Category Archives: PUD

Renewables have not displaced fossil-fuel generation

Posted on by davald

Washington is different, the Snohomish County PUD even more so—in this respect: the majority of the electricity is generated by renewable resources, mostly hydroelectric plants along the Columbia River. There is only one coal plant still operating (Centralia), and that will be phased out over the next decade and a half. Natural gas facilities contribute a bit over ten percent (pdf) of electricity generation. With the passage of Initiative 937 (pdf), both private and public utilities with more than 25,000 customers (the PUD has over 300,000) must populate their supply portfolios with increasing percentages of renewable resources, save for new hydro, which does not qualify, for dubious reasons. The resource of choice is decidedly wind power.

Utilities are scrambling to meet the initiative deadlines. This year the percentage of the supply portfolio that must be in the form of qualifying renewables is three percent; it jumps to nine percent by 2016; and reaches its maximum of 15 percent by 2020. The PUD is well ahead of the curve.

Things are different for the U.S. as a whole and for over 100 other countries. A study by University of Oregon professor Richard York concludes that almost all of the renewable resources built over the last 30 years have been swallowed up by increasing demand for electricity; the green resources have not displaced coal and natural gas.

York found that each kilowatt-hour (kWh) of electricity generated from non-fossil-fuel sources displaced only 0.089 kWh of that from fossil fuels. To put this in perspective, displacing one kWh of fossil-fuel electricity would require over 11 kWh of electricity from alternative sources.

It’s not easy being green.

 

Light bulbs and taking the long view

Posted on by davald

By default I am enmeshed in energy issues, given that I sit on the board of the Snohomish County Public Utility District, which purveys electricity and some water to over 300,000 customers in Snohomish County and Camano Island. During my initial campaign for office in 2002 I pushed what I called ‘The Goal.’ In fine, the PUD would continue to meet the electricity demands of its customers with no net increase in aggregate load. Since the utility is adding customers each year, to achieve The Goal per-customer consumption would necessarily have to fall. That could occur only through steadily increasing energy efficiency.

Well, after being in office for nine years and a quarter, the utility has fallen short of meeting that challenge. Not for lack of trying, mind you, as each year the PUD acquires record amounts of conservation. But instead of declining per-capita consumption, we are seeing just the opposite. Here’s a graph showing annual per-customer consumption in the residential sector.

Moreover, total residential consumption (aggregate load) is moving further away from The Goal. The utility is connecting new customers and the average customer is using more electricity than before. The combination manifests itself in rising aggregate demand.

But I have not given up hope. I believe that The Goal is still possible. However, to do so will require a new paradigm in approaching conservation. I suspect that it will have something to do with taking a long view. I’ll focus on one example, the light bulb.

Humans tend to be an impatient lot. We would prefer to have something today rather than defer gratification. I’ve got money in my pocket. Where shall I spend it? Business owners, in particular, focus on the short term. They want a rapid return on their investment. So they’re typically unwilling to take the long view.

The PUD, on the other hand, can afford to take the long view. We’ve been operating for more than half a century; I expect that it will be around for many decades to come. Moreover, the PUD is a public, non-profit institution with access to tax-exempt financing. We should not be constrained by short-term considerations that inflict our customers.

Let me give you an example of the difference. It’s about a light bulb. Not your ordinary incandescent, mind you. This bulb would set you back $50. Manufactured by Phillips in Wisconsin, the bulb received a Department of Energy prize for lighting innovation.

The Washington Post quickly denounced both the award and the bulb, the latter deemed “too costly.” The newspaper included a graphic that purported to demonstrate that buying incandescent bulbs would be cheaper, even over the long run. The super-efficient, 10-watt bulb, which will last 30 years, would cost the buyer $5 more than had he purchased a series of incandescents.

There is a big problem with the arithmetic, however. The Post got it wrong, decidedly so. The Post assumed an electricity rate of one cent per kilowatt-hour. Yet, the national average retail rate is about 12 cents/kWh. (The PUD rate is about 8.4 cents.)

A corrected version of the Washington Post lightbulb cost comparison shows $50 LED bulb over $100 cheaper than incandescents.

Instead of costing the consumer $5 more, the bulb would actually save $100.

Yet, who wants to spend $50 on a bulb, even if it will last three decades and save you $100? Heck, the bulb would outlive me. If most people had the same attitude, the Phillips bulbs remain on retail shelves. Enter the PUD.

