MEA coal-fired plant plan spurns heated debate

 

May 13 - McClatchy-Tribune Regional News - Margaret Bauman Alaska Journal of Commerce, Anchorage

A proposed coal-fired plant to provide much of the electricity for nearly 53,000 customers of Matanuska Electric Association is nowhere near the permitting stage yet, but the prospect has already generated heated debate.

On one side stands Tuckerman Babcock, a key spokesman for MEA, asserting that the utility's job is to be sure that when members of the cooperative switch on the power, the lights go on and that people can afford it.

On the other side are folks like Jim Sykes of Utility Watch, which monitors the activities of utility companies serving Valley residents. Sykes asserts that people want to be part of the process of deciding whether the plant should even be built.

Meanwhile, a state agency has filed a lawsuit relating to limitations on emissions that could affect the plant's outcome.

MEA maintains that by building its own coal-fired and natural gas plants right in the borough the utility can provide its customers with a cheaper source of power than it does by purchasing power from Chugach Electric Association. Just what that price would be is not clear, however, as MEA has not pinpointed the cost of the coal and natural gas purchases and other related items.

Babcock insists that an integrated resource plan commissioned by MEA from CH2MHill spells out that by building coal and natural gas power plants in the Matanuska Valley, MEA can provide cheaper power than under its current power-purchasing contract with Chugach Electric Association. MEA's current expenses include a minimum $500,000 a year "just to manage our contract with Chugach," Babcock said. "That cost would disappear if we had our own generation."

By the time its contract with Chugach ends in December 2014, MEA wants to be generating its own power, using the combination of coal and natural gas, Babcock said.

While there are still many unknowns -- such as how much coal or gas the new facilities would need, how much it will cost or the actual costs of emission allowances -- the research by CH2MHill shows that mercury emissions from a 100 megawatt coal plant would be 3 pounds a year, compared to 10 pounds from the current 25 megawatt plant located in Healy, according to Babcock.

With other coal-fired plants proposed to come online soon, the competition for Alaska's allowable mercury pollution credits could get stiff.

Competitors include the currently idle 50-megawatt Healy Clean Coal Project, which Homer Electric Association hopes to restart, plus a 200-megawatt coal power plant planned in Nikiski. That project is part of Agrium Corp.'s coal gasification project, which the company would use to manufacture its fertilizer products.

The 50-megawatt Healy Clean Coal Project has been idle since 1999, after a commercial dispute developed between the Alaska Industrial Development and Export Authority, which owns the plant, and Golden Valley Electric Association, the Interior Alaska electric utility that had contracted with AIDEA to operate the plant and purchase its power. AIDEA is now working with Homer Electric to restart the plant and purchasing its power. Mark Schimscheimer, project manager for AIDEA's Healy Clean Coal Project, said he is optimistic about resolving litigation with GVEA within six months to a year, and restarting the Healy plant soon after.

"AIDEA will own the plant. Homer will assist in the restart," he said. In 2014, Homer will take control of the plant and repay AIDEA for the restart.

GVEA operates a smaller, older 25-megawatt coal-fired plant adjacent to the larger plant in Healy. Usibelli Coal Mine Inc. supplies coal from its Healy mine for the GVEA plant and would also supply coal for the clean coal plant, if it restarts, as well as the MEA coal and the coal power plant at the Agrium plant in Nikiski.

The financial feasibility of the relatively new technology planned for use at the MEA plant and whether it would drive up the cost of power are other unknowns. According to the U.S. Environmental Protection Agency, there are federally funded studies ongoing in Florida and Indiana to answer those questions.

None of the Alaska coal power plants planned uses the newest technology, which involves coal gasification. Agrium is planning coal gasification for its fertilizer plant, but the 200-megawatt power plant would be a conventional coal-combustion plant, although it would involve the latest technology of that type. The plant MEA plans would also rely on conventional coal-burning systems. "If you gasify the coal, the technology is there to remove the mercury before you burn the fuel gas," said David Bray, special assistant to the director of the EPA office of air, waste and toxics for Region 10. The people who build coal gasification systems are marketing their product, but these are demonstration projects, being run with government subsidies, he said.

Mat-Su Borough Mayor Curt Menard said that, cost issues aside, he is not opposed to MEA using clean coal generation for electricity.

"We're not going to go without electricity," he said. "If we can find a huge gas source that would be the best, but I'm not going to oppose a coal fired plant unless some scientists come out and say there are major health issues; that releasing huge amounts of mercury is adversarial to health."

