Renewable Mandate Challenged in the Centennial State (An economic, legal case for free, fair energy choice in Colorado)

The American Tradition Institute (ATI) and the American Tradition Partnership (ATP) have filed suit in Federal District Court in Colorado to have Colorado’s renewable energy standard (RES) declared unconstitutional. The plaintiffs find that the Colorado RES discriminates on its face against legal, safer, less costly, less polluting and more reliable in-state and out-of-state generators of electricity sold in interstate commerce, and thus violates the Commerce Clause of the U.S. Constitution.

Given 29 states with either a RES or a Renewable Portfolio Standard (RPS) of varying strength, the outcome of this case will likely have far reaching implications. The suit was filed yesterday, April 4, 2011.

Part of the suit is a “declaration” of technical aspects and the costs and benefits of how the RES is implemented; I am the author of that declaration. The other major part of the filing, as would be expected, is various legal arguments. This posting does not further describe the legal arguments but simply summarizes the content of my declaration.

RES/RPS Requirements

Renewable portfolio standards require utilities to use renewable energy or renewable energy credits (RECs) to account for a certain percentage of their retail electricity sales — or a certain amount of generating capacity — according to a specified schedule. The term “set-aside” or “carve-out” refers to a provision within an RPS that requires utilities to use a specific renewable resource (usually solar energy) to account for a certain percentage of their retail electricity sales (or a certain amount of generating capacity) according to a set schedule.

Colorado became the first U.S. state to create a renewable portfolio standard (RPS) by ballot initiative when voters approved Amendment 37 in November 2004. The original version of Colorado’s RPS required utilities serving 40,000 or more customers to generate or purchase enough renewable energy to supply 10% of their retail electric sales. In March 2007, HB 1281 increased the RPS to 15% from 2015–19 and 20% from 2020 forward, as well as  extending a separate renewable-energy requirement to electric cooperatives, among other changes. HB 1001 of 2010 expanded the RPS to 30% for 2020.

Eligible renewable-energy resources include solar-electric energy, wind energy, geothermal-electric energy, biomass facilities that burn nontoxic plants, landfill gas, animal waste, hydropower, recycled energy, and fuel cells using hydrogen derived from eligible renewables.

The PUC has issued rules to implement the RPS. The rules were amended as required by HB 1001 in August 2010. The PUC’s rules generally apply to investor-owned utilities (IOUs). Electric cooperatives and municipal utilities serving more than 40,000 customers are still bound to the separate requirement approved by the legislature.

Across the country, no states have the same levels nor qualifying technologies as other states. There is nothing standard about renewable energy standards, except they mandate higher prices for customers for little or no benefit.

Electricity’s Multi-State Grid

Colorado’s electricity grid is a portion of the Western Interconnection (see figure), which is managed by multiple entities. The Western Electricity Coordinating Council (WECC) helps manage the Western Interconnection and is a Regional forum for promoting regional electric service reliability in Western Canada and the Western United States.

Within WECC’s southwest electrical region, the Rocky Mountain Power Area is managed by two balancing authorities, the Public Service Company of Colorado (PSCo) and the Western Area Power Administration – Colorado-Missouri (WAPA.)

The Western Area Power Administration markets and delivers hydroelectric power and related services within a 15-state region of the central and western U.S. WAPA is a Federal agency and is one of four power-marketing administrations within the U.S. Department of Energy whose role is to market and transmit electricity from multi-use water projects. Restrictions and mandates imposed at the intrastate and/or retail level constrain WAPA’s ability to comply with its Congressional mandate by constraining WAPA’s accessible market.

Electricity Must Be Reliable

Electricity generation supplied to an interstate electrical grid must equal the electricity demand from the grid on a second-by-second basis. When the demand exceeds the supply (including back-up spinning reserve), the voltage and frequency drop, increasing loss-of-load-probability (LOLP). Even small changes in frequency or voltage (either positive or negative) can significantly increase the LOLP. Loss of load implies blackouts and or brownout. In some cases, to prevent such contingencies from cascading and becoming wider spread and unmanageable outages the balancing authorities will impose crisis management protocols such as disconnecting customers from a localized distribution network.

Blackouts and brownouts and other system excursions most disrupt industrial and commercial operations. Brownouts reduce the available voltage, causing instability and/or failure of electronic equipment, for example, and can cause protective devices to “trip”, shutting down industrial and commercial equipment. So-called “high tech” commercial and industrial facilities are especially prone to economic harm from voltage or frequency disruptions of even sub-cycle (less than 1/60 of a second) disruption. Blackouts and brownouts can have severe consequences to homeowners as well. For instance, refrigerator compressors can fail with either.

