The True Cost of Electricity

The News Journal today published an op-ed I wrote on all of the costs of the electricity we buy:

Consider health costs in energy planning
Tom Noyes

Delmarva Power's Integrated Resource Plan (IRP), now being reviewed by the Public Service Commission (PSC), includes a projection of the economic benefits of using more renewable energy to generate electricity for Delaware -- and it's a big number.

The benefits of current plans to shift from coal to renewable energy are estimated to be $1.8 billion to $4.3 billion over the next 10 years.

That's roughly $2,000 to $4,750 in reduced health and mortality costs for every Delaware resident between now and the year 2020.

These benefits are attributed to Delaware's Renewable Portfolio Standard, the Energy Efficiency Resource Standard, the Regional Greenhouse Gas Initiative (RGGI), the planned Bluewater Wind offshore wind project, other renewable energy sources and a reduction in emissions from coal-burning power plants in and around Delaware.

Significant numbers of Delawareans will remain healthy and live longer over the next 10 years because power plants will be spewing less nitrous oxide, sulfur dioxide and particulate matter into the air we breathe.

The Delaware Chapter of the Sierra Club has intervened in this docket to make the case for including the calculation of health benefits as an integral part of our energy planning.

Ken Kristl of the Environmental and Natural Resources Law Clinic at the Widener University School of Law is representing the Sierra Club.

Until now, the PSC has considered only the cost of our utility bills -- and not the cost of our medical bills -- when reviewing plans to meet our energy needs.

This innovation in energy planning was prompted by Gov. Jack Markell, who two years ago called for a "level playing field for clean energy" by including all of the costs and benefits in PSC proceedings.

These new figures give us a clearer picture of what a level playing field would look like.

The IRP's projected health benefits of renewable energy come to 12 percent to 30 percent of Delaware's retail electricity sales.

In contrast, I calculate that the Regional Greenhouse Gas Initiative and the Renewable Portfolio Standard together will add less than a percentage point to our electricity bills.

Bluewater Wind is projected to add about one half of 1 percent to our bills -- if fossil-fuel prices don't increase too much over the life of the project. When you compare such modest costs to the enormous benefits of cleaner air, renewable energy looks like a pretty good bargain.

But after all the number crunching, it's worth remembering that our energy policy is not just about economics; it's about fewer chest X-rays and cancer cases and longer and healthier lives.

For those seeking to roll back these clean-energy policies, I ask: How much of these benefits would you have us give back? How much more spending on lung disease and cancer should we be willing to tolerate?

Given the size of the benefits, why should we accept even a short-term delay in shifting from coal to renewable energy?

Three years ago, we rallied around the plan to build offshore wind power in Delaware. Now that we have a more complete picture of the economics, we should reaffirm our commitment to promoting renewable energy -- and to providing cleaner air for all of us to breathe.

"The last full measure of devotion"

On Memorial Day, it is a TommyWonk tradition to ponder the words of the Gettysburg Address. Students of history are surprised to learn that there are several versions of the address; we are not entirely sure of the precise words Lincoln used. Here is the text of the Bliss Version (with links to readings by Sam Waterston, Jeff Daniels and Johnny Cash):

Fourscore and seven years ago our fathers brought forth on this continent a new nation, conceived in liberty and dedicated to the proposition that all men are created equal. Now we are engaged in a great civil war, testing whether that nation or any nation so conceived and so dedicated can long endure. We are met on a great battlefield of that war.

We have come to dedicate a portion of that field as a final resting-place for those who here gave their lives that that nation might live. It is altogether fitting and proper that we should do this. But, in a larger sense, we cannot dedicate, we cannot consecrate, we cannot hallow this ground. The brave men, living and dead who struggled here have consecrated it far above our poor power to add or detract.

The world will little note nor long remember what we say here, but it can never forget what they did here.

It is for us the living rather to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us -- that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion -- that we here highly resolve that these dead shall not have died in vain, that this nation under God shall have a new birth of freedom, and that government of the people, by the people, for the people shall not perish from the earth.

While we're on the subject, it's worth taking a look at the infamous Powerpoint version, a lesson in how to take a powerful message and reduce it to mush.

Wilmington’s annual Memorial Day parade is always held on May 30, which this year just happens to fall on the observed holiday. The parade begins at six o’clock this evening, starting near Rockford Park, and marching down Delaware Avenue to the Soldiers & Sailors Monument at Broom Street.

Setbacks for Renewable Energy in Delaware and New Jersey

Yesterday the News Journal reported that NRG is slowing its timetable for the Bluewater Wind project. A meteorologic tower to gather data on wind patterns and bird migration, will not go up this year as planned. NRG cited the defunding of a federal loan guarantee program as reason for delaying the project. Governor Markell was not shy in showing his impatience with NRG on the news:

Gov. Jack Markell said it would be unwise to spend years waiting for the political climate to improve, noting the state has worked hard to smooth Bluewater's path to construction.

