Let's be clear from
the start about where I stand: I believe this country needs coal in its
energy portfolio. And I am greatly concerned about our nation's drift
toward reliance on natural gas for electric power generation.
Consider Wisconsin,
where my company does business. Figures from the state Public Service
Commission list nearly 9,000 MW of capacity recently built, approved,
or in some stage of the approval process. All of it is gas-fueled except
for 50 MW of wind generation. The reality is not all of that capacity
will be built. But consider what could happen to the price and reliability
of electric power if we rely so heavily on a single fuel.
That has to change
- and it is changing. Over the past 18 months or so, Wisconsin utilities
have announced plans to build about 3,000 MW of new coal-based generation.
My company, Wisconsin Energy Corporation, is leading the way with plans
for three new coal-based units, totaling 1,800 MW, under a 10-year, $7
billion initiative we call "Power the Future".
POWER
THE FUTURE
I'd like to outline
our Power the Future initiative. The plan has four basic components:
First, we plan to
build 2,800 MW of new generating capacity. That includes two 500 MW intermediate-load,
combined-cycle, gas-fired units. It also includes three new 600 MW coal-based
units, using supercritical pulverized coal and IGCC technology.
Second, we plan to
improve existing power plants and retire older plants. By upgrading our
coal-based generation and closing plants that have become obsolete, we
will increase efficiency and reliability while improving environmental
performance.
Third, we plan to
upgrade our distribution system. We will add 18 new substations, build
2,500 miles of new rural distribution, rebuild some 6,000 miles of existing
distribution, and add new control technologies that improve reliability.
Fourth, we will continue
investing in conservation and renewable energy.
Power the Future
commits our company to getting 50 percent more energy from renewable sources
than state law requires. We will increase our renewable capacity from
127 MW to 400 MW over the next 10 years. We also will increase our commitment
to cost-effective energy conservation measures.
The benefits of Power
the Future are compelling.
The first principle:
Decisions we make about power generation must be based on a sound energy
policy.
Regional power shortages
toward the end of the 1990s awakened this country to the need for more
power plants. The focus immediately turned toward natural gas - not as
a policy decision but as a matter of convenience. Power was needed as
soon as possible. Gas plants could be built quickly and cheaply. And gas
plants were politically easy - the public perceived them as environmentally
clean.
Unfortunately, the
quick, cheap and easy solution is seldom the best. And almost exclusive
reliance on natural gas to generate power would be, in the long run, a
costly mistake. Natural gas certainly has many positive aspects, but a
sound energy policy must include coal-based power generation - and there
are four fundamental reasons why.
Number one, economy,
environment and energy supply must be kept in balance. If one of those
three takes precedence, the others may suffer.
Number two, fuel
diversity is essential. Simply stated, we cannot afford to put all of
our eggs in one basket. A diverse fuel mix protects customers from fuel
shortages that can hurt reliability and drive up prices. At present, natural
gas prices are somewhat volatile. Coal prices are low and relatively stable
- and expected to remain so for the foreseeable future.
Number three, an
energy policy must address the long term. A wholesale shift toward natural-gas-fired
generation is the epitome of short-term thinking. It gets new power plants
into service quickly for perceived environmental benefits. Yet soaring
orders for gas equipment strain manufacturers' capacity to build it. And
questions remain about long-term gas supplies and prices. Plus, using
natural gas for electricity generation competes for natural gas supplies
required to serve other needs. Instead, we need a long-term approach that
sustains a diverse mix of power plants, built in a prudent manner by utility
and non-utility generators in a competitive market.
Number four, we need
to leverage domestic resources. Domestic fuel is inherently more reliable
than imported fuel - political unrest in other countries cannot disrupt
the supply. The United States has the world's largest proven reserves
of coal. Domestic coal can meet our energy needs for 250 to 350 years.
On the other hand, proven natural gas reserves appear adequate for about
60 years, based on current consumption - and consumption is projected
to rise by nearly 10 trillion cubic feet in the next 15 years. Coal-based
generation, is already attractive. It will look even better as technology
drives down its cost, and as gas prices continue to rise.
This four-part strategic
approach works well not just for Wisconsin but for the nation. In fact,
it aligns closely with the National Energy Policy developed by the Bush
Administration. That policy is guided by three basic principles:
* A long-term, comprehensive strategy.
* Advancement of new, environmentally friendly technologies to increase
energy supplies and encourage cleaner, more efficient
energy use.
* Raising the nation's standard of living by fully integrating energy,
environmental and economic policies.
The policy specifically
cites the importance of fuel diversity and the necessity of keeping coal
in the nation's energy picture.
The second principle:
The challenge of winning favor for coal is social and political - not
just technical.
Continued acceptance
of coal-based generation depends on cleaner and more efficient combustion
technologies - clean coal, advanced coal, or whatever you choose to call
them. But the mere existence of these technologies will not be enough.
Ultimately, coal must win the battle of public perception.
For years, the public
has been told, quite simply, that natural gas plants are "clean" and coal
plants are "dirty." Our challenge as proponents of coal is to make sure
the public sees the whole picture, in all its complexity.
I don't think the
public appreciates how much progress we've made in coal-plant emissions
- even aside from the new combustion technologies. The US Department of
Energy reports that the nation's air is becoming cleaner, even as utilities
use more coal.
The nation's utilities
increased coal consumption by 60 percent between 1980 and 1998. Yet in
that time power plants reduced sulfur dioxide emissions by 23 percent
and nitrogen oxide emissions by 12 percent. Under today's stricter air
standards, embodied in the 1990 Clean Air Act Amendments, further reductions
are occurring. New coal technologies can speed up that progress.
The third principle:
Public acceptance of coal depends on the creation of informed consensus
among a broad base of interests.
I mentioned earlier
the need to balance economy, environment and energy supply. The best way
to make that happen is to bring diverse and balanced interests into the
discussion. That is what we have done with Power the Future - since the
very earliest stages of its development. By doing so, we have increased
the chances Power the Future eventually will be approved by the state
Public Service Commission.
A plan like Power
the Future probably would fail if proposed in a "top down" manner by a
single utility. Wisconsin Energy looked at Power the Future as a strategic
initiative to benefit the entire state. It was therefore essential to
bring a wide range of interests to the table.
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