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Archive for the ‘Clean Power Plan’ Category

The Obama Administration set records on expansive and expensive new environmental regulations.  In one example, compare the 56 federal implementation plans forced on states during the Obama years to the 5 total imposed by the combined Clinton and Bush presidencies.  Unfortunately, the Obama years also yielded the slowest regulation driven environmental gains in decades, 2% in seven years compared to 2% a year from 1980 to 2009.

The primary force for a better environment turned out to be innovations in natural gas production, a development the administration and environmental groups fought, that was carried out by private industry on private lands. Natural gas prices dropped 80% as producers figured out how to use horizontal drilling and hydraulic fracturing to release tightly held gas from shale formations.  Falling natural gas prices dragged down the price of coal and oil that shows up in lower electricity, gasoline, and heating costs, and is saving families over $1500 a year in lower energy prices!  Fuel switching from coal to cleaner burning natural gas at power plants added almost another 5% improvement in air quality.

Obama era regulations targeted three primary substances; ground level ozone and fine particles the Environmental Protection Agency claimed posed a health hazard, and carbon dioxide the EPA linked to rising global temperatures.  Ozone levels improved by 1% a year up to 2009, but only improved 1% in seven years under Obama.  Fine particles improved 3% a year up to 2009, but only improved 3% over seven years under Obama.  The Obama regulatory effort reduced carbon dioxide emissions by an amount that will lower global temperatures by 0.01°C by 2100, essentially zero impact!  Carbon dioxide reductions from power plants can be attributed 70% to fuel switching for lower prices, and 30% to new regulations.

EPA cost benefit analysis showed new regulations would cost tens of billions of dollars a year to implement.  Free market sources, such as, the US Chamber of Commerce, estimated the cost to more likely be hundreds of billions of dollars.  Either way, a lot of money for marginal air pollution improvements.

The problems don’t end with air pollution regulations.  Voluntary multistate programs to improve water quality in areas such as the Chesapeake Bay brought Water Quality Index improvements of 25-percent from 1986 to 2010. That improvement ended after the voluntary agreement became a regulation in 2010 requiring states to institute mandatory steps, such as, storm water management regulations.  No water quality improvement, but those regulations have managed to increase new home prices by $10,000 each in the Chesapeake watershed.

Aggressive requirements in motor vehicle miles per gallon standards were also mandated.  The latest information shows average MPG for the nations motor vehicle fleet actually dropped from 17.6 MPG in 2009 to 17.5 MPG in 2014.  The mandated MPG standards were unreachable and will likely be scaled back to a more practical level by the Trump Administration.

The Obama Administration, often through procedural short cuts and with support from questionable science, relied on ineffective regulations to “improve” the environment.  Predictably, results were poor.  We look forward to the Trump Administration rolling back bad regulations, and following the rule of law.  We expect a focus on actual improvements to the environment. This could include increasing infrastructure spending on securing drinkable water (remember Flint?), improving sewer systems, and reclaiming brownfields and Superfund sites.  Under the new administration, infrastructure spending could double without increasing the budget by using sources such as multi-billion dollar fines from the Volkswagen settlement for fudging tail pipe emissions, and other large settlements instead of handing them over to the Sierra Club and Greenpeace, favored interest groups of the Obama EPA administration.

For more details on air quality improvements see our study “Sorting Root Causes of Air Quality Improvements 2009 to 2015” at https://criblog.wordpress.com/2017/02/12/sorting-root-causes-of-air-quality-improvements-2009-to-2015/ .

David T. Stevenson, Director, Member Trump Administration EPA Transition Team

E-Mail: David Stevenson@CaesarRodney.org

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Delaware and Maryland utility commissions have one more shot to convince electric grid regulators to lower the cost of the Artificial Island Transmission Line.  Governors Markell and Hogan have joined forces to fight the burdensome cost of this project, but a new approach is needed.  If we want to win this fight we need to negotiate using an alternative approach.  More local power generation could replace the transmission line.  This could lead to lower electric rates instead of higher rates, to a more robust economy, and to improved electric reliability.

 

The Artificial Island project is a technical response to importation of power.  Maryland and Delaware are the second and fifth highest electricity importing states in the country.  In 2015 Maryland imported 41% of its power, and Delaware imported 32%.