The Colorado Energy Forum, , reports that 355,120 commercial and industrial Colorado customers (28% or all such customers) suffered economic losses of $1.8 Billion due to blackouts in a single year. Untold additional costs arise from brownouts.

Outage costs tend to be driven by the frequency rather than the duration of reliability events. Momentary power interruptions, which are more frequent, have a stronger impact on the total cost of interruptions than sustained interruptions.¹⁰Mandated Renewable Energy in Colorado Is Unreliable

Renewable energy in Colorado is generated by hydropower from river flow (28%) and wind facilities (72%). Hydropower from pumped storage (26% of all renewable energy) can only be used for four hours at a time. Thus, the vast majority of Colorado’s renewable energy comes from wind facilities that directly supply the grid.

Wind facilities can only produce electricity when the wind blows within a very specific range of wind speeds. Winds are unpredictable and often gusty. Even with widely distributed wind facilities connected together in order to produce the greatest possible reliability, they remain undependable.

The graphic below shows how the output from the 60 wind facilities (over 1,000 turbines) built throughout all Ireland dropped to nearly zero in an unpredictable manner and from hours to weeks at a time. Similar data is available from Australia, PJM Interconnection (PJM; originally named after Pennsylvania, Jersey and Maryland has since expanded yet retained its original acronym based name) and California Independent System Operator (CaISO). In California, peak day output of wind turbines seldom exceeds 5% of wind turbine installed capacity.

This unreliability in wind energy has caused known brownouts in Texas and Florida. The lack of transparency in Colorado wind generation recordkeeping precludes determination of the number of similar Colorado brownouts due to wind energy irregularities, however the National Electricity Reliability Council (NERC) has forecast that Colorado capacity margins would fall below minimum acceptable levels in 2009, thus increasing the frequency of brownouts when wind is connected to the grid.

Modeling of blackouts and brownouts indicates that the higher percentage of wind power on the grid, the greater the unreliability of the grid and the greater the likelihood of blackouts and brownouts. This risk increases exponentially, not linearly, with increasing levels of wind generation.

Unreliable Sources Must Be Balanced With Reliable Sources and Can Increase Fuel Use and Emissions

To ensure electricity generation (supply) equals demand on a second-by-second basis, independent system operators (ISOs), also known as “balancing authorities”, increase and reduce generation as needed, often using automated generation control (AGC).

When demand increases (or other supplies become unavailable), the ISO directs a generating facility operator to “ramp up” their generation. When demand drops, the ISO directs a “ramp down” in generation. Prior to the advent of wind generation, these ramp ups and ramp downs reflected daily life and followed a predictable schedule that prevented the need for saw-tooth ramping to balance the second-by-second variation in wind generation connected to the grid. The graphic in this paragraph shows how reliable generation sources, in this example gas fired, must be ramped up and down to account for the variation in wind energy.

When wind speed increases (but remains below the maximum speed allowed by the turbines), generation companies curtail generation from their intermediate load units sufficient to accommodate the wind power. Intermediate load units are usually natural gas powered generators, but, as discussed below, must on occasion be slow-to-respond coal-fired units. When the wind subsequently slows, generation from the intermediate load units is increased or otherwise brought back online as needed. The process by which generation is ramped up and down at a plant due to wind or any other factor is called cycling. Integrating erratic and unpredictable wind resources with established coal and natural gas generation resources requires the electricity generators to cycle their intermediate load coal and natural gas-fired units. This wind-energy-caused cycling results in significantly less efficient performance of fossil fuel facilities.The net result is increased emissions and fuel use.

Renewable Mandates Do Not Save Money

The price of wind power is generally higher, and in many cases significantly higher, than current prices for market based alternatives.

A quantitative analysis by an authoritative body comparing the cost of coal, natural gas and wind electricity generation in a mature mixture of all three sources with significant reliance on wind energy documents natural gas to be 27% more expensive than coal, coastal wind to be 62% more expensive than coal and inland wind to be 89% more expensive than coal. These general trends are confirmed by the U.S. Department of Energy, Energy Information Administration.

States that have adopted an RES program have subsequently experienced a 0.35% larger annual increase in average retail prices than those that did not adopt RES. The analysis reporting these outcomes includes the years from 1990 through 2005, controlling for natural gas prices, coal prices, and the generation mix for each state thereby filtering out these other price effects, allowing discovery of the specific effect strictly due to RES.

