Coal Mountain

The celebrated ecological economist Herman Daly once said, "There is something fundamentally wrong with treating the earth as if it were a business in liquidation." In the year ahead, the Los Angeles Department of Water & Power, the nation's largest municipal utility, has the perfect opportunity to begin righting that wrong.

The question on the minds of many environmentalists and elected officials in Los Angeles is whether the department -- which contributes to smog in Southern California and environmental degradation throughout the Southwest -- will begin to treat earth's resources as precious stones to be conserved for future generations or go on treating them like cheap goods at a discount store?

If any place in the nation has the potential to make a massive shift toward renewable power it would seem to be Los Angeles, with its abundant sunshine and urgent need to clean up air pollution. Ironically, though, the department seems poised to invest in a distant coal plant. It's not alone. Across the intermountain West, energy companies are contemplating construction of some 35 new coal power plants. Other proposals dot the South and nation as a whole.

Indeed, coal shows no signs of giving up its throne as the king of fuels in the U.S. electric utility industry. Cheaper today than in 1949, coal produces 56 percent of the nation's electricity and the Department of Energy estimates that the U.S. has enough of the mineral to burn for hundreds of years to come.

Yet, even with modern day environmental controls, coal is a major source of air pollution, including toxic mercury, and produces more carbon dioxide than other fossil fuels, which scientists widely acknowledge are causing Earth to warm up. Coal, for instance, produces 89% of the carbon dioxide from U.S. electric power plants.

Despite such problems, early next year the Utah Department of Environmental Quality is expected to issue a draft permit to build a third coal-burning power plant at the state's InterMountain Power Project. The Los Angeles department has spent $2 million to support planning and permit applications for the project and soon will have to decide whether to help finance the proposed $1.75 billion project. Alternatively, it could spend the money on renewable power facilities in its own smog-clouded backyard.

That looks unlikely. A recent report from the city council's chief advisor recommends that that department embrace green power and move toward the state's 20 percent renewable portfolio standard, but only if it's not too expensive, a caveat that appears to leave the door open to more coal.

The problem chronicled by the report -- which relies on conventional accounting -- is that renewable energy costs more than fossil fuel. For instance, wind costs between 5 and 6.5 cents/kwh and solar power costs between 40 and 60 cents/kWh, even in sunny Southern California. Meanwhile, power made from coal, like rags on a department store discount rack, costs just 2 to 4 cents/kWh.

No surprise then that the department is likely to invest in coal power in the coming year and hold off much of its planned investment in renewable power until the proverbial out years.

The Intermountain Power Project -- built in the early 1980s -- already has two 950-megawatt coal-fired units and the Los Angeles department consumes about 45 percent of their combined output. The units burn 5.3 million tons of coal a year. Their operator, the Intermountain Power Agency, estimates there are about 100 million tons of recoverable coal in the vicinity of the project's current supply mines, or a 20-year supply. The project is one of three major coal-fired power plants on which the department relies.

Its upcoming decision on whether to invest in expanding the Intermountain Power Project is likely to be intertwined with the fate of another coal plant, the Mohave Generation Station in Laughlin, Nevada. Mohave -- owned jointly by Southern California Edison, the department, the Salt River Project, and Nevada Power Co. -- has operated since 1971. The federal Environmental Protection Agency is requiring the operators to reduce the plant's sulfur dioxide emissions by 85 percent by 2006 because it diminishes visibility at the Grand Canyon. It is the single biggest source of the acidic emissions in the western United States, producing about 41,000 tons of the pollutant a year.

The 273-mile slurry pipeline that supplies the plant with coal from the Black Mesa Mine is depleting the local aquifer of the Navajo and Hopi Indians and the mine itself faces eventual depletion. Given the prospect of having to internalize some of the costs of the pollution and resource depletion, instead the department and other Mohave plant owners may simply walk away and close the plant in 2005. This would cut the department's capacity by 158 megawatts, which is 10 percent of the plant's total 1,580-megawatt capacity.

Seeing the writing on the wall, the department sold half its original 20 percent interest in the Mohave plant to the Salt River Project in 2000. It has since used the $95 million in proceeds to modernize major generating stations in the Los Angeles Basin, which operate on natural gas. The move will enable the plants to make more power without exceeding air pollution limits. However, environmental groups point out that more frequent operation of the plants will increase the actual pollution emitted from the facilities at a time when air quality shows signs of deteriorating in the Los Angeles region.

Last year, the inland area downwind of the department's plants experienced its first stage one smog alert since 1998, forcing the local air district to tell residents to restrict their outdoor activities. Over the past two years, the number of days over the federal ozone standard in the Los Angeles area shot up from an all-time low of 36 in 2001 to 68 during the 2003 summer smog season.

Meanwhile, state law requires the department to develop a renewable portfolio standard plan. In response, it plans some investments in wind, solar power, and other renewable facilities. However, even with those additional facilities, its total renewable energy generation capacity will amount to only 3 percent, or 220 megawatts out of a total of 7,000 megawatts.

The department's laggard pace at developing renewable power has rankled some members of the Los Angeles City Council and state Legislature, which has buoyed the hopes of environmentalists that a breakthrough may be at hand in the next month or two. But the promise of cheap and abundant power for the nation's second biggest city and profits from wholesale power sales bode against any departmental rush to green power.

Instead, the future is likely to involve burning sizable amounts of coal that release large amounts of carbon dioxide, acidic gases, and mercury, pollutants that are changing the climate, polluting the air, gradually contaminating the world's fish supply, and damaging human health. Coal, which supplies 50 percent of the department's power, sells for less than $24/ton, down from a peak price of $52 a ton in 1979. As long as the coal is mined and burned hundreds of miles from Southern California, Angelinos will not bear the environmental costs, at least not directly.

Being able to escape those costs will likely make it irresistible for the Los Angeles City Council -- which depends upon the department to transfer 7 percent of its power sales revenues to the city's general coffers each year -- to pass up the opportunity to invest in the new coal plant, even as they give lip-service to a renewable future.

William J. Kelly is a correspondent for Energy Circuit, where a version of this story originally appeared, at www.californiaenergycircuit.net.

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