Suppose there are 300,000 residential PUD customers and each has an average of 10 light bulbs. That’s a total of 3 million bulbs. Suppose further that the average wattage is 60 and that each bulb is on for five hours a day. (The assumptions are just for discussion purposes and don’t reflect actual data, which I don’t have in front of me.) We’ll also assume that the retail rate is eight cents per kilowatt-hour.

3,000,000 bulbs x 60 watts x 5 hours = 9 million watt-hours, or 900,000 kilowatt-hours
900,000 kWh x $0.08/kWh = $72,000 per day

Now let’s suppose that all these bulbs are replaced with super-efficent Phillips bulbs.

Three million bulbs @ 10 watts each running five hours a day = 150,000,000 watts, or 150,000 kWh/day. At eight cents/kWh, the daily total would drop to $12,000, for a savings of $60,000/day.

A 60-watt incandescent bulb lasts about 5,000 hours. The new Phillips bulb stops working after 25,000 hours, or five times as long. Thus, we’d need to buy five incandescent bulbs for every Phillips bulb.

Suppose the incandescent bulb costs 53¢. Right now the Phillips bulb would set you back $50. You’re not likely to shell out that kind of money for a light bulb. If you bought 10, you’d be out $500. For that you could purchase almost 1,000 incandescent bulbs. But bear with me.

If you purchased the Phillips bulb you would have saved $57.65 over its life, assuming it’s on five hours a day and that you’re paying the PUD’s retail rate of just over eight cents a kWh.

Again you say, “Meh.” I still don’t want to pay $50 for a bulb, even if it lasts longer and saves me money.

Now let’s expand our focus again. We’ll look at all 300,000 PUD customers to see the cumulative effect of everyone using the new Phillips bulb instead of incandescents. (By the way, the Phillips bulb is superior to existing LED and CFL bulbs in color rendition and sustained output over time, factors relevant to receiving the award.)

If the PUD bought 3 million Phillips bulbs it would cost $150 million. Buying five times as many incandescent bulbs would run $7,950,000 (assuming 53¢ ea.). But the savings lie in electricity consumption.

This may seem odd, but if the PUD (or its customers) invested $142 million in Phillips bulbs (over and above what the incandescent bulbs would cost) it would save a net of $173 million. That’s because customers would pay only $63 million for electricity (over the life of the Phillips bulb) whereas they would pay $378 million if they all continued to use 60-watt incandescent bulbs.

How difficult it would be for the utility to convince all 300,000 customers to buy the Phillips bulbs. Not going to happen. But why couldn’t the PUD buy the bulbs on behalf of its customers and figure out a way to ensure that they’re all installed?

After all, one way of thinking about a public utility is that it is the customers. Everything it does, from buying wholesale electricity to maintaining its fleet, is for customers. In exchange, customers pay a rate for each unit of electricity they consume. So, if the PUD bought all those bulbs the costs would be paid by the customers, just as they pay for the utility’s trucks and PUD employees’ desks.

In the long run all this makes sense. The customers—as a whole—invest the money and get a guaranteed return, expressed in lower electric bills. The PUD could borrow the money, and since interest rates are so low, the total debt service wouldn’t be much more than the initial capital.

The ThinkProgress article linked above mentioned that the Phillips bulb will last 30 years, which means that whoever ran the calculations assumed about two hours a day for the bulb, whereas I’ve used five hours to get a bulb-life of about 14 years. So, every 15 years, or 30, the PUD would sell low-interest bonds, buy millions of bulbs, and save the community millions of dollars a year.

Customers may think short term. The PUD doesn’t have to, and really shouldn’t. Indeed, it can afford to take the long view, which benefits its customers.

Still a long way to go before realizing The Goal. But I’ve described one place to start.

The strange Everett school board

Posted on by davald

Lots of ink has been spilled over the fighting (literal) amongst school board members, with member Jessica Olson playing the instigator—or so it seems. Last night the board took a bizarre step toward further inanity: limiting the review of the district’s superintendent to a committee of three; the board has five members. We may presume that Ms. Olson will not be invited to participate. She said that the 3-1 vote cemented the board’s “laughingstock” reputation, according to the Everett Herald.

For whatever reasons, she has given black marks to Superintendent Gary Cohn. But her review has been in the form of a minority report, which evidently didn’t become part of the record.

