College of Law Center for Energy and Sustainable Development

James Van Nostrand
May 17, 2013

CERES, Natural Resources Defense Council
May 2013

Benchmarking Air Emissions of the 100 Largest Electric Power Producers in the United States

Despite an increase in overall electricity generation, the nation’s largest power producers cut emissions of major air pollutants in 2011, according to a new report from CERES and Natural Resources Defense Council. According to the report, the increase in the use of natural gas (due to low prices) and the adoption of renewable energy resulted in reduced emissions of nitrogen oxide (NOX), sulfur dioxide (SO2) and carbon dioxide (CO2) in 2011. CO2 emissions have dropped steadily since 2007. Although CO2 emissions have increased by 20 percent since 19990, emissions have gone down by 7 percent between 2008 and 2011.

The report is based on data from the Energy Information Administration and the EPA, and focuses on the top 100 power producers, which accounted for 86 percent of the electricity produced in the United States in 2011. AEP, which serves West Virginia through its Appalachian Power subsidiary, is the second largest electricity producer in the country, and the largest CO2 source. FirstEnergy, which serves portions of West Virginia through its Mon Power and Potomac Edison subsidiaries, is the fourth largest emitter of CO2 in the country.

The report also broke down CO2 emissions by state and found that states with a larger coal share generally had the highest CO2 emission rates. For example, Wyoming, which has an 86 percent coal share, and Kentucky, which has a 93 percent share, had the highest CO2 emission rates. West Virginia, with its 96 percent reliance on coal-fired generation, had the third highest CO2 emissions rate, and the tenth highest level of total CO2 emissions. Texas had the highest total CO2 emissions. The report observes that “[o]ne of the challenges in developing a policy to regulate power plant CO2 emissions will be to design an approach that recognizes the wide variability in the carbon intensity of the electric generating fleet.”

James Van Nostrand
May 5, 2013

Charleston Gazette
March 30, 2013

Sales of Coal Power Plants Raise Concerns
Ken Ward

As reported by Ken Ward in the Charleston Gazette, a number of questions are being raised about FirstEnergy’s proposal to transfer ownership of 80% of the Harrison coal plant to Mon Power. The Harrison coal plant is a huge, 1984-megawatt (MW) facility built in the early 1970s in Haywood, West Virginia. Mon Power currently owns 20% of the plant, and the remaining 80% is owned by an unregulated FirstEnergy affiliate, Allegheny Energy Supply Company. Due to coal plant closings, Mon Power is purportedly 938 MW short of capacity, and is proposing to acquire the 1576 MW installed capacity in Harrison that it does not already own. (As part of the deal, Mon Power is proposing to sell 100 MW of capacity in its Pleasants Power Station to AE Supply, for a net capacity addition of 1476 MW.) Approval of the proposed deal is currently pending before the West Virginia Public Service Commission (PSC).

From this author’s analysis of the application to the PSC, the proposed deal is a bad one for Mon Power ratepayers (and the author is one such ratepayer), and should be rejected by the PSC. Perhaps the terms of the deal can be rehabilitated through conditions that the PSC could attach to its approval. As currently proposed, however, the application is sorely deficient, and fails to meet the “public interest” standard necessary for its approval. The deficiencies include the following:

The Proposed transaction would give Mon Power more capacity than it needs, thereby precluding any role for energy efficiency, natural gas-fired generation, or wholesale market purchases. As noted above, Mon Power claims to be 938 MW short of capacity in 2013, and the transaction would add 1476 MW of new capacity (1576 MW from Harrison, less 100 MW of Pleasant being sold). Thus, Mon Power’s capacity needs will be much more than filled by additional coal plant capacity. Given the excess capacity situation that would be created, there will be a strong disincentive for FirstEnergy to promote energy efficiency (which would simply exacerbate the excess capacity position). Moreover, there will be no room in Mon Power’s resource strategy for the possibility of including some natural gas-fired generation in its portfolio of resources. Finally, there will be no room in Mon Power’s resource strategy for wholesale market purchases, which are substantially cheaper than the Harrison plant acquisition. PJM wholesale prices are down 29% over the past year, due largely to cheap natural gas-fired generation, and wholesale prices are likely to remain relatively low for the foreseeable future. By filling its entire capacity needs (and then some) with the Harrison plant purchase, Mon Power will be precluded from pursuing other, cheaper options, such as energy efficiency, natural gas-fired generation, and purchases from the wholesale market. The Center for Energy and Sustainable Development has prepared a Discussion Paper on Integrated Resource Planning that highlights the reasons for a diversified portfolio mix, including natural gas-fired generation, renewable energy resources, and energy efficiency.

