The Electricity Daily is a publication of The Electricity Journal

Monday, February 24, 2003 Volume 20, Number 36

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Is Bush Negotiating on ‘Clear Skies’ Plan?

The Bush administration is quietly negotiating behind the scenes on some compromises to its Clear Skies approach to rewriting the 1990 Clean Air Act, according to Utah environmental lawyer Steve Christiansen. "The scuttlebutt is that the White House is talking abut some changes to the bill it introduced last year that would make the legislation more palatable to a wider group of players," he told Electricity Daily last week.

Christiansen, whose experience with the air law goes back to the early 1980s, said he suspects that the success of the administration’s "voluntary" reduction program – which apparently involves considerable twisting of arms to accomplish the industrial voluntarism – is a key to compromise on the contentious issues surrounding the multiple pollutant approach in the Bush plan. The dispute, of course, is about whether "multipollutant" means three pollutants – SO₂, NOx, and Hg – or, as pushed by greens, a fourth – CO₂.

"If the administration, through its voluntary program, can create the perception that it is serious and making progress, that could translate into a deal," said Christiansen, who represents industrial clients for the Salt Lake City firm of Parr, Waddoups, Brown, Gee and Loveless.

But Christiansen doesn’t believe Congress is likely to pass legislation this year. "This year is difficult," he said, "because of terrorism, Iraq, the economy. Bush Sr. used the 1990 amendments as a political chit to help improve his environmental image in the runup to the 1992 election." Christiansen said he expects that is what’s on the mind of the son, suggesting that next year might offer the opportunity for passage. "From the state of the union address," he said, "it is clear that these issues are on Bush’s mind from a political standpoint."

An emissions trading mechanism is likely to be the key to a compromise, says Christiansen. "Most agree that Title IV of the ’90 amendments works pretty well. There will be attempts to take a similar approach, with tighter caps on SO₂ and especially NOx, and a cap on mercury." Christiansen said he believes it is significant that the administration sent veteran Environmental Protection Agency staffer Brian McLain to represent it at a recent utility environment meeting in Tucson. "He’s EPA’s trading guru," he said, noting that McLain had been working on trading policy issues since before the passage of the 1990 amendments.

It’s clear, Christiansen said, that the command-and-control approach of earlier iterations of air legislation can no longer work well. "Command-and-control can be successful," he said. "But we have gotten about 90 percent of the reductions available. We have picked the low-hanging fruit. For every additional percentage reduced, the cost is geometrically higher."

The capital costs of the administration’s Clear Skies plan, Christiansen noted, have been variously estimated at $25 billion over 15-20 years (EPA) to $36 billion (Edison Electric Institute). In any case, he says, "that’s a lot of money. And this is the most industry-friendly of all the bills that have been talked about." [KM]

Aussies Try Spicy Approach to Geothermal Energy

Most geothermal power generation is from natural steam, but Australia is about to try hot dry rocks, which the U.S. tried repeatedly in the 1980s and 1990s without much success. With the help of a $5 million federal grant, Geodynamics Ltd. has begun drilling its "Habanero 1" well in South Australia. The well will extend about 3 miles under Cooper Basin to tap one of the world’s hottest geothermal resources. When the well is complete in 10 to 12 weeks, it is expected to reach an underground "hot spot" where rocks achieve temperatures of about 554º Fahrenheit.

Unlike today’s geothermal power plants, which draw on existing underground reservoirs of water and steam heated by the earth, HDR technology draws energy from underground hot spots where no water exists. The technology involves first drilling a well down to the hot rock, then injecting high pressure water to fractionate the rock, creating a reservoir of fissures filled with hot water and steam. Then a separate well is drilled a to draw the hot water or steam back up from the reservoir. The hot water or steam is used to produce power on the surface, then injected back into the first well, closing the loop.

Geodynamics Ltd. CEO Bertus de Graaf claims, "The energy stored at a depth of less than 5 km (i.e. within the ‘oil window’) within Geodynamics’ two geothermal exploration licenses totaling 985 square kilometers, is equivalent to 50 billion barrels of oil. By comparison, the proved oil reserves in the U.S. are estimated at about 30 billion barrels, and in Australia, 3 billion barrels." [DW]

CMS Sells Wholesale Electric Trading Book

In a further retreat from trading, Michigan-based CMS Energy has sold the wholesale electric trading book and related supply portfolio of its CMS Marketing, Services and Trading subsidiary to Constellation Power Source, Inc. Terms weren’t disclosed and the sale is subject to Federal Energy Regulatory Commission review.

