As we stated in an earlier post, there are plenty of reasons for concern over SB 178, State Senator Angela Giron’s attempt to increase significantly the state’s renewable energy mandate, including:
- Dramatic increase in electric rates.
- Lack of input from stakeholders including ratepayers and some utilities.
- Significant policy change introduced just days before the end of the session.
Oddly enough, none of those issues bothers bill supporters. Instead a commonplace multiplier (explained here) used in numerous states to soften the financial burden of renewable energy for ratepayers is the burr in their saddle and the impetus for SB 178.
We did a little research and found the examples of how several states use a similar multiplier or “credit” that Colorado environmentalists think is imperative to expunge from statute. The following information came from the Database for State Incentives for Renewables and Efficiencies (DSIRE).
Extra credit multipliers may be earned for early installation of certain technologies, in-state solar installation, and in-state manufactured content. The multipliers are additive, but cannot exceed 2.0.
Several compliance multipliers are currently available under the Delaware RPS. The details of these multipliers are described below:
- 300% credit toward RPS compliance for in-state customer-sited photovoltaic generation and fuel cells using renewable fuels that are installed on or before December 31, 2014. The 300% multiplier cannot be applied to SRECs used for compliance with the PV carve-out (see PSC notice), thus for PV carve-out compliance purposes, SRECs are counted on a 1-to-1 basis. The 300% credit formerly applied to all solar electric generation prior to the 2007 amendments.
- 150% credit toward RPS compliance for energy generated by wind turbines sited in Delaware on or before December 31, 2012. This provision dates to the 2005 legislation that established the RPS.
- 350% credit for PSC-regulated electric companies (i.e., Delmarva Power & Light, the state’s only investor-owned utility) for energy derived from offshore wind facilities sited on or before May 31, 2017. This provision was added by S.B. 328 in 2008.
District of Columbia:
Certain renewable resources have in the past received preferential treatment through the use of compliance multipliers. Before January 1, 2007, electricity suppliers received 120% credit toward meeting the RPS for energy generated by wind or solar. Between January 1, 2007 and December 31, 2009, electricity suppliers received 110% credit for energy generated by wind or solar. Before January 1, 2010, electricity suppliers received 110% credit for energy generated by landfill methane or wastewater-treatment methane. Suppliers that fail to comply with the requirements must pay $0.05 per kilowatt-hour (kWh) of shortfall from required Tier 1 resources, $0.01 for each kWh of shortfall from Tier 2 resources.Solar energy sources have an unique set of shortfall payment requirements, from 2011 through 2016 at $.50 per kWh, $0.35 in 2017, $0.30 in 2018, $0.20 in 2019 and 2020, $0.15 in 2021 and 2022, and $0.05 in 2023 and thereafter. Alternative compliance fees are deposited into the D.C. Renewable Energy Development Fund and may be used to provide support to renewable energy projects. Energy supply contracts entered into prior to August 1, 2011 will not be subject to the increased solar requirements.
Each MW of eligible capacity installed in Kansas after January 1, 2000 will count as 1.1 MW for the purpose of compliance.
Initially, the RPS included credit multipliers for wind, solar, and methane. The multiplier for solar was replaced by the 2% solar requirement in 2007. Multipliers for wind and methane remained for facilities placed in service on or after January 1, 2004, although both have subsequently expired:
- A supplier received 120% credit toward meeting its Tier 1 obligations through RECs associated with wind energy through December 31, 2005. Beginning in 2006 and through 2008, a 110% credit was in effect.
- A supplier received 110% credit toward meeting its Tier 1 obligations through RECs associated with energy derived from methane through 2008.
Bonus Credits The standard also contains a series of bonus credits, termed Michigan incentive renewable energy credits, for each megawatt-hour (MWh) of electricity generated by certain types of systems. These credits act in addition to the single credit that a facility receives for producing 1 MWh of electricity from a qualified resource. Thus it is possible to earn multiple credit bonuses on a single MWh of electricity generation. The bonuses are described below.
- Electricity produced using solar power receives an additional 2 credits per MWh.
- Renewable electricity produced at peak demand times by technologies other than wind receives an additional 1/5 credit per MWh. Peak demand time was defined by the PSC in a December 2008 temporary order as weekdays between 6:00 AM and 10:00 PM, excepting certain holidays.
- Off-peak renewable electricity generation stored using advanced electric storage technology or hydroelectric pumped storage and used during peak demand times receives an additional 1/5 credit per MWh. The credit is calculated based on the initial amount of electricity used to charge the storage device, not the amount that is discharged.
- Renewable electricity produced using equipment manufactured within the state of Michigan receives an additional 1/10 credit per MWh. This add-on is only available for three years after the in-service date of the facility.
