Better Plan, Wisconsin

 Industrial scale wind farms, such as the one being proposed in the Columbia County Towns of Randolph and Scott, are supposed to help to solve that problem by replacing our coal plants.

On the surface it seems pretty simple: just replace dirty coal with clean wind.

The problem is not a single coal fired plant has ever been taken off line in exchange for wind power. Not in the US, not anywhere in the world, including Denmark and Germany, two countries that use the most wind power in their energy mix, and yet continue to burn fossil fuels at an unchanged rate.  In fact, during Germany’s expanded use of more renewable energy, they've also built more coal plants.

 The elephant in the room is this: If coal fired plants are not taken off line in exchange for renewable energy, the current level of air pollution remains the same.

Which brings us to the state of Wisconsin, home to about 300 industrial scale wind turbines with hundreds more being proposed.

The question about what actual impact Wisconsin wind farms are having in terms of reducing current levels of air pollution in our state has never been fully addressed by state environmental organizations except in theory. Theoretically they should reduce GHG, but what are the facts?

 Clean Wisconsin decided to step up and ask the hard questions. Their conclusions are presented in the post-hearing brief filed with the Public Service Commission in response to the proposed Glacier Hills wind farm.

QUOTE:"This practice means that approval of Glacier Hills alone would have literally no impact on GHG reductions. On the contrary, WEPCO would have a financial incentive to generate as much electricity as possible from its coal-fired facilities."

 Though Clean Wisconsin supports the project for the economic benefits it may bring, they clearly point out that unless WEPCO retires a coal burning plant, the construction of the Glacier hills wind farm [and Invenergy's alternate proposed wind farm] will have no effect on reduction of green house gasses in our state.  And they clearly lay out the reasons why.

QUOTE: "One could therefore theoretically satisfy the RPS requirement of a specified percentage of electricity generation from renewable resources while undermining the global warming objectives of reducing GHGs emitted into the atmosphere. That is precisely what will happen here if the Commission does not restrain WEPCO’s electricity generation from coal-fired facilities."

QUOTE: "If the Commission allows WEPCO to continue construct [sic] Glacier Hills and operate all of its existing coal-fired capacity, WEPCO’s ratepayers will be paying over $525 million for a new facility that is not needed to satisfy demand and will not result in overall CO2 emission reductions."

QUOTE: “For these reasons approval and implementation of either of the wind power proposals will not achieve their intended effect of reducing GHGs and will result in significant excess capacity unless the Commission also requires WEPCO to reduce its coal-fired generating capacity."

 By their willingness to acknowledge and address the difficult questions head on, Clean Wisconsin proves themselves to be an organization truly committed to protecting Wisconsin's environment and finding real ways to reduce current levels of pollution in our state.

NOTE: There is no indication that WEPCO intends to shut down any of its coal fired plants in exchange for wind energy.

 The complete text of the brief is provided below. It can also be downloaded at the Public Service Commission’s website by clicking here and entering docket number 6630-CE-302

[Better Plan has put the more interesting parts of the brief below in bold type]

 BEFORE THE PUBLIC SERVICE COMMISSION OF WISCONSIN
Application for a Certificate of Public )
Convenience and Necessity to Construct )
and Place in Service a Wind Turbine Electric ) Docket No. 6630-CE-302
Generation Facility Known as the Glacier Hills )
Wind Park in Columbia County, Wisconsin )
______________________________________________________________________________
CLEAN WISCONSIN, INC.’S INITIAL POST-HEARING BRIEF
_____________________________________________________________________________ _
INTRODUCTION

Clean Wisconsin, Inc. (“Clean Wisconsin”) strongly supports the development of renewable energy resources in Wisconsin, including wind power.

Renewable energy resources are important components for reducing emissions of greenhouse gases (“GHGs”), which are a significant contributor to global warming. In order to meet this principal objective of reducing GHG emissions, however, the added renewable energy facilities must actually displace the primary source of GHG emissions: coal-fired electric generating facilities.