"The announcement puts the project's future into question," Markell said. "If they think they can't build it without the guarantee, then it makes sense to see who might."

NRG has not yanked its funding of Bluewater, which continues to work on permits and procurement.

Governor Chris Christie announced today that he was pulling New Jersey out of RGGI, the Regional Greenhouse Gas Initiative. Killing RGGI has emerged as a top priority for the Tea Party. In announcing his decision, Christie said he believes that climate change is real, but that the program wasn't effective, perhaps because the governor had raided the funds to pay for general operating expenses:

But several states, including New Jersey, have raided their portion of the proceeds to fill budget gaps. Christie took $65.2 million from the state’s Global Warming Solutions Fund to balance the current budget.

As of last August, participating states had invested 63 percent of RGGI auction proceeds in programs to improve energy efficiency and accelerate the use of renewable energy technologies, according to the intiative’s website.

Christie complained that the program wasn't effective. Perhaps RGGI would be more effective if the proceeds were used for their intended purpose.

As for the cost, Christie acknowledged that it actually isn't that great a burden on ratepayers:

But when asked what the savings from backing out of RGGI would be for consumers, Christie said: "I don’t want to overplay that because we’re not talking about a huge difference."

Here in Delaware, RGGI costs the average household 38 cents a month, 0.285 percent of electricity bills. When asked about his decision by the News Journal, John Kowalko called Christie an "environmental neanderthal."

Another Report on the Costs of Coal Power

A new report from the Chesapeake Bay Foundation provides another example of how coal power comes with costs that don't show up on customers' utility bills. The Williamsburg Yorktown Daily has the story:

The Old Dominion Electric Cooperative plans to build a $20 million, 1,500-megawatt power plant in the town of Dendron, which ODEC [Old Dominion Electric Cooperative] argues will bring jobs and much-needed revenue to the area. Monday’s CBF report, "A Coal Plant’s Drain on Health and Wealth," uses data supplied by ODEC to the US Environment Protection Agency on pollution generated by the plant’s 650-foot smokestacks. The report estimates that health-related costs generated by the plant could top $200 million each year.

The report, "A Coal Plant's Drain on Health and Wealth," projects that the new coal power plant would lead to "442 asthma attacks, as well as 3,340 work days lost to sickness, 40 heart attacks, and an estimated 26 premature deaths" annually.

These findings square with a Harvard study, titled “Full cost accounting for the life cycle of coal,” which was recently published in the Annals of the New York Academy of Sciences. The authors calculate the externalities (environmental and health costs) of coal power to be $345.3 billion annually

Delmarva Power's Integrated Resource Plan (IRP), now before the Public Service Commission, projects the benefits of current plans to shift from coal to renewable energy to be $1.8 billion to $4.3 billion over the next ten years. That's $2,000 to $4,750 for every Delaware resident, and 12 percent to 30 percent of retail electricity sales in Delaware. The PSC has extended public comment period on the IRP to May 31, and will likely hold hearings on the plan afterwards.

Should Bondholders Be Insulated from Risk?

New York Times columnist Floyd Norris has the story of Japanese bankers balking at the prospect of taking a loss on loans to Tepco:

The president of Japan’s largest bank, Mitsubishi UFJ Financial, was shocked by the very idea that a bank should lose money if it lent to a company that could not meet its obligations. Mr. Edano’s remarks “came out of the blue,” said the executive, Katsunori Nagayasu. “I felt there was something wrong about them.”

To Yasuchika Hasgawa, the chief executive of the Takeda Pharmaceutical Company and chairman of the Japanese Association of Corporate Executives, the idea violated basic tenets of society. Mr. Hasgawa said he “cannot help but question how this country’s democracy can be made to work with free-market-based capitalism.”

His definition of “free-market-based capitalism” seems to assume that lenders should escape without pain, at least if they are lending to major institutions. It is an idea that has become remarkably pervasive.

“We consider banks and Tepco systemically important institutions,” wrote Tetsuya Yamamoto, a Moody’s analyst based in Tokyo. “Debt forgiveness undermines the systemic importance of the bank and utility sectors in the national economy.” These are, he added, “developments we did not anticipate.”

While we might shake our heads in wonder at the wacky Japanese, I can think of two examples closer to home of bondholders arguing for immunity from risk.

In 2009 investors complained that their contractual rights were being violated in the Chrysler and GM bankruptcy proceedings. Some, including Indiana state treasurer Richard Mourdock, sued to halt the proceedings, based on the belief that their rights as bondholders trumped the contractual rights of workers and suppliers.