- Renewable electricity produced using a system which was constructed using an in-state workforce receives an additional 1/10 credit per MWh. This add-on is only available for three years after the in-service date of the facility.
Pursuant to meeting the 500 MW non-wind goal contained in S.B. 20 of 2005, the PUCT has elected to award a “compliance premium” for each non-wind REC generated after December 31, 2007. Compliance premiums are functionally equivalent to a REC for the RPS compliance purposes and may only be awarded to non-wind facilities that were installed and certified by the PUCT after September 1, 2005. This method effectively doubles the compliance value of electricity generated by renewable resources other than wind.
Electricity may be produced within the state, or within the geographic boundary of the Western Electricity Coordinating Council. Notably, each kWh of electricity produced using solar energy counts as 2.4 kWh for the purposes of meeting the goal.
Credits will be awarded in the following way:
- One credit for each MWh of electricity generated or purchased from an alternative energy resource facility. It should be noted that utilities may meet no more than 10% of the standard with credits obtained from electricity generated from natural gas.
- Two credits for each MWh of electricity generated or purchased from a renewable energy resource facility
- Three credits for each MWh of electricity generated or purchased from a renewable energy resource facility located on a reclaimed surface mine in West Virginia
- Customer-generators will be awarded one credit for each MWh of electricity generated from an alternative energy resource facility and two credits for each MWh of electricity generated from a renewable energy resource facility.
- The PSC is authorized to award one credit to an electric utility for each ton of carbon dioxide-equivalent reduced or offset by approved projects.
- The PSC is also authorized to award one credit to an electric utility for each MWh of electricity conserved by an approved energy efficiency or demand-side management project, provided that the project savings are verified and certified according to PSC rules (to be determined).
Bottom line is don’t fear the multiplier. It serves to save ratepayers money. Fear the environmentalists and the lawmakers who want it to go away.
Perhaps the number one reason for pushing so-called clean, green renewable energy projects is to reduce warming that, according to climate change proponents, increases climate volatility–(formerly known as global warming and now increasingly identified as the wild but undefined “change” that so worries them)–creating the need to build ever more renewable projects.
But according to the latest scientific observations, at least one of those technologies has a rather troubling and substantial down side:
Using sensors aboard a NASA satellite, researchers at the University at Albany-State University of New York, and the University of Illinois systematically tracked a cluster of wind farms in central Texas as the installations grew from a few dozen turbines in 2003 to more than 2,350 by 2011.
On average, the nighttime air around the wind farms became about 0.72 degree Celsius warmer over that time, compared with the surrounding area, the scientists reported Sunday in the peer-reviewed journal Nature Climate Change.
“The warming trend corresponds very well with the growth of the wind turbines,” said wind-energy expert Somnath Baidya Roy at the University of Illinois, who was part of the research group. “The warming is going to level off when you stop adding more turbines.”
From another report on the same story:
While converting the kinetic energy of wind into electricity, wind turbines modify exchanges between the ground and atmosphere, and affect the transfer of energy, momentum, mass and moisture within the air, the authors of the study said.
“Our results show a significant warming trend of up to 0.72 degree per decade, particularly at night-time, over wind farms relative to nearby non-wind-farm regions,” wrote lead author Liming Zhou, a Research Associate Professor from the Department of Atmospheric and Environmental Sciences at University at Albany. “We attribute this warming primarily to wind farms as its spatial pattern and magnitude couples very well with the geographic distribution of wind turbines.”
With calls for increasing wind farm generation through renewable energy mandates or increasing government subsidies over the next two decades, this warming effect could pose significant local problems if the amount of increase–0.72 degrees Celsius–holds.
That’s more than three times the amount of temperature increase per decade estimated by climate change advocates:
Scientists say the world’s average temperature has warmed by about 0.8 degrees Celsius since 1900, and nearly 0.2 degrees per decade since 1979. Efforts to cut carbon dioxide and other greenhouse gas emissions are not seen as sufficient to stop the planet heating up beyond 2 degrees C this century, a threshold scientists say risks an unstable climate in which weather extremes are common.
From the WSJ:
“One hundred nine days into a 120-day session you introduced major [energy policy] legislation,” Senator Steve King (R-Grand Junction) skeptically asked of SB 178 sponsor Senator Angela Giron (D-Pueblo).
Sen. King’s skepticism is justified because SB 178 is a significant policy change that increases Colorado’s renewable energy mandate by 20 percent. Because renewable energy is not competitive with traditional fossil fuels, supporters of the mandate originally included a multiplier to make it more palatable when advancing prior legislation to increase the mandate.
Under current law, for every kilowatt-hour of electricity provided by a renewable resource it counts as one and one quarter hour toward Colorado’s 30 percent renewable mandate. In other words, Colorado’s actual mandate is 24 percent. SB 178 REMOVES the multiplier, raising the mandate significantly and, ultimately, electricity rates.
