Tuesday, March 30, 2004
By Dan D'Ambrosio, Associated Press

DENVER — Coal, spurned for decades by power plant builders, is enjoying something of a renaissance as natural gas prices drive up the cost of generating electricity.

In the West, as well as other parts of the country, utility companies are contemplating new coal-fired electric power plants for the first time since the early 1990s. But the renewed interest in coal, prompted by concerns over the volatility in natural gas prices, is also reviving protests by environmentalists worried because coal pollutes the air.

The shift toward coal coincides with the Environmental Protection Agency's implementation of a regional air pollution plan intended to clear haze lingering over western wilderness areas.

"We haven't seen a coal plant built in Colorado in two decades and there's a reason for that," said Robin Hubbard of Environment Colorado. "Denver just had the dirtiest summer we've had in 18 years. We clearly need to look at other means of power generation."

Utilities turned to natural gas for new power in the 1990s because the plants are cheaper to build and cleaner to operate than those run on coal. But then came the jump in natural gas prices. Fuel costs for gas-fired plants are as high as 4 cents per kilowatt hour, while coal plants come in at about 1 cent, said Robert McIlvaine of McIlvaine Co., an energy consulting firm in Northfield, Illinois.

"The breaking point is somewhere around $3 per million BTUs of natural gas," McIlvaine said. "Below $3, gas-fired generation is more attractive than coal."

A BTU, or British thermal unit, is roughly equivalent to the amount of heat generated by burning a kitchen match, according to Xcel Energy spokesman Steve Roalstad. At the current price of about $5.50 per million BTUs, natural gas is not even close to competitive with coal. Some gas-fired plants around the nation are being shuttered because the cost to run them equals the sales price for the electricity generated, McIlvaine said.

Nationwide, as many as 90 new coal-fired plants are being considered with a combined capacity of 50,000 megawatts, McIlvaine said. That equals about 7 percent of the total power generation available in the United States and carries a price tag of about $75 billion. One megawatt supplies the amount of electricity used by 400 to 900 homes in one year.

In Colorado, Xcel Energy is planning a 750-megawatt, coal-fired plant near Pueblo, Colorado, for $1.3 billion, while a comparable gas-fired plant would cost about $533 million. Xcel had seen a 13 percent increase in per capita demand for electricity in the last decade, thanks to a proliferation of household appliances from big screen televisions to cell phone chargers, Roalstad said.

Over the next 10 years, the United States will need about 140,000 megawatts of increased power, with about one-half or more to come from coal plants, McIlvaine said.

Jim Owen, a spokesman for Edison Electric Institute, an industry trade organization, said it is too soon to tell how big the coal-fired boom will be, given that less than half of planned plants are usually built. The downside for coal-fired plants is that they are a major source of carbon dioxide emissions, the leading cause of global warming. Coal plants also emit sulfur dioxide, which creates acid rain; nitrogen oxide, which turns to ozone creating smog; and mercury, a neurotoxin especially dangerous to children.
Neither carbon dioxide nor mercury are currently regulated for coal-fired plants by the EPA, but proposed mercury rules are expected by the end of the year. The technology for dealing with both types of emissions is just emerging.

"I have not heard of any really viable carbon control technologies," Roalstad said.

Meanwhile, the EPA is debuting a regional air pollution plan intended to improve visibility in 16 national parks and wilderness areas, including the Grand Canyon National Park in Arizona. Environmentalists believe the EPA's actions are another reason utilities are turning to coal plants now.

"The theory is the industry sees carbon and mercury regulations coming and they have to get in their last push to get permits, because once those kick in, coal-fired electricity could cost more than wind," said Matt Lewis of Resource Media in San Francisco.

Xcel's new plant in Pueblo will meet all current emission requirements, as will any other plants the company builds in the future, Roalstad said. "Legislators and regulators can certainly draft legislation to accomplish what they want to accomplish," Roalstad said. "We will comply with all regulatory requirements. We have no choice."

In the West, coal-fired power plants are in the works in Arizona, Colorado, Montana, New Mexico, Utah, and Wyoming. The biggest plant being contemplated is a 1,500-megawatt station on Navajo land in the Four Corners region.

Source: Associated Press