The additional 0.35% increase will have a cumulative effect over time. A state can expect that, after ten years, rates will be about 3.5% higher with RES than they otherwise would have been without RPS. Further, these increases do not include other costs such as the added cost of additional intra- and interstate transmission lines needed by wind facilities.

The U.S. Department of Energy, Energy Information Administration tracks electricity prices by state over time. Currently Colorado has the nation’s 21^st highest electricity rate, degrading from 31^st in 1990.

Renewable Sources Can Cause More Pollution, Don’t Improve Natural Environment Of the State

The erratic and highly variable nature of wind power has been found to increase rather than decrease emissions of pollutants regulated under the Clean Air Act. This occurs because the cycling of coal and natural gas plants results in inefficient operation of both the combustion processes and the pollution control processes, as well as from the increases of fuel used to product an MWh of electricity.

Examination of the effects of wind variability on the cycling of fossil fuel plants needed to balance grid voltage and frequency demonstrate use of wind causes more pollution emissions than it prevents. The two most significant pollutants regulated under the federal Clean Air Act and emitted by fossil fuel electricity generation units are sulfur dioxide (SO₂) which causes acid rain and nitrogen oxides (NO_x) which cause smog. Another pollutant now being controlled under the Clean Air Act is the greenhouse gas carbon dioxide (CO₂).

By netting out the emissions associated with the coal-fired generation that were avoided by using wind, the result is that due to wind generation, SO₂ and NO_x emissions were significantly higher (23% and 27%, respectively) than they would have been if the coal plants had not been cycled to compensate for wind generation. In addition, more tons of CO₂ (2%) were emitted than if the erratic variability of wind had not caused the plants to be cycled.

In a second two-day analysis of the effects of wind variability and subsequent cycling of fossil fuel plants, use of wind power resulted in an increase of 18% in SO₂ pollution emissions and a 10% increase in NO_x pollution emissions more than would have been emitted had coal not been cycled.

In addition to emissions increases in Clean Air Act pollutants and emissions of greenhouse gases due to the variability in wind power generation, renewable energy mandates cause other environmental problems. With competition for limited biomass and open land resources (to grow biomass) for ethanol feedstocks (required to meet existing Federal renewable fuel standards), food crops and forest industry products, higher RES requirements will materially increase the risk of forest land shortages and higher prices for food and feedstocks.

Wind Energy: Other Environmental Negatives

Wildlife/Endangered Species: Wind energy is a threat to wildlife and endangered species. Wind resource areas often are coincident with critical habitat and/or migratory flyways. Many of these conflicts are for protected, threatened and endangered species. Wind energy development has long had significant issues with avian and bat mortality, even given the relatively few wind turbines installed to date. More wind turbines will pose greater threats.

For example, in California’s Altamont Pass area, one of the nation’s oldest development areas, forty to 120 Golden Eagles are slaughtered each year. Research by raptor experts for the California Energy Commission indicates that the facility’s turbines kill more than 1,000 birds of prey from 40 different species each year, violating federal and state wildlife protection laws such as the Bald Eagle and Golden Eagle Protection Act, the Migratory Bird Treaty Act, and several California Fish and Game Code provisions. Further, the additional transmission lines necessary to serve wind development areas pose special threats to birds as well.

Colorado is an important part of both the Pacific Flyway and Central Flyway for migratory birds, with thousands of migratory birds transiting to and through the State. Both protected and endangered species are included within this mass migration each year. The threat of significant avian mortality has caused partial shutdowns and required equipment replacement in the Altamont Wind Resource Area in California due to a lawsuit brought by the Center for Biological Diversity.

The potential deaths of California Condors from wind turbine development is one of several reasons given by the Administrative Law Judge (ALJ) in denying a permit to Pacific Gas and Electric Co. for a Certificate of Public Convenience and Necessity for a large turbine installation in California. The ALJ found the Manzana Wind Project to not be cost-competitive and to pose unacceptable risks to ratepayers. It will subject the ratepayers to unacceptable risks due to potential cost increases resulting from project under-performance, less than forecasted project life, and any delays which might occur concerning transmission upgrades and commercial online date. Ratepayers would be at risk if the project underperforms.

In particular, if the Manzana Wind Project fails to achieve production as expected for any reason such as construction delays or curtailments as a result of a collision with a California condor, shareholders face no risks while customers could incur increased costs. Under different ownership and financing schemes (e.g. power purchase agreement with a third party owned wind project) ratepayers are only partially, if at all, protected from lack of production. In the event a project fails to produce, ratepayers will be exposed to higher prices for makeup power and/or physical shortages of power.