During testimony on Tuesday, April 24, in the Senate Judiciary Committee, the sordid legislative tale of SB 178 began to unfold. It has been dubbed “son of 1365,” referring to the collusion and fast tracking of Colorado’s infamous fuel-switching bill passed in 2010.
Renewable energy companies are win big with SB 178 because utilities will be forced to either “build more or buy more” renewable energy. No shock that wind and solar advocates testified in favor.
New Energy Economy advocates who still believe that wind and solar are commercially viable energy sources, despite overwhelming evidence to the contrary also win because SB 178 continues to fuel their green fantasies.
Xcel Energy doesn’t show up on a search of lobbyists for and against SB 178, but a number of sources tell me that Colorado’s largest investor owned utility (IOU) has been working hard on this bill at the state capital. Why? Because Xcel has banked significant renewable energy credits (RECs), which they can sell to other utilities in order to meet the higher standard. Also, as energy rates go up, and they will under SB 178, Xcel makes more money because the Public Utility Commission guarantees Xcel’s rate of return. (Example: 10 percent of $100 is a lot more than 10 percent of $75)
The Chinese will be big winners – yes, the Chinese. The more we rely upon wind and solar as a source of energy, the more dependent we become on the Chinese who control 95 percent the world’s supply or rare earth minerals necessary to manufacture solar panels and wind turbines.
Consumers and the economy will lose big. Representing Black Hills Energy, Colorado’s second largest IOU, Wendy Moser testified against SB 178 because Black Hills estimates rates will rise 25 percent in order to pay for the increased mandate. The increase will stifle all economic activity because energy costs will needlessly take a larger percentage of consumers’ and businesses’ budgets.
Large energy consumers such as mining companies and heavy manufacturing which are energy intensive will lose big because their cost of doing business will go up and make them less competitive.
The environment is also a loser; as we have documented renewable energy is neither clean nor green. In fact, if Colorado exacerbates reliance on China, we fuel the pending ecological disaster.
Highlights from testimony on SB 178
- Supporters call eliminating the 1.25 multiplier “leveling the playing field” because it’s time renewables compete in a “free market.” Advocates repeated these catch phrases numerous times, and I assume they did so with a straight face (I only listened to testimony). If they truly believed in a free market, the discussion would be about eliminating the 30 percent renewable mandate rather than just a multiplier.
- Supporter Neal Lurie from the Colorado Solar Energy Industry Association (COSEIA) had the audacity to call eliminating the multiplier good for transparency for consumers. Just a year ago, COSEIA testified against SB11-30 transparency for ratepayers, Senator Scott Renfroe’s bill that would have required IOUs such as Xcel to disclose the actual cost of electricity by fuel source on a quarterly basis. Lurie and COSEIA don’t want consumers to know the real cost of renewable energy because they know it far exceeds the misleading “2 percent rate cap.”
- Black Hills and Tri-State Generation, electricity provider to numerous local co-ops, combined represent roughly 1 million ratepayers in Colorado. Yet bill supporters never consulted either company about SB 178. These two power providers did not find out about this attempt at massive policy change until a few days before testimony. Thank you to Senator King for repeatedly bringing up the timeline.
- The Public Utilities Commission (PUC) continues the 2 percent rate cap sham that we have discredited on numerous occasions. The total cost of renewable energy is not contained within the two percent rate cap on consumers’ bills, see the paper I co-authored with William Yeatman “The Great Green Deception.” Updated figures and brief explanation of how Xcel avoids the 2 percent cap are provided below.*
- Gene Camp of the PUC initially testified that raising the mandate by 20 percent would have no impact on ratepayers’ electric bills. Following a discussion of what will happen to the two percent rate cap, Senator Kevin Lundberg (R-Berthoud) pressed that increasing the amount of energy derived from a more expensive fuel source will increase rates. Silence befell the room for 5 or 6 seconds before Camp then responded that it’s up to legislature because he is unsure what will happen.
- Attorney General John Suthers’ office testified in favor of SB 178 because the current multiplier applies only to Colorado produced renewable power and may be unconstitutional. When Senator Lundberg suggested that Colorado extend the multiplier to all renewable power producers regardless of location, the AG office agreed that likely would satisfy the constitutional issue.
- Senator Ellen Roberts (R-Durango) wondered why no one caught the constitutional conflict before.
- Sen. Lundberg did offer an amendment to extend the multiplier to all states and save consumers money, but it was defeated.
Like HB 1365, SB 178 makes a mockery of the legislative process. This bill smells dirty. Introduced at the last moment and key stakeholders were not even invited to participate. It’s a disaster for Colorado ratepayers. It’s not about consumers or markets or leveling the playing field, SB 178 is about enriching the eco-left and Xcel Energy. That’s no shock because whatever Xcel wants, Xcel gets.
