Energy | Ecotrope

A loophole for coal-fired power hiding in the grid?

Ecotrope | July 7, 2011 12:39 p.m. | Updated: Feb. 19, 2013 1:37 p.m.

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You know how Oregon imports coal-fired power from other states through the grid? Well, that could create a problem for regulators trying to stop utilities from buying coal-fired power, according to Thane Jennings.

Jennings is the plant manager at Calpine Corp.’s gas-fired power plant in Hermiston. And he’s not so sure the state’s rules will do anything to reduce greenhouse gas emissions from Oregon’s electricity use.

His reasoning: The new draft rule limiting greenhouse gas emissions allows utilities to count “non-specified power” (power the utility can’t track back to one single source) as if it came from natural gas (roughly 1,100 pounds of CO2 per megawatt hour). In reality, he says, if that electricity is imported from other states through the Northwest power grid it’s more likely to be coming from coal (more like 2,000 pounds of CO2 per megawatt hour):

“Oregon is a net importing state for electricity. So regardless of the amount of hydro we have and all the wind power we’ve built, we’re still importing. And that imported power is coal. … I think it’s important for environmental groups and the people of Oregon to understand that this rule may not lower the carbon profile of the electricity they buy.”

Oregon Department of Energy policy analyst Bill Drumheller says if the new rules didn’t set the “non-specified power” (let’s call it mystery power) rate at 1,100 pounds it would prevent utilities from entering long-term contracts for any mystery power.

“In some cases it’s not possible to determine what specific facility is actually providing the power. Some power contracts are literally just that: ‘We’ll give you some power.’ That’s where the heart of the discussion around unspecified electricity occurred. That’s the crux of that issue. If you set the value for the unspecified power higher than the standard, then you’re prohibiting that purchase. It’s rather black and white that way.”

Jennings says Oregon is going easy on the utilities that buy and sell coal-fired power and leaving the door open for people to game the system by “obscuring” the coal-fired source of their power. In California, which already has an emissions standard for utilities buying electricity, doesn’t allow any mystery power purchases. And Washington’s mystery power emissions rate is 2,600 pounds. In other words, regulators there assume any mystery power is coming from a dirty source. That provides an incentive to utilities to buy their power from known, low-emissions sources.

Jennings admits he has a vested interest in how these rules shape up. After all, he runs a natural gas plant that started up in 2002:

“We’ve invested in clean plants – the cleanest you can build. And we’re getting squeezed out of power markets by dirty coal producers. … We’re an independent power producer. We sell electricity into the marketplace and PacifiCorp could come and buy power from our plant in Hermiston instead of a coal plant in Utah. Our plant isn’t running 100 percent of the time, the way we’d like it to be.”

So, from his perspective, setting the greenhouse gas emission rate for mystery power at the same rate as natural gas “gives something to coal.” Something … like a loophole they can sell their power through.

“It won’t be hard to obscure the source of your power,” he told Oregon Department of Energy officials today. “When you start trading your power that can be very easily done.”

DOE’s Drumheller said that’s going to more of an issue for the investor owned utilities: Pacific Power (aka PacifiCorp) Portland General Electric and Idaho Power Company. But he also told Jennings that it’s rare for a long-term power contract to be completely “unspecified.” Again, he said, it’s time to tune into the Oregon Public Utility Commission, which will be telling the big three how to avoid buying coal-fired power as ordered by the Oregon legislature in 2009.

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