Clean Wisconsin appreciates the efforts by the applicant, Wisconsin Electric Power Company (“WEPCO”), to develop the Glacier Hills proposal. Clean Wisconsin urges the Public Service Commission (“Commission”) to approve the Glacier Hills project or the Ledge Wind purchased power alternative proposed by Invenergy in this docket as economically beneficial alternatives to meeting statutory renewable fuel requirements.

However, the mere approval of a wind facility will not serve the legislative and societal goal of the Renewable Portfolio Standard (“RPS”) unless the Commission also requires a corresponding reduction of coal generating capacity.

The undisputed evidence in the record, neither challenged nor questioned by WEPCO or Commission staff, demonstrates the following:

1. The application is designed to satisfy the RPS standard, but it is not needed to meet demand in WEPCO’s service area. In fact, WEPCO will have excess capacity for several years without any new generating capacity. Even without the new generating capacity necessary to meet the statutory RPS requirement, WEPCO will have excess capacity until at least 2024.

2. The development of an RPS facility does not ensure that it will be operated, or that it will displace high-GHG facilities. Under the regional MISO system, MISO may require the dispatch of any available facility to satisfy demand within the MISO region. MISO dispatches facilities based on cost: it will dispatch the available facility that is lowest cost based on the locational marginal price (“LMP”). If a coal-fired generating facility is available for dispatch, MISO will require that WEPCO dispatch the coal-generated electricity if it represents the LMP.

3. There is concern at the regional level about events in which utilities dispatch coal generated electricity ahead of wind-generated electricity, and the effects of this phenomenon on RPS compliance and costs.

4. Irrespective of whether MISO requires the dispatch of coal-generated electricity, WEPCO intends to sell all of its excess capacity. If there is a market, it will continue to generate electricity from its coal-fired plants regardless of the dispatch from Glacier Hills. This practice means that approval of Glacier Hills alone
would have literally no impact on GHG reductions. On the contrary, WEPCO would have a financial incentive to generate as much electricity as possible from its coal-fired facilities.

For these reasons, approval and implementation of either of the wind power proposals will not achieve their intended effect of reducing GHGs and will result in significant excess capacity unless the Commission also requires WEPCO to reduce its coal-fired generating capacity.

ANALYSIS OF THE EVIDENCE

I. WEPCO HAS PROPOSED GLACIER HILLS TO SATISFY RENEWABLE PORTFOLIO STANDARDS LEGISLATIVE REQUIREMENTS, INCLUDING THE GOAL OF REDUCING GREENHOUSE GAS EMISSIONS.

- 3 -
Under Wis. Stat. § 196.491(3)(d) and Wis. Admin. Code § PSC 111.53, a public utility may not begin construction of a new plant, facility or equipment without a Certificate of Public Convenience and Necessity (“CPCN”) complying with the applicable rules of the Commission.

The statutory requirements for an application for a CPCN include determinations of need and cost-effectiveness, and specifically include the following:

3. The design and location or route is in the public interest considering alternative sources of supply, alternative locations or routes, individual hardships, engineering, economic, safety, reliability and environmental factors.

WEPCO does not seek approval of Glacier Hills based on need and cost-effectiveness of satisfying demand in its service area. Rather, WEPCO has applied for a CPCN to satisfy the RPS requirements under Wis. Stat. § 196.378 (also referred to as “Act 141”). See, e.g., Application (Exhibit 1) at 1-2; Hesselbach Direct Testimony at 107-108; Elver Direct Testimony at 125-128. The application therefore must be reviewed in the context of satisfying the RPS goals and requirements.

The principal goal of Act 141 is to increase the use of renewable resources, which are defined by statute to include renewable fuel cells, tidal/wave action, solar, wind, geothermal and biomass. Wis. Stat. 196.378(1)(h)1.  A primary purpose of this statute is to reduce Wisconsin’s reliance on and generation of electricity using fossil fuels (especially coal) that result in significant GHG emissions (especially CO2). See Mendl Direct Testimony at D4.5-P.1

The RPS targets for percentage of electricity generation from renewable resources focus on “electric energy consumed in the state.” Wis. Stat. § 196.378(2)(a). That is, the RPS does not account for generation of electricity in Wisconsin from non-renewable resources.

