Jeff Edgens: Plant Washington will help ensure affordable power
January 20, 2012 12:00 AM | 1658 views | 27 27 comments | 10 10 recommendations | email to a friend | print
The recent op-ed from a Cobb EMC member questioning the need for Plant Washington demonstrates a surprising misunderstanding of energy markets from someone who worked in the industry for many years. The economic case for the plant can be found by looking no further than media reports about U.S. energy demand and costs.

Under the ominous headline “Household electricity bills skyrocket,” a recent USA Today analysis found the average American household pays $300 more a year for electricity than it did five years ago. More onerous, residential electric costs hit a record high of 11.8 cents per kilowatt hour this year and now consume a greater share of Americans’ after-tax incomes than at any time since 1996.

Such increases have been driven largely by two factors. The first is a sharp increase in demand. After dropping in 2009, the paper found electricity demand rebounded to record levels in 2010. According to the U.S. Energy Information Administration (EIA), gains in the energy efficiency of household appliances are consistently offset by the proliferation of new electronic devices such as flat-screen TVs, DVRs, computers, game consoles and smartphones.

Electric rates also have increased due to costs imposed on utilities by new EPA regulations. Those same regulations are forcing many utilities to shutter older power plants rather than spend billions of dollars for upgrades that would push rates even higher. In Georgia, the state’s largest utility has announced plans to close numerous older power plants that provide hundreds of megawatts of affordable electricity. Unfortunately, a shrinking power supply combined with increasing consumption and rapidly escalating costs is not the recipe for stable, affordable electric rates.

Technological advances in shale gas production have resulted in an abundant supply of cheap natural gas in the U.S. But as federal regulators consider greater oversight of the industry — which always adds cost — many questions remain. Further, natural gas producers have shown little willingness to lock themselves into long-term contracts to sell their product at record low prices. What business would?

Natural gas prices have been volatile historically and expecting them to stay as low as they are today is naïve. In its 2011 Annual Energy Outlook, the EIA projects that the cost of natural gas could nearly triple in coming years (to $9.99 per million BTU in 2035 from $3.62 per million BTU in 2009). Building a diverse energy portfolio that includes coal, nuclear and, where economically viable without government subsidies, even renewable resources in addition to natural gas will help shield consumers from such substantial cost increases.

Although opponents would like you to believe that virtually no one is working to develop coal-fired power plants anymore, the facts tell a different story. According to the National Energy Technology Laboratory (NETL), 11 new coal power plants became operational in the U.S. during 2010, the most since 1985. As of July, 23 new coal plants are in the permitting phase, near construction or are under construction.

Why do so many utilities want to build and operate coal-based power plants? The answer, quite simply, is that coal is cheap and plentiful (the U.S. has the largest coal reserves on the globe — we have more coal than the Mideast has oil). And inexpensive fuel means affordable electricity costs for customers. The majority of “studies” that purport to show customers bearing a cost burden due to Plant Washington were paid for by opponents of the project and contain greatly exaggerated claims.

Georgia is no longer in a position to pick and choose between energy resources we like and those we don’t. Nor should ratepayers be asked to pay more for something as basic and important as electricity simply to satisfy the agenda of so-called environmentalists. We need all presently available generation resources, and must work to make all of our energy resources cost-effective and environmentally responsible. Failing to do so only ensures that electric bills will continue to skyrocket, with the greatest impact on those that can least afford it.

Dr. Jeff Edgens is an Assistant Professor at East Georgia College and an adviser with the Committee For a Constructive Tomorrow, in Washington, D.C.
Comments
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EMC customer
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January 24, 2012
Congratulations to the Cobb EMC Board for voting to pull out of the Plant Washington deal!!! (If this were such a good deal, wouldn't someone have stepped in when Jackson EMC, Greystone EMC, and the others pulled out years ago?)
Dan Davis
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January 24, 2012
Some observations:

What Dr. Edgens's bio fails to note is that he is a Political Science professor, which fully explains why he feels qualified, in spite of an utter lack of industry credentials, to challenge a respected energy industry veteran based on nothing more than clumsily assembled "media reports about U.S. energy demand and costs."

Edgens's irresponsible and fallacious claims (especially the outrageous suggestion that the customers of Power4Georgians member EMCs won't bear a cost burden from the planning, construction and operation of Plant Washington) are exactly what one might expect from an advisor for a lobbying organization substantially funded by fossil fuel companies and other vested interests.

