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

I once heard a preacher say there is nothing wrong with fishing with your kids on Sunday morning.  Fishing is a wholesome activity, and especially good if you are spending the time with your family.  However, he went on to say that an even better activity is spending that time with them in church.  Both activities are good; just one is better than the other.

The same principal applies to Arkansas's growing biomass industry.  Phoenix Renewable Energy is building biomass plants in Camden and El Dorado for the the production of wood pellets.  The pellets will be used in Europe for home heating and electricity production.  That is good.  Certainly those communities in South Arkansas can use the jobs and economic development that Phoenix is creating.  There may be an even better use for Arkansas's biomass potential, however.

We previously noted that Arkansas has the biomass potential to produce 150% of the state's residential electric needs.  Moreover, biomass is certain to have an increasing share of the U.S. electricity generation portfolio.  Why not utilize that fuel within the state, rather than importing fuel (coal) for electricity production, and exporting dollars?  Arkansans currently spend 10.1 billion annually for fossil fuel, a significant portion of which is fuel for the production of electricity.

The Arkansas Code, sections 14-206-101 through 14-206-112, permits Arkansas municipalities to acquire or construct, and operate, an electric public utility plant for the production, transmission, delivery, or furnishing of any public service.  Moreover, section 14-200-101 permits municipalities owning or operating facilities may extend service to rural areas contiguous to the municipality.  Municipalities in Arkansas with nearby biomass stocks, including timber and wood products waste, biomass feed stocks grown on marginal agricultural land, and even municipal waste, in conjunction with companies like Phoenix Renewable Energy, should consider municipal electric power generation and distribution.  The benefits are obvious:

• Local economic development -- through the construction and operation of facilities, as well as through the manufacture and installation of distributed generation systems made an integral part of a municipal electric utility.
• Keeping the money for fuel costs in the community -- rather than importing fossil fuel and exporting dollars, the money for fuel stays in the local economy.  Arkansas timber owners, loggers, and wood products manufacturers would have a ready market for what would otherwise be waste products.  Moreover, Arkansas farmers and landowners would have additional cash crops.
• More local control of energy production -- decisions about energy production would be made locally, rather than by entities far away without knowledge of local conditions and needs.
• Creating a sustainable community -- What industry wouldn't want to locate in a community with sustainable power production and what employees wouldn't want to relocate to an environmentally conscious community?
• Incentives for integration of smart grid technologies and distributed generation -- In a sustainable community, grass roots efforts at distributed generation could be rewarded through a net-metering policy that purchases any excess generation, rather than our current state system that is like a cell phone plan where you surrender the unused minutes.

Point to remember:  Lest you think municipal electric generation from biomass is a pie-in-the-sky proposition, read about the Joseph C. McNeil Generating Station in Burlington, Vermont.  That electric power generating station has been producing power from wood waste for Burlington for nearly 30-years.

Arkansas Nuclear One, which provides one-fourth of the electric power in Arkansas, and more than half sold by Entergy Arkansas, turned 35 this month, according to an article in Arkansas News.  Entergy supports climate change legislation, and in 2001 voluntarily capped its carbon emissions to the previous year's release.  More importantly, it has since reduced its emissions by 17.5 percent, to 43.9 million tons in 2008.  According to company officials, Nuclear One is emissions free.

Regarding the importance of climate change legislation, the article quotes Entergy Chairman and CEO Wayne Leonard as saying:

We're playing Russian roulette with the planet and our economy.  The difference is there's a bullet in every chamber except one.  We have to answer the question of whether we're more important than future generations.  I believe with all my heart that everybody involved in this debate in their own heart knows what the answer to that question is.

Not all groups view nuclear power as the right alternative to reduce emissions and retard climate change.  The article notes that the Sierra Club in Arkansas is opposed to nuclear power because of nuclear waste.  The Sierra Club supports the use of wind, solar, and geothermal, along with natural gas a a bridge fuel, to provide electric power and reduce carbon emissions.

Our Take:  Every type of electric energy generation has its own drawbacks.  Wind and solar are emissions free, but are intermittent and require a lot of land and significant investments in transmission.  Coal is cheaper, but the emissions are a primary driver of climate change.  Natural gas has fewer emissions than coal, but is subject to price volatility.  Nuclear power solves the problem of emissions, but there are safety concerns and problems disposing of nuclear waste.  However, if the overriding goals are energy independence and stopping climate change, then each form of generation should be seriously considered and implemented where and when appropriate.

The Wind Coalition, a group devoted to the development of wind energy in the United States, is attempting to intervene in the Arkansas Public Service Commission's White Bluff Docket, wherein Entergy Arkansas and the other owners of the White Bluff generating facility seek approval for environmental upgrades.  According to the Wind Coalition's filings, its

members have begun acquiring land rights to potentially construct wind farms in and near Arkansas, and are willing and able to provide renewable energy in Arkansas to [Entergy Arkansas] or other companies.  A Declaratory Order from the Commission indicating that the Project (which, as structrured, has no renewable generation component) is in the public interest would potentially preclude the Wind Coalition from providing such renewable energy to [Entergy Arkansas] or another entity in the future.

In addition, the Wind Coalition states that permitting it to intervene would:

• ensure that wind energy is considered on the same playing field as other types of generation such as coal, nuclear, and natural gas;
• assist in the evaluation of Entergy's price assumptions for coal supply; the capital costs of wind power; wind capacity factors; the economic impacts of joining the Southwest Power Pool; and whether Entergy considered the improved import capability from the upcoming transmission upgrades approved over the next four years;
• assist the Commission in developing a full, fair and adequate record upon which to base its decision concerning whether the White Bluff upgrades as currently structured is in the public interest.

Entergy asserted in its original petition that it "considered whether renewable generation and efficiency alternatives would be appropriate for comparison" but "concluded that it would be unrealistic to assume that either alternative" would be effective.  If the APSC permits the Wind Coalition and other similar groups to intervene in this docket, submit additional evidence, and independently evaluate Entergy's analysis, would certainly go far "in developing a full, fair and adequate record upon which to base its decision regarding the proposed White Bluff upgrades.

The Arkansas Public Service Commission Staff sought a suspension of the procedural schedule in the Commission's White Bluff docket on December 3.  Entergy Arkansas joined in that effort today.

The requested delay is based upon the response of the U.S. Environmental Protection Agency and U.S. Forest Service to the proposed permit for the facility to be issued by ADEQ.  In a letter to the Arkansas Department of Environmental Quality regarding the permit application for the White Bluff upgrades, the EPA noted that:

we do not feel an SO2 emission limit of 0.15 lbs/MMBtu has been shown by the Arkansas Department of Environmental Quality (ADEQ) to be BART [Best Available Retrofit Technology]. . . [W]e do not believe ADEQ has properly conducted its BART analyses . . . including the Entergy White Bluff facility, as required by 40 CFR 51.308.  Had this analysis been performed, we feel that a more stringent control level would have been likely shown to be BART.

The U.S. Forest Service echoed those concerns.

The upshot is that action by the EPA and other federal agencies could delay the implementation of the upgrades beyond the 2013 target date.  Therefore, the Commission Staff and Entergy have requested a suspension of the procedural schedule until the federal concerns are addressed by the ADEQ.

More important than the procedural delay, however, is the effect of the federal action on whether the project, as proposed, can move forward.  If there is a change in the allowable emissions rate, that may effect whether the technology proposed to be used is sufficient to meet the new allowable emission rate.

The more fundamental issue the Commission will have to address is whether, in light of other existing generating resources, the facility upgrade should be approved at all.