*The following comes from an op-ed I co-authored with energy policy center colleague Michael Sandoval and originally published in January. It provides a brief summary of how the PUC allows Xcel to avoid the two percent rate cap.
It is true Xcel stayed within the two percent rate cap line item labeled the Renewable Electric Standard Adjustment (RESA) on customers’ electric bills. But it is not true that the RESA represents the real, total cost of renewable energy to Xcel ratepayers, and Bakers knows it.
Two years ago in the “Great Green Deception,” the Independence Institute exposed how the PUC allows Xcel to hide the real cost of renewable energy by utilizing two line items on a ratepayer’s bill. Customers pay two percent of their bill through RESA, but the balance of the total cost of renewable energy is captured through another fund – the Electric Commodity Adjustment (ECA) – that is likely the second largest line item cost.
The practice continues today as Xcel’s Robin Kittel explained in direct testimony to the PUC regarding its 2012 Renewable Energy Standard Compliance Plan. According to Kittel, Xcel recovers the cost of renewable energy “through a combination of the RESA and ECA.”
The ECA is NOT subject to the legislatively mandated two percent rate cap. The Public Utility Commission staff’s William Dalton acknowledged the PUC’s role in confusing the public about the rate cap in his September 2009 testimony before the commission:
“This could be a point of confusion to ratepayers and other interested parties…The costs above the retail rate impact limit are recovered through other Commission approved cost recovery mechanisms, primarily the ECA. [Emphasis ours] Once the renewable energy resource cost recovery is allocated to the ECA, cost recovery of these resources is no longer subject to retail rate impact criteria or cost cap.”
According to Xcel’s 2012 Renewable Energy Compliance Plan, ECA costs were $35,280,340 in 2011, but will explode by more than 1000 percent to $354,819,209 in 2021 (thanks also to Colorado’s $20 per ton “phantom carbon tax”). Yet Xcel and Baker [PUC Commissioner Matt Baker] can claim to be within the two percent rate cap for the RESA.
It is easy to be angry with Xcel for all the cost shifting shenanigans, but the blame should be placed on lawmakers and PUC commissioners.
By Molly Sullivan
The 1603 program, part of the American Recovery and Reinvestment Act (ARRA) of 2009 was designated for job creation and job endurance for long-term economic growth in the field of renewable energy sources.
Michael Sandoval’s March 19, article in the Colorado Observer, “Liquor Stores, Fortune 500 Companies among Colorado Stimulus Beneficiaries”, highlighted how the 1603 program was able to slip under the radar allowing companies like Solyndra, funded under a separate section of the ARRA, to take the public heat. The numbers of jobs created is a number so difficult to calculate, all numbers put forth should be taken with a severe grain of salt. The article gives a picture of the types of companies taxpayers covered solar costs for in Colorado including restaurants, mega insurance agency MetLife, and the second largest bank in the US- Wells Fargo.
Looking at the 1603 program from a national scale however, it’s clear that big companies took the biggest holdings they could, with little emphasis on the sustentation of jobs. Some of the top recipients in Colorado also took 1603 tax credits in multiple states. Below is a breakdown of a few of the larger dollar amounts from the May 5, 2011, ARRA report.
SunRun Solar : $31,492,224.00
Based in San Francisco, the self-proclaimed “number one home solar company” in the nation, Sure took a huge chunk of taxpayer money without a whole lot to show for it considering each job opening cost taxpayers $1,499,629.71.
- Five States: California, Massachusetts, Arizona, Colorado, and New Jersey
- 21 job openings, 20 of which are in San Francisco, one in New York
“America’s Number One Choice for Solar Power”, SolarCity operates in 14 states. They managed to rack up a hefty amount of tax credits for doing their usual private-sector solar energy work. They did have the most job postings out of these top company takers, still totaling a whopping $119,184 per job listing.
- Three States: California, Arizona, Oregon
- 280 job postings currently
Metropolitan Life Insurance Company: $20,976,044.00
The insurance giant is clear on their Web site that they believe in environmental projects, currently investing $2.5 billion in “renewable energy projects including solar, wind, and geothermal technologies”. A company has the right to pick and choose their social issues to fund, but not on the taxpayer’s dime. Separately, MetLife is already in hot water over the penalties they will face for faulty underwriting and questionable foreclosure practices after the housing market crash since foreclosure reform recently passed.
- Five States: California, New Jersey, North Carolina, Arizona, Colorado
- Recently announced they will be laying off 4,300 people due to a separate issue of mortgage foreclosure reform
The spreadsheet below shows a few other companies who took significant amounts of tax-payer money from multiple states.