Now I don’t know any of the school board members. Nor am I in a position to finger one or more as the cause of the bitter animus between them, although readers of the Herald would likely infer that Olson is chiefly responsible.

But she has a point.

Olson contended the parameters for Cohn’s review should take place in a public meeting.

Having been through such processes as a member of the Snohomish County PUD board, I am quite familiar with the state’s Open Public Meetings Act, which gives deference to the people’s right to know what their public bodies are up to. The act allows for executive-session exemptions (pdf)—evaluating the performance of a public employee being one.

However, and this is where I think Olson has it right, the evaluation criteria are a matter of public record. Only the discussion of whether or not the employee satisfied the criteria belongs in executive session.

I’ve been on contentious boards, for which I was largely responsible. It’s not much fun, certainly. I’m relieved that we PUD commissioners managed to work through our problems—with the help of a professional facilitator. We’re now actually governing. Fancy that.

Intergenerational equity

Posted on by davald

Following several decades of declining average residential consumption, the good citizens of Snohomish County started using more electricity—despite Snohomish County PUD’s record-breaking conservation efforts (see chart immediately below, which shows the average consumption per residential meter in annual kilowatt-hours). In this post I don’t want to focus on why this is happening. Here I wish to use this recent upward trend to explore a philosophical issue.

If population continues to increase and if per-customer electricity consumption also increases, the PUD and other utilities experiencing the same trends will have to increase their power supplies, do even more conservation, or both.

As I mentioned above, the PUD has, since 2005, steadily increased its annual conservation numbers (aMW). Beginning in 2009 the PUD has broken the previous annual record every year. But, even this level of conservation has failed to arrest the rise in electricity consumption. Each of us, on average, is using more kilowatt-hours than before, and there are more of us each year.

Whatever we use today of finite resources will not be available for future generations. Also, with consumption comes waste, which must be disposed of. As we continue to pollute the air and the water and the land we create scarcities of public goods for future generations.

Yet, should we even care about the well-being of future generations? Do we have any moral obligations to make the planet habitable for our progeny?

Let’s try a thought experiment based on John Rawls’s discussion of “the original position.” Imagine that you are in a special room with nine others. Each of you ten represents the interests of a century’s worth of people. However, you don’t know which century you represent. It could be this century or it could have been five centuries ago. The point is, you don’t know. We’ll also assume for this experiment that there are no technological differences between centuries. Thus, what the tenth century could do with machines and gadgets and devices the first century could do, as well. In doing this I want to ignore the positive technological and intellectual capital that one generation bequeaths to the next, so that there is no cost-benefit analysis going on from one generation to another, as in, “I’ll put up with the stinky, rotten air because I’ve got this great Blackberry to play with.” (That’s so 20th century.)

Let’s also assume that there is a grand moderator who tasks the group with making energy resource decisions behind this “veil of ignorance.” How do you decide?

If you knew you represented the earliest of the ten centuries, you might not give a damn about what you leave behind. If you were the second century, you might experience a little less of this and a little more of that; but in total, your well-being is not all that different from the first century’s. However, by the tenth century, the accumulation of I-don’t-give-a-damn decisions leaves you with nine centuries’ worth of garbage, polluted air, global warming, food insecurity, and so on. If you could, you’d ring the necks of the other nine.

But, again, you don’t know which century you represent. If you imagine that your century is at the mid-point or closer to the last, you would very well prefer that the previous centuries had behaved themselves, and didn’t leave the planet worse off than when they found it. Indeed, because you don’t know, you’re likely to make decisions that do no harm, or as little as possible, since you could be on the receiving end of, well, a whole lot of shit. And no one likes shit.

I’ll assume that you generally appreciate the implications of this little thought experiment, and that you understand the do-no-harm principle under the “veil of ignorance.” So, what kind of energy resource decisions do you make?

We might consider those things we would not do, for fear that we could be on the receiving end. Here’s a brief list:

  • mine, pulverize, then burn all the coal under the ground
  • extract oil from tar sands that is later burned
  • buy and drive gas guzzlers
  • extract and burn all the natural gas you can find
  • cut down all the trees and burn them to make room for petroleum-based agriculture
  • toss all your used batteries and gadgets into the garbage
  • have more than two children
  • increase your consumption of electricity

These things that we’d likely not do look awfully familiar, because that’s pretty much what we do today. Suppose we avoid doing them all. Is that enough? Hardly.

