Nowhere are the failings of traditional utility regulation more evident than on Long Island. The New York Public Service Commission (PSC) has raised rates for the Long Island Lighting Co. (LILCO)...
Changing the Fuel Mix: Time for a Nuclear Rescue?
appears unique in that it is moving forward with larger plants, while most coal-fired plants planned or under construction are much smaller. For example, Bloomington, Illinois-based Corn Belt Energy Corp. plans to build a 91-MW coal-fired, mine-mouth plant at a cost of $137 million. And the Tennessee Valley Authority is preparing an environmental impact statement for PickWick Power LLC's proposed 100-MW coal-fired plant it wants to build and operate in Tennessee.
Wisconsin Company Objects
Wisconsin Energy recently has come under fire for a proposal to build three 600-MW, coal-fueled units at its Oak Creek Power plant site. The three plants are part of a 2,800-megawatt project, including two 500-MW natural gas fired plants that the utility's CEO is touting as "the largest building project in the history of Wisconsin." Wisconsin Energy, in its filing for building permits, said that constructing the coal-fired units will save customers $1 billion over the life of the units when compared to "natural gas only" plants.
But S.C. Johnson & Son, Inc. is raising strong objections to the coal plants, arguing they would add to pollution in Racine County, where the company is located. Racine County has been listed as a "severe" non-attainment area under 1990 amendments to the federal Clean Air Act due to high ozone levels. The jury is out as to whether the utility company will prevail.
But as a practical matter, if coal plants, or any plants for that matter, are to be built, cost is a main consideration. According to EIA, where once coal-fired generating plants produced power at average price of over 3.5 cents per kWh, total production costs for coal-fired plants now average less than 1.8 cents per kWh. EIA attributes that drop primarily to declining fuel costs. Between 1981 and 1997, EIA reports that mine-mouth coal prices declined by 60 percent, from $45 per short ton ($2.12 per million Btu) in 1981 to $18 per short ton ($0.88 per million Btu) in 1997. That decline continues to $16.45 per ton in 2000 and a projected $12.70 per ton in 2020. It represents a shift from eastern subsurface mines to western surface mines, as well as a rapid increase in mining productivity in all types of mines. Over the same period, the delivered price of coal to electric power plants fell from $2.61 to $1.27 per million Btu. But other factors, such as increased utilization, reductions in nonfuel expenditures, and fewer employees per plant also played a role in price declines, EIA said.
Meanwhile, EIA said that world oil prices remained relatively high in 2001 due to actions by OPEC and non-OPEC countries to restrain oil production. U.S. natural gas prices hit record levels in 2001, due to a cold winter and tight supplies caused by reduced drilling in response to low prices in 1998 and 1999. Those numbers could open the door for other fuels.
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