Molly Sullivan is an intern with the Independence Institute’s Energy Policy Center for Spring 2012. Currently she is studying political science at Regis University in Denver.
Colorado already has the most expensive electric rates of all neighboring states and the second highest in the Rocky Mountain West, with projections to go even higher in the near future. Now, a bill just introduced into the state senate threatens to make Colorado’s energy rates even more expensive. The following is a column from the Colorado Consumer Coalition about the dangers of SB 178. Senator Kevin Lundberg offered an amendment that would have achieved the bill’s supposed primary purpose and saved consumers money, but it was voted down as the column details.
Colorado consumers—from Denver down to Pueblo and all across the state—could wind up paying even more for their electricity following a troubling development at the legislature this week. An obscure bill just introduced on Tuesday with almost no warning, only days before the end of the 2012 session, would pull the rug out from under the state’s public utilities and turn their long-term energy planning inside-out. And ratepayers would be left holding the bag.
Senate Bill 178 would scrap a key feature of Colorado’s renewable-energy mandate, on which utilities have based their plans and projections for years to come; the change would force them to get even more of their electricity from pricey renewables like wind and solar power than the law now requires. Specifically, the bill would take away a break that utilities have been able to pass on to consumers as they strive to meet costly state mandates to derive 30 percent of their electricity from renewables by 2030.
The break to ratepayers was enacted in 2004 along with the mandates because those who had been advocating for the shift to a greater reliance on alternative fuels also realized such a seismic change doesn’t come cheaply. And it’s neither fair nor even possible to make hard-pressed home- and business owners bear the whole burden. So, the policy’s authors not only placed a 2-percent cap on year-to-year rate increases due to the increased cost of renewables, but they also wrote the law to give extra credit to utilities for switching to alternative energy sources. That gave the utilities greater flexibility in meeting the statutory standards for renewables so consumers wouldn’t have to dig so deeply into their pockets.
Now, SB 178 aims to monkey-wrench that delicate balance. By revoking the extra credit for switching to renewable energy after 2015, the bill effectively would require the public to rely on an even higher percentage of renewable energy sources than most of the state’s utilities had anticipated. The result would be to wreak havoc with the balance sheets and strategic plans of the utilities, for-profit and nonprofit alike. They’d have to scramble to acquire more renewable sources for power and, inevitably, pass the cost on to the public through higher power bills.
Not surprisingly, when the bill was unveiled Wednesday at a meeting of the Senate Judiciary Committee, lawmakers got an earful from representatives of some of those utilities as well as other stakeholders—many of whom had only heard of the legislation a few days earlier and, in some cases, only hours prior to the hearing. And they told lawmakers point-blank what would happen if the bill were enacted.
“This bill will result in increased costs to… members and their customers,” said Thomas Dougherty, representing Tri-State Generation and Transmission Association, a wholesale electric power supplier owned by 44 electric cooperatives and serving 900,000 Coloradans.
Ratepayers of Black Hills Energy, which serves the Pueblo region, would be dealt a major blow by the legislation, the company’s Wenday Moser told lawmakers Wednesday.
“We are very concerned about Senate Bill 178 because we are concerned about our ability to meet the renewable energy standard,” Moser said. “As of now, Black Hills is marginally meeting the standard…We are struggling to meet that standard.”
Dougherty had noted in his testimony that even though the law caps renewable-energy cost increases at 2 percent a year on power bills, that increase in an of itself still can pack a punch for consumers. And Moser made clear that the cap really won’t spare consumers at all over the long run.
She pointed out that companies such as hers simply will be forced to assess that extra 2 percent “for many more years” until recovering the added costs of the additional renewables. After all, the utilities are legally bound to attain the renewable-energy standard; it’ll just take them longer to recover those costs from consumers.
Why this bill at this time—out of the blue like this? What possibly could have motivated some lawmakers to propose such a reckless policy for so little gain—at a time when Colorado already is well on its way toward greater reliance on renewable energy?
A representative of Attorney General John Suthers told the committee at Wednesday’s hearing that his office wasn’t behind the bill but had endorsed it because of concerns about a provision in the current law allowing the extra renewable-energy credits for purchases of Colorado energy but not for renewables originating outside the state. That, the AG’s rep said, set up Colorado for a constitutional challenge in court.
Fine, responded a skeptical Sen. Kevin Lundberg, of Berthoud—then why not simply extend the same extra credit to any acquisition of renewable energy from outside Colorado as well? Lundberg was told the attorney general would in fact be fine with that alternative, so Lundberg proposed it as an amendment to the bill. Unfortunately, it was voted down.