With a debt crisis at hand, a significant portion of Republican lawmakers are arguing that the U.S. can avoid default for a time by paying bondholders and delaying the payment of other obligations such as Social Security. Talking Points Memo reports that Senator Pat Toomey, a former bond trader, thinks we can avoid a crisis by "prioritizing" the government's obligations:

Toomey's preference would be for the Treasury to avoid defaulting altogether by prioritizing outlays of incoming revenue on interest payment to U.S. debt holders -- thus slashing spending on a host of other obligations, including, perhaps, Social Security benefits, vendor reimbursements, and the military.

Prioritizing is what bankruptcy courts do. In each case, we see the argument that investors should be immune to risks that everyone else should bear.

TommyWonk at Town Square Delaware

Town Square Delaware has published my first piece; it's on the economics of renewable energy.

When Delaware was debating the Bluewater Wind project, the opponents of wind power offered big estimates of the so-called green premium we would be forced to pay if the project went forward. One prominent legislator spoke darkly of electric bills going up by as much as $75 a month. As it turned out, the final Public Service Commission estimate of the cost of the Bluewater Wind project was 0.07 cents a kilowatt hour, which would come to not much more than a dollar a month for the average Delaware household using 1,550 kilowatt hours a month.

Why rehash this old argument? Because we’re hearing it again.

More specifically, we heard it last week when HB 86, which would have pulled Delaware out of the Regional Greenhouse Gas Initiative, was debated. As I and others have pointed out, RGGI costs the average household about 38 cents a month—about 0.285 percent of household electricity bills. Happily, HB 86 was kept in committee. But we can expect the opponents of renewable energy to keep trying to kill programs using the same arguments.

Also worth a read is Michael Stafford's piece, "Ryan, Rand, and the Objectivist Budget," in which he neatly dismantles the thinking behind the House Republican's budget, and with footnotes.

Welcome Town Square Delaware

Town Square Delaware, a new opinion site, has gone live this morning. Here's how the editors describe the new site:

We are a group of community-minded Delawareans interested in creating a forum for the most productive, provocative and positive dialogue about the issues, people and places that make our state unique. Our goal is to engage and educate, to collaborate and connect. To be, first and foremost, of, for and about Delaware. Join the conversation!

Town Square Delaware features a terrific collection of contributors and including veteran bloggers Dave Burris, Charlie Copeland, Maria Evans, Mike Matthews (first post: "Greetings From A Disaffected Former Blogger"), Jason Scott and Michael Stafford. Also joining up are Michael Fleming, Ken Grant, Al Mascitti and Sam Waltz. I'll be adding my thoughts from time to time. So head on over, and tell 'em Tommywonk sent you.

House Bill 86 Kept in Committee

House Bill 86, which would have pulled Delaware out of the Regional Greenhouse Gas Initiative (RGGI), failed to make it out of committee today. After nearly two hours of spirited and sometimes heated debate, the House Energy Committee voted against moving the bill to the House floor.

Actually there were two votes. A vote to release the bill to the House floor failed 3 to 4. Then a motion to table the bill passed 4 to 3.

The room was packed with environmental advocates and opponents of RGGI, who were led by the Caesar Rodney Institute and the 9/12 Delaware Patriots. Lots of numbers were thrown around, and the opponents warned of the enormous costs of participation in RGGI. But these dire predictions of high costs have not yet come true. Last year RGGI cost residential customers an average of 38 cents a month, only 0.285 percent of the average bill.

Is RGGI a Threat to Freedom?

Aaron Nathans, reporting on House Bill 86 in the News Journal, quotes John Nichols, a supporter of the bill, which would terminate Delaware's participation in RGGI, the Regional Greenhouse Gas Initiative:

John Nichols, a citizen activist supporting the repeal bill, said the initiative cedes government power to nongovernmental agencies like RGGI and the SEU. Those groups, he said, are "a threat to freedom and liberty."

And what is the cost of this threat to freedom? Nathans reports that RGGI currently costs 38 cents per household per month. That's 0.285 percent of the average residential electricity bill in Delaware. I've grown used to hearing inflated estimates of the cost of renewable energy, but this is the first time I have heard anyone say that 38 cents a month represents a threat to liberty.

HB 86 comes up before the House Energy Committee tomorrow at 4:00.

House Energy Committee To Consider House Bill 86 Wednesday

House Bill 86, which would pull Delaware out of the Regional Greenhouse Gas Initiative (RGGI), will be taken up at a hearing of the House Energy Committee on Wednesday, May 11 at 4:00 PM.

