Wisconsin Cannot Afford to Ignore Rising Coal Prices

For immediate release
December 1, 2010

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RENEW Wisconsin
Michael Vickerman
608.255.4044
mvickerman@renewwisconsin.org

Wisconsin Cannot Afford to Ignore Rising Coal Prices

Long-considered an inexpensive and reliable fuel source, coal has become subject to market and regulatory pressures that threaten to make it an expensive and risky way to generate electricity, according to national news reports and pertinent utility filings with the Wisconsin Public Service Commission (PSC).

“The expectation of continued increases in coal prices reinforces the value of relying on Wisconsin’s own energy resources. If there’s an effort to find savings for utility customers, the logical move would be to shutter antiquated coal plants before they become more of a liability,” said Michael Vickerman, Executive Director of RENEW Wisconsin, a statewide, nonprofit renewable energy advocacy organization.

A key driver behind coal’s rising cost is China, which has moved from an exporter to an importer of coal. The New York Times (NYT) reported last week that Chinese coal imports will hit all-time highs for November and December of this year. Some of this coal is coming from Wyoming’s Powder River Basin, the coal field that also supplies many Wisconsin power plants.1

In the New York Times story, an executive from Peabody Energy, the world’s largest private coal company, predicted that his company will send larger and larger quantities of coal to China in the coming years.

Further adding to the upward price pressure on coal is the rising cost of diesel fuel. The PSC has estimated that half of the delivered cost of coal in Wisconsin is attributable to rail shipment, that is highly sensitive to the price of diesel fuel, which sells for 38 cents more per gallon than it did a year ago, according to the U.S. Energy Information Administration.2 Tom Whipple, editor of the Peak Oil Review, expects diesel fuel supplies to tighten in 2011 as a consequence of flat production volumes and increasing demand from Asia.3 This phenomenon could affect Wisconsin electric utility rates as early as January 2011, according to Vickerman.

We Energies’ coal costs have escalated by $57 million, of which transportation costs account for almost $33 million, according to the utility’s most recent rate filing with the PSC. On top of that, We Energies expects to pay an additional $8 million in oil surcharge costs.4

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Pollution is harmful; cleanup is overdue

From a column by Francisco Enriquez in the Milwaukee Journal Sentinel:

A cloud of soot engulfed Milwaukee recently, with particle pollution levels so high that the Department of Natural Resources issued four days of advisories and watches that warned children, older adults and people with asthma, bronchitis and heart or lung disease to pay close attention to their symptoms. On days when air pollution levels are high, more people suffer from more frequent, more severe and more deadly asthma attacks, heart attacks and strokes.

As a pediatrician on the near south side of Milwaukee, I am deeply concerned about the effects of breathing polluted air. Some of my patients’ medical conditions get much worse when they are exposed to an environment that is loaded with irritants and noxious chemicals. Access to health care and medication can lead to improvement, but if they are to heal, then cleaning our polluted environment is paramount.

Where does this pollution come from? In Milwaukee, We Energies’ Valley power plant, operating without modern pollution controls, is the single largest source of particle pollutants. Sitting in the Menomonee Valley among some of the most densely populated communities in the state, the stacks are neighbors to some 24,000 people who live within a mile of the plant. The pollution from the plant contributes to violations of health standards that are set to protect public health. Cleanup of the Valley coal plant is long overdue.

'Green print' saves county greenbacks

From an article by Steve Schultze of the Milwaukee Journal Sentinel:

$800,000 in energy saving has been realized from efficiency program

Milwaukee County has reaped some $800,000 in energy saving from its “green print” environmental program, as well as millions of gallons of water and gasoline saved through more efficient plumbing, cars and trucks.

Though slow to adopt “green” efficiencies, the county jump-started its efforts once a half-time sustainability director was assigned to monitor the program in early 2009. Since then, the courthouse complex and more than 50 other county buildings either have undergone energy audits or soon will.

Lighting, heating, cooling and other upgrades enabled the saving, though it’s applied to upfront costs of some $10 million. In theory, after eight years the costs through contracts with private vendors will be covered, and savings will go to the county’s bottom line.

“I’m happy with the successes we’ve had with the resources we’ve been given,” said Supervisor Marina Dimitrijevic, who pushed for the program’s creation in 2007. She said more could be done if the county would add more staff time to the effort.

It took more than a year to designate a green print coordinator, with the county’s budget problems hindering the initiative.

“By having small changes all over the place, we’ll have a very huge result,” said Dimitrijevic.

200 people rally to support rail line

From an article by Tom Daykin in the Milwaukee Journal Sentinel:

About 200 people attended a Saturday rally at Milwaukee’s Amtrak-Greyhound station, asking Governor-elect Scott Walker to back off his pledge to cancel contracts for a planned Milwaukee-to-Madison passenger rail line.

Rally speakers said the rail service would create badly need jobs, provide a more environmentally friendly alternative to driving, and link Milwaukee and Madison to a national rail network that includes Chicago – and eventually Minneapolis.

Without that link, said state Sen. Spencer Coggs (D-Milwaukee), Wisconsin “will be isolated from the rest of the national rail network.”

The rally, organized by the Sierra Club and other groups, was part of a statewide action that included rallies in Madison, Eau Claire, La Crosse, Oshkosh and Watertown.

Milwaukee rally organizers asked the crowd to write or call Walker.

Walker says the estimated annual costs to state taxpayers of operating the train, $7.5 million once fare revenue is subtracted, would be too high for an underused and unneeded service.

Governor-elect Walker should get on board

From a post by Wallace White, principal and CEO of Milwaukee’s W2EXCEL LLC, on the BizTimes blog:

Here are my reasons for supporting high speed rail for Wisconsin:

$810 million of work for our engineering firms and contractors and some of our minority and women owned companies. For example, Norris and Associates, a Milwaukee based African-American engineering firm, had won a subconsultant contract with a HSR engineering company. He had just hired 3 engineers and now has had to lay them off. The same is true for all the other companies who had just started to work on HSR contracts.

The returned money may not just go to Illinois or New York where there are Democratic governors. Other Republican governors would love to have the money. Gov. Rick Perry and the Republican administration of the state of Texas is seeking HSR funds to run trains between Dallas, Austin, San Antonio and Houston. The Republican administration of the state of South Carolina has applied for HSR funding to connect Savannah, Charleston, Florence and parts of North Carolina. The Republican administration of Minnesota has joined the Democratic administration of Wisconsin to study HSR between Minneapolis & Madison. They have received $1 million of planning money from the federal government.

The United States is in competition with the rest of the world for economic survival. Transportation is a large part of this global effort – we are competing with Japan, China, Brazil and Europe – all of which have already committed to some form of HSR to expand their economy, reduce pollution, provide service to rural areas and to the poor. Wisconsin Governor-elect Scott Walker should understand – this is part of a bigger picture. . . .