Did Charles Patton Really Say That?

I was just reading an article by Sarah Tincher in The State Journal about a meeting in Beckley earlier today where people got together to talk about compliance with EPA’s rule 111(d).

At the end of the article I read the following quotes from Appalachian Power CEO Charles Patton:

“Just to say we’re going to stop using these power plants and invest in wind mills and solar panels and have our customers pay for it is just – it’s crazy,” he said. “The other thing is renewables — they’re important part of portfolio but the wind doesn’t blow all the time and the sun doesn’t shine all the time.

“We need some sort of fossil based or nuclear power,” he added. “As we saw during the Polar Vortex, the wind didn’t quite blow the way it was forecasted to. It’s important to keep that in mind.

I think Mr. Patton is a pretty smart guy.  He was either very poorly prepared or he was deliberately misleading his listeners.

Look at what really happened during the 2014 polar vortex cold spells:

For the second time in two weeks, wind power once again kept consumers’ energy costs down as extreme cold drove energy prices to record highs across much of the eastern U.S.

Electricity and natural gas prices skyrocketed to 10 to 50 times normal across parts of the Mid-Atlantic and Great Lakes states as extreme cold drove demand for electric and gas heating to near-record levels late last week. Fortunately, regional wind energy output was strong throughout these periods of peak demand, producing around 3,000 megawatts (MW) on the evening of Jan. 22 when supply was particularly tight, and roughly 3,000 to 4,000 MW for nearly all of Jan. 23 as electricity prices remained very high.

The savings that wind energy provided for consumers last week likely tally in the millions if not tens of millions of dollars, as wind energy reduced consumers’ energy costs in several major ways. Wind energy always provides these savings for consumers, which is why more than a dozen state government, grid operator, and other studies have confirmed that wind energy reduces consumers’ electricity prices.

Mr. Patton doesn’t seem like the kind of guy to come to an important meeting without being prepared.  That leaves only one alternative – he was knowingly spouting false propaganda for his employer, American Electric Power.

China Turning Away from Coal

The US coal industry is facing a wave of bankruptcies.  Nick Cunningham, of OilPrice.com says:

The coal markets have collapsed in spectacular fashion over the last few years due to a perfect storm of factors. U.S. coal producers first had to compete ferociously with shale gas in America’s electric power sector as fracking took off about a decade ago. That forced an array of coal plants to shut down as cheap gas washed over the country. Subsequently a regulatory crack down from the federal government – including forthcoming restrictions on greenhouse gases – further dimmed the growth prospects of coal.

But U.S. coal producers always had the international market, and exports stepped up in concert with falling domestic consumption. Now the foreign buyers are shrinking as well. China, the one country that the coal industry could count on for ceaseless growth in coal consumption, actually burned 2.9 percent less coal in 2014 than it did the year before.

When China, which consumes about as much coal as the rest of the world combined, sees its level of coal burning stay flat or even fall, that raises red flags for the entire industry.

Here are the specifics from IEEFA’s Tim Buckley:

When the largest coal producer in China puts out the kind of numbers China Shenhua Energy Co. just reported, it’s an unmistakable signal that the most populous country on the planet is continuing to step back from coal.

In announcing its 2014 results and its 2015 business targets, Shenhua dropped some bombshells:

  • It sees a 10 percent drop in its domestic coal sales in 2015 (that’s a 47 million tonne reduction to 404 million tonnes).
  • Its capital expenditure plans for coal and power generation in 2015 are down 25 percent over 2014 to $3.2 billion.
  • It expects its ports and rail investment to drop 12 percent year-over-year to $2.5 billion.

The numbers reveal a strategic shift by Shenhua as it reduces its volumes, its operating costs and its capital spending, and the 2015 numbers in particular signal an acceleration in this strategy. These trends are bigger, actually, than Shenhua. The company has a 15 percent share of the Chinese coal market, so it’s a key barometer of the larger picture, and its cutbacks send a clear signal that China is intent on curbing its emissions by a rapid diversification away from coal.

You read that right:  “a clear signal that China is intent on curbing its emissions by a rapid diversification away from coal.”

Gone are the days when Bill Raney, president of the WV Coal Association, can claim that the US doesn’t have to do anything about carbon emissions, because China isn’t.  Gone are the days when Mr. Raney can claim that WV coal miners will be back at work soon exporting coal to Germany and China.