You still need electricity to do just about everything, from running your alarm clock to drying your hair to warming up leftovers to powering your computers and gadgets to keeping the lights on. You may also need it to keep warm, especially if you live in a multi-family dwelling.

Can we continue to operate our devices without using up all the resources and leaving the planet in a mess? Maybe, but it will take a different mindset.

First of all, from this thought experiment we can gain a keener understanding of sustainability. We cannot exhaust finite resources as if there were no tomorrow. But are there enough renewable resources to provide our electricity needs over ten centuries and more?

On a positive note, consider that almost all of the electricity consumed by PUD customers is renewable, and most of that is hydro. Only a tiny fraction of the supply comes from fossil-fuel generation plants, and that’s only because the utility is forced at times to buy power from the market. Since that market is largely defined by the regional transmission grid, each utility served by that system can and does use power generated by coal and natural gas plants in Montana, Oregon, Idaho, and any of eleven western states, plus parts of Canada and even northern Mexico.

However, if you lived just about anywhere else in the United States, most of your electricity is generated by combusting carbons. Are there enough renewable resources to replace indigenous coal and gas?

Back to conservation, by using scarce resources more efficiently there would be more electricity to go around, perhaps even enough for future generations. But trust me, that’s going to require a quantum leap in how we live, work, build and transport things, and get from here to there.

To be sure, I really don’t know if the entire population of the planet could meet its electricity needs from only renewable resources plus conservation. If we can’t figure out a way to do so, then we may be consigning future generations to misery and privation.

I’ll offer my quick answer. I don’t think we have the collective will to change course. We’ll continue as before, with a relative few managing to escape the negative externalities imposed by prior generations. The descendants of the Rest of Us will not be so lucky.

Selective focus

Posted on by davald

There on the front page of this morning’s Everett Herald is an article on thievery. Someone, and we don’t know who, stole $21,000 of emergency cash from an old safe that may not have closed properly at the PUD’s Operations Center.

On the Seattle Times front page we see this:

Snohomish County executive Aaron Reardon is under investigation for possible felony charges. The Washington State Patrol is in possession of incriminating documents, including emails, Facebook entries, receipts, etc. corroborating the allegations of Tamara Dutton, a county social worker.

During last fall’s campaign, she approached County Council Chairman Dave Somers, admitting that she had had a long-term affair with Executive Reardon, who is married to the media relations head of the city of Everett. Ms. Dutton reported that she and Reardon would separately travel to Washington, D.C., and other cities, where they would share hotel rooms and, it appears, precious bodily fluids. Back home, they would spend hours at a time on the phone and also rendezvous at different locations, including Reardon’s office. Somers turned the matter over to the county’s prosecutor who then tapped the State Patrol to investigate the allegations.

For his part, Reardon charged his trips as “official business,” for which the county paid. It seems that there was indeed “business” going on, but not the kind normally paid for by citizens. The Seattle Times:

Detectives with the Washington State Patrol, which is investigating whether Reardon misused county funds, have no doubt that Dutton and Reardon had an affair, according to a law-enforcement source close to the investigation.

Reardon was sloppy in other ways. The state auditor found that the county’s records were in disarray and incomplete, making the investigation more difficult.

Sensational stuff, thought the Times editors, enough to place the matter front and center. But its absence from the Herald‘s pages is certainly conspicuous, though perhaps understandable. Reardon, whom I’ve met, had just won his third term. He’s widely viewed as a rising star in the Democratic Party—at least until recently. His wife, Kate, used to work at the Herald before assuming her position as the city’s spokesperson. The couple have two children. So, the Herald editors chose the PUD larceny as its lead article rather than the embarrassing piece on Reardon.

By the way, the utility has purchased a brand new safe and placed it in a manager’s office, entrance to which requires a key or swipe card. Only two people have the safe’s combination, which will be routinely changed to ensure extra security.

Popularizing government

Posted on by davald

Polls show that we don’t much care about our governments, from federal down to city. We certainly don’t trust the people who run them.

Well, I’m a member of government, albeit a unique one. I managed to get myself elected to my current position, then re-elected three years ago. Each term is six years. As I’ve written on several occasions, the form of governance initially conceived by the legislature some 80 years ago and modified by a prior board of commissioners works extremely well; our customers seem to think so, for the most part.