Health Effects. Living too close to wind turbines imposes health and safety risks to the public. The tip speed of modern wind turbines approaches 200 MPH when operating. Ice and blade throw, from the top of a 300 foot tower, while infrequent, poses serious safety risks to the public within about ¾ to a mile.

Further, the noise from wind turbines can cause health effects, as documented by Dr. Nina Pierpont and others. Industrial wind turbines produce significant amounts of audible and low-frequency noise. Dr. Oguz A. Soysal, Professor and Chairman of the Dept. of Physics and Engineering at Frostburg State University in Maryland, measured sound levels over half a mile away from the Meyersdale, PA, 20-turbine wind farm. Typical audible (A-weighted) dB (decibel) levels were in the 50-60 range, and audible plus low-frequency (C-weighted) dB were in the 65-70 range. 65-70 dB is the loudness of a washing machine, vacuum cleaner, or hair dryer. A difference of 10 dB between A and C weighting represents a significant amount of low-frequency sound by World Health Organization standards.

The noise produced by wind turbines has a thumping, pulsing character, especially at night, when it is more audible. The noise is louder at night because of the contrast between the still, cool air at ground level and the steady stream of wind at the level of the turbine hubs. This nighttime noise travels a long distance. It has been documented to be disturbing to residents 1.2 miles away from wind turbines in regular rolling terrain, and 1.5 miles away in Appalachian valleys. At night, the World Health Organization (WHO) recommends, the level of continuous noise at the outside a dwelling should be 45 dB or less, and inside, 30 dB or less.

These thresholds should be even lower if there is a significant low-frequency component to the sound, – as there is for wind turbines. Higher levels of noise disturb sleep and produce a host of effects on health, well-being, and productivity. Effects of noise-induced sleep disturbance include fatigue, depressed mood or well-being, decreased performance, and increased use of sedatives or sleeping pills. Measured physiologic effects of noise during sleep are increased blood pressure and heart rate, changes in breathing pattern, and cardiac arrhythmias.

Renewable Mandates Don’t Create Net New Jobs or Grow Economy

Recent economic analysis of electricity generation indicates that renewable energy generation causes a net reduction in the economy. In addition to this finding, the use of more land for capturing renewable energy flows has a similar negative effect on long run economic growth.

A detailed study on the effect of a mandate for wind energy, which is the practical effect of the Colorado RES, demonstrates that above-market wind energy costs had the harmful effects of reshuffling consumer spending and increasing the cost of production for businesses. Increased costs for households and employers reduced the otherwise positive employment impacts of renewable energy capital investment and ongoing operational repair and maintenance activities.[32]

The study also undercuts the claim that wind power creates significant numbers of new jobs. The study found that the net gain in employment was far less than conventionally thought with long term winners and losers by economic sector. Moreover, the analysis did not consider the detrimental impacts of diverting capital investment away from more productive opportunities.[33]

The majority of wind turbine installation continue to use wind turbines imported from foreign sources, further reducing job creation for Coloradans and Americans.

Wind energy has other adverse impacts on the economy. There is no penalty for wind developers to submit a bid for a certain amount of future power (e.g. 10 MWH for tomorrow afternoon) and then not supply it (due to winds not being as forecasted). Conventional power sources are penalized if they can’t supply what they bid. This is de facto favoritism of a generation source, to the disadvantage of the other sources, including interstate sources; and, is reflected in the larger bills consumers must pay when a last minute substitution for wind has to be made.

The lack of a penalty for wind energy’s inability to supply what is expected of it results in higher prices to all customers than if wind were available or if wind were not on the grid. In such cases, the ISO would not need to add otherwise unnecessary intermittent generation.[35]

Western Governors Association, http://www.westgov.org/wieb/meetings/crep1099/wiiso.htm.

North American Electric Reliability Corporation (NERC), http://www.nerc.com/filez/ctrlarealist.htm

The NextGen Energy Council, Management Information Services, Inc. (September 2008), “Lights Out In 2009?” p. 26-27.