Lundberg and fellow Judiciary Committee Sens. Steve King, of Grand Junction, and Ellen Roberts, of Durango, deserve credit for asking tough and probing questions about the bill during the hearing. All three laudably voted against the measure, but they were outgunned by the majority, and the measure now moves to the Senate floor for further action.
Pending what happens next, let’s give credit to Black Hills Energy, too, for telling lawmakers what they really needed to hear—whether they wanted to or not—about a costly, destructive bill with no discernible value to Colorado Consumers.
My take: this bill isn’t about leveling the playing field for in-state versus out-of-state renewable energy producers but rather about forcing Colorado energy consumers to rely more heavily upon unreliable, expensive wind and solar energy. To make matters worse, this will be a windfall for Xcel Energy because the more expensive electricity is, the more Xcel makes. If this bill gets fast-tracked through the legislature like HB 1365, the infamous fuel-switching bill, consumers will have more proof that Xcel “owns” the state legislature.
This past Wednesday, the EPA released new regulations on hydraulic fracturing (“fracking”). Surprisingly, the 588 pages of regulations don’t amount to much. At best, they codify existing industry practices. At worst, they might cause delays and other unintended consequences.
The new regulations focus on “green completions” (“completions” refers to the whole well-stimulation process, including fracking). Immediately after a well is fracked, the mixture that flows back up to the surface includes water, sand, natural gas, and other hydrocarbons. Conventional equipment cannot handle the abrasive sand—because it erodes the metal components—so companies let the mixture flow into a plastic-lined pit until the sand concentration is low enough to use the conventional equipment. What the EPA and environmentalists don’t like about this process, is that while the well is flowing to the lined-pit, the gas is escaping into the air rather than going into a pipeline.
Green completions use special equipment that can filter out the sand before the mixture goes into the conventional equipment. This way, companies can separate out the natural gas and flow it into the pipeline from the very beginning.
Before these regulations, half of all completions were already using green completion technology, primarily as a way to capture and sell more of the gas. The percentage of green completions was also, undeniably, trending upward. So why the need for EPA regulations when companies were already making these changes on their own?
The concerns that gave rise to these new regulations were emissions of volatile organic compounds (VOCs), benzene, and methane in the initial, uncaptured flow of gas. These are natural hydrocarbons and components of natural gas, i.e. they are not chemicals additives from fracking fluids (sometimes benzene is added to fracking fluids, but most benzene emissions result from the natural gas itself).
VOCs are a concern because they are SMOG precursors. SMOG is a respiratory irritant, so it can increase incidences of asthma, and cause other problems, but only at high concentrations. SMOG was first identified in Los Angeles in the 1950s, because it was so bad that people could literally see a brownish haze set over the city. But how bad is SMOG today? From 1970 to 1990 the installation of catalytic converters in cars reduced smog-forming tailpipe emissions by 99%. Consequently, when people compare SMOG caused by oil and gas activity to that from cars—as was done recently in a an article in the Dallas Morning News—they fail to realize that cars are no longer a major source of SMOG forming emissions. So, while oil and gas development does result in SMOG levels comparable to that from urban traffic, that does not suggest dangerous levels of SMOG.
Likewise, the reductions in benzene would have a minimal effect on improving health, given the ultra-low concentrations of benzene emissions, and the short-lived nature of these emissions. (for details on benzene see Fracking: Chemicals, Cancer, and Relative Risks).
While the benefits from these new regulations are likely to be elusive—and I do not support needless regulations—I must admit that they do not look terribly destructive. As already noted, many companies have already begun to do green completions.
One concern is that there may not be enough equipment available for green completions, which could cause delays or a bidding war that would drive up the prices beyond cost-effectiveness. However, the regulations do not go into effect until 2015, which should hopefully give enough time to manufacture more equipment.
Another possible problem is related to pipeline construction. When companies develop a field, they move quickly from one well to the next, in order to make the most efficient use of their drilling and fracking equipment. Sometimes, as a result, they outrun their pipeline installation crews. The pipeline, however, must be in place to do a green completion. Otherwise, there’s nowhere to put the captured gas. What companies usually do, in this case, is complete (“frack”) the well, flowback into the plastic-lined pit (for various technical reasons, flowback needs to happen right away), and then shut the well in (close the valve) until the pipeline is installed. With these new regulations, companies will have to precisely schedule their pipeline, drilling, and fracking operations. But even with the most precise scheduling, there will inevitably be delays. The regulations will compound the cost of these delays by requiring rented equipment (costing tens of thousands of dollars per day) to sit idle while pipelines catch up.
This brings me to my final criticism, common to many regulations: The one-size-fits-all approach. If it makes economic sense for a company to do a green completion (as the EPA suggests), it will do so—but under unique circumstances, such as the occasional delay, or in cases of difficult terrain, remote areas, or unique safety considerations, companies will no longer have the freedom to make intelligent well-by-well assessments of whether or not green completions make sense in a particular circumstance.
