Why Plant Washington Will Not Fly

Guest Blog | April 27, 2012 | Coal, Energy Policy
On April 10, Power4Georgians (P4G) settled a legal challenge with several environmental groups over our appeal of Plant Washington’s air pollution permit. Afterward, plant developer Dean Alford told the press that Plant Washington is ready to proceed, with its permit in hand and a new backer, retired Colorado utility exec Tim Taylor. He couldn’t be more wrong.

The first obstacle: Plant Washington’s permit was not final in time to avoid a proposed Environmental Protection Agency (EPA) rule that seriously threatens the plant. The proposed rule, Carbon Pollution Standards for New Power Plants, would stipulate that new facilities must produce no more than 1,000 tons of carbon dioxide per MW of power generated – a limit Plant Washington is not designed to meet. No coal plant could, without carbon capture and sequestration, a technology that is expensive, unproven on a commercial scale, and requires specific geological features on site. The Plant Washington site has not even been studied for feasibility.

P4G attempted to achieve the final permit before the rule was officially published, in order to be “grandfathered in” and avoid immediate compliance, but no dice. The EPA published the rule on April 13, before the settlement was even signed. Moreover, according to the settlement, P4G will not have a final permit until its proposed amendment to reduce mercury emissions (in compliance with the new MATS rule, which is now required through this settlement) goes through the state Environmental Protection Division’s public notice and comment period, which will take at least thirty days.

The second obstacle: There’s a second criterion of the new GHG standard in order to be “grandfathered in” and temporarily avoid the emission limit: Plant Washington would also need to make demonstrable construction progress by April 13, 2013. We are very skeptical of Power4Georgian’s ability to do so. For example, P4G has not done any of the engineering work required to order a boiler, historically a key piece of evidence that construction has commenced. For a facility of this size experts estimate the cost of a boiler to be about $400 million; if P4G ordered it and then cancelled their order, penalties alone could range from $20-80 million. Considering that Allied Energy Services, P4G’s consultant, was sold last summer for $128,000, we wonder whether P4G has even that much cash on hand.

The third obstacle: The very real possibility that the EPA rule could halt Plant Washington is a major turn-off for potential investors… so that boiler is looking more and more elusive. Imagine you’re a banker – would you put billions of dollars into constructing a power plant that might be stymied in short order by public health rules, and is likely to produce power at above-market prices? Furthermore, Plant Washington would produce far more power than the four EMCs participating now could use. Financiers are looking for assurance that the plant will be profitable, specifically, that contracts are in place for utilities to buy 100% of its power – so Alford has to convince these EMCs and others to lock in contracts now, at a higher rate than today’s rates, before the investors will even take him seriously.

Activists try to prevent Taylor's Comanche 3 plant from going online in Colorado. Image from colorado.indymedia.org

Even Alford’s new friend, Tim Taylor, hasn’t publically committed a dollar amount to Plant Washington (we look forward to Power4Georgians’ release of the actual financial commitment) – and his role is just to get the project ready to seek financing. Alford has actually admitted to Cobb EMC board members that P4G never planned on constructing Plant Washington themselves anyway and would sell its (near-complete) permit to another developer, theoretically recouping some of the participating EMCs’ expenditures. But any potential buyer would face the same problems that Alford and P4G currently do in terms of attracting investors.

Given these major hurdles, P4G’s member EMCs look less and less likely to receive any return on their investment so far. That’s why we think they should stop spending now. Such was the decision of Cobb EMC, which not only withdrew all spending on Plant Washington, but also recently announced an investment in a large solar array.

For these EMCs (Snapping Shoals, Central Georgia, Washington and Upson EMCs), we recommend careful investments in energy saving technology – the cheapest way to meet their energy needs –as well as an updated, post-recession projection of electricity demands and an industry-standard assessment of all alternatives for meeting it. That’s the smart way to invest member money, and to invest in healthy communities at the same time.

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