We picked a fine time to shutter those coal-fired power plants

Nevada zigs while everyone else zags.

The governor signed into law Senate Bill 123, which prematurely closes perfectly good, acceptably clean coal-fired power plants and replaces their output with natural gas and renewables.

A funny thing happened on the way to the bill signing. The price of coal for power generation dropped four cents per million Btus, while the price of natural gas increased 78 percent March 2012 to March of this year.

According to The Wall Street Journal, coal use for power went up 13 percent, in the first quarter, while natural gas use for power dropped 8 percent.

Of course on Planet Green this and its impact on your power bill is irrelevant. On Wednesday, WSJ reports, White House energy and climate czar Heather Zichal said Obama is about to slay the mythical climate change dragon, saying the focus will be “on the power plants piece of the equation.” The administration is behind schedule in finishing emissions rules that would effectively ban new coal-fired plants using current technology. Zichal did not say anything about existing coal plants, but the EPA can regulate them, too.

No one predicted the price of natural gas sold to power plants would fall from $9.26 per thousand cubic feet in 2008 to $3.52 in 2012, but it did. Past performance is no guarantee of future performance.

Since there has been no global warming in 16 or 17 years, is this trip really necessary.

EIA figures on power generation

EIA figures on power generation

Newspaper column: NVision has hidden costs

In testimony to a state Senate committee, NV Energy spokesman Pete Ernaut estimated the company plan to scrap coal-fired generators early and replace them with natural gas and renewables, cutely labeled NVision, would add no more than 4 percent to power bills over the next 20 years. Instead of rising by 32 percent under current plans, rates would climb 36 percent, plus inflation.

But there are hidden costs and a myriad of assumptions that may not pan out, as reported in this week’s newspaper column, available online at The Ely Times and the Elko Daily Free Press.

As part of its plan, NV Energy submitted Senate Bill 123 to the Legislature. The bill would cut the company’s risks and assure ratepayers and taxpayers cover the costs.

To replace the coal generation, the company plans to build 2,000 megawatts of natural gas-fired power plants as well as 150 megawatts of renewable energy and contract out for another 450 megawatts of “green” energy.

Reid Gardner plant would close early. (Sun photo)

While the impact on ratepayers appears relatively minor, left unsaid was what the impact of adding 600 megawatts of “green” power might have on federal, state and local taxes. SB123 takes nearly $300 million of ratepayer money and gives it to those who build solar and wind generation at homes, businesses and government agencies, covering as much as 50 percent of the cost of construction.

Additionally, smaller solar panel projects are exempt from both sales and property taxes. Larger facilities are eligible for various tax abatements, too, as well as millions in federal Energy Department grants and production tax credits and nearly free public land.

Such hidden costs are not easily quantified and affect even those who are not served by NV Energy.

Once these renewable energy projects are built the price per kilowatt-hour of electricity will be locked in with 20-year contracts with annual price increases, no matter what happens to the price of natural gas or technological breakthroughs.

Dan Jacobsen of the attorney general’s Bureau of Consumer Protection, which represents ratepayer interests at the Public Utilities Commission, said, “In addition to replacing about 1,000 megawatts of coal capacity, the bill also would be replacing a very large amount of power purchase agreements right now that ratepayers don’t have to provide a return on.”

NV Energy’s profits come from a rate of return on equity, which is currently about 10 percent, but the more equity in power plants and power lines the greater the return.

Jacobsen also said SB123 could deter the PUC’s ability to control costs. One part dictates the “Commission shall approve” costs, and another says emissions reduction “shall be deemed to be a prudent investment. The electric utility may recover all just and reasonable costs …”

Read the full column at the Ely or Elko websites.