With a nation still struggling to find its way out of a recession, and a manufacturing boom fueled by cheap natural gas, why waste our efforts on needless and potentially damaging regulations? Even if the damage turns out to be small, the number of man-hours already spent drafting, reviewing, commenting on, and reading the 588 pages of regulation were, no doubt, a waste of human resources.
Vestas Wind Systems A/S and 1,700 Colorado employees could see a takeover bid by one of the two largest Chinese wind manufacturers:
Danish newspaper Jyllands-Posten, citing unnamed sources, reports that Sinovel Wind Group and Xinjiang Goldwind Science & Technology, the No. 1 and 2 Chinese wind-turbine makers respectively, have discussed takeover bids with bankers.
Reuters, in a report Monday, quoted an analyst as saying that both companies are state-backed and have adequate financial capacity to acquire Vestas.
“Vestas would be a strong acquisition target for either Sinovel or Goldwind,” Keith Li, analyst at CIMB research, told Reuters.
Aarhus, Denmark-based Vestas (DK: VWS) — facing stiff competition from China and slackening demand in debt-plagued Europe — has seen its share value sink more than 50 percent since October. It posted a bigger-than-expected 2011 loss of $218.4 million.
Vestas stock soared on the news of the possible Chinese acquisition.
Other analysts, citing the difficulty of a purchase of the company by either of its two Chinese competitors, point to a potential partnership instead.
It’s unclear what effect the news will have on Vestas’ push for an extension of the wind production tax credits or the support for such a push in Congress, especially from Colorado’s delegation, should the company become wholly or partly owned by Chinese companies and possibly the Chinese government.
Congressman Cory Gardner was on my radio show this morning defending his plan to first extend and then phase out the production tax credit (PTC) for wind energy. My colleague Michael Sandoval and I are on record as opposing the PTC, and all other energy subsidies. Now we have additional evidence that renewables are so inefficient that without subsidies, its likely no one would use wind or solar as an electric resource on a commercial scale.
Thanks to a blog post from Steven Hayward of the American Enterprise Institute, which explains that the subsidies for non-hydro renewable energy are even more outrageous when measured in BTUs:
Last week’s energy fact looked at a new CBO report which showed that non-hydro renewable energy now receives two-thirds of all federal government tax preferences, while fossil fuels only receive about 15 percent. But the situation is really much worse than it looks if you calculate how much energy is produced per dollar of tax subsidy. While the CBO report didn’t make this calculation, we did, and the results are in the chart below, which displays how much energy is produced for every dollar of tax preference. Every dollar of tax preference for non-hydro renewables produces 407,000 BTUs of energy, while every dollar of tax preference for fossil fuel delivers 66 times as much, 27 million BTUs of energy. Nuclear power subsidies—only 4 percent of total tax preferences—produce almost 26 times more energy per dollar than renewables. This is the reason renewable subsidies are both necessary to the industry, and unsustainable, at least at any scale that the taxpayer would be willing to pay. For renewables to match the output of fossil fuels at the current tax preference rate, the total tax preference would need to be $897 billion. That’s probably real money even to Obama.
Score one for common sense. The Colorado Public Advocate reports that Dr. Ann Maest, a scientist with Boulder-based Stratus Consulting, dropped out of an Environmental Protection Agency (EPA) mining conference this week in Denver amid challenges to her credibility following accusations that she fudged data to support a massive lawsuit against Chevron and its drilling practices in the Amazon.
Last year, Chevron fired a legal shot of their own naming Maest, along with Stratus Consulting, and the lead attorney Steven Donzinger as co-defendents in a racketeering lawsuit that accuses the defendants of seeking:
to extort, defraud, and otherwise tortiously injure plaintiff Chevron by means of a plan they conceived and substantially executed in the United States. It has been carried out by a U.S.-based enterprise comprised of, among others, U.S. plaintiffs’ lawyers, led by Donzinger; U.S. environmental consultants, led by Stratus Consulting, Inc., Ann Maest, and Doug Beltman; their Ecuadorian colleagues…These conspirators are collectively referred to herein as the ‘RICO Defendants.’
The enterprise’s ultimate aim is to create enough pressure on Chevron in the United States to extort it into paying to stop the campaign against it. The RICO Defendants have sought to inflict maximum “damage to [Chevron’s] reputation” to put “personal psychological pressure on their top executives,” to disrupt Chevron’s relations with its shareholders and investors, to provoke U.S. federal and state governmental investigations, and thereby force the company into making a payoff.
Specifically, the lawsuit alleges that Maest, Stratus Consulting, and Donzinger conspired to:
- Submit “fabricated evidence in the form of expert reports in the name of a U.S. environmental consultant, Dr. Charles Calmbacher, that he did not draft or approve.
