NewEnergyNews: Holiday Reading: Is the US Building Transmission Fast Enough or Too Fast? The 2006 federal order 679 giving incentives for new lines may be out of control.

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Gleanings from the web and the world, condensed for convenience, illustrated for enlightenment, arranged for impact...

Every day is Earth Day.

YESTERDAY

  • THE STUDY: THIS COULD BE THE REAL VALUE OF SOLAR
  • QUICK NEWS, April 14: DE-RISKED RENEWABLES HAVE MORE INVESTORS THAN DEALS; THE MYTH OF CONSOLIDATION IN SOLAR; TEXAS BREAKS MORE WIND RECORDS
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    THE DAY BEFORE

  • Weekend Video: Bill Maher On What’s Happening In The Oceans
  • Weekend Video: The Human Disharmony In The Climate System Symphony
  • Weekend Video: A Few Thoughts About Solar 2.0
  • THE DAY BEFORE THE DAY BEFORE

  • FRIDAY WORLD HEADLINE- THE CLIMATE CHANGE FIGHT MOVES DOWNTOWN
  • FRIDAY WORLD HEADLINE-SHIFTING AND GROWING AMONG GLOBAL SOLAR LEADERS
  • FRIDAY WORLD HEADLINE-UK OFFSHORE WIND SETTING RECORDS
  • FRIDAY WORLD HEADLINE-MICROGRIDS RISING AROUND THE WORLD
  • THE DAY BEFORE THAT

    THINGS-TO-THINK-ABOUT THURSDAY, April 10:

  • TTTA Thursday-FOX NEWS ON CLIMATE – FAIR AND BALANCED BUT MISLEADING
  • TTTA Thursday-RECORD SOLAR GROWTH GOES ON
  • TTTA Thursday-WIND’S DROPPING COST MEANS SAVINGS ON U.S. POWER BILLS
  • TTTA Thursday-EFFICIENCY SCORING BIG ACROSS THE COUNTRY
  • AND THE DAY BEFORE THAT

  • THE STUDY: HOW UTILITIES CAN MAKE IT IN A NEW ENERGY WORLD
  • QUICK NEWS, April 9: A CLOSER LOOK AT SOLAR JOB NUMBERS; HOW MUCH WIND HAS CUT U.S. EMISSIONS; WHERE OPPORTUNITY WILL GROW IN THE CAR BIZ
  • THE LAST DAY UP HERE

  • THE STUDY: BACK TO THE DRAWING BOARD FOR U.S. ELECTRICITY SOURCING AND DELIVERY
  • QUICK NEWS, April 8: NEW ENERGY SPENDING DECLINED IN 2013; GE LAUNCHES TURBINE DESIGNED FOR INDIA’S WIND; SOLAR + STORAGE EXPLAINED
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    Anne B. Butterfield of Daily Camera and Huffington Post, is a biweekly contributor to NewEnergyNews

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT)

    November 26, 2013 (Huffington Post via NewEnergyNews)

    Everywhere we turn, environmental news is filled with horrid developments and glimpses of irreversible tipping points.

    Just a handful of examples are breathtaking: Scientists have dared to pinpoint the years at which locations around the world may reach runaway heat, and in the northern hemisphere it's well in sight for our children: 2047. Survivors of Superstorm Sandy are packing up as costs of repair and insurance go out of reach, one threat that climate science has long predicted. Or we could simply talk about the plight of bees and the potential impact on food supplies. Surprising no one who explores the Pacific Ocean, sailor Ivan MacFadyen described long a journey dubbed The Ocean is Broken, in which he saw vast expanses of trash and almost no wildlife save for a whale struggling a with giant tumor on its head, evoking the tons of radioactive water coming daily from Fukushima's lamed nuclear power center. Rampaging fishing methods and ocean acidification are now reported as causing the overpopulation of jellyfish that have jammed the intakes of nuclear plants around the world. Yet the shutting down of nuclear plants is a trifling setback compared with the doom that can result in coming days at Fukushima in the delicate job to extract bent and spent fuel rods from a ruined storage tank, a project dubbed "radioactive pick up sticks."

    With all these horrors to ponder you wouldn't expect to hear that you should also worry about the United States running out of coal. But you would be wrong, says Leslie Glustrom, founder and research director for Clean Energy Action. Her contention is that we've passed the peak in our nation's legendary supply of coal that powers over one-third of our grid capacity. This grim news is faithfully spelled out in three reports, with the complete story told in Warning: Faulty Reporting of US Coal Reserves (pdf). (Disclosure: I serve on CEA's board and have known the author for years.)

    Glustrom's research presents a sea change in how we should understand our energy challenges, or experience grim consequences. It's not only about toxic and heat-trapping emissions anymore; it's also about having enough energy generation to run big cities and regions that now rely on coal. Glustrom worries openly about how commerce will go on in many regions in 2025 if they don't plan their energy futures right.