The Snohomish County PUD works for several reasons:

  • a very small governing body (three members);
  • strict separation between the commission and the organization—we commissioners do policy; the general manager executes them, and superbly, I should add;
  • the commission, when acting as a whole, has broad authority to ensure that the utility meets its multiple obligations;
  • the board can raise rates without the vote of the people, although we cannot do so until after a public hearing;
  • all formal actions are transparent and made in public; and
  • if customers don’t like what the board is doing, they can vote in some other commissioners.

Moreover, we have only two board meetings a month, with mornings taken up with briefings and discussion and the afternoons devoted to paying bills. Those afternoon sessions last no more than a couple of hours, although I’ve been the chair pounding the gavel less than fifteen minutes after opening.

With this brief description you understand straightaway that the PUD, in particular, is very different from any other public entity, from school boards and city councils to county councils and state houses—with Congress being in another universe in terms of structure and governance. It’s those other bodies, I submit, that are the problem, and citizens have every right to complain, even if they know that their criticisms fall on deaf ears.

Having the experience of setting policy and governing a public entity I have come to appreciate that the biggest flaw of other governments is their size followed closely by procedures. I will add another shortly.

School boards and both city and county councils usually have at least five members, sometimes more. If two heads are better than one, than why not have seven or a hundred? As we move up the government pyramid, the number of elected officials escalates. Congress has 435 members in the House and another hundred in the Senate. (For the sake of my own sanity, I will not touch on the latter body’s arcane and labyrinthian rules. The House is bad enough.)

For this blog entry I’ll focus my attention on Olympia, the capital of Washington. It has two houses of government, a governor, and a supreme court. There are also a lot of agencies too numerous to mention. So far not much different from any other state government.

In a previous post I talked about committees and sub-committees. Each legislative body has several, and each of those committees’ members tend to view the world from the perspective of their committee, and they’re usually busy at pushing this or that legislation pertaining to their committee’s jurisdiction. I described Olympia’s legislative process as a giant hopper and inverted pyramid, mixing metaphors, perhaps, but I hope that you get the picture. Well, actually, there are two hoppers and pyramids, one set for house and the senate.

Merely describing this makes one tired. There are so many layers, and hearings, and documents, and aides, and lobbyists, and issues. Yes, there are many, many issues, and each issue has its own set of interests, both pro and con.

I will admit that there is no incentive on God’s green earth that would entice me to be a member of any of these bodies. I prefer things be neat, simple, and effective.

Now all that I’ve described barely scratches the surface. But we begin to understand why so many people have lost faith in their governments, which they rightly believe to be controlled by the rich and powerful. We may have the best governments that money can buy, but we lack governments for the Rest of Us, and I believe that we deserve better.

If I could play dictator for a day and be given the opportunity to alter our form of government, what would I do?

Why do we need two houses in Olympia (or in Washington, D.C.)? I don’t see the need, so I eliminate one body—composed of 100 members.

The members would not represent geographical areas (what I call ‘the politics of dirt’). Rather, members would represent ideas or, if you wish, political parties, of which we now have only two. What’s my rationale here? If you’re a conservative living in Seattle, your preference will not be represented in the legislature. Likewise, if you are a liberal living on the other side of the Cascades, you’re out of luck when it comes to Olympia, because your representative or senator is a conservative, staunchly so. Wouldn’t it be nice if you could vote for someone because of what they stood for as opposed to where they lived?

This unicameral legislature’s complexion would be determined by proportional representation, rather than real estate. I should imagine that under this scheme Tim Eyman’s party would hold a few seats as would socialists and conservatives and progressives. I’d establish a threshold of five percent. If your party, the one that reflects your views, gains at least five percent of the popular vote, you get a seat.

This single body would not divide itself into committees. It would deliberate as a whole, preferably with the general will in mind, à la Rousseau’s social contract theory. A simple majority decides each issue.

Now, here’s the real kicker. The leader of the majority coalition would be, in effect, the state’s governor. If this sounds like Europe, so be it. Washington, after all, is larger than most European countries, all having parliaments.

While I’m at it, I would abolish the initiative and the referendum. The people have their say through their chosen representatives. If they want something different emanating from the legislature, choose someone else.

