Arkansas Electric Energy Law : Arkansas Electric Energy Lawyer & Attorney : Eric Hughes Law Firm : Wind & Solar Power, Distributed Generation : Arkadelphia, Little Rock, Pine Bluff

A new Natural Resources Defense Council report, A Clean Energy Economy for Arkansas, argues that clean energy is a key factor for rural economic development in the state.  Some key facts underlying the analysis are:

• Each year Arkansans spend $10.1 billion for fossil fossil fuels.
• Which translates to $3,500 in energy costs for every person (not household) in the state.
• 78% of those energy dollars leave the state, never to return.

Arkansas ranks 13th in per capita energy consumption, and is expected to need 2,500 megawatts (MW) in new generating capacity over the next 15 fears.

The report cites a previous NRDC study indicating that "green jobs" primarily in construction, engineering, installation, agriculture, and operation of rural energy production facilities -- jobs which cannot be exported.  According to the report, clean energy investments 3.6 times more jobs for people without a college education, and 2.6 times more jobs for people with a college education, than comparable investments in fossil fuel energy.

The report goes on to examine

the potential for renewable resource development in Arkansas and finds unprecedented opportunity for long-term economic growth in rural communities as well as new income sources fro farmers from an array of emerging clean energy technologies, particularly wind, biofuels, biopower, and biogas.

 Wind Power.  40 of Arkansas's 75 counties have commercially viable wind resources.  A federal government study projects that 1,000 MW of generating capacity would create $830 million in economic benefits over 20 years, including 3,496 construction and locally stimulated indirect jobs and 504 permanent operations jobs.

Biofuels.  With its strong agricultural base, Arkansas is "perfectly situated to become a center for the next generation of biofuels production."  Existing Arkansas crop and timber residue are "sufficient to produce 770 million gallons of transportation fuels each year, equivalent to 50 percent of all the gasoline used in Arkansas.

Biopower.  The report points out that combining solid biomass with coal at existing power plants is a relatively low-cost way to ramp up renewable resource development.  "If 10 percent of Arkansas's coal-fired power capacity were replaced with biopower, more than 700 new long-term jobs would be created, not including new agricultural jobs to produce and harvest the biomass fuel."

Biogas.  Methane from decomposing manure has 21 times the global warming potential as carbon dioxide.  While Arkansas is one of the nation's leading livestock and poultry producers, it has no operating biodigesters.  "In addition to providing a potential source of revenue and energy for livestock operation, anaerobic digestion systems create high-quality fertilizer and other byproducts while reducing odors, water pollution, and emissions.

Important Point.  Even the Arkansas Energy Office recognizes the potential for producing electric power with biomass, estimating that Arkansas has sufficient biomass potential to supply 150 percent of the state's residential electricity use.

A November 19 ruling by the Federal Energy Regulatory Commission will allow Entergy Arkansas to withdraw from a System Agreement with the other Entergy companies.  In December 2005 Entergy Arkansas notified the System Agreement participants that it intended to withdraw from the agreement as of December 2013.

Entergy Arkansas's withdrawal was prompted by the action of Louisiana regulators, which had caused some of the cost of Entergy Louisiana's more expensive natural gas fueled generating plants to be shifted to Arkansas rate payers.  Entergy Arkansas generates electric power primarily through nuclear and coal fired plants.

According to the Arkansas Democrat Gazette, FERC's ruling will save Entergy's Arkansas customers about $218 per year.

Other Important Points:

• If FERC does not permit a rehearing, the Louisiana regulators can appeal to the United States Circuit Court of Appeals for the District of Columbia
• As FERC Chairman John Wellinghof points out, the ruling "will allow Entergy and any interested party to engage in meaningful negotiations for a successor arrangement to the System Agreement to be in effect prior to the withdrawal of Entergy Arkansas. . . ."

