Articles by Sean Casten

The Kansas City Star: New coal plants are expensive

The Kansas City Star reports:

Electric bills are poised to soar for customers of utilities building coal-fired power plants.

Coal-based electric utility executive responds:

We're moving forward regardless of what you namby-pamby, cheap-energy-loving hippies think.*

Michael Dworkin then raises the obvious question:

You've got to ask: "Do you think we have reached a point where it economically doesn't make sense?"

It will be interesting to see how this affects the Sunflower Electric debate, since the state does now seem to be getting beyond the false belief that coal is cheap.

*Italicized text implied but entirely fabricated by the author.

Florida Power & Light on wind power

Florida Power & Light is fairly notorious as a utility that embraces competition so long as it doesn't happen in their service territory. On the regulatory side, they have worked pretty hard to make sure that no one can build power in their state except themselves. But on the unregulated side, their sister company FPL Energy has been one of the leading installers of wind turbines. (Not coincidentally, you will find that they tend not to do projects anywhere near Florida. Mind the hand that feeds you ... )

Needless to say, there are some conflicts there. Which have recently come back to bite them.

How will the auction vs. allocation debate affect power prices?

Last January, Rep. Ed Markey (D-Mass.) convened hearings on the ways allocation of CO2 permits under a cap-and-trade system will impact power prices and utility profit margins. The short version, drawn from the evidence of Kyoto and other systems that have given credits away for free, is that while free allocations lower power prices in theory, in reality prices rise just as much as they would otherwise -- but they increase margins for exempt generators (i.e., coal plants). Indeed, one of the great criticisms of the Kyoto Protocol has been that it has directly led to increased profits for Europe's old coal plants.

Since then, there has been a growing chorus from (coal-heavy elements within) the electric sector arguing that utility regulations compel them to pass along any operating savings to the rate payers -- and therefore, that free allocations really do ensure lower power costs. (See here for more details on the "pass-throughs" innate to modern utility regulation.)

So on the one hand, we have the paper trail from Kyoto, and on the other hand, we have what would appear to be a pretty robust theory based on modern utility law. Who's right?

The short version: facts on the ground trump theory. The longer version is below the fold.

Coal: getting expensiver

More details on the new, really-really-expensive AEP coal plant in West Virginia.

It seems like just yesterday that I wrote that the 17 percent rate increase announced by AEP would not be the last one, given the cost of this plant. Two days later, here they come.

Specifically, "Customers could start paying as early as next year with rate hikes starting at $1 per month in 2009 and eventually climbing to $7.70 per month. AEP customers could pay nearly $160 million during construction and $116.23 million per year after that to fund the new plant."

And why do we need those rates? Because this plant will be "the single most expensive utility project in the state's history."

And why do we need the coal plant? Because ... [drum roll] ... coal is cheap!

Full story from Greenwire ($ub. req'd) below the fold.