For the moment I’ll leave the judiciary alone. I’ll say this much: I don’t take kindly to judicial review. The legislature is paramount.

There you have it—a much smaller government that can get something done. And I think you’re going to like the way it looks, pace Men’s Wearhouse.

Your turn.

Federal subsidies

Posted on by davald

The almost certain demise of electric vehicle manufacturer Think made the pages of both the Everett Herald and Seattle Times this morning. The article tells us that the government’s pushing this or that technology is no guarantee of success, as we discovered with Solyndra.

For politicians betting on electric vehicles to drive job growth, the view from inside Think City’s plant here is their worst nightmare: 100 unfinished vehicles lined up with no word whether they will be completed.

The vehicles, two of which could fit into a parking space, were to cost $40,000. That’s a tough sell in any economy, but especially so under current conditions.

Conservatives generally loathe subsidies for at least three reasons:

  1. they distort the market;
  2. governments can make bad bets; and
  3. the government shouldn’t be in the business of picking winners and losers, which is a variation on the first.

For politicians, however, bringing home the bacon is the staple of electability. And it’s a gift that keeps on giving. The senator or congressperson gets elected in the first place. He or she somehow manages to secure federal dollars for this or that project. The folks back home love bacon, so they re-elect the politician—and so on. One can appreciate that such a cycle improves constituency fortunes if the politician remains in office; the longer the better.

We can liken the subsidy process to a giant punch bowl filled with a favorite liquid. All of us contribute to the supply. But there are only so many straws, and some straws have larger diameters than others. The trick for politicians is to grab the bigger straw to siphon off more of the liquid—that is, subsidies.

I happen to be in the energy business, as an elected commissioner for the Snohomish County PUD. Our board adopted a rather simple and straightforward policy on energy resources: Acquire as much conservation as financially and technically feasible, then make up the difference with renewable resources, preferably developed and operated by the utility in our own backyard. Thus, we’re exploring both tidal and geothermal energy. We’ve purchased an extensive portfolio of wind power, and we’ve been pushing solar energy as well.

Regardless of how one feels about the broader issue of government subsidies, as long as they are in play, the PUD would be derelict in its duty to customers if it refused them. So the utility has applied for and received millions of dollars from the federal government for out smart grid initiative and our tidal and geothermal explorations.

But as a private citizen, I’m not so sure about subsidies, for the reasons mentioned above. I’ll discuss my views within the context of energy policy, since that’s in my bailiwick.

The Energy Information Agency publishes data (pdf) on energy subsidies. In 2010, the Department of Energy doled out $37.2 billion to the energy sector; and, yes, the PUD is among them. The End-Use category is mostly for low-income citizens through LIHEAP.

Each of these expenditures were no doubt the product of commercial interests and bringing home the bacon. Of the $37.2 billion total, $14.8 billion came by way of ARRA, the stimulus package—conservation and renewables (mostly wind) comprising 84% of that. With the expiration of ARRA, it should follow that the subsidy total will decline. Indeed, in fiscal year 2007 the total amount was $17.9 billion.

We can appreciate that the environmental community supports renewable and conservation resources, but objects to subsidies for fossil fuels and likely nuclear, though for different reasons. The politicians representing coal states prefer that subsidy continue; likewise with nuclear and natural gas.

What would the energy sector look like without the subsidies? I should think that coal and other fossil fuels would hold their own; renewables not so much. Coal is cheap and abundant. Solar and wind, while abundant, are more expensive to harness and transmit. Without subsidies and resource portfolio standards renewable resources cannot compete with fossil fuels on cost alone.

As someone concerned about climate change, I support the development of renewable resources and energy efficiency. Those who care not a whit about global warming may prefer that renewable subsidies go away.

However, there is another factor that distorts markets. The total social cost of resources is not reflected in their retail price. Fossil fuels, in addition to their greenhouse gas emissions, cause all sorts of health problems because of their particulates and toxic chemicals. Long-established hydropower projects adversely impact fish and wildlife, though I should add that BPA customers pay handsomely for salmon mitigation measures.

Without wading into the political challenges, suppose we could determine the externality costs of different resources. Then those costs are embedded in the price utilities and consumers pay. Without subsidies across the board, what resources would be preferred in a competitive market?

