Archive for Monday, June 4, 2007

Kansas’ low electric costs come with high emissions price

June 4, 2007

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— A kilowatt-hour of electricity generated in Kansas costs significantly less than the national average but contributes much more to global warming than power generated in most other states.

It shouldn't be a surprise that those two facts are connected.

Three-fourths of the electricity generated in the Sunflower State comes from coal-fired plants, and coal is the go-to fuel for supplying electricity around-the-clock because it's readily available and cheap. But Kansas ranks among the top 10 states in utilities' carbon dioxide emissions per person.

Gov. Kathleen Sebelius and other officials are caught in a policy dilemma created by those facts. Cheap electricity is undoubtedly popular and raising its cost could hurt the economy. But carbon dioxide, its link to global warming and the possible consequences of climate change are getting more attention in Kansas.

"Up until recently, Kansas electricity has been considered inexpensive because we only considered its cost in terms of fuel, generation and transmission," Sebelius said in a statement last week.

She added: "But we now understand that the 'costs' of energy include environmental damage and health hazards for our citizens. Frankly, those costs are very hard to quantify in terms of dollars and cents, but we know they are significant."

National debate

Kansas is at the center of a national debate over global warming because of plans by Hays-based Sunflower Electric Power Corp. to build two or three new coal-fired plants next to one it operates outside Holcomb in southwest Kansas. Sunflower is seeking the necessary air-quality permit for two of them from the state Department of Health and Environment.

Sunflower has said the technology it will use will prevent the new plants from increasing pollution that the state does regulate, such as mercury and sulfur dioxide. The utility also says it will comply with whatever regulations on CO2 emissions are enacted - though neither the state nor federal government has any in effect.

But the plans still have drawn strong criticism from environmentalists and the attorneys general of eight states, including California and New York.

Sebelius has sent mixed messages. She has said the state relies too heavily on coal-fired plants, but she's also said it makes little sense for Kansas to prevent Sunflower or other utilities from building them, only to see them built just across the state line.

Last month, she and executives from six utilities - including Sunflower - announced they had agreed on goals to increase the use of wind energy and promote conservation programs.

But some of those executives said coal would remain part of any effort to meet future power needs. Earl Watkins Jr., Sunflower's chief executive officer, said the new coal plants would lead to new transmission lines, which in turn would create a way of delivering wind-generated power.

And Senate Utilities Committee Chairman Jay Emler, R-Lindsborg, said when it comes to meeting future demand, "We can't do it all with wind."

Cost analysis

An analysis of federal energy data suggests some correlation between high reliance on coal and relatively low electric costs per kilowatt-hour.

Kansas' average cost in 2005 was 6.55 cents per kilowatt-hour, the 15th lowest in the nation and almost 20 percent lower than the national average of 8.14 cents, according to the federal Energy Information Administration.

Half of the 14 states with lower costs than Kansas obtained 85 percent or more of their power from coal-fired plants. Kentucky had the lowest cost, 5.01 cents per kilowatt-hour, and obtained 91 percent of its power from coal.

Four other states relied most heavily on coal but had singificant contributions from nuclear plants. The remaining three - Idaho, Oregon and Washington - received much of their power from water-powered turbines.

What's also significant is that only one of the 10 states with the highest electric cost per kilowatt-hour - Massachussetts - generated more than a quarter of its power from coal-fired plants. Six of them also were in the bottom 10 for utilities' CO2 emissions per person.

In contrast, carbon dioxide emissions from Kansas utilities in 2003, the latest data available, were nearly 14 tons per person, or 77 percent higher than the national average, which was less than 8 pounds per person.

Other cheap-electricity states relying heavily on coal ranked high in per-capita emissions: Wyoming, first; North Dakota, second; West Virginia, third; Kentucky, fourth; Indiana, sixth, and Utah, ninth.

Conservation urged

Some legislators and coal industry officials pin much hope on developing technology to capture, store and reuse carbon dioxide so that it doesn't go into the atmosphere. Some environmentalists don't see the technology developing quickly enough to combat the immediate threat they see in global warming.