FirstEnergy completely ignores energy efficiency as an alternative, even for a portion of the needed capacity. FirstEnergy’s “Resource Plan” states that “demand side resource options are not a viable solution capable of meeting Mon Power’s obligations . . . [as they] do not address energy shortfalls as significant as the shortfall faced by Mon Power.” [Resource Plan, p. 56] Admittedly, energy efficiency programs cannot be ramped up quickly enough to make up a [claimed] capacity deficit of 938 MW. But energy efficiency, at 3-4¢/kWh, is substantially less than the 7.4¢/kWh that FirstEnergy is proposing to charge Mon Power customers for Harrison’s output. FirstEnergy needs to start treating energy efficiency as a resource, alongside supply-side options; this is a good proceeding to illustrate the comparative advantages of investments in energy efficiency versus buying an over-priced 40+ year-old coal plant. FirstEnergy has virtually no energy efficiency program offerings for its West Virginia customers, to help them manage their energy costs. First Energy’s energy efficiency programs in West Virginia were established to save 0.5% in 5 years, which is lower than the level being achieved in 40 other states. As far as actual results, FirstEnergy didn’t even reach 0.1% savings in the first year. The Center for Energy and Sustainable Development has prepared a Discussion Paper on Energy Efficiency that makes the case for increased investments in energy efficiency in West Virginia, and by FirstEnergy in particular.

The price for the Harrison plant acquisition is inflated far above what utility regulators ever would allow, by reference to generally accepted ratemaking principles. The net book value of the plant, based on “original cost depreciated” (the basis for ratemaking under the FERC Uniform System of Accounts, and followed by virtually every PUC in the country), is $574 million [$1.24 billion less $667.3 million in accumulated depreciation]. FirstEnergy is proposing to include an “acquisition adjustment” of $589.6 million that would more than double the acquisition cost of the plant for West Virginia ratepayers, to $1.163 billion. This “acquisition adjustment” is purportedly based upon “a purchase accounting fair value measurement component . . . related to the completion of the FirstEnergy/Allegheny merger in February 2011.” [Wise Testimony, p. 7] FirstEnergy claims that without PSC approval to include the unamortized portion of the acquisition adjustment in rate based until it is fully amortized, “Mon Power will not proceed with the transaction.” [Wise Testimony, p. 7] As a regulatory attorney for 22 years in the Pacific Northwest who has handled the regulatory approvals for 7 different merger deals in front of 6 different PUCs in the West, this author can represent that these “fair value adjustments,” also known as “goodwill” adjustments, are NEVER recovered from utility ratepayers. Regulatory ratemaking principles simply do not allow it; rates are based on original cost depreciated of rate base assets, not some “fair market value adjustment” based on some utility deciding to overpay to acquire another utility. There is no basis for ratepayers being burdened with FirstEnergy’s foolish decision to overpay to acquire Allegheny. Most regulatory approvals of mergers, and all 7 of the deals in which this author was involved, impose conditions precluding the utility from ever seeking to recover such acquisition adjustments in rates. While this author has not personally reviewed the order approving the FirstEnergy/Allegheny merger, it is my understanding that FirstEnergy agreed to such a condition in connection with receiving regulatory approval of the merger.

The numbers for the transaction defy common sense, apart from what generally accepted ratemaking principles or the Uniform System of Accounts require. The value of the 20% of the Harrison plant already owned by Mon Power on its books is $319/kW, while the proposed purchase price for the remaining 80% is $767/kW. This price disparity is inexplicable, given that there is nothing physically different in the four-fifths of the plant not owned by Mon Power versus the one fifth of the plant that Mon Power already owns. Are the electrons coming from the Allegheny Energy Supply side of the plant really worth 2½ times the value of the electrons from the Mon Power side of the plant? Try explaining that to the average FirstEnergy ratepayer in West Virginia.

The price for the Harrison plant acquisition is substantially overstated and does not reflect the current value of the plant. Recent, comparable coal plant transactions provide some guidance on what used coal plants are selling for these days. It is interesting that FirstEnergy claims an upward $589.6 million adjustment to the price of Harrison based on “accounting fair value” at the time of the FirstEnergy/Allegheny merger, yet does not want to consider what the Harrison plant’s fair market value might be today. Such an “accounting fair value” adjustment would go in the other direction, as Harrison is currently worth far less than the price being sought by FirstEnergy from Mon Power ratepayers. Based on recent transactions, even the original cost depreciated figure of $574 million is substantially higher than market value, and a bad deal for Mon Power customers.

