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Jamestown Coal Plant Issue Summary and Fact Sheet -- February 2011

Jamestown Coal Plant Issue Summary and Fact Sheet -- February 2011

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Clean Energy for JamestownSubstituting Energy Efficiency for Coal Burning
By Clean Energy for JamestownFebruary 2011
Contact: Walter Simpsonenconser@buffalo.edu,(716) 839-0062The Jamestown Board of Public Utilities (JBPU), the municipal utility serving Jamestown, NewYork, is proposing to build a $500 million 50 megawatt (MW) experimental coal-fired powerplant to replace its aging and polluting coal-fired Carlson plant. Originally envisioned as aconventional coal plant with no controls on climate-changing carbon dioxide emissions, thecurrent version of this project is a proposed carbon capture and storage (CCS) demonstrationproject.The JBPU has been pursuing this new coal plant project despite its huge cost and the fact that itis not needed to meet Jamestown
ratepayers’ electricity
needs which are now met almost entirelyby low cost hydropower from the New York Power Authority (NYPA). The project has beenopposed by our coalition of twenty local, regional, state, and national environmentalorganizations which maintain that through conservation and efficiency the JBPU can reduce its
ratepayer’s electric demand sufficiently that ratepayer electric needs can be met entirely by the
JBP
U’s NYPA allocation with only occasional modest purchases from the regional grid – 
thus
making the proposed new coal plant, as well as the operation of the JBPU’s aged and polluting
existing coal plant, entirely unnecessary. Eliminating coal-burning with a more aggressiveenergy conservation and efficiency program would cost much less, lower electric rates, save stateand federal taxpayers hundreds of millions of dollars, and reduce both land destruction caused bycoal-mining and air pollution caused by coal combustion.In 2008, NYS Governor David Paterson endorsed this ill-conceived coal plant demonstrationproject which then was turned down three times for funding by the U.S. Department of Energy,failed twice to get CCS-enabling legislation passed by the NYS Legislature, and saw twoimportant backers -- Praxair Corporation and the University at Buffalo -- pull out because theybelieved the project was not viable. More recently it has become clear that this project willrequire a massive amount of state funding
– 
as much as $100 million
– 
to be built. These fundswill not be
forthcoming given New York’s budget crisis and growing
taxpayer opposition to pork barrel spending.Governor Andrew Cuomo has an opportunity to resolve this controversy by indicating that hewill not support this $500 million 50 megawatt (MW) experimental coal-fired power plant butinstead will assist Jamestown in pursuing the energy efficiency-based program we haverecommended. We believe that if the Cuomo administration were to take this step, the Governorcould dramatically demonstrate fiscal prudence, a commitment to clean energy, and creativestate-municipal partnerships to resolve difficult issues.
 
The following facts explain in detail why the JBPU’s $500 million plant should and
will not bebuilt:
 
The vast majority
– 
e.g. over 90% in 2008 and 100% in 2009 -- of the electric needs of 
the JBPU’s 20,000 electric ratepayers are met by low cost power (2 cents per kWh
delivered) from NYPA, making it obvious that there is no need for either continued
operation of the JBPU’s existing coal
-fired power plant or a new $500 million coal-firedpower plant.
 
A sensible, cost-effective and environmentally clean energy plan for JBPU ratepayerswould rely on enhanced energy efficiency and demand reduction strategies coupled withoccasional modest purchases off of the regional electric grid to achieve near 100%reliance on 2 cent per kilowatt hour NYPA hydro power for Jamestown ratepayers. Thissensible plan has been rejected by the JBPU in favor of building a new coal plant at greatexpense and risk.
 
The JBPU has never fairly examined alternatives to its proposed new coal plant.
 
A March 2009 study by Optimal Energy, commissioned by NYPA, concluded that theJBPU could reduce its ratepayer electric load by 20% within 5 years through a cost-effective energy efficiency program.
 
The technology the JBPU intends to use for its proposed new coal plant is called
“oxycoal,” i.e. burning coal in oxygen and recycled flue gas, an e
nergy intensive processwhich significantly decreases power plant efficiency and therefore significantly increasespower production costs.
 
The proposed 50 MW Jamestown coal plant would have an output of just 30 MWbecause of the energy requirements of producing oxygen for oxycoal combustion andcompressing, pumping and injecting carbon dioxide from the plant into the ground.
 