But environmentalists also suggest a way out of the energy bind - conservation.

Generally, legislators seem to assume that demands for power will increase as Kansans put the latest computers, big-screen televisions and cool gadgets in their homes. After all, Kansas' net generation of power increased 34 percent from 1990 to 2005.

But California generated less total megawatt-hours of electricity in 2005 than it did in 2000. Vermont's figures have seen peaks and valleys from 1990 to 2005.

Sebelius acknowledged, "We have to address the energy issue from both a supply and demand point of view."

Until now, Kansans haven't had as much incentive as Californians and Vermonters to conserve electricity because it's been relatively cheap. Now, with more attention focused on global warming, some appear to be pondering more than the kilowatt-hour charge.

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  1. DaveR (anonymous) says…

    Hello Kansas,

    You're being sold smoke. Out here in Maryland, in 1999 the legislature rushed into the fad of the day, energy deregulation. To get us into it, they fixed a rate that was roughly equal to what Kansas would be paying in 2007. And left it unchanged until deregulation arrived with a bang last summer. The hope was that "competition" would make rates even lower. California blew that to pieces in 2000, but loyal timid Marylanders sat on their hands.

    Suddenly one day last year we were to go to "market rates" & our electricity would cost twice what it did the day before, more than twice what yours does now (KS: 4.8-ish cents/kilowatt hour, MD: 11.5-ish cents/kilowatt hour.) No one said the increase was because of newfangled smokestack scrubbers. It was the skyrocketing cost of fuel to feed the generators. That was the reason they gave.

    This was more than funny, because the utility, BGE, was required to tell us four times a year just exactly where they got the energy from. And it's been 55% coal, 35% nuclear for years & years.

    Same coal that Kansas burns. In practically the same sort of plants.

    Well, maybe not. I did some simple on-line research & found a government paper that said the price of coal, even adjusted for inflation, has been steady, or even declining, over recent years. Improvements in extraction (robots replace humans) being the reason why. Simultaneously, a lot of western coal is now getting shipped to eastern plants, replacing cheaper Appalachian coal. Even more interesting, the US now imports significant amounts of coal from Venezuela, Indonesia & (you'll love this) China. Sure, I suppose the ore is cheap, but what's it cost to haul it half way around the world?

    Given that I don't think BGE's increase was due to increases in the cost of nuclear fuel, this meant that BGE, which was in no financial difficulty in the months before deregulation, had somehow found a supply of coal roughly four times as expensive as what they had burned before. If you're wondering why, the answer is that profits are fixed at a certain percentage of costs. While percentages remain the same, absolute profits rise along with absolute expenses. The higher the expenses, the more money you make.

    In an early speech at the UN, Fidel Castro described how Cuba, in 1959, had some of the highest electrical rates in the world. He could find no reason for it, short of greed.

    I also read about electricity in the US in the 1920's. Republican administrations let utility monopolies set the highest rates they could get away with. FDR broke that up, and not only gave us municipal power (which saved Los Angeles in 2000), but also passed specific legislation that prohibited 1920's price gouging. Interestingly enough, these laws were repealed in the 1990's. With predictable results.

    So beware of pompous fools telling you that electric rates have to rise. This is an old, old story.

  2. gr (anonymous) says…

    Thanks Dave. That is very informative. I kind of wonder about such things. Glad to hear it from someone besides just me. The utitilities, in general, don't care about efficiencies or global warming or whatever. They will use wasteful means of generation if it equals higher profits. They write you letters informing how they keep their costs low, then the next month ask for a price increase. Then they pull stunts about "weather normalization" so they collect the same money whether the winter or summer is normal. A perfect racket.

    The problem is the government encourages it. It sets the profits at a certain percentage of costs, and only a fool would not figure out how to increase costs.

  3. Bubbles (anonymous) says…

    If you don't like the electricity these people have created for you don't buy it.

    Buying something consistently and crying about it at the same time is not healthy.

  4. gr (anonymous) says…

    But it's a monopoly and you have no choice.