Meanwhile, there are a growing number of concerned MEA cooperative members and others, like Valley resident Jim Sykes of Utility Watch, who want an open process in the decision-making. "They want to be part of the decision of whether or not to have a coal plant and MEA is not offering that," Sykes said.

Babcock said there is a simple reason why members are being asked their opinion on where to put the power plant but not whether they actually want it. "It's been an incredible process even to be able to ask the membership where the plant should go," Babcock said. "It's been very complicated and difficult even to do that.

"To actually ask people to weigh the various technologies available and different costs and applications if you build it this year or that year, or choosing to go with this kind of technology or that; to try to wade through all those technicalities, even MEA can't do that. That's why we hired CH2MHill to advise us. It would be beyond anything reasonable to expect to ask citizens to weigh in on something that complex," he said.

But some cooperative members want to weigh in on the plant, and to educate themselves. They also want access to the full CH2MHill report. So far, a few of MEA board members have only been given access to the executive summary, released on MEA's Web site.

Michael Janecek, who served one term on the MEA board, said reliability of the utilities in Alaska is more tied to the down time of the grid system, due to snow load or trees falling, than the actual energy production.

"The downside is coal-fired plants are expensive to build and it takes more manpower to operate a coal fired than gas fired plant," he said. "Emissions are the expensive part (of the proposed coal fired plant). I don't believe MEA has done their homework reflecting the potential financial risk involved in carbon dioxide offset taxation. Carbon dioxide offset taxes alone could reflect a lot of debt in the future. Mercury is probably the most instant pollution factor. The type of generator they are talking about, fluidized bed, is very good at removing nitrogen oxide, but it is not good at removing carbon dioxide nor is it any good at removing mercury. Mercury could be the most hazardous pollution we are talking about here."

Utility consultant Mark Foster was hired by the National Wildlife Federation to look at the Railbelt utilities and the potential for renewable energy. Foster said he is still working on his analysis, but he already feels that MEA has significantly underestimated the cost of coal, and he's not surprised. "It's not uncommon for outside consulting firms to underestimate the cost of coal-fired power plants in Alaska," he said.

Under the federal Clean Air Mercury Rule, in litigation before the District of Columbia Circuit Court of Appeals, Alaska would be allocated 18 pounds of mercury emissions annually when the law takes effect in 2010. MEA faces a risk of whether it will be able to buy quota shares of mercury emissions, at an unpredictable cost, Foster said. Some states are moving to say they will not sell across state borders and if Alaska is left out of a regional approach, it may not be able to buy a tradable permit, he said.

The federal lawsuit was initiated by AIDEA onbecause the organization felt the state's allocation was too low, Schimscheimer said.

The low allocation could hold up reopening the Healy coal plant.

Schimscheimer said he found it unfair that Alaska was given an 18-pound annual limit on mercury pollution, while Texas was given nearly 4 tons. "The point being the mercury regulations are detrimental to AIDEA, to anyone in Alaska who wants to develop the coal industry," he said. "Mercury is not a pollutant that we have regulated up to now," said Tom Chapple, director of the state Division of Air Quality, within the Department of Environmental Conservation. "As a general rule, we have very few coal fired power plants compared to other states."

Still, because of the health hazards of airborne mercury, including mercury from other countries that enters Alaska through the air, research is underway.

"EPA has done some computer-based modeling that shows how soon mercury falls out of the clouds and under what conditions," Chapple said. "We are in the process of installing two air monitoring stations, at Dutch Harbor and Kodiak, to measure what we might be getting in mercury content from rainfall as those clouds approach our shores."

Given all the concerns about pollution from mercury, sulfur dioxide, nitrogen oxide, particulate matter (including coal dust), lead and carbon monoxide, why aren't renewable energy options being considered more seriously?

According to the executive summary of the CH2MHill report, wind, biomass and geothermal energy were identified as renewable energy options with potential application in or in close proximity to MEA's service area, but they don't appear to be viable on a large scale as baseload generation resources.

Yet when Gov. Sarah Palin addressed the MEA membership at their annual meeting March 17, she did not sing the praises of coal-fired plants.

"We need energy, and we're at a pivotal time in history," Palin told MEA.

"We need to seize this time to explore alternative energy programs, and to harness our renewable resources, including powerful energy found within geothermal, wind, hydro and tidal sources."