One could therefore theoretically satisfy the RPS requirement of a specified percentage of electricity generation from renewable resources while undermining the global warming objectives of reducing GHGs emitted into the atmosphere.

That is precisely what will happen here if the Commission does not restrain WEPCO’s electricity generation from coal-fired facilities.

II. RETIREMENT OR OTHER REDUCTION IN COAL-FIRED GENERATING CAPACITY IS NECESSARY FOR GLACIER HILLS TO SERVE ITS GHG-REDUCTION PURPOSE.

A. Glacier Hills or Ledge Wind Are Not Necessary to Satisfy Demand in WEPCO’s Service Area and Would Result in Excess Capacity for at least 12-14 Years.

There is no dispute that Glacier Hills is not necessary to satisfy demand in WEPCO’s service area, the conventional “need” requirement for a CPCN. WEPCO’s application acknowledges that if the application is approved, it would have excess capacity until at least 2019. See, e.g., Exhibit 1, § 1.3 at 2.

In its supplemental direct testimony based on revised forecasts and modeling, WEPCO testified that it would have excess capacity until at least 2024. See,Mendl Direct Testimony at D4.3-P; D4.5-P.

If one accounts for all additional capacity necessary to satisfy its RPS requirement, it is undisputed that WEPCO will have excess capacity until at least 2026. Mendl Direct Testimony at D4.3-P; D4.5-P.

B. Under the MISO System, WEPCO’s Coal-Fired Facilities May Be Required to Operate Notwithstanding the Availability of Renewable Resource Facilities.

WEPCO’s EGEAS modeling and testimony was based on its expected cost and dispatch of electric generating units within its own system, accounting for only its own resources. Exhibit 305; Mendl D4.13-P.

The modeling and assumptions do not reflect the reality of how units are dispatched because they ignore the fact that dispatch is directed on a regional basis by MISO.

Exhibit 307 is WEPCO’s response to discovery request 2-CWI-7. In that exhibit, WEPCO explained that under the MISO tariff, all WEPCO plants must be offered in the MISO Energy Market; and that MISO will dispatch units across the system based on cost. See also, Mendl Direct Testimony at D4.13-P.

The significance of the MISO Energy Market is profound. If a WEPCO coal-fired plant is available and within the price margin, it will be selected for dispatch irrespective of the availability of Glacier Hills or other facilities with a lower GHG profile. That is, MISO could dictate that WEPCO operate Pleasant Prairie or another coal-fired plant because of its low marginal cost, when it would otherwise select Glacier Hills or Port Washington. Id. at D4.13-P to D4.14-P.

The end result would be that, notwithstanding the construction and use of Glacier Hills, Wisconsin would be an underperforming state in terms of CO2 emissions reductions. Id.

Another unintended consequence is that the utility could operate (or be required to operate) a coal-fired facility in lieu of wind even though the cost of wind generation is logically lower. As Mr. Mendl explained, price is based on the locational marginal price (“LMP”) at the location of the vicinity. His evaluation of the LMPs at Columbia, in the vicinity of Glacier Hills, showed that there have been periodic negative LMPs (i.e., the utility pays MISO to take its energy production). Id. at D4.16-P. When price is set on a negative LMP, the utility’s interest is to shut down that resource. As Mr. Mendl explained in his testimony: The analysis suggests that particularly in summer months, when strongly negative LMPs can occur, it would be in the economic interest of the wind generator to shut down the wind turbines, which have zero fuel cost and produce no CO2; and instead operate coal plants that incur fuel costs and generate CO2. In essence the way the MISO market works, free energy with the environmental benefits is too expensive!

Id. at D4.18-P. It bears reiteration that no party disputed this evidence and analysis: not WEPCO, not Invenergy, not the Commission staff.

C. Unless Required to Be Retired by the Commission, WEPCO Intends to Operate its Coal Fired Plants Irrespective of Need, and Sell Its Excess Generation.