Real world economics have caught up to the coal industry and no amount of US or WV government subsidies can save it.

And where is China turning for energy?  Here it is from Jack Perkowski at Forbes:

According to The Global Status Report, which was released earlier this month by the Renewable Energy Policy Network for the 21st Century, China once again led the rest of the world in renewable energy investment in 2013, spending a total of $56.3 billion on wind, solar and other renewable projects. The report stated that China accounted for 61 percent of the total investment in renewables by developing countries, and that China invested more in renewable energy than all of Europe last year.

Solar Eclipse Not a Problem for German Grid Managers

For the last month, there has been a lot of hyper-ventilating about what would happen to Germany’s electric dispatch system with today’s eclipse of the sun.  Germany has the highest penetration of solar electrical generation in the world, and the media (more than a little of it “fossil-fueled”?) was touting Germany’s “vulnerability” to catastrophe.

So what happened?  As it turns out, not so vulnerable.

Here’s the real world from Reuters:

Electrical grids in Europe claimed success on Friday in managing the unprecedented disruption to solar power from a 2-1/2-hour eclipse that brought sudden, massive drops in supply.

Germany, Europe’s biggest economy, at the heart of the event, boasts the world’s biggest solar-powered installations, which last year supplied 6 percent of national power requirements.

The initial 13 gigawatts (GW) drop in Germany was less than operators had feared and they were able to draw on alternative power sources including coal, gas, biogas and hydroelectric energy pumped from storage.

Grid spokespeople said control rooms were tense. “The mood is concentrated but confident that it will go smoothly,” said Andreas Preuss, spokesman of TenneT peer Amprion, which operates the longest network inside Germany.

“Network frequency is stable, reserve load is being called on,” one of the four high-voltage grid firms, TenneT, said in a live webfeed.

Naturally, grid managers would be “tense” because this is a significant event that they have never experienced before, but there is still lots of non-solar generation capacity to be deployed.  Germany has one of the most extensive and sophisticated load management systems in the world, which was available as well.

WV PSC Files IRP Order

The WV PSC filed an order laying out very modest guidelines pursuant to the toothless, voluntary Integrated Resource Planning law that AEP and FirstEnergy slipped through the WV Legislature back in 2014.

The WV IRP law, and the PSC’s minimal approach, is a far cry from the kind of law supported by WVU Law School professor James Van Nostrand and Energy Efficient WV in the 2012 and 2013 legislative sessions.


AEP Shows Its Hand on HB2201

The Charleston Daily Mail ran an op ed by AEP’s Jim Fawcett today that revealed for the first time AEP’s interpretation of the just passed HB2201:

The bill defines cross- subsidization as “the practice of charging costs directly incurred by the electric utility in accommodating a net metering system to electric retail customers who are not customer generators.”

In other words, whatever it costs to serve a net metering customer should be borne by the net metering customer, not other customers.

Net metering was first created to encourage the budding solar industry by requiring electric utilities to purchase at the full retail rate any excess energy generated by a customer.

That full retail rate includes the costs of the poles, wires, meters and other infrastructure that keep the electric grid running.

By allowing solar providers to avoid the cost of a service that they benefit from and by paying an inflated cost for the power provided by these solar providers, all customers — even low income customers least able to afford solar panels on their own homes — have to help pay for those who have solar generation installed.

So AEP has just revealed that they believe 2201 throws into question the fundamental one-to-one kwh credit system (which Mr. Fawcett refers to as “inflated costs”) that exists now in WV.  Keep in mind that the actual language in 2201 which defines “cross-subsidization” is not as clear as Mr. Fawcett claims.  The total costs that Mr. Fawcett refers to are indirect costs generally included in AEP’s base rate calculation.

Here’s what 2201 actually says:

 (c) “Cross-subsidization”, for purposes of this section, means the practice of charging costs directly incurred by the electric utility in accommodating a net metering system to electric retail customers who are not customer generators. [emphasis mine]

(d) The Public Service Commission shall adopt a rule requiring that all electric utilities provide a rebate or discount at fair value, to be determined by the Public Service Commission, to customer-generators for any electricity generation that is delivered to the utility under a net metering arrangement. The commission shall assure that any net metering tariff does not create a cross-subsidization between customers within one class of service.