 

Importing power lowers electric grid reliability.  It also adds cost.  Regional grid manager, PJM Interconnection, is responsible for maintaining reliability with a combination of pricing mechanisms, and transmission line policy.  There are line charges to compensate for longer power transmission distances, congestion charges to encourage lower peak demand, and capacity charges to encourage more local generation.  See the graph below to see how these premiums can go.  These premium charges roughly equal the added monthly costs of the proposed transmission line, are already added to our electric bills, and most of the cost will continue even if the new transmission line is built!

 

Cost Premiums in Delaware & Maryland for Grid Congestion and Transmission Cost

dave stevenson Artificial Island

Source: PJM Interconnection Real Time Statistics

So, how do we boost local generation?  Start by asking electric generation and distribution companies already invested in the state what state policies would encourage more generation.  State policies led to lower local generation in very real ways and changed policies can help reverse the trend.  Prepare to kill some sacred cows when we hear the answers.

 

Maryland and Delaware are the only two states in the thirteen state PJM region with a tax on carbon dioxide emissions from power plants.  The cost of that tax is passed on as a hidden tax on electric bills.  Our generating facilities burning coal and natural gas have to charge more, and lose bids to supply power.  Consequently, local power plants operate less frequently.  For example, the Indian River power plant in Millsboro, Delaware, is only operating 20% of the time compared to an average of 55% for coal fired plants nationally.

 

The tax was designed to reduce emissions but all it has really done is shifted the emissions out of state, and discouraged power plant construction locally.  The revenue was supposed to be used for energy efficiency and renewable energy projects, but after a decade of work only a quarter of annual tax revenue is being spent on such projects.  Ending the tax would lower electricity prices and would allow more power to be generated locally.

 

In Delaware we only need to build the equivalent of three to four new power plants to become self-sufficient.  Calpine recently completed a new natural gas fired power unit in Dover and has the permits needed for a second unit.  What incentive does Calpine need to build the second unit?

 

Exelon recently acquired Delmarva Power, the state’s largest electric distribution company, and is one of the largest generation companies in the nation.  A decade ago distribution companies owned all the generation facilities as well with a guaranteed rate of return regulated by the Public Service Commission.  Delaware and Maryland joined a handful of other states in deregulating the price of generated power thinking this would increase competition and lower electric cost.  The actual result was the sale of generating facilities and a 70% increase in electric rates in the deregulated states.  Partial reregulation might encourage distribution companies to build at least some new generation capacity.

 

Exelon is one of the largest builders of large scale solar farms in the country.  A little known fact is utility scale solar is now essentially competitive with conventional power plants during high demand daylight hours.  Delaware policy has emphasized building smaller scale systems that actually add cost to our electric bills.  Yes, in this case bigger is better and a policy change is needed.

 

Land acquisition is a barrier to building more solar.  The state could offer marginal state owned open space land for long term lease for solar farms to lower start-up costs.  The revenue could be used for state park operations.

 

No doubt a dialogue to boost local power generation would uncover more opportunities.  The result would not only avoid the added cost of the Artificial Island project but might lower existing electric rates by as much as 15% removing a barrier to job creation, and could lead to up to a billion dollars in new construction projects.   

David T. Stevenson, Director

Center for Energy Competitiveness

                               

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Sometimes we have to go beyond Delaware’s borders to protect the pocket books of our residents.  CRI has become a resource in the national fight to oppose taxes and regulations that misrepresents bad policy as critical to improving the environment.  We joined AEA in petitioning Congress to pass this important resolution.

Illegal tactics used by the EPA in drafting the so-called Clean Power Plan have been stayed by the US Supreme Court following a legal strategy encouraged by the CRI team.  The EPA called for a tax on carbon dioxide emissions to gain the agencies approval for individual state compliance plans.  EPA Director Gina McCarthy, and past Department of Energy Assistant Energy Secretary Charles McConnell both have stated the Clean Power Plan will have no impact on global warming but could add billions in energy costs.  McConnell describes how the plan is “all pain, and no gain”, how electric rates could see double digit increases, impact the poor and middleclass the most, and how the emissions savings would be replaced by three weeks output from China.

The resolution opposes the misguided plan to impose these unnecessary taxes.

 

David T. Stevenson

Director, Center for Energy Competitiveness

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