There is no dispute that WEPCO intends to sell its excess capacity on the open market.
Exhibit 302 is a discovery response from WEPCO to 2-CWI-14, which identifies the amount of excess capacity that WEPCO expects to sell over the next ten years. That amount was based on its original forecast. Under its updated forecast reflected in its supplemental testimony, WEPCO would have more excess capacity available for sale. See also, Mendl Direct Testimony at D4.5-P to D4.6-P.

It is also undisputed that if WEPCO sells its excess capacity as planned, there will be little or no reduction in CO2 emissions from its electric generating fleet. Id. at D4.6-P.

As Mr. Mendl observed: The net result of building Glacier Hills to comply with Wisconsin RPS requirements and then selling the excess capacity may be to improve the economics, but it would lessen the reduction in CO2 emissions relative to WEPCO’s analysis. Id. at D4.7-P.

If the Commission allows WEPCO to continue construct Glacier Hills and operate all of its existing coal-fired capacity, WEPCO’s ratepayers will be paying over $525 million for a new facility that is not needed to satisfy demand and will not result in overall CO2 emission reductions.

II. COMMISSION SHOULD REQUIRE WEPCO TO SUBMIT A PROPOSAL FOR RETIREMENT OF 100 MEGAWATTS OF COAL-FIRED GENERATING CAPACITY.

The obvious and logical solution to the potential negative consequences described above is for WEPCO reduce the amount of coal-fired capacity that is available for dispatch in the MISO Energy Market. The only effective way to achieve this result is to retire existing coalfired facilities.

WEPCO has requested to increase its electric generating portfolio by Glacier Hills, with a rated capacity of 162 MW, part of the 662 mw of wind generation it predicts it will need to meet its RPS requirements. Ex.1, p. 2.

Glacier Hills has an accredited capacity of approximately 100 MW, as it operates intermittently based on the availability of wind. The evidence also indicates that WEPCO has excess capacity of 212-347 MW over the next decade. Id. at D4.6-P.

Accordingly, WEPCO can retire at least 100 MW of coal-fired capacity without jeopardizing reliability or its ability to satisfy demand within its service area, and it would still have excess capacity well into the 2020s.

CONCLUSION

Clean Wisconsin recognizes and agrees with the importance of the RPS requirement, the economic and environmental benefits of wind power, and the need for WEPCO to develop or purchase electricity generated from renewable resources.

While Clean Wisconsin has taken no position on the relative benefits of Glacier Hills versus Ledge Wind, Clean Wisconsin strongly urges the Commission to approve one of these facilities to partially satisfy WEPCO’s RPS
requirements in a cost-effective manner.

Clean Wisconsin also submits that the mere approval of one of the proposed wind power alternatives will not satisfy the statutory goal of reducing GHG emissions in Wisconsin. In order
to effectuate this goal, the Commission must also require that facilities with high CO2 and other GHG emissions be retired, so that those facilities cannot be operated to satisfy demand outside of Wisconsin while effectively placing the GHG emissions burden, with its expected CO2 costs, squarely on the shoulders of Wisconsin’s ratepayers and our environment.

Clean Wisconsin therefore asks that the Commission require, as a condition of approval, that WEPCO develop a proposal, on an aggressive schedule, to retire at least 100 MW of existing coal-fired capacity.

Dated this 24th day of November, 2009.
Respectfully submitted,
CLEAN WISCONSIN, INC.
/s/ Katie Nekola
_______________________________
Katie Nekola
State Bar No. 1053203
ADDRESS:
122 State Street, Suite 200
Madison, WI 53703
(608) 251-7020 x 14 (direct)
(608) 212-8751 (cell)
E-mail: knekola@cleanwisconsin.org
AXLEY BRYNELSON, LLP
/s/ Carl Sinderbrand
____________________________
Carl A. Sinderbrand
State Bar No. 1018593
Attorneys for Clean Wisconsin, Inc.
ADDRESS
2 E. Mifflin St., Suite 200
Madison, WI 53703
(608) 257-5661
(608) 260-2472 (direct)
(608) 257-5444 (fax)
csinderbrand@axley.com
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