December 31, 2010-by Grant Smith, Executive Director of the citizens Action Coalition. (Editor’s note: Valley Watch is a joint intervener with the Citizens Action Coalition in several dockets before the Indiana Utility Regulator Commission).
On Dec. 26, The Star published a question-and-answer session with Gov. Mitch Daniels. This is a response to the governor’s answer with respect to coal-fired power and the coal gasification plant proposed for Rockport that would be designed to produce pipeline-quality gas.
Grant Smith in file photo from the Evansville "Step It Up" Rally on April 14, 2007. Photo by John Blair
Coal is not what it’s cracked up to be. The coal industry directly employs about 0.1 percent of Hoosiers and represents about 0.47 percent of Indiana’s gross domestic product. In fact, three renewable energy manufacturers coming into Indiana will create the equivalent of 50 percent of the coal mining jobs within a few years at no cost to Hoosier ratepayers and little risk to taxpayers. The Duke Edwardsport coal gasification plant, by contrast, will support about 300 mining jobs at a cost, we estimate, of approximately $8 billion over 30 years to Duke Energy Indiana ratepayers.
Second, Citizens Action Coalition is critical of coal for financial reasons. Coal-fired power is on the same path as nuclear power. The unit costs keep increasing despite massive shifting of construction risks to ratepayers and taxpayers. The Edwardsport plant and a study with respect to the Taylorsville Energy Center, a plant similar to Rockport, by the Illinois regulatory commission prove that these new coal plant designs are experiments and too costly to bother with. What evidence is there to lead us to believe Rockport will be any different? We would argue that the price announced by the Indiana Finance Authority is a floor, not a ceiling. Leucadia was unwilling to accept financial risk after two years of failed negotiations with Indiana’s major gas utilities, and the convoluted financial deal offered in the contract between Leucadia and the state is not designed to protect ratepayers. Rather, we contend that it is structured to protect the company’s profit margin during the course of operation.
Third, it is far cheaper to reduce natural gas demand by making homes and businesses more energy efficient than it is to add supply by converting coal to synthesized gas.
Fourth, the public health cost of coal-fired power is enormous. The National Academy of Sciences completed a study last year that estimated the health cost of lung-damaging soot from coal plants to be $62 billion per year, which is slightly under the revenue generated by coal plants from electric sales. In other words, coal-fired power costs society more than its worth.
If the governor is interested in creating jobs and a healthier, more productive citizenry while meeting electric demand, he’ll call for a shift in utility investment away from fossil fuels and nuclear power and toward efficiency, renewables and distributed power. The mid-20th-century financial models that the governor is hanging his hat on simply do not apply anymore. The net jobs created would far outweigh any job loss in the coal or utility industry. Moreover, like automotive components, energy-efficiency measures and component manufacturing can be installed or produced anywhere, including Southern Indiana, and renewable component manufacturing can be produced anywhere, including Southern Indiana.