EPA Clean Power Plan and Coal Mining Association

Response to the November 3, 2014 Gazette article by Stuart Sanderson, CEO of the Colorado  Mining Association:

Colorado has been in the forefront in diversifying its economy and its electricity production by increasing its reliance on its rich renewable energy resources, while maintaining relatively low electricity rates.  Portions of the Front Range which have sought opportunities to increase investments in innovative clean technologies have seen steady growth.   The EPA’s Clean Power Plan provides new incentives to continue to modernize our electricity system while saving money over time.

Polls have proven time and again that those of us living in the West want to preserve our clean air and water.  We understand that reducing pollution from our electricity and energy production plays a key part in preserving our quality of life.  Climate protection ranks high among the goals of voters around the country, with voters in Colorado and other swing states overwhelmingly endorsing the proposed Clean Power Plan, including  61 percent of undecided voters and nearly half of Republican voters.  Hart Research Associates, October 2014, http://www.nrdcactionfund.org/wp-content/uploads/2014/10/FINAL-Swing-State-Voters-on-Climate-Change.pdf.   Voters are much more likely to vote for both Republican and Democratic candidates who want to promote more renewable energy development.  Colorado College State of the Rockies poll, Conservation and Voting, 2014.  https://www.coloradocollege.edu/dotAsset/952beeaf-16a1-43ce-b53e-54eafc3a9a23.pdf.

The Mining Association and others reliant on the use of commodities like coal to generate power have been concerned that the EPA Clean Power Plan implementation will cause disastrous rate increases and loss of jobs.   Coal miners have suffered periodic downturns and job losses because of the volatile nature of the industry.   The coal mining industry faces its current reduced demand primarily due to the low price of natural gas, which has become more competitive in the marketplace.   We all must be sensitive to the impacts on residents in rural areas around the West as a more global and diverse economy allows us to be less reliant on development of fossil fuels for our jobs and economic prosperity.  Fortunately, rural schools, county governments and landowners hosting wind and solar facilities receive large predictable revenue injections from this new type of economic development added to their agricultural resources.

The EPA has encouraged flexible and creative methods for each state to reduce its carbon production, allowing each state to rely on its own strengths.   In fact, increased development of renewable wind and solar resources while reducing our reliance on coal electricity can benefit us in Colorado and around the West, offering stable or fixed prices at low rates, providing an important hedge against fossil fuel price volatility.  Wind and solar facilities produce electricity with zero fuel costs.  This drives down the market price for all electricity that is purchased in the market, not just the wind or solar energy, because the market price for all electricity purchasers is set by the last and most expensive power plant that was chosen to operate.  In this way more of the electricity demand throughout the year is met by lower-cost power.  In Colorado wind energy can be produced at costs competitive with natural gas, and solar energy prices have dropped at to unprecedented lows.  Lazard’s Levelized Cost of Energy Analysis – Version 8.0, Sept. 2014; http://www.lazard.com/PDF/Levelized%20Cost%20of%20Energy%20-%20Version%208.0.pdf.

SunShot, Photovoltaic System Pricing Trends, Historical, Recent, and Near-Term Projections, 2014 ed., September 22, 2014, http://www.nrel.gov/docs/fy14osti/62558.pdf. These declining costs, compared with the rising capital costs required to maintain outdated and inefficient coal-fired plants, make renewable resources cost-effective in the face of uncertain long-term fuel costs for conventional generation technologies.  Increased renewables will save consumers money.

These prices are not hypothetical, they are offered to utilities in Colorado today.   Public Service Company of Colorado and rural cooperatives receive record low prices for wind and solar energy now, and the result is overall cost savings because while the wind is blowing and the sun is shining, they can stop burning coal and gas, while maintaining a highly reliable combination of electricity generation resources.  American consumers in the top wind energy-producing states — Texas, Wyoming, Oregon, Oklahoma, Idaho, Colorado, Kansas, Minnesota, North Dakota, South Dakota, and Iowa, which produce more than 7 percent of their electricity from wind — have actually seen their electricity prices decrease by 0.37 percent over the last 5 years, while all other states have seen their electricity prices increase by 7.79 percent.  Increasing our portfolio of stable-priced renewables reduces overall power prices by offering a lower-priced alternative when fuel prices peak.  Wind energy in Texas is saving consumers $1.2 billion a year by moderating price spikes for electricity, and is saving society $3.3 billion a year by avoiding the costs of pollution and electric power replacement.  “Consumer and Societal Benefits of Wind Energy in Texas”, American Wind Energy Association, Nov. 2014, http://awea.files.cms-plus.com/ERCOT%20report%2011-7FINAL.pdf. “Wind Power’s Consumer Benefits”, American Wind Energy Association, Feb., 2014; http://awea.files.cms-plus.com/AWEA%20White%20Paper-Consumer%20Benefits%20final.pdf.

The landmark 2011 study by the Harvard  Medical School provides a statistical range of cost for the full life cycle of coal.  Their “best estimate” value of the cost of air pollution, mercury poisoning, asthma, cardiovascular disease, lung damage and other effects is 10 cents per kilowatt-hour.  When including climate damage from CO2 and black carbon, the best estimate cost of coal rises to 13 cents per kilowatt-hour.  This is more than three times the cost of utility-scale wind generation.  Even the independent HDR Study, commissioned for $500,000 by the Colorado Springs City Council to study the decommissioning of the Martin Drake power plant, provides a median cost of health and environmental impacts of coal (excluding impacts of climate change) to be over $336,000 per ton of emission.

Continued reliance on coal as our primary baseload resource will require higher rates.  Coal cost will continue to increase because shallow, easy to reach coal has been mostly mined out.  The U.S. Energy Information Agency forecasts a 1.4% increase above inflation, every year, in coal fuel between now and 2040.  Higher rates are also required to fund capital investments to replace outdated technology and to provide for reasonable pollution controls.  Colorado Springs Utilities has just announced rate increases because of the coal plant investments required to maintain a reasonable level of emissions, including mercury, ash, nitrous oxide, sulfur oxide, and methane, without even addressing carbon.   Millions more will be required within the next 10 years to reduce carbon emissions, while some of our leaders still insist that continuing to pour money into these outdated technologies.  As we all know, there comes a point when it is more cost-effective to buy a newer vehicle rather than continuing to maintain, repair and replace parts in an older out-of-date vehicle which has completed its useful life.  This is especially true of coal plants which require upgrades and additional equipment to continue to operate, when fuel-free alternatives are available to avoid rising coal and natural gas prices. The Clean Power Plan provides a levelizing influence so that all states can contribute to the overall goal of cleaning up our power system.  In the long run, Coloradans will save money by reducing pollution from our electricity generation.