HB 86 was introduced by Representative Jack Peterman. He is supported in this by the Caesar Rodney Institute (CRI), the 9/12 Delaware Patriots and other forces seeking to turn back the clock on clean energy and environmental protection in Delaware. This effort also involves out of state organizations like the State Policy Network (which provides funding to the CRI) and the American Tradition Institute, which is financing lawsuits challenging the constitutionality of renewable energy laws across the country.

The members of the House Energy Committee are listed below:

Chairman: John A. Kowalko
Vice-Chairman: Dennis E. Williams
Debra J. Heffernan
S. Quinton Johnson
Harvey R. Kenton
Nick T. Manolakos
Michael P. Mulrooney
William R. "Bobby" Outten

RGGI is not just about climate change, although Delaware is uniquely vulnerable to even a modest amount of sea level rise. RGGI funds programs that support energy efficiency and renewable energy programs that have immediate and tangible benefits right here in Delaware.

The projected economic benefits of shifting from coal power to renewable energy are enormous: $1.8 billion to $4.3 billion in reduced health and mortality costs over the next ten years. That’s roughly $2,000 to $4,750 for every Delaware resident. These projected benefits represent 12 percent to 30 percent of Delaware’s 2008 retail electricity sales—far more than RGGI and Delaware’s other renewable policies and programs. And these benefits do not include the development of green industry in Delaware.

These figures come from Delmarva Power, which is required to submit an Integrated Resource Plan (IRP) to the Public Service Commission (PSC) every two years. The draft IRP estimates the environmental impact of Delaware’s Renewable Portfolio Standard, the Energy Efficiency Resource Standard, the state’s participation in the Regional Greenhouse Gas Initiative (RGGI), the planned Bluewater Wind project, other renewable energy sources coming on line, and a sharp reduction in emissions from coal burning power plants in Delaware.
 
There is nothing subtle about the organized opposition to renewable energy in Delaware. The groups mobilizing to oppose RGGI are also opposed to renewable portfolio standards and offshore wind. I expect that HB 86 will not be the last bill introduced to turn back the clock on clean energy in Delaware.

The CRI Raises the Alarm on RGGI

The Caesar Rodney Institute (CRI) is raising the alarm. I got an e-mail alert yesterday that the governor is talking to legislators:

The battle over Delaware's destructive cap and trade tax has reached a new level, with Governor Markel [sic] now personally making phone calls to legislators asking them to defeat House Bill 86.

That's the report we just received from a member of the Delaware House committee that's considering the bill, and it's why we are issuing this urgent appeal for help from our friends and supporters.

That governor! Talking to legislators? Will he stop at nothing?

House Bill 86, which would terminate Delaware’s participation in the Regional Greenhouse Gas Initiative (RGGI), will be taken up by the House Energy Committee on Wednesday, May 11 at 4:00 PM.

The CRI has made this a top priority:

Passage of HB 86 would be a defeat for radical environmental extremists and their legislative allies who have blindly followed the "Green" agenda. It would be a victory for sensible environmental policies rooted in valid science and common sense.

By "radical environmental extremists" the CRI would mean me. But the insidious tentacles of cap and trade reach much further—all the way to the Republicans who created the market-based approach that successfully reduced the SO2 emissions that caused acid rain.

I don't have much of an idea what the CRI means by "sensible environmental policies," since I haven't seen them actually propose any.

The CRI has been making robocalls on the issue since last week. If you agree with paying higher energy bills because of cap and trade, you are instructed to press one, and the call is terminated. If you want to end cap and trade, you press two, and you are connected to a receptionist or legislative aide. I don't know how much real effect these calls are having, since legislative aides can smell a robocall a mile away.

If you want to know how to fight back against the forces working to kill RGGI in Delaware, visit the new Delaware Environmental Summit website.

Lifting the National Mood

The news that U.S. forces had killed Osama bin Laden punctuates a decade of seeming futility for our country. Prompted by bin Laden's terrorism, we plunged into two wars in which progress has come slowly if at all. We have had a decade of near zero job growth accompanied by ballooning budget deficits. Yet, with our president beset with deficits, joblessness and two wars, we found ourselves debating the bizarre assertion that he wasn't actually a citizen. Meanwhile Congress is having a serious discussion of whether our national government should make good on its debt obligations.

We can hope that the success in finding and killing bin Laden will help break the stifling can’t-do atmosphere that has descended on Washington and the country.

Growing up, I imagined the 21st century to be a time of possibility and progress, not of dread and discouragement. I imagined a time when we would use science to travel into space, build beautiful new cities and clean up our environment. Maybe now, with the man who launched the 9/11 attack now buried at sea, we can begin to lift our sights and get back to building our future.