GHG regulation. The group of 12 -- electric utilities of several types, power generators, industrials and the Environmental Defense Fund -- is "prepared to work constructively with EPA." But it was hard to find the beef.

Perhaps it's code, and EPA has the key.

France's EDF did say in October that it was no longer interested in trying to buy Constellation Energy. Actually, it said that given the state of financial markets then, the time was not right. It seems one had to take the French company literally, because ... it's back.

The markets don't seem to have changed a great deal, but clearly something did. The new offer from EDF stirs the pot in Maryland, where MidAmerican Energy's $26.50/share offer has generated lots of mixed feelings.

Jay Hancock at the Baltimore Sun noted today that Constellation's share price was up a few dollars this morning, to $28-plus, meaning that at first blush the market likes EDF's idea, which would further the EDF-Constellation nuclear venture while leaving Baltimore Gas & Electric pretty unaffected. The offer is complex, and all its implications weren't immediately clear

T. Boone Pickens' ambitious campaign to convert most US vehicles to natural gas is taking root in the billionaire oilman's own hometown -- but is there more to recent developments in Dallas than meets the eye?

At the urging of Pickens and Dallas Mayor Tom Leppert, the Dallas Area Rapid Transit (DART) this week halted its plans to buy a fleet of more than 500 new diesel-powered buses. According to Tuesday's Dallas Morning News, Leppert said buying buses that run on diesel instead of compressed natural gas would send the wrong message. "As a city, we have been very conscientious in moving forward and being at the forefront of environmental issues," Leppert was quoted as saying.

But is it really all about the environment?

The UK's independent Committee on Climate Change told the government Monday that by 2020, it should cut its emissions of carbon dioxide 42% below 1990 levels if a new global deal to abate the effects of climate change is reached by 2012. That is a tough goal. In a report that gave the UK a large set of recommendations for action, the committee also said the government should allow new coal-fired plants to be built only if they are retrofitted with carbon capture and storage equipment by the early 2020s. If the deadline is not met, the suggestion is, plants may have to face harsh limits on hours of operation.

The committee's CEO, David Kennedy, told Platts' Emissions Daily Monday that the recommendation means the market must not be permitted to control when CCS technology is deployed.

Avoided cost. There's a term we don't deal with much nowadays, but there was a time when it was everyday talk in the power industry -- thanks to the Public Utility Regulatory Policies Act, the law that observed its 30th birthday in November, as my colleague Peter Maloney recalled in a post this past Wednesday. He took a look at PURPA in our weekly publications, and will explore it and its progeny more in the coming months. At any rate, way back when, PURPA regulations made qualifying power facilities get paid amounts linked to utilities' avoided costs.

In the 1980s we even published something called Avoided-Cost Quarterly. Not everyone can say that. But the term is being used in a different context now.