Washington, D.C. – Consistently high natural gas prices have prompted utility companies in six western states to plan the construction of new coal-fired electric plants for the first time in more than a decade, according to the Associated Press. Coal-fired power plants are in the works in Arizona, Colorado, Montana, New Mexico, Utah and Wyoming due to stubbornly expensive natural gas prices, AP reported Saturday. Nationwide, as many as 90 new coal-fired plants are being considered with a combined capacity of 50,000 megawatts. Western environmental groups in the region roundly criticized the plans, citing fears of increased air pollution. Existing coal-fired plants emit carbon dioxide, sulfur dioxide, nitrogen oxide and mercury. The groups noted that existing haze over western wilderness areas has prompted the EPA to debut a regional air pollution control plan. By contrast, the Energy Information Agency has reported that if the energy bill is passed into law, emission levels will be reduced by 96 million metric tons by the year 2025. The EIA based its assessment on several provisions in H.R. 6, including: advanced coal technology incentives, incentives for nuclear energy and renewable fuel and the Alaska Natural Gas Pipeline. With the exception of the incentives for nuclear energy, S. 2095 contains the same provisions. Statement by Chairman Pete V. Domenici: “Passing the energy bill increases natural gas supply, making natural gas more affordable for utility companies to burn. This will allow utility companies to continue operating environmentally-friendly natural gas plants. “Passing the energy bill means the development of advanced coal technologies that will sharply reduce the emission from future coal-fired electricity plants in the future. That means we can use our abundant supplies of coal while ensuring clean air and clean water for our children. According to the EIA, the advanced coal technology and other environmental provisions in the bill will keep 96 million metric tons of future emissions out of our air. That’s the equivalent of pulling nearly 1 million SUVs off the road.” The EIA assessment on the impact of H.R. 6 was written in response to a request from Senator John Sununu. Senator Sununu asked EIA to analyze the effects of the H.R. 6 conference report on the Reference Case projections laid out in the Annual Energy Outlook 2004 (AEO2004). The EIA analysis was received by the Energy Committee on February 13. The complete text of the March 22, 2004 AP report is included below: natural gas prices rise, utilities plan new coal-fired plants Associated Press March 20, 2004 Spurred on by stubbornly expensive natural gas prices, Western utility companies are contemplating new coal-fired electric power plants for the first time in more than a decade, a move that could worsen already deteriorating air quality across the region. Utility regulators in at least six Western states are in the process of considering new plants or additions to existing ones. The push, prompted by industry concern over the volatility in natural gas prices, comes as the Environmental Protection Agency is debuting a regional air pollution plan intended to clear haze lingering over wilderness areas. While utility companies say the shift from natural gas to coal-fired plants will help them fill an increased demand at a cheaper price, environmentalists find the trend disturbing. "We haven't seen a coal plant built in Colorado in two decades and there's a reason for that," said Robin Hubbard of Environment Colorado. "Denver just had the dirtiest summer we've had in 18 years. We clearly need to look at other means of power generation." Utilities turned to natural gas for new power in the 1990s because the plants - essentially a jet turbine powering a generator - are cheaper to build and cleaner to operate. But then came the run-up in fuel costs, which piled onto the higher capital costs. Fuel costs for gas-fired plants are as high as 4 cents per kilowatt hour, while coal plants come in at about 1 cent, said Robert McIlvaine of McIlvaine Co., an energy consulting firm based in Northfield, Ill. "The breaking point is somewhere around $3 per million BTUs of natural gas," McIlvaine said. "Below $3, gas-fired generation is more attractive than coal." A BTU, or British Thermal Unit, is roughly equivalent to the amount of heat generated by burning a kitchen match, according to Xcel Energy spokesman Steve Roalstad. At the current price of $6 to $7 per million BTUs, natural gas is not even close to competitive with coal. Some gas-fired plants around the nation are being shuttered because the cost to run them equals the sales price for the electricity generated, McIlvaine said. Nationwide, as many as 90 new coal-fired plants are being considered with a combined capacity of 50,000 megawatts, McIlvaine said. That equals about 7 percent of the total power generation available in the United States and carries a price tag of about $75 billion. One megawatt supplies the amount of electricity used by 400 to 900 homes in one year. In Colorado, Xcel Energy is planning to build a 750-megawatt coal-fired plant near Pueblo, Colo., for $1.3 billion, while a comparable gas-fired plant would cost about $533 million. Xcel had seen a 13 percent increase in per capita demand for electricity in the last decade, thanks to a proliferation of household appliances from big screen televisions to cell phone chargers, Roalstad said. Over the next 10 years, the United States will need about 140,000 megawatts of increased power, with about one-half or more to come from coal plants, McIlvaine said. Jim Owen of Edison Electric Group, an industry trade organization, said it is too soon to tell just how big the coal-fired boom will be, given that less than half of planned plants are usually built. The downside for coal-fired plants is that they are a major source of carbon dioxide emissions, the leading cause of global warming. Coal plants also emit sulfur dioxide, which creates acid rain; nitrogen oxide, which turns to ozone creating smog; and mercury, a neurotoxin especially dangerous to children. Neither carbon dioxide nor mercury are currently regulated for coal-fired plants by the EPA, but proposed mercury rules are expected by the end of the year. The technology for dealing with both types of emissions is just emerging. "I have not heard of any really viable carbon control technologies," Roalstad said. As the plants are being built, the EPA is debuting a regional air pollution plan intended to improve visibility in 16 national parks and wilderness areas, including the Grand Canyon National Park in Arizona. The Western Regional Air Partnership hopes to reduce sulfur dioxide emissions from coal-fired plants by 50 percent to 70 percent by 2040. Environmentalists believe the EPA's actions are another reason utilities are turning to coal plants now. "The theory is the industry sees carbon and mercury regulations coming and they have to get in their last push to get permits, because once those kick in, coal-fired electricity could cost more than wind," said Matt Lewis of Resource Media in San Francisco. Xcel's new plant in Pueblo will meet all current emission requirements, as will any other plants the company builds in the future, Roalstad said. "Legislators and regulators can certainly draft legislation to accomplish what they want to accomplish," Roalstad said. "We will comply with all regulatory requirements. We have no choice." Utilities are also gravitating toward coal because of base demand, which is the average amount of power a utility needs to produce for its customers. Coal has been the fuel of choice for base demand because it's cheap compared to other fuels, and because once turned on, coal-fired power plants run 24 hours a day, seven days a week. Peak demand is the amount of power a utility needs to have at its command when customers are cranking their thermostats to fend off extreme weather. Roalstad said the last Xcel study, produced in 1999, called for an additional 2,000 megawatts of power to serve greater peaking loads, but not a greater base load. Today, it's a different story. Xcel now believes they do need a greater base load capacity because of more customers in Colorado. Brunetti said recently that Xcel's customer base has increased by 20 percent in the last decade, while peak load has gone up by 60 percent. Coal-fired power plants are in the works in Arizona, Colorado, Montana, New Mexico, Utah and Wyoming. The biggest plant being contemplated is a 1,500-megawatt station on Navajo land in the Four Corners region. McIlvaine said coal accounts for more than 50 percent of the nation's electrical power and natural gas appears to be on the wane as a fuel source. "Natural gas production is going to decline, there's no question about that," McIlvaine said. "There's a 300-year supply of coal." ###