In the end, this is just one more disingenuous, fact-free piece of disinformation (in the style of Dean Alford and Sam Kelly) designed to associate Plant Washington opposition with a specific, negatively-perceived political position. In reality, Plant Washington opponents span all demographics, because the issue has never been about coal but about fiscal accountability, objective due diligence, and the misappropriation of EMC member assets to line insiders' pockets.
Dan Davis
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January 24, 2012
So much for scholarly credibility.
Maatf
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January 23, 2012
We don't need to support this now. We need a new study by a new EMC board before this moves forward.
OnGuard
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January 23, 2012
I wouldn't get too excited about 17 suppliers responding to the RFP, unless the RFP is objective and fair, especially for the Scheduling Services. As noted in the reader comments to the MDJ article "Cobb EMC’s pursuit cools on coal-fired power plant" most of the power is purchased from this entity and not the suppliers of the term energy. As also noted in the comments, there is no opportunity to put these purchases out for bid and it's a opportunity that's ripe for price gouging. This combined with granting the Scheduling Services provider the right to be Cobb's agent in the management of their generation and transmission assets, again noted in the reader comments, is a big concern to me. Especially since the business has historically been granted to the company owned by Dwight Brown's associate Cliff Hare and operated by Hare's own associates. I agree with the readers that the RFP does not at all address these concerns. Not only should the forensic audit cover the scheduling services from the past but the new contract needs to be structured as any reasonable contract would; with exact terms regarding the agent’s activities as well as strong audit, control, penalty and termination rights. This contract should also not be administrated by the Cobb Energy Affiliate, Energy Consulting Group but by an independent Control Officer with experience in these matters and not anther flunkie propped up by Brown and his associates.
Bruce Nilles
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January 22, 2012
The writer makes some remarkable assertions as he glosses over some key facts. Coal is not in any kind of resurgence. It is going away. No new coal plants broke ground in 2011. Indeed, since November 2008 only one coal plant has broken ground - the Kemper coal plant in Mississippi, and that plant is projected to raise customers' bills by more than 45 percent! And since January of 2010 more than 91 existing coal plants have been retired or announced to be retired: that is about 11 percent of all the existing coal generation in the United States.

And when the writer talks about new coal plants that have come on line in the past year (they started construction before 11/2008) he failed to that the $400,000,000 Spiritwood coal plant in North Dakota is one of those "new" completed plants and it is not running. Why is a shiny new coal plant mothballed? Simple - clean energy like wind and solar, and natural gas are cleaner and cheaper.

Cobb EMC members beware of anyone trying to sell you a coal plant, it is an expensive and unnecessary bet. The reason 161 proposed coal plants been rejected in the past decade is that any serious assessment recognizes this is a fuel of the past, not the future.
Texas Ranger
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January 21, 2012
@kcummings

Don't get your hopes up regrading the 17 suppliers that responded to the RFP. Cobb's feigned RFPs before through Sherali's Energy Consulting Group. Somehow, the company owned by Brown's buddy Cliff Hare, always was selected despite the relative worth of other proposals. This company still does business with Cobb. It's name is EDF, formerly Eagle Energy Partners. Can you say Forensic Audit?!?!

See more comments in The Marietta Daily Journals "Cobb EMC’s pursuit cools on coal fired power plant."
kcummings
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January 23, 2012
I am hopeful that with new Board members the recent RFPs are done in a genuine effort to provide lower rates.
anonymous
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January 21, 2012
@Sixer666 It's not all about the environment. It's mainly about corruption and cost. Also, pick up a paper and learn about our abundnant natural gas reserves.

@Fred from Cobb Read what I wrote to Sixer666.

I don't know if your both out of touch or plants for Dwight Brown.

I wonder how much EMC members had to pay for Brown, Alford, Kelly, Rayder, Sherali and Howell to orchestrate the drivel in this article.

@Scared2 Yes the doc does look angry!

@Elvis Costello Very good rebuttal!

Sixer666
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January 20, 2012
Yeah, god forbid someone offer a differ opinion than the enviros and Brown haters on here. Several good points in the column. I thought the previous op-ed was flawed quite a bit in reasoning. I can understand cost concerns, etc., but the some of the logic was beyond messed up - especially as it pertains to nat. gas. I hope they see it through, as they've come this far. Just get it done.
Fred from Cobb
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January 20, 2012
I am pretty sure Katherine Cummings is not a member of Cobb EMC. Perhaps she should mind her own business too.

And Take Back Cobb EMC? Calling for transparency but still won't publicly deny it is in fact a front for the Southern Alliance for Clean Energy whose goal is not to increase transparency at Cobb EMC but rather to kill Plant Washington. That is not very transparent.