CMS CEO Ken Whipple said the sale allows the marketing company to focus on the Michigan retail market. "As part of our back-to-basics strategy," Whipple said, "we’re going to be building on the success that CMS MST has had in the Michigan market. This sale is another step forward for the company’s liquidity improvement plan."

CMS says it will close the Houston marketing and trading office and relocate remaining operations to Michigan after the sale to Baltimore-based Constellation closes. CMS sold its wholesale gas book earlier this year and stopped speculative energy trading in 2002 after being embroiled in the round-trip trading scandal. [KM]

Coloradans Want Color Green, Says UCD Survey

Coloradoans want future electricity generation to focus more on renewable sources than fossil fuel sources, according to a new study conducted by the University of Colorado at Denver (UCD). An overwhelming 82 percent of those surveyed said they would like to see renewables as the focus for generating new power.

Peggy Cuciti, director of the Wells Fargo Public Opinion Research Program at UCD, said, "These are striking results. Support is high regardless of how we cut the data, whether by region, party affiliation, age, or gender."

Key findings:

* More than 90 percent of respondents disagreed with the statement, "It really makes no difference to me how my utility generates electricity;"

* Nearly four out of 10 said they would like to see more wind energy development, 36 percent said solar, and 5 percent said coal;

* Nearly 80 percent supported legislative action to require large Colorado utilities, the most prominent of which is Xcel Energy, to produce 10 percent of their electricity from renewable sources within the next 10 years; and

* Eight of 10 said they were willing to pay more for electricity to get utilities to develop renewables.

Greg Schnacke, vice president of the Colorado Oil & Gas Association, disputed the accuracy and methodology of the study, saying that it lacked market reality. [DS]

BNFL’s Norman Askew Will Step Down This Year

The chief executive of U.K.-owned British Nuclear Fuels (BNFL), Norman Askew, will step down this summer. Askew’s announcement came as a surprise since it was widely expected that he was preparing BNFL for partial privatization. Askew, who has headed BNFL since 2000, denied that his decision was linked to an upcoming government decision on whether to build more nuclear power stations. Askew formerly headed U.K.-based East Midlands Electricity and Virginia Power.

Askew said, "In taking the decision to announce my intention to step down, I am recognizing the need to put in place a chief executive who can see through the next stage of the company’s growth. The company has a clear strategy, a committed shareholder [the U.K. government], and strong businesses in its chosen fields of operation."

The (London) Daily Mail has reported that in the next three years the government hopes to sell 49 percent of BNFL for a price upwards of $1.5 billion. BNFL owns eight elderly Magnox reactors at the Sellafield nuclear operation.

Meanwhile, Greenpeace will seek to annul the European Commission’s decision to approve a $1 billion rescue aid package given by the U.K. government to British Energy last year, not likely welcome news for Mike Alexander, current chief operating office of Centrica plc., who on March 1 becomes chief executive of BE. If successful, the legal challenge might deal a fatal blow to BE’s efforts to avoid bankruptcy (ED, Dec. 20, 2002).

Jim Footner, Greenpeace spokesman, said, "The European Commission has approved a loan to British Energy which is unfairly distorting the U.K. electricity markets. Their reasoning is based on a misunderstanding of the facts and does not take into account the alternatives to this massive bailout of nuclear power." Greenpeace supports early closure of BE’s nukes. [DS]

Skoda Inks Deal for 500 MW, $300M India Power Project

The Czech Republic’s Skoda power developer has signed a deal worth more than $300 million with Karnataka Power Corporation for a new 500 MW thermal plant in India. Skoda says the turbines will be supplied by the alliance of Skoda-Energo and the U.S. Appian Group. Design engineering will be by Skoda-Prague, and construction work by Indian firms. The Czech Export Bank will finance the project, which will be and guaranteed by the Czech government. Construction is to begin within 18 months of signing of the contract, with completion set within 36 months.

Skoda already has a presence in the Indian market. The venerable Czech company has just finished a modernization of one unit in the southern town of Enore, and is preparing for work on another two units. [ML]

Commentary: Appreciation For Young Tom Edison

"I think electricity is just about the best value you can get for your money, other than having a baby or a heart operation. Electricity is the best value we have going and we can’t even see it!"