• In a transaction announced in March 2013, Dynegy is acquiring 4561 MW of super-critical coal capacity from Ameren for $825 million, or a cost per kW of $180.88

• In a transaction announced in March 2013, Energy Capital Partners is acquiring 2868 MW of super-critical coal capacity and 1424 of natural gas-fired capacity from Dominion for $650 million, or a cost per kW of $130

• In a transaction announced in August 2012, Riverstone Holdings is acquiring 2265 MW of super-critical coal capacity from Exelon for $400 million, or a cost per kW of $176.60

Under FirstEnergy’s proposed transaction price of $1.163 billion, the cost per kW is $785.91, or almost 5 times higher than the average per kW price from recent transactions. Even using original cost depreciated for Harrison of $574 million, the cost per kW would be $388, or almost 2½ times higher than the average per kW price from recent transactions. The market value of Harrison, based on the average price from the above recent transactions ($171.45 per kW) is $253 million.

FirstEnergy’s “resource plan” fails to consider and properly evaluate the various alternatives. FirstEnergy included a “resource plan” in its filing, which attempted to justify the purchase of the Harrison plant as an outcome preferred to other “alternatives” purportedly analyzed in the document. Market purchases, or relying on power purchases from the wholesale market, was the primary alternative identified in the “resource plan.” But the wholesale price projections used in FirstEnergy’s “resource plan,” and upon which FirstEnergy rejected market purchases as an alternative, are based upon outdated, inaccurately high—about 30% too high—projections of Henry Hub natural gas market prices. On this point, compare Figure 16 on page 21 of the “resource plan” with recent natural gas price forecasts from the Energy Information Administration and the difference in obvious. The effect? The “analysis” substantially overstates the cost of the “alternative,” which makes the Harrison plant transaction look relatively cheaper by comparison.

Moreover, the “analysis” in the “resource plan” fails utterly to evaluate the risks associated with exclusive reliance on coal-fired generation. If the Harrison plant transaction is approved, it would preclude any diversification in Mon Power’s energy supply portfolio, which would be virtually 100% coal-fired. Mon Power would be dependent on two 40-plus year old coal plants (Harrison and Ft. Martin) for 90% of its internal generation. That lack of diversification very likely puts the ratepayers at risk for significant cost increases when replacement capacity is needed for those plants. The “resource plan” also does not analyze the risk to ratepayers from coal price volatility, even though they will be extremely exposed if this transfer goes through.

The transaction appears to be an integral part of FirstEnergy’s financial restructuring. Why should West Virginia ratepayers be expected to bail out FirstEnergy’s management for bad resource acquisition decisions? FirstEnergy’s baseload capacity factor was 64% in 2012, down from 84% in 2008. Low natural gas prices are clearly hurting FirstEnergy’s competitive generation segment. FirstEnergy is also targeting substantial debt paydown this year in its competitive generation segment ($1.4 billion), which appears to be a major driver of the Harrison plant transaction. In addition to selling off Harrison, it has announced plans to sell off some pumped hydro units and possibly additional assets.

The transaction, if approved, should reflect terms that are fair to West Virginia ratepayers, and that accommodate some resource diversity for Mon Power. The transaction, as currently proposed, is a bad deal for Mon Power customers. Mon Power would be substantially overpaying for a 40-year old coal plant that is in excess of its capacity needs, and the acquisition would preclude Mon Power from pursuing cheaper alternatives, such as natural gas-fired generation, wholesale market purchases, and energy efficiency. There is some sentiment, of course, for Mon Power “stepping up” to acquire this plant, given that most of the coal burned at the plant is from the nearby Robinson Run #95 mine, owned by Consol Energy. The argument is that failure to “do this deal” would jeopardize the plant’s future operation, and the mining jobs that are directly associated with the plant’s fuel supply.