And if you don't think the price of natural gas is going to go up, you haven't been paying attention to hundreds of years of energy history. Or is it that a barrel of oil is still $17 as it was in the mid-80s?
kcummings
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January 23, 2012
@ Fred from Cobb-I am a Washington County EMC member, Washington County taxpayer, and a Washington County resident. I have every reason to be concerned about this plant for those very reasons. It is my business because MY co-op is involved in this and it will impact everyone in my community.

We all have a vested interest in clear air, clean water, and healthy communities. Pollution and bad business decisions do not adhere to county lines. This problem is bigger than Cobb EMC's.
Tom77
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January 20, 2012
By what laws of economics are future costs of natural gas completely unpredictable but the future cost of coal entirely certain?

Coal is perhaps the most environmentally destructive form of energy known to man. What we know is that the Cobb EMC membership overwhelming has rejected the current corrupt board, and we can expect the remaining board is liable to be sacked this spring--for good reason. Therefore, these decisions should be made after the members such as myself have put in a new Board, which will be responsible for dealing with this proposed plant, so it should not be handed off to a completely new board. And, if the new board wants to consider this plant, it should start with feasibility studies, which should have been done a long time ago.
tell_the_truth
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January 20, 2012
Yes -- we need to assess presently available generation resources -- that's why Cobb EMC just issued an RFP for future generation...you know, the industry standard way to see what's out there.

You've betrayed your own lack of expertise with the industry by failing to note that what Cobb EMC needs (and has now solicited) is peaking power, not baseload power. A coal plant can't easily be cycled on and off to meet the fluctuating demands of Cobb EMC's customers and really doesn't fit our needs. I don't know about you, but I don't want to pay for something I don't need, especially when it's going to cost billions of dollars.

Furthermore, if you were as well-versed as you pretend, you'd know that new EPA rules haven't taken effect yet, so blaming the EPA for rate changes is pretty ridiculous. And you'd know something about the financial sector's assessment of coal plants, i.e. that it's getting more difficult to get a loan to build them (the US Government stopped making loans for new coal plants in 2008 because it's too risky). Or that a financial pro forma is Plant Construction 101, and the fact that one was never done for Plant Washington is an egregious error that, to me, indicates either incompetence or foul play.

Mike Jones
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January 20, 2012
Just when will this nightmare named "Dwight Brown" end?
EMC Member
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January 20, 2012
This guy demonstrates a surprising misunderstanding of the power co-op business. Co-op's are distributors of power, not producers of power. The executives at Cobb EMC have no idea how to run a coal plant. Their complete incompetence on this is what has caused the members to spend millions of dollars on this without even a study to determine if it can make money. Dr. Edgens, please mind your own business. You are not a Cobb EMC member who will be on the hook for this money pit.
Scared2
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January 20, 2012
Am I imagining things, or does the photo of Doc Edgens get angrier and angrier looking as the criticism rolls in?
Take Back Cobb EMC
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January 20, 2012
Cobb EMC members need and deserve a full study on the feasibility of Plant Washington. The plant was a pet project for the now indicted Dwight Brown and anything that Brown wanted, we need better details. Simply telling us that it's the right thing to do isn't going to cut it.

Millions of dollars have already been spent on a projected $2.1 billion construction project. We shouldn't spend another dime to see Mr. Brown's dream project come true!

If Cobb EMC is bringing transparency and accountability back to our co-op, then it's time to do a real study on the feasibility of Plant Washington and finally give us facts, not opinions, on why we need to invest billions in this plant.
MarketWiz
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January 20, 2012
Edgen’s hypothesis is that natural gas prices will not be competitive with coal as it escalates from a 2009 price of $3.62 per MM Btu to $9.99 in 2035. Natural gas is now $2.33 per MM Btu, down more than 35% since 2009.

Not only is his commentary horribly misleading as noted by reader “Elvis Costello” but it’s researched so badly he wouldn’t get a passing grade if this was a high school paper.
EdnaG
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January 20, 2012
Elvis Costello nails it with his valid criticisms of this piece.

Possibly my favorite part of all this is that Mr. Edgens is affiliated with an ideologically-driven organization, CFACT, that receives donations from companies that mine coal (or blast mountains apart to get at it), drill for oil (and then spill it everywhere), and generally want to maintain their stranglehold and their record profits.

Cobb EMC members aren't stupid, Mr. Edgens, and it'll take a little more substantiation to demonstrate these claims. Plant Washington is a money-making scheme, full stop.
spellckecker
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January 20, 2012
It's spelled Edgens not Egan or Egens but your points are still very well taken.
Spell Checker
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January 20, 2012
It is spelled Edgen not Egan or Egens, but points are still very well taken.
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