While the JBPU refuses to release its estimates of the production cost of electricity fromits proposed new coal plant, our estimate
– 
based on JBPU data
– 
is that the output willprobably cost 20 cents per kilowatt hour or more, an amount which will significantlyraise electric rates for JBPU ratepayers and make it impossible for the JBPU to sellexcess power to non-ratepayers at anything other than huge losses.
 
The JBPU plans to charge $145 million dollars of the cost of the plant to ratepayers andto pay debt service on this amount by raising ratepayer rates. Yet this project could neverpass a fairly administered prudence review by the NYS Public Service Commissionbecause of its high cost and the existence of much cheaper alternatives.
 
The NYS PSC, in its July 20, 2010, ruling on a JBPU rate increase request established aprocess for evaluating future coal-burning in Jamestown and stipulated that JBPU newcoal plant development costs should not be billed to its ratepayers.
 
We estimate, based on the JBPU data presented to the PSC, that the JBPU has alreadyspent $10 million developing and promoting this project. These costs amount to anincredible $500 per JBPU ratepayer.
 
Thus far, New York State has paid an estimated $8 million in developmental costs forthis coal plant through NYSERDA, the Empire State Development Corporation, andfunds allocated by the NYS Legislature.
 
The proposed plant would have an output capacity far in excess of any conceivableportion of JBPU ratepayer electric load not already met by low cost hydro power fromNYPA. Thus, the JBPU must plan to sell all or most
of the plant’s output to non
-
 
ratepayers
– 
a completely uneconomic plan given the super-high cost of producing thispower vs. likely market prices for electricity.
 
In 2009 the federal government’s Department of Energy (DOE) Clean Coal Power 
Initiative (CCP
I) twice rejected the JBPU’s funding application for this project.
Then, inearly 2010 the DOE announced funding recipients of its industrial CCS program and theJBPU was not among them.
Clearly, the JBPU’s
funding applications have not beencompetitive with other CCS demonstration project funding candidates.
 
Until recently, the DOE has not funded any oxycoal CCS demonstration projects. OnAugust 5, 2010, Energy Secretary Steven Chu announced that FutureGen 2.0 will involverepowering a 200 MW existing coal plant inMeredosia, Illinois
– 
making clear the
DOE’s preference for demonstrating this technology on a larger, existing coal plant.
 
 
Even if future federal funding did become available to build this project
– 
and it isdoubtful it will be
– 
in addition to the $145 million the JBPU would need from itsratepayers the JBPU probably would need $100 million from the New York State in orderto meet federal funding matching dollar requirements. NYS
budget crisis guaranteesthat these funds will not be available.
 
Even assuming the impossible, i.e. that all CCS construction and demonstration costs forthis project were covered by others, JBPU ratepayers would still experience much higher
electric rates for years to come because of the plant’s very high operating costs over its
50 to 60 year lifespan coupled with the huge losses the JBPU would experience trying tosell power from the new plant on the open market.
 
Without on-going life-of-the-plant federal or state funding (both unlikely in the extreme),the JBPU would face severe economic pressure to abandon a high rate of CCS as soon asthe
DOE’s three year 
demonstration period was over in order to reduce operating costsand minimize expected dollar losses. Thus, carbon dioxide emissions levels for most of the plant lifespan would be much higher than promised and much higher than the nearzero emissions which could be achieved by an energy plan more reliant on energyefficiency.
 
Enabling legislation for this project failed to pass in the state legislature for twosuccessive years (2009 and 2010).
 
The proposed state enabling legislation did not address the critical CCS liability issue.So, even if the enabling legislation had been passed, the JBPU would have remainedliable for all risks associated with the CCS component of the project, thereby potentiallyraising the costs of this plant to unforeseen even more astronomical levels.
 
JBPU test drilling failed to find suitable geological reservoirs in which to bury CO
2
fromthe proposed new Jamestown coal plant.
 
Key initial project partners -- Praxair, Inc. and the University of Buffalo
– 
withdrew fromthe project team in 2009 on the eve of consideration of the project application by thefederal government, and comparable new partners have never been found.
 
Even the continued operation of the existing Carlson plant has recently been called intoquestion. On January 24, 2011, the New York State Public Service Commission, in itsdecision in a National Grid matter, required National Grid to conduct a study todetermine what must be done vis-à-vis the JBPU
s connection with the National Grid-operated regional grid to
“enable the potent
ial retirement of the Jamestown coal-fired
facility.”
 

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