HB2201 does not say all costs, direct and indirect, connected with serving all net metered customers.  It says “costs directly incurred by the electric utility in accommodating a net metering system.”  Costs that cannot create “cross-subsidization” must be “directly incurred” “in accommodating a net metering system.”

Under current PSC net metering regulations, the direct costs required to connect a net metered customer to a power company must already be paid by the net metered customer, and are not passed on to anyone else.  If a special meter is required, or a new transformer must be installed, the net metered customer must pay for it.  There is no “cross-subsidization” as defined by the new law, and there never has been, when it comes to direct costs incurred by the power company in accommodating a net metered customer.

Apparently, Mr. Fawcett thinks otherwise.  And we know where his thinking comes from.

I heard FirstEnergy lobbyist Sammy Gray state twice during the just concluded legislative session, once to the House Energy Committee and once to the Senate Judiciary, that FirstEnergy disagreed with Mr. Fawcett’s (and apparently AEP’s) interpretation of the bill and agreed with my reading.  It will be interesting to see how FirstEnergy responds officially to Mr. Fawcett’s interpretation of HB2201.

When they were encouraged to support language which would further clarify HB2201’s definition of “cross-subsidization” in the law, AEP’s lobbyist Steve Stewart refused to accept any changes.  We also saw AEP misleading legislators from the beginning on HB2201.  Until Mr. Fawcett’s op ed, however, AEP has never stated publicly or privately what their actual interpretation of HB2201 was.

Now we know.

Charleston Engineer Alan Tweddle Explains Why WV Needs Solar Energy Renewal

Alan Tweddle is an engineer and entrepreneur based in Charleston.  In a recent op ed in the Charleston Daily Mail, he made the case for rebuilding WV’s economy using renewable energy, particularly solar power.

Mr. Tweddle provides clear and specific examples of why we need to shift our economy to solar power:

And if you don’t like my statement that coal fired power is too expensive, then I suggest you look very carefully at the Province of Ontario, Canada.

Ontario studied why they were experiencing very excessive health-care costs in the air shadows of the coal-fired power plants. After two years of study, they determined that if they shut those plants down and replaced them with renewable energy systems, they would save money in the provincial budget, lowering the costs of electric power and health care, and increasing the health of the local people.

Ontario determined in 2005 that renewable energy is less costly than coal-fired power, so they completed their transition to shutting down all coal-fired power plants last year.

Legislators should visit with the Minister of Environment and Climate Change (How’s that for a cabinet level title?). While there, I could arrange to see a remarkable development in concentrated photovoltaic cells that has brought the price of electric power from solar energy down to 5 cents per KWH. Currently John Amos, I am told by AEP executives, is running at 6 cents per KWH. This same company, Morgan Solar, has a next generation of CPV cells that will generate at 3 cents per KWH.

Solar Power Driving Down Prices for All Rate Payers

The Institute for Energy Economics and Financial Analysis points to a recent study of the California electrical system that demonstrates clearly that as solar power expands, the price of electricity falls.

The truth is this: Rooftop solar provides substantial benefits for everyone, regardless of who installs it. It helps power the homes and shops that adopt it, to be sure, but it has far-reaching benefits for other customers as well. If Jane Doe in Anywhere, USA, puts a solar panel on her roof, every other electricity ratepayer within the footprint of whatever regional grid Jane Doe is tied into will benefit as well.

Honest purveyors of utility-industry fact know this, of course, and say it quite often. So, more and more, does Wall Street. No less a titan than Sanford Burstein & Co., one of the perennially best-rated firms in Institutional Investor’s annual rankings of investment researchers, has studied the issue deeply over the past couple of years and comes away with an unequivocal take on the issue: Rooftop solar, aka photovoltaic solar, means lower peak-hour energy prices for all.

Bernstein lays out the supporting research in a reported published last month that found that the rapid increase in the amount of solar PV available on the electricity grid in California—a seven-fold expansion in only four years, from 0.7 gigawatts in 2010 to 4.8 GW in 2014— had helped reduce system loads so much that peak prices were put off until later in the day, when demand was lower. Lower demand means lower prices.

Load shifting to reduce peak prices is only one of the many ways in which the expansion of solar power helps everyone.