Xcel Energy, Plant Summaries http://www.xcelenergy.com/Colorado/Company/About_Energy_and_Rates/Power%20Generation/ColoradoPlants/Pages/OriginalDefaultPageIgnore.aspx

McKay, J.C. (2009) Sustainable Energy – Without the Hot Air, p. 187, UIT Cambridge Ltd., http://www.withouthotair.com/download.html

Russell, K. (2010) “The Great Renewable Energy Rort”, Quadrant, Volume LIV No. 7-8, http://www.quadrant.org.au/magazine/issue/2010/7-8/the-great-renewable-energy-rort. Wind Generation and Grid Operations: Experience & Perspective, Yuri Makarov and David Hawkins, California Independent System Operator Corporation, Folsom, California, March 23, 2005

Reuters (2009), “Loss of wind causes Texas power grid emergency”, (Feb. 27, 2008).

North American Electric Reliability Corporation, 2007 Long-Term Reliability Assessment, October 2007.

The NextGen Energy Council Management Information Services, Inc. (2008) “Lights out in 2009”.

NERC, “Standard BAL-001-0.1a — Real Power Balancing Control Performance”.

Boone, J. (2010), “Overblown”.

Bentek Energy (2010), “How Less Became More: Wind, Power and Unintended Consequences in the Colorado Energy Market”.

Vermont Department of Public Service (2009), “The economic impacts of Vermont feed in tariffs”.

Morthorst, JE, “The Economics of Wind Power”, Wind Energy – The Facts,

http://www.eia.doe.gov/oiaf/aeo/overview/electricity.html

Hansen, D., Kirsch, L. and O’Sheasy, M. (2007), “An Analysis of the Effect of Renewable Portfolio Standards on Retail Electricity Prices” Christensen Associates Energy Consulting, LLC, October 17, 2007

Hansen, D., Kirsch, L. and O’Sheasy, M. (2007), “An Analysis of the Effect of Renewable Portfolio Standards on Retail Electricity Prices” Christensen Associates Energy Consulting, LLC, October 17, 2007

FERC (2010), “18 CFR Chapter I Integration of Variable Energy Resources”, Docket No. RM10-11-000, 130 F.E.R.C. P61,053; 2010 FERC LEXIS 121, January 21, 2010

http://www.eia.gov/cneaf/electricity/epa/average_price_state.xls

Bentek Energy (2010), “How Less Became More: Wind, Power and Unintended Consequences in the Colorado Energy Market”.

Bentek Energy (2010), “How Less Became More: Wind, Power and Unintended Consequences in the Colorado Energy Market”, http://www.wind-watch.org/documents/wp-content/uploads/BENTEK-How-Less-Became-More.pdf

Ibid.

Ibid

Hewson, T.A. and Pressman, D. (2009), “Evaluation of Wind Power Avoided Emissions Benefits”, Energy Ventures Analysis Inc., Arlington, VA.

The Trend Of Golden Eagle Territory Occupancy In The Vicinity Of The Altamont Pass Wind Resource Area: 2005 Survey Prepared For: California Energy Commission Public Interest Energy Research Program, June 2006, CEC-500-2006-056.

http://www.birdnature.com/allflyways.html

Center for Biological Diversity, Inc. v. FPL Group, Inc. (2008) 167 Cal.App.4th 384a [-- Cal.Rptr.3d --].

The California Condor is an endangered species under both [Ca]State and Federal law and is fully protected under State law.

Proposed Decision Of Alj Ebke (Mailed 12/21/2010) Before The Public Utilities Commission Of The State Of California, in Re: Application of Pacific Gas and Electric Company for Approval of the Manzana Wind Project and Issuance of a Certificate of Public Convenience and Necessity (U39E).

Application 09-12-002 (Filed December 3, 2009)

King, C. W. (2010), “Energy intensity ratios as net energy measures of United States energy production and expenditures”, Environ. Res. Lett. 5 (2010) 044006.

Jones C. I. 2002 Introduction to Economic Growth (New York: W W Norton) (cited in King (2010)).

Vermont Department of Public Service (2009), “The Economic Impacts of Vermont Feed in Tariffs”.

Lesser (2011), “Gresham’s Law of Green Energy: High-cost subsidized renewable resources destroy jobs and hurt consumers”, Regulation, Winter 2010-2011, p. 12 ; and see Vermont Department of Public Service (2009), “The Economic Impacts of Vermont Feed in Tariffs”.

Ryan Wiser, Lawrence Berkeley National Laboratory, Mark Bolinger, Lawrence Berkeley National Laboratory, Annual Report on U.S. Wind Power Installation, Cost, and Performance Trends: 2007; May 2008.

Vermont Department of Public Service (2009), “The Economic Impacts of Vermont Feed in Tariffs”.

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