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Clean Energy for Jamestown

Substituting Energy Efficiency for Coal Burning

By Clean Energy for Jamestown


February 2011
Contact: Walter Simpson
enconser@buffalo.edu, (716) 839-0062

The Jamestown Board of Public Utilities (JBPU), the municipal utility serving Jamestown, New
York, is proposing to build a $500 million 50 megawatt (MW) experimental coal-fired power
plant to replace its aging and polluting coal-fired Carlson plant. Originally envisioned as a
conventional coal plant with no controls on climate-changing carbon dioxide emissions, the
current version of this project is a proposed carbon capture and storage (CCS) demonstration
project.

The JBPU has been pursuing this new coal plant project despite its huge cost and the fact that it
is not needed to meet Jamestown ratepayers’ electricity needs which are now met almost entirely
by low cost hydropower from the New York Power Authority (NYPA). The project has been
opposed by our coalition of twenty local, regional, state, and national environmental
organizations 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
JBPU’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 aggressive
energy conservation and efficiency program would cost much less, lower electric rates, save state
and federal taxpayers hundreds of millions of dollars, and reduce both land destruction caused by
coal-mining and air pollution caused by coal combustion.

In 2008, NYS Governor David Paterson endorsed this ill-conceived coal plant demonstration
project 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 two
important backers -- Praxair Corporation and the University at Buffalo -- pull out because they
believed the project was not viable. More recently it has become clear that this project will
require a massive amount of state funding – as much as $100 million – to be built. These funds
will 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 he
will not support this $500 million 50 megawatt (MW) experimental coal-fired power plant but
instead will assist Jamestown in pursuing the energy efficiency-based program we have
recommended. We believe that if the Cuomo administration were to take this step, the Governor
could dramatically demonstrate fiscal prudence, a commitment to clean energy, and creative
state-municipal partnerships to resolve difficult issues.
The following facts explain in detail why the JBPU’s $500 million plant should and will not be
built:

 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-fired
power plant.
 A sensible, cost-effective and environmentally clean energy plan for JBPU ratepayers
would rely on enhanced energy efficiency and demand reduction strategies coupled with
occasional 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. This
sensible plan has been rejected by the JBPU in favor of building a new coal plant at great
expense 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 the
JBPU 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 energy intensive process
which significantly decreases power plant efficiency and therefore significantly increases
power production costs.
 The proposed 50 MW Jamestown coal plant would have an output of just 30 MW
because of the energy requirements of producing oxygen for oxycoal combustion and
compressing, 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 from
its proposed new coal plant, our estimate – based on JBPU data – is that the output will
probably cost 20 cents per kilowatt hour or more, an amount which will significantly
raise electric rates for JBPU ratepayers and make it impossible for the JBPU to sell
excess 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 and
to pay debt service on this amount by raising ratepayer rates. Yet this project could never
pass a fairly administered prudence review by the NYS Public Service Commission
because 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 a
process for evaluating future coal-burning in Jamestown and stipulated that JBPU new
coal 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 already
spent $10 million developing and promoting this project. These costs amount to an
incredible $500 per JBPU ratepayer.
 Thus far, New York State has paid an estimated $8 million in developmental costs for
this coal plant through NYSERDA, the Empire State Development Corporation, and
funds allocated by the NYS Legislature.
 The proposed plant would have an output capacity far in excess of any conceivable
portion of JBPU ratepayer electric load not already met by low cost hydro power from
NYPA. 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 this
power vs. likely market prices for electricity.
 In 2009 the federal government’s Department of Energy (DOE) Clean Coal Power
Initiative (CCPI) twice rejected the JBPU’s funding application for this project. Then, in
early 2010 the DOE announced funding recipients of its industrial CCS program and the
JBPU was not among them. Clearly, the JBPU’s funding applications have not been
competitive with other CCS demonstration project funding candidates.
 Until recently, the DOE has not funded any oxycoal CCS demonstration projects. On
August 5, 2010, Energy Secretary Steven Chu announced that FutureGen 2.0 will involve
repowering a 200 MW existing coal plant in Meredosia, 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 is
doubtful it will be – in addition to the $145 million the JBPU would need from its
ratepayers the JBPU probably would need $100 million from the New York State in order
to meet federal funding matching dollar requirements. NYS’ budget crisis guarantees
that these funds will not be available.
 Even assuming the impossible, i.e. that all CCS construction and demonstration costs for
this 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 to
sell 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 as
the DOE’s three year demonstration period was over in order to reduce operating costs
and 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 near
zero emissions which could be achieved by an energy plan more reliant on energy
efficiency.
 Enabling legislation for this project failed to pass in the state legislature for two
successive 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 remained
liable for all risks associated with the CCS component of the project, thereby potentially
raising 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 from
the proposed new Jamestown coal plant.
 Key initial project partners -- Praxair, Inc. and the University of Buffalo – withdrew from
the project team in 2009 on the eve of consideration of the project application by the
federal government, and comparable new partners have never been found.
 Even the continued operation of the existing Carlson plant has recently been called into
question. On January 24, 2011, the New York State Public Service Commission, in its
decision in a National Grid matter, required National Grid to conduct a study to
determine what must be done vis-à-vis the JBPU’s connection with the National Grid-
operated regional grid to “enable the potential retirement of the Jamestown coal-fired
facility.”
*****

The following organizations have been participating in Clean Energy for Jamestown and are
on record as being opposed to the proposed new coal plant for Jamestown, NY:

 Alliance for Clean Energy New York


 American Lung Association in New York
 Campus Climate Challenge, SUNY Fredonia
 Catholic Care for Creation Committee of Buffalo
 Citizens Campaign for the Environment
 Clean Air Coalition of Western New York
 Earthjustice
 Environmental Advocates of New York
 Global Warming Action Network, Syracuse
 Great Lakes United
 Jamestown Area Concerned Citizens
 Natural Resources Defense Council (NRDC)
 New York Interfaith Power & Light
 New York Public Interest Research Group (NYPIRG)
 Northeast Sustainable Energy Association
 Pace Energy and Climate Center
 Physicians for Social Responsibility (PSR), Washington, D.C.
 Sierra Club, Atlantic Chapter
 UB Environmental Network
 WNY Climate Action Coalition
 WNY Sustainable Energy Association