Last March Entergy Arkansas sought a Declaratory Order from the Arkansas Public Service Commisson approving the installation of various environmental controls at its White Bluff facility made necessary by the Arkansas Department of Environmental Quality's implementation of the EPA's Regional Haze Rule.  Without the environmental controls, the facility will have to close in 2013.

Entergy and the co-owner's of the White Bluff facility contend that implementation of the environmental controls is the lowest cost reasonable alternative to meet their customers' long-term power supply needs.

However, a number of groups, including Entegra Power Group, LLC, GDF SUEZ, The Wind Coalition, Audobon Arkansas and the Sierra Club, dispute that Entergy properly considered a broad range of alternatives.

Why is this Important?  This PSC docket, unlike the docket approving construction of the Turk Plant, will focus attention on existing generating facilities and force the Commission to decide whether to allow utilities to build new generating capacity, expand their owned existing capacity, or make them utilize capacity already in existence, even if owned by a third party.

An interesting article in the December 2009 issue of The Atlantic magazine, Who Needs the Grid, reports on an old technology newly adapted to produce electricity cleanly and inexpensively:  fuel cells.  Bloom Energy has a power producing device -- called a Bloom box and about the size of a coffee table -- capable of powering a 5,000 square foot house.  The article, by Lane Wallace, reports that a five-kilowatt Bloom box has been used in an ongoing trial at the University of Tennessee, and,

has proved twice as efficient as a traditional gas-burning system and produced 60 percent fewer emissions.

Some of the article highlights are:

• The Bloom box has been in development for eight years with the support of a reported $250 million in venture capital.
• It is "fuel agnostic," meaning the boxes can be run on existing propane, natural gas, or ethanol sources, but can also be run on plant waste (biomass) or almost anything containing hyrdogen and carbon.
• The boxes operate independent of the power grid, critical for developing countries lacking infrastructure -- and nice for any consumer that wants to be free of its utility.

What Does It Mean?  One thing it means is that your local generating and distribution utility better get good at innovation.  If the ideas the utilities have expressed in the Arkansas PSC dockets on Sustainable Energy Resources, Ratemaking, and Energy Efficiency are any indication, they will be obsolete before they know it.

UPDATES:

Bloom Energy to Unveil Bloom Boxes Wednesday

Bloom Boxes Could Promote Economic Development in Arkansas

Bloom Boxes Unveiled by Bloomenergy

Wind power doubters beware -- wind power can produce enough electricity to meet a significant portion of demand.  For example, on the night of November 8, 2009, Spanish wind power produced at its peak 53.7% of the total electricity demand in Spain.

The Spanish Wind Energy Association said the sustained peak in wind powered electricity production proves that “wind energy is no longer marginal”. By 2020 Spain is expected to double its wind-power producing capacity from the current level of 16 gigawatts to 45 GW. “With this expected growth in capacity we could envisage wind meeting the vast majority of demand during times of peak supply by 2020,” Jacopo Moccia, regulatory affairs adviser for EWEA said.

Any increase in wind energy capacity in either Arkansas or surrounding states should be good for our economy, especially since Arkansas is becoming a leading center for blade manufacturing.

According to a new study released by the Utilities Telecom Council (UTC), Smart Grid technologies can yield benefits of $110-million annually to utilities.  The study -- entitled Smart Grid Economics:  Making the Business Case for Smart Network Technology -- was based on a comprehensive Smart Grid deployment by utilities with one million electric meters.

SmartGridNews.com reports that the study shows that with the use of Smart Grid technologies:

• System reliability is increased from 99.48% to 99.75%, reducing outage minutes by 16.8 million customer minutes
• Nearly 300,000 tons of carbon emissions are eliminated annually
• Over 9,000 direct and indirect job-years are created
• The internal rate of return for the smart network program is calculated at 13.8% without accounting for the value customers may place on the increased reliability of the electric grid; when factoring in these benefits, internal rate of return exceeds 35%
• System benefits calculated by the end of a 10-year forecast period are likely to exceed $110 million per year

As may remember from a previous post, the Arkansas PSC has current dockets investigating the proper use of these technologies in Arkansas.