    2013-11-05-FigureES4_FULL.jpgclick to enlarge

    Scrutinizing data for prices on delivered coal nationwide, Glustrom's new report establishes that coal's price has risen nearly 8 percent annually for eight years, roughly doubling, due mostly to thinner, deeper coal seams plus costlier diesel transport expenses. Higher coal prices in a time of "cheap" natural gas and affordable renewables means coal companies are lamed by low or no profits, as they hold debt levels that dwarf their market value and carry very high interest rates.

    2013-11-05-Table_ES2_FULL.jpgclick to enlarge

    2013-11-05-Figure_ES2_FULL.jpg

    One leading coal company, Patriot, filed for bankruptcy last year; many others are also struggling under bankruptcy watch and not eager to upgrade equipment for the tougher mining ahead. Add to this the bizarre event this fall of a coal lease failing to sell in Wyoming's Powder River Basin, the "Fort Knox" of the nation's coal supply, with some pundits agreeing this portends a tightening of the nation's coal supply, not to mention the array of researchers cited in the report. Indeed, at the mid point of 2013, only 488 millions tons of coal were produced in the U.S.; unless a major catch up happens by year-end, 2013 may be as low in production as 1993.

    Coal may exist in large quantities geologically, but economically, it's getting out of reach, as confirmed by US Geological Survey in studies indicating that less than 20 percent of US coal formations are economically recoverable, as explored in the CEA report. To Glustrom, that number plus others translate to 10 to 20 years more of burning coal in the US. It takes capital, accessible coal with good heat content and favorable market conditions to assure that mining companies will stay in business. She has observed a classic disconnect between camps of professionals in which geologists tend to assume money is "infinite" and financial analysts tend to assume that available coal is "infinite." Both biases are faulty and together they court disaster, and "it is only by combining thoughtful estimates of available coal and available money that our country can come to a realistic estimate of the amount of US coal that can be mined at a profit." This brings us back to her main and rather simple point: "If the companies cannot make a profit by mining coal they won't be mining for long."

    No one is more emphatic than Glustrom herself that she cannot predict the future, but she presents trend lines that are robust and confirmed assertively by the editorial board at West Virginia Gazette:

    Although Clean Energy Action is a "green" nonprofit opposed to fossil fuels, this study contains many hard economic facts. As we've said before, West Virginia's leaders should lower their protests about pollution controls, and instead launch intelligent planning for the profound shift that is occurring in the Mountain State's economy.

    The report "Warning, Faulty Reporting of US Coal Reserves" and its companion reports belong in the hands of energy and climate policy makers, investors, bankers, and rate payer watchdog groups, so that states can plan for, rather than react to, a future with sea change risk factors.

    [Clean Energy Action is fundraising to support the dissemination of this report through December 11. Contribute here.]

    It bears mentioning that even China is enacting a "peak coal" mentality, with Shanghai declaring that it will completely ban coal burning in 2017 with intent to close down hundreds of coal burning boilers and industrial furnaces, or shifting them to clean energy by 2015. And Citi Research, in "The Unimaginable: Peak Coal in China," took a look at all forms of energy production in China and figured that demand for coal will flatten or peak by 2020 and those "coal exporting countries that have been counting on strong future coal demand could be most at risk." Include US coal producers in that group of exporters.

    Our world is undergoing many sorts of change and upheaval. We in the industrialized world have spent about a century dismissing ocean trash, overfishing, pesticides, nuclear hazard, and oil and coal burning with a shrug of, "Hey it's fine, nature can manage it." Now we're surrounded by impacts of industrial-grade consumption, including depletion of critical resources and tipping points of many kinds. It is not enough to think of only ourselves and plan for strictly our own survival or convenience. The threat to animals everywhere, indeed to whole systems of the living, is the grief-filled backdrop of our times. It's "all hands on deck" at this point of human voyaging, and in our nation's capital, we certainly don't have that. Towns, states and regions need to plan fiercely and follow through. And a fine example is Boulder Colorado's recent victory to keep on track for clean energy by separating from its electric utility that makes 59 percent of its power from coal.

    Clean Energy Action is disseminating "Warning: Faulty Reporting of US Coal Reserves" for free to all manner of relevant professionals who should be concerned about long range trends which now include the supply risks of coal, and is supporting that outreach through a fundraising campaign.

    [Clean Energy Action is fundraising to support the dissemination of this report through December 11. Contribute here.]

    Author's note: Want to support my work? Please "fan" me at Huffpost Denver, here (http://www.huffingtonpost.com/anne-butterfield). Thanks.

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    Anne's previous NewEnergyNews columns:

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT), November 26, 2013
  • SOLAR FOR ME BUT NOT FOR THEE ~ Xcel's Push to Undermine Rooftop Solar, September 20, 2013
  • NEW BILLS AND NEW BIRDS in Colorado's recent session, May 20, 2013
  • Lies, damned lies and politicians (October 8, 2012)
  • Colorado's Elegant Solution to Fracking (April 23, 2012)
  • Shale Gas: From Geologic Bubble to Economic Bubble (March 15, 2012)
  • Taken for granted no more (February 5, 2012)
  • The Republican clown car circus (January 6, 2012)
  • Twenty-Somethings of Colorado With Skin in the Game (November 22, 2011)
  • Occupy, Xcel, and the Mother of All Cliffs (October 31, 2011)
  • Boulder Can Own Its Power With Distributed Generation (June 7, 2011)
  • The Plunging Cost of Renewables and Boulder's Energy Future (April 19, 2011)
  • Paddling Down the River Denial (January 12, 2011)
  • The Fox (News) That Jumped the Shark (December 16, 2010)
  • Click here for an archive of Butterfield columns

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    Some details about NewEnergyNews and the man behind the curtain: Herman K. Trabish, Agua Dulce, CA., Doctor with my hands, Writer with my head, Student of New Energy and Human Experience with my heart

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  • Wednesday, January 02, 2013

    Holiday Reading: Is the US Building Transmission Fast Enough or Too Fast? The 2006 federal order 679 giving incentives for new lines may be out of control.