-- Elner Shimfissle, a character in Fanny Flagg’s fine 2002 novel, Standing in the Rainbow.

Elner, a farm wife in Missouri in the 1940s and 1950s, had it right. Electricity is ‘bout the bestest thing that mankind has developed for the benefit of other human beings. It beats the heck out of fast food joints, SUVs, Rolfing, and aqua therapy. Not to mention both political parties, Fox News, National Public Radio, and snowboarding. Leave it to a farm wife, albeit fictional, who grew up without the magic of electrical current, to remind us what a great bargain it is.

It’s useful at this time of the year to contemplate the ubiquitous utility of electricity. Thomas Alva Edison, boy genius and inventor, the avatar of the American of the 19^th century, the man who transformed our life with electrons, was born 156 years ago, on Feb. 11, 1847. There should be a national holiday.

In honor of the boy genius, I decided to inventory the importance of electricity in my home and office. Here’s the list, and it’s pretty impressive.

* In my office: The computer I’m using to type this story and that I will later use to send the copy to production over the Internet (plus the satellite modem that will permit that transaction); a backup computer in case Numero Uno has problems, and which I can take on the road; my printer, fax machine, and two copiers; a postage meter and postal scale; my telephone system -- two conventional phone lines and a cell phone; my radio, which keeps me tuned in to news, jazz, and the Tony Kornheiser show; my CD player, which lets me listen to Diana Krall and Nnenna Freelon when the news gets too depressing; the overhead light, which lets me work early in the morning and after dark (maybe I work too much?); the electric breadbox that keeps my copy paper in working condition during the summer humidity; the overhead fan that helps distribute heat in the winter and cool in the summer; and my Palm Pilot that lets me travel light.

* In my wife’s studio: the computer that she uses to design knitwear, track inventory, tackle correspondence, and surf the net; a color printer for her designs; two sewing machines, one for everyday work and a second for heavy-duty leather sewing; a cassette tape player for books on tape; a radio for NPR; an overhead light; a ceiling fan; and a floor lamp for help in detailed knitting and sewing.

* In our house: the pump that moves water from our well to house; the hot water heater; the heat pump that provides the base on which our solar and wood heat can function effectively, and air conditioning (occasionally) in the summer; two television sets and two VCRs, one of which is also a DVD player; another phone line; Dish Network; three overhead fans; the refrigerator; a range hood; a washing machine; the sound system; three freezers; numerous kitchen appliances such as food processor, toaster, ice cream maker, rice cooker, tortilla maker, and the like; overhead and floor lighting; and two vacuum cleaners.

* In our guest apartment: hot water heater; heat pump; washer and dryer; stove and range hood; refrigerator; TV, VCR, and Dish Network; two overhead fans; sound system; kitchen appliances; and overhead and floor lighting.

* In the garage and shop: table saw; power miter saw; shop vac; two automotive battery chargers; two overhead garage door openers; power tools including hand drills, router, circular saw, saber saw, and belt and orbital sanders; and a 7 KW electric-start gasoline-fired backup generator.

I was amazed when I created this list, and am particularly flabbergasted that the price I pay for the electricity for all of these power-using devices is so low. I have no complaints about my electric bill (although I have some about its reliability, see generator listed above).

I’m also gratified that the more electricity society uses, the less society pollutes the environment. That’s important to me. Compare the tasks I perform with electricity to the essentially similar tasks—absent such things as TV, radio, and sound—that the Amish also get done. They use animal (including mankind) power and wood or fossil fuels burned directly (for heating, washing, cooking, and the like). I’m convinced the Amish turn out more pollution per unit of economic output than my family.

So I join Elner in saying, "Thank you, Tom Edison."

-- Kennedy Maize

Disclaimer: The Electricity Daily provides unparalleled news coverage, utilising the skills of dedicated expert contributors monitoring every electricity event in the USA. Every effort is made by the publisher to see that no inaccurate or misleading data, opinion or statement is featured. Accordingly the publishers, their employees, officers and agents accept no responsibility or liability whatsoever for the consequences of any such inaccurate or misleading data, opinion or statement.

Copyright: © 2003 Elsevier Science Inc. All rights reserved

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