Certainly fossil-fuel resources would become more expensive. How much more? Various studies have estimated coal’s externality costs, and the estimates range from $10 an emitted ton of CO2 to as much as $100 or more. Ignoring greenhouse gases for a moment, coal-burning damages the environment and animal species, including humans.

According to the National Research Council report, in 2005 the total annual external damages from sulfur dioxide, nitrogen oxides, and particulate matter created by burning coal at 406 coal-fired power plants (which produce 95 percent of the nation’s coal-generated electricity), were about $62 billion.

A Harvard study found those costs to be much higher. The study found that at the low end the costs were $345 billion; at the high end $523 billion.

“Our comprehensive review finds that the best estimate for the total economically quantifiable costs, based on a conservative weighting of many of the study findings, amount to some $345.3 billion, adding close to 17.8¢/kWh of electricity generated from coal. The low estimate is $175 billion, or over 9¢/kWh, while the true monetizable costs could be as much as the upper bounds of $523.3 billion, adding close to 26.89¢/kWh. These and the more difficult to quantify externalities are borne by the general public.” The average residential price of electricity at the time of the report is 12¢/kWh.”

Yet the study authors suggest that even these costs do not represent the total social costs of coal.

“Still these figures do not represent the full societal and environmental burden of coal. In quantifying the damages, we have omitted the impacts of toxic chemicals and heavy metals on ecological systems and diverse plants and animals; some ill-health endpoints (morbidity) aside from mortality related to air pollutants released through coal combustion that are still not captured; the direct risks and hazards posed by coal sludge, coal slurry, and coal waste impoundments; the full contributions of nitrogen deposition to eutrophication of fresh and coastal sea water; the prolonged impacts of acid rain and acid mine drainage; many of the long-term impacts on the physical and mental health of those living in coal-field regions and nearby MTR sites; some of the health impacts and climate forcing due to increased tropospheric ozone formation; and the full assessment of impacts due to an increasingly unstable climate.”

Coal-burning plants generate about half of the nation’s electricity. Should the price of coal be raised to reflect the externalities, millions of people would experience much higher electricity bills—at least in the short run.

Over time, the market would adjust to the price differences to deliver cheaper alternatives, which would be renewable resources and conservation.* Their externality costs would be at or near zero.

Nevertheless, both conservatives and liberals should be willing to kill subsidies and devise a suitable mechanism to embed total social costs in the price of all resources, preferably by incremental steps over time. Then let the market do its thing.

How conservative of me.

___________

*  Actually, conservation is already and has long been the cheapest available resource. The reason utilities, especially investor-owned, stop far short of maximizing their conservation potential is that, by definition, conservation measures reduce consumption. Lower consumption, all other things being equal, reduces revenues. Since IOUs are in the business of making profits (unlike consumer-owned utilities like the PUD), shareholders balk at doing more conservation.

 

Speaking of divided houses…

Posted on by davald

The Snohomish County PUD, upon whose board I sit, actively insinuates itself in the legislative process. We have two highly capable staff members and a professional consultant monitoring and often influencing bills for our customers’ benefit. During the legislative session, the commission receives regular updates on the progress of pertinent legislation. And this takes a while; there are literally dozens of bills under consideration in Olympia that affect the utility in one way or another.

We all know that Washington state, like many other states, faces severe financial challenges. With a stuttering economy generating lower revenues, the overwhelming task before the legislature is cutting this or that program, since there is virtually no chance that Olympia could obtain a super majority necessary to raise taxes. Thank you, Tim Eyman.

Yet, legislators are busy drafting one bill after another having little, if anything, to do with the major problem at hand—balancing the budget. Why is this so?

I blame the proliferation of bills on the system of committees and sub-committees, of which there are several in Olympia. Each committee chair must feel compelled to do something—often, I suspect, for no other reason than to justify the existence of his or her committee.

State legislatures, like Congress, are giant sorting machines. At the top are very large hoppers, into which anything is tossed, no matter how big or small, significant or trivial. These bills emanate from the committees, and each committee is viewed by its members, and especially its chair, as having nothing really to do with any other committee. Thus, there is no collective sense of the general will or the good of the whole. It’s all about my committee.

Behind the scenes legislators, their aides, and myriad lobbyists engage in an endless exchange of back-scratching, pros and cons, and, occasionally, relevant and useful information. (That’s where the PUD comes in.) This process narrows the list—somewhat. The committee takes a vote. If the bill succeeds, it goes into another process, then another.