These arguments miss the point, however, with respect to the impact on Mon Power ratepayers. The transaction, as currently proposed, is nothing but a financial bail-out for FirstEnergy’s shareholders. The plant will not cease operating if Mon Power does not do this deal. No coal miners will lose their jobs if Mon Power does not do this deal. Rather, FirstEnergy will be subject to the wholesale power marketplace, and will be forced to sell the output at competitively determined prices rather than the inflated price – 7.4 cents/kWh – FirstEnergy is proposing in this transaction. The transaction as currently proposed puts the consequences of FirstEnergy’s imprudent resource acquisition decisions on the backs of the Mon Power ratepayers, and that is an unjust and unreasonable outcome. FirstEnergy’s shareholders, not Mon Power ratepayers, should bear the consequences if the Harrison Plant output must be sold into the wholesale power markets at prices that fail to capture the profit margin that FirstEnergy’s unregulated affiliate deems necessary. The Public Service Commission needs to step up on this one and make a decision that is in the best long-term interests of Mon Power customers, and that properly places the impact of the Harrison Plant’s apparent uneconomic competitiveness on the backs of the FirstEnergy shareholders, where the risk belongs.

If the Commission decides that Mon Power should expand its ownership of the Harrison Plant beyond its current 20% share, that acquisition should be (1) scaled down in price to reflect no more than the current market value of the plant, and (2) scaled down in size to correspond with Mon Power’s current capacity needs, while leaving some room for cheaper alternatives such as natural gas-fired generation, wholesale market purchases, and energy efficiency. The best solution would be to require Mon Power to issue a Request for Proposals, to really test the market for the alternatives that currently exist to meet Mon Power’s existing capacity needs. The RFP process would allow FirstEnergy to offer a portion of the Harrison Plant on terms that need to be competitive with other market-based alternatives, and FirstEnergy’s shareholders would bear the consequences of any shortfall between covering the Harrison plant costs and the competitively derived price. And by scaling down the magnitude of the acquisition to something more closely corresponding to Mon Power’s claimed capacity needs – about 900 MW – rather than the 1476 MW proposed in the transaction, Mon Power would have the flexibility to pursue cheaper alternatives that are in the best long-term interests of its customers, such as natural gas-fired generation, wholesale market purchases, and energy efficiency.

The Energy Forward blog is a regular feature of the WVU College of Law’s Center for Energy and Sustainable Development. The blog will include links and commentary on news and events from a forward looking perspective on the energy industry. The “CleanTech” policies and practices for the energy industry of the future will include the development of clean coal technology, and efforts to capture and sequester CO₂ emissions from fossil fuel-based generating resources; renewable energy sources (e.g., wind, solar, geothermal, biomass and hydro); distributed generation resources (e.g., high efficiency combined heat and power or co-generation); energy efficiency and conservation; and investments in the energy grid of the future (the “smart grid”) to facilitate the integration of renewable energy resources and wider deployment of demand response technologies. The energy industry of the future can be expected to be different than in the past, as energy producers focus more effort on developing energy resources in a more sustainable manner that minimizes adverse environmental impacts and preserves the natural resource base and environmental quality for future generations. This Energy Forward blog will focus on the news and events relating to the evolution of the energy industry in West Virginia and nationally.

Prof. James M. Van Nostrand
Director, WVU College of Law
Center for Energy and Sustainable Development

James Van Nostrand
December 6, 2012

WVU Center for Energy & Sustainable Development
December 6, 2012

The Case for Integrated Resource Planning in West Virginia
James Van Nostrand

Associate Professor of Law Jamie Van Nostrand has found that West Virginia’s utility companies do not properly consider energy efficiency or conservation as possible solutions to the need for additional resources. In a new discussion paper titled “The Case for Integrated Resource Planning in West Virginia” Van Nostrand analyzes and describes the deficiencies in the system planning approaches used by American Electric Power (and its affiliates Appalachian Power and Wheeling Power) and FirstEnergy (and its affiliates Mon Power and Potomac Edison). In the discussion paper, Van Nostrand explains why electric companies in West Virginia need to engage in rigorous long-term planning and take a critical look at the various sources for acquiring a reasonably priced and reliable electricity supply. He endorses a practice known as “integrated resource planning,” which has been widely accepted since the late 1980s as the practical means for utility companies to develop long-term resource plans.

Van Nostrand explains that “a key element of integrated resource planning is that when a utility company evaluates its options for meeting its future needs, it considers energy efficiency and conservation measures—demand-side resources—on the same footing as the addition of generating capacity—supply-side resources.” The practical result of integrated resource planning is that utilities can decide to devote more resources to offering their customers energy efficiency and conservation programs, which is cheaper in most instances than building new power plants, according to Van Nostrand.

FirstEnergy and American Electric Power are currently seeking approval from the West Virginia Public Service Commission to increase rates in order to recover the costs of their investments in existing coal plants from West Virginia ratepayers. This additional investment is $1.1 billion in the case of FirstEnergy, and $1.2 billion in the case of American Electric