With the debate over the cost of generating electric power by fossil fuel versus renewable resources, a new report from the National Research Council is timely.  Congress requested the report to assess the external effects caused by various energy sources over their entire life cycle -- for example, not only the pollution generated when gasoline is used to run a car, but also the pollution created by extracting and refining oil and transporting fuel to gas stations.  These effects are often not reflected in energy prices, so government, businesses, and consumers may not realize the full impact of their choices.

The committee that wrote the report focused on monetizing the damage of major air pollutants -- sulfur dioxide, nitrogen oxides, ozone, and particulate matter -- on human health, grain crops and timber yields, buildings and recreation.  The report concluded that electricity produced from coal at 406 coal-fired power plants had non-climate related external costs -- not reflected in the price the electricity consumer pays -- of $62 billion, or about 3.2 cents for every kilowatt-hour (Kwh) produced.  The climate based monetary damages range from 0.1 to 10 cents per Kwh.  The report also stated that coal-fired plants are the single largest source of greenhouse gases in the U.S.

On the other hand, the life-cycle damages of wind power are small.  Although wind power currently produces just over 1 percent of U.S. electricity, it has large growth potential.

Why this is important for Arkansans? 

• Arkansans have relatively poor health compared to the rest of the nation and health care costs are rising.  Coal fired power plants contribute to both problems.
• Agriculture, timber production, and outdoor recreation are a big part of the state's economy.  Coal fired power plants can hurt those parts of our economy.

Electric energy efficiency, conservation, demand response, innovative ratemaking, and transmission are hot topics throughout the United States, and the Arkansas Public Service Commission is actively addressing these issues.

• ENERGY EFFICIENCY.  Beginning in 2006, the Commission led an inquiry into the potential for utility led energy efficiency and conservation programs (06-004-R).  The result was the Commission's Rules for Conservation and Energy Efficiency Programs, under which the state's electric utilities implemented Quick Start C&EE programs for 2008 and 2009, and have filed plans for a Comprehensive C&EE Plans for 2010 and beyond.
  

• TRANSMISSION.  The Commission's Electric Transmission Docket, (08-136-U) was initiated in September 2008 to consider the state of the existing transmission network and to gather "information on new technologies related to the efficient transmission of electricity."  Not is the Commission examining new technologies that will "lead to greater optimization of the electric transmission grid" but is also considering "the adoption of 'Smart Grid' technologies" to increase energy efficiencies for consumers.
  

• RATEMAKING.  The implementation of Smart Grid and other technologies leading to energy efficiency and conservation pose issues of cost recovery and other revenue issues for utilities.  Therefore, the Commission initiated a docket expressly to consider innovative ratemaking rules (08-137-U).  In its Order establishing the docket, the Commission noted that while increased energy efficiency and demand response opportunities may decrease usage by consumers of electricity, but acknowledged "that revenue recovery by the utilities could be compromised absent possible implementation of decoupling mechanisms."
  

• SUSTAINABLE ENERGY.  Finally, the Commission is also considering the "expanded development of Sustainable Energy Resources ("SER")" (08-144-U).  The Commission defined SER to include energy efficiency, demand response, automatic metering (including the "Smart Grid"), and renewable resources.  Moreover, the Commission pointed to a number of regulatory models implemented across the country that include cost recovery for utilities implementing SER programs and lost revenue allowances (decoupling of utility profits from sales volume) to remove disincentives fro utilities to help customers save energy.

In light of the overlap between these four dockets, the Commission might consider consolidating them into a single docket for developing a regulatory framework that addresses:

1. Current and future generating capacity requirements;
2. Rules for siting and transmission for utilities and Independent Power Producers;
3. Integration of electricity produced by renewable resources;
4. Standards for the implementation of demand response, including automatic metering and "Smart Grid" technologies for consumers; and
5. Rules for cost recovery and decoupling.