Only a small percentage of all those bills entering the hopper at a session’s beginning survive the process-gauntlet. Viewed graphically, the legislative process resembles a giant inverted pyramid, obscuring the sorting machinery.

The PUD board, thankfully, is too small to divide into committees. Therefore, we three commissioners work on every issue as a whole. And there aren’t’ that many issues. But each issue coming to the board’s attention, almost by definition, is significant. We listen. We talk. We vote. Simple, but very effective.

If this structure works well for a near-billion-dollar-a-year utility, imagine it applied to Olympia. I’ll explore this in a subsequent post.

Two passages

Posted on by davald

As I get older, news about others turns negative. In place of weddings and births, obituaries reign. A few thoughts on two recent deaths. I did not know either person well.

The first was Bob Hayman. He and his wife and young family were briefly neighbors in Marysville. They had met at Stanford, where he received a degree in fish biology, I think. Makes sense since he earned his living as a fish biologist. The family moved to Seattle some time ago, ironically a few blocks from my daughter’s residence on the same street.

When I was much younger I’d jog. And I do mean jog, rather than run. No marathons in these bones. I set out in the early mornings back then, usually before dawn. Invariably I’d be startled by the sound of bouncing shoes on the pavement. It would be Bob, a serious and proficient runner who literally bounded as he sprinted past me.

He seemed to be a private man, much less gregarious than his wife. He appreciated his children and had turned their home into a playground of sorts for their kids.

I don’t know what ailed Bob. I presume it was cancer, since his circulatory system must have been excellent; all those miles each day.

My thoughts go out to Barbara, his wife, and their children. He was much too young to die.

Today I learn that Walt Notaft passed away, after a long struggle with cancer. He regularly attended PUD board meetings. But he didn’t just sit there, he cheerfully contributed with thoughtful comments and questions. As a retired Boeing engineer he got the technical stuff, so his contributions were well-informed. He was also wont to praise the utility for its “prudence,” what has become a favorite expression of mine and I think my colleagues. However defined, we seem to have it at the PUD, judging by our record of achievements, if I can boast for a moment.

Having often been the lone member of the public sitting in the audience for every board meeting, in these past several months Walt’s attendance became conspicuously sporadic, then non-existent since the end of last fall.

My thoughts extend to his wife, Karla, who contacted the PUD this morning with the sad news.

A quick note about K-C

Posted on by davald

Dallas-based Kimberly-Clark’s principals decided over a year ago that they would seek a buyer for their Everett plant or, failing that, shutter its doors and send over 700 workers to the streets. These are family-wage jobs, since the K-C employees are union-represented.

Having then lost the Costco contract, which accounted for most of the plant’s business, K-C headquarters approached the PUD. The company believed that its existing co-generation contract with the local utility jeopardized prospects for an eventual sale. So the board of commissioners, on which I sit, approved a negotiated settlement; the contract was to expire at the end of 2016. We were led to believe that the early termination would improve the chances of the plant’s remaining open under new ownership.

The PUD was apprised of the ongoing discussions with prospective buyers, of which there were only two. After one suitor was disqualified, for whatever reasons, K-C focused its attention on Atlas Holdings, a Connecticut-based financial firm. All seemed to be proceeding smoothly and in a positive direction until environmental concerns* reportedly put the kibosh on a proposed deal, at which point Kimberly-Clark announced that the plant would be closed, workers sent packing, and the facility demolished for possible redevelopment. Merry Christmas, employees.

Anyone who has lived in this area for a while knows one or more current or former K-C workers. The plant’s closure will likely devastate families, given the dismal economic climate. My heart goes out to the workers, their spouses, and children. One bright spot may be that the skills acquired at K-C will transfer to new jobs at Boeing, which is hiring, or Boeing suppliers. We’ll see.

________________

*  Since the massive environmental study of Port Gardner Bay for the Navy’s homeport, we’ve known for 25 years at least that the local waters and seabeds contain toxic chemicals, particularly dioxin. There was much controversy at the time as the Navy prepared the site via extensive dredging. What to do with the contaminants? Some proposed adding a layer of soil to cover the harbor bottom. Others recommended the dirty soil be buried elsewhere. As I recall a decision was made to deposit the contaminated soil on Smith Island, midway between Everett and Marysville. I submit that no one should have been surprised about the existence of toxins.