    Holiday Reading: Is the US Building Transmission Fast Enough or Too Fast? The 2006 federal order 679 giving incentives for new lines may be out of control.

    Herman K. Trabish, July 23, 2012 (Greentech Media)

    With the approval of Congress, the Federal Energy Regulatory Commission (FERC) issued an order in 2006 providing an array of incentives for building new transmission.

    FERC’s Order 679 seemed like a good idea at the time. Congress had just passed the landmark Energy Policy Act of 2005 that opened the door to a lot of new generation capacity -- renewable as well as traditional.

    And, as the FERC order noted at the time, the U.S. load had doubled between 1975 and 1998 while its investment in transmission dropped significantly. Though transmission infrastructure investment increased after 1998, the FERC order added, it was still less in 2003 than it had been in 1975.

    Order 679 was “intended to encourage transmission infrastructure investment.” It created “incentive-based (including performance-based) rate treatments for the transmission of electric energy in interstate commerce by public utilities.” New transmission, the order said, would benefit consumers “by ensuring reliability and reducing the cost of delivered power by reducing transmission congestion.”

    It worked. Transmission infrastructure spending, according to the Edison Electric Institute (EEI), grew from $7.5 billion in 2005 to $10.2 billion in 2010. In its 2011 report, the EEI projected spending of $54 billion from 2011 to 2014, a 43 percent increase over spending from 2007 to 2010.

    TransmissionHub just reported that spending for the 2012 to 2016 period of close to $23 billion has been applied for under the Order 679 “incentive rate treatment.” That, the report said, would bring 2008 to 2016 total investment to $36.2 billion.

    The 2012 incentive rate treatment is estimated at $4.2 billion. The peak of spending for incentive rate treatment infrastructure investment through 2016 is expected to come in 2013 at $5.4 billion, followed by $5.2 billion in 2014, $4.5 billion in 2015 and $3.6 billion in 2016.

    Total spending for the new North American transmission infrastructure that will come on line between 2012 and 2016, the TransmissionHub report estimated, will be $68.6 billion. The 2012 to 2020 total investment was estimated at $169.7 billion.

    Total spending in 2012, for some 3,100 miles of mostly 230-kilovolt lines, was projected to approach $7 billion.

    Spending was projected to be twice that for both 2013 ($15.4 billion for 5,600 miles of lines) and 2014 ($15.3 billion for 6,100 miles of lines).

    Spending in 2015 will double again, TransmissionHub projected, to $31 billion for 9,700 miles of lines.

    North American transmission investment from 2016 to 2020 was projected to be $101.2 billion, with $74.3 billion of the spending coming from 2016 to 2018.

    The leading builders of transmission projects scheduled to go into service between 2012 and 2016, according to TransmissionHub, are Edison International (NYSE:EIX) subsidiarySouthern California Edison ($4.9 billion), Dominion Resources subsidiary Virginia Electric Power ($

    The success of the Order 679 incentives has raised questions. Representative Edward Markey (D-MA), as Chair of the House Subcommittee on Energy and Environment in 2009, asked then FERC Chair Jon Wellinghoff if the program was too big.

    More recently regulators have characterized the incentives as excessive and questioned the lucrative compensation building transmission infrastructure. In response, FERC issued a notice of inquiry (NOI) in May 2011 which asked for reform proposals.

    Order 679 allowed incentives in the forms of (1) an incentive-based return on equity (ROE), (2) construction work in progress (CWIP), (3) a hypothetical capital structure, (4) accelerated depreciation, (5) recovery of prudently incurred costs, (6) deferred cost recovery or (7) single-issue ratemaking.

    Massachusetts Attorney General Martha Coakley filed a complaint with FERC in September 2011 arguing that the base ROE for New England transmission should be lowered from 11.14 percent to 9.2 percent. Representative Markey supported her filing.

    Transmission builders like Northeast Utilities (NYSE:NU), National Grid, and United Illuminating, responded that the New England base ROE meets FERC's “just and reasonable” standard.

    Other NOI comments from utilities, government and non-governmental organizations have noted aspects of Order 679 that could be reconsidered. The use of CWIP, which allows transmission builders to bill ratepayers while the infrastructure is under construction, is an especially controversial type of incentive. Opponents say it shifts risk to rate payers. Advocates say it facilitates new transmission and lower rates by improving cash flows, debt ratings and capital costs for builders.

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