Independence Power and Light unveiled its plan Saturday to move from coal to a more diversified power supply due to EPA regulations and the age of its two coal plants.
“Do you have safe and reliable service at reasonable rates?” energy attorney Karl Zobrist asked the audience.
This question framed the discussion on energy options. Nearly a hundred people came to learn about the fates of the two coal power plants owned by the city of Independence: Blue Valley and Missouri City. They heard from representatives from IPL, Indy Energy and the Sierra Club and then had the opportunity to voice their concerns.
IPL director Leon Daggett said it wants to go a more diverse route for energy sources in order for rates to remain stable. The plan is to retire the Missouri City plant in January 2016 and the Blue Valley power plant off of Truman Road in Independence will switch from coal to natural gas. No additional expense will be required to convert Blue Valley to use natural gas, he said, because the plant was originally designed for it.
Recent EPA regulations mandate that all U.S. coal power plants operate at a cleaner and more efficient level beginning this year. Jason White of Indy Energy said meeting this requirement will cost $105.5 million to upgrade both plants.
“Burning coal will be expensive,” White told the audience. “Potential costs to upgrade the plants to meet EPA regulations will be $27.1 million for Missouri City and $78.4 million for Blue Valley, bringing a total of $105.5 million.”
White said the costs were determined by a 2011 master plan update in which IPL outlined energy issues and options. The study revealed three developments: the cancellation or delay of over 100 coal-fired projects, declining natural gas prices and pending environmental requirements.
According to a December 2013 report by the Union of Concerned Scientists, a nonprofit advocacy group, as many as 329 coal-fired generators in the country are no longer economically competitive to operate.
“They are simply older, dirtier and underutilized compared to natural gas or wind power,” White said.
The UCS report also said the IPL plants are “ripe for retirement” with Missouri City being 59 years old and Blue Valley 51. The average life expectancy of a coal plant is 45 years, White said.
The IPL master plan also recommends to replace the two coal plants as well, citing output. It says the plants have an increasingly smaller role in meeting overall energy needs. Peaking at 38.2 percent in 2008, the plants only generate 10 or 11 percent of the city’s power today.
“Missouri City is a small plant that is used four months during the summer,” said Daggett. “The city’s power is 60 to 65 percent from two life-of-unit contracts through Iatan and NC-2 at 5.5 cents per kilowatt hour; 13 percent is from natural gas at the Dogwood Facility in Pleasant Hill and the rest are from spot purchases and renewable sources.”
Page 2 of 4 - Blue Valley operates year-round.
To compensate for the remaining 90 to 91 percent of the output, IPL participates in the Southwest Power Pool, a six-state regional pool through which it can purchase power from others or sell excess capacity. On Jan. 6, the Independence City Council approved a new agreement where IPL can purchase on a day-ahead basis in order to hold down rates.
“But it may be sooner,” said Leon Daggett, director of IPL, over the phone days later. “We may change to natural gas as soon as it gets lower than the cost of coal.”
Also, Daggett said that IPL will seek to double its renewable energy sources by 2018. And despite rates being increased over the past five years, they should remain stable with the continued diversified energy portfolio plan once the transition has been made to natural gas at Blue Valley, according to Daggett. He said the recent increased rates were due to safety measures.
“There could have been a blowout in one of the boiler’s lines. Money had to be spent to ensure safety and reliability.” He also said that IPL's sole source of revenue is from ratepayers.
International Brotherhood of Electrical Workers Local 53 representative Bruce VanCompernolle said the union wants to continue with coal power and the change to natural gas could potentially impact jobs.
“Local 53 has a vested interest in the city,” he said. “Of the 350 city employees, 160 of those are at IPL and 58 of them are on the production unit.” He said both Blue Valley and Missouri City have the ability to produce a third of Independence’s energy. “We pride ourselves in owning our utilities.”
“Coal is still the cheapest,” he said. “But the EPA requirements make it more expensive.”