- Pressure U.S. environmental consultant David Russell to generate an inflated $6 billion damages figure.
- Intimidate Ecuadorian judges.
- Make false statements to cover up wrongdoing and obstruct Chevron’s discovery efforts.
Chevron has some strong evidence to support its accusations including video outtakes from the documentary Crude which “in part chronicles the class-action suit against Chevron” that Donzinger, Maest, and Stratus championed. The clip below is just one of many. This one is a “lunch meeting between plaintiffs’ lead U.S. lawyer Steven Donziger and plaintiffs’ U.S. consultants Charles Champ, Ann Maest and Richard Kamp,” where they admit a lack of evidence but still intend to manipulate the Ecuadorian court.
The initial case against Chevron may have been worthy, but that is now overshadowed by overzealous environmental activists who seem to want Chevron’s money more than they want justice for Ecuadorians. The negative press surrounding Maest’s appearance at the EPA mining conference including an “Occupy the EPA” protest scheduled for Wednesday, April 4, the day she was to speak, likely contributed to her dropping out and is poetic justice for someone who behaves more like an eco-gangster than a scientist.
The EPA should take this one step farther and rescind the speaking invitation to Stratus Consulting as a whole. It isn’t just Maest’s credibility that is being called into question.
Public Utilities Commissioner Matt Baker is leaving the PUC to join the William and Flora Hewlett Foundation, a left-leaning non-profit, as “an officer in its Environment Program” foundation officials announced yesterday. Former Governor Bill Ritter appointed the environmental activist Baker in 2008, and his term had expired without current Governor John Hickenlooper acting to reappoint Baker to another term.
Baker was instrumental in steering the state’s “new energy economy” as both an activist and a PUC commissioner. In January the Energy Policy Center raised questions about Baker’s ability to serve as an independent regulator:
Conventional wisdom in energy policy circles says that Governor John Hickenlooper will re-appoint current Public Utilities Commissioner Matt Baker to another four-year term on the PUC. His State Senate confirmation will be a mere formality, but it shouldn’t be.
Serious questions linger about his lack of honesty regarding energy costs and his ability to be an independent regulator.
Rather than regulate Colorado’s investor-owned utilities, the environmental activist-turned-regulator Baker is more interested in advancing his green energy agenda to the detriment of Colorado ratepayers. He and former PUC Chairman Ron Binz (whose own re-appointment was derailed with an ethics violation after which he withdrew his name for consideration) were instrumental in negotiating the language of HB 1365, a senseless fuel-switching bill and the “crown jewel” of Bill Ritter’s New Energy Economy that will cost ratepayers more than $1 billion.
This is blow to the environmental left and Xcel Energy because Baker provided them a seemingly credible voice to perpetuate the myth that Colorado’s 30 percent renewable energy mandate costs electricity ratepayers a mere two percent on their Xcel Energy bills. As we have demonstrated before and reiterated in January this is simply untrue, and Baker and Xcel both know it.
Baker’s love affair with renewable energy prevents him from being objective about Colorado energy policy and thus not honest with the people he is charged with serving – eroding consumer rights and driving up energy costs with regulatory sleight of hand.
In a recent op-ed in RenewablesBiz.com, Baker gushes over the advancement of his green agenda. He repeats one the biggest renewable falsehoods green activists have perpetuated on Colorado ratepayers: Colorado’s largest utility Xcel Energy can acquire 30 percent of its power from expensive renewable sources while keeping a cap on electric rates.
Most ratepayers believe that means that the renewable energy mandate – energy from sources such as wind and solar – will only cost them an additional two percent on their electric bill. “While Colorado’s largest utility, Xcel Energy, has exceeded its goals, it has stayed within the 2 percent cap set by the legislature,” says Baker.
It is true Xcel stayed within the two percent rate cap line item labeled the Renewable Electric Standard Adjustment (RESA) on customers’ electric bills. But it is not true that the RESA represents the real, total cost of renewable energy to Xcel ratepayers, and Bakers knows it.
We were also the first to expose that Baker and fellow commissioner Ron Binz spent a lot of time traveling, which led to ethics complaints being filed against both men. Binz left the PUC rather than seek a second term. In December the ethics commission found that Binz violated the state constitution by accepting a trip paid for by a company he was supposed to regulate. The same commission recently decided there was not “sufficient evidence” to prove that Baker’s trip to Seville, Spain, paid for a spanish government owned company, violated Colorado’s ethics law.
What remains to be seen is who Governor Hickenlooper will appoint to replace Baker. If the Governor’s first appointee, Chairman Josh Epel, is any indication of how he envisions the role of the PUC, ratepayers can expect more balanced treatment in the future.