He said natural gas is a “volatile market” and “you’re at the whim of the price.” Plus he said that rates could possibly triple. Daggett said that Texas, where 64 percent of its power comes from natural gas, recently experienced a spike where electricity prices were $5,000 per megawatt hour; hence the justification for a diverse energy portfolio approach for the city's future.
"Once Blue Valley changes to natural gas, it will still generate 10 to 11 percent of the city's power," Daggett added.
Vancompernolle said that IBEW’s position is to go ahead with plans to meet EPA regulations by retrofitting both plants and continue to burn coal with clean coal technology.
“Citizens have the say-so on the rates. This isn’t investor-owned and up to the shareholders. We have quality jobs here at IPL. The natural gas change could impact the number of employees and loss of high quality jobs.”
Daggett later said that Missouri City consists of temporary workers, mostly former IPL employees. Once Missouri City closes, Daggett said supervisors and management of the plant would be transferred back to Blue Valley.
Page 3 of 4 - “Natural gas is not totally environmentally friendly,” Vamcompernolle added. “We like having quality jobs in the community, and we may lose our positions if we go to natural gas.”
Besides natural gas or coal as sources of energy, what about the possibility of switching to renewables?
Andy Knott of the Sierra Club pointed out that KCP&L nearly doubled its investment in wind energy, resulting in producing 200 megawatts.
“Wind is environmentally friendly and no rates will increase,” he said. “It will save payers more money and most importantly, wind is free.”
As for the reliance on natural gas, Knott suggested weather patterns, such as last week’s polar vortex, affect energy costs.
“Wind turbines could bring in hundreds of new employees,” he said. “Siemens is hiring in Kansas and Iowa for their wind farms and many renewable companies in Missouri are developing.”
Knott said that besides the positive economic benefits renewable sources, such as wind, may bring, the reason the Sierra Club wanted to participate in Saturday’s meeting was because of how coal impacts the environment.
Knott nevertheless commended IPL for its streetlight replacement project, switching the city to more efficient LED bulbs.
“I know what is reliable, safe and economic,” replied Daggett. “Wind has a lot of problems.” He said he has been involved in the energy industry for over 30 years and said 80 percent of the electricity generated in Missouri is from coal.
He said that although 5 percent of IPL’s energy comes from a wind farm in Kansas, the source is only available 40 percent of the time. “Plus no one manufactures wind turbines in town.”
One citizen pointed out there is potential liability if IPL decides to pursue wind turbines. They reported to have clipped five newspaper articles where wind farms were fined for killing rare birds. He also said it was estimated that one million birds are killed annually by wind turbines.
On the other hand, another person brought up the danger of continuing with coal power. They said coal pollutants contain mercury when it burns and seeps into the environment that kills off other kinds of animals. “And they cause respiratory aliments.”
Daggett maintained that renewables such as solar or wind would not even count as capacity resources because of the low wattage they generate. As for solar paneling, he said Independence was the first in the area to allow it.
One citizen said he wanted to install solar paneling for his home, especially with his ideal 33 degree sloped roof. He said Independence’s city ordinance mandates that in order to have solar paneling on a house, it must be installed by a qualified installer. “But it doesn’t define what exactly is a qualified installer,” he added.
Page 4 of 4 - Toward the end of the forum, the panel all seemed to agree that the two coal plants would not shut down overnight. “It’s technologically unfeasible,” Knott said, “but we’re very dependent on coal. It’s not economically viable and we have to move on to something more sustainable. In terms of electrical needs, how can you do it in a responsible and environmentally friendly way?” He also said the diverse portfolio IPL is implementing is a “balanced and reasonable approach.” However, IBEW remained adamant that continuing with coal is the best long-term option.
“We’re not excited about the transition. We want to maintain ‘independence’ in Independence,” said Vancompernolle.
“We’re a blue collar community yet concerned about the environment,” said a member of the audience. That comment was followed by applause and cheers.
The panel concluded that it is important for Independence residents, specifically voters, to continue to be involved with IPL and their source of energy, since it is municipally-owned.
“These are terribly complicated problems, but we’re all in this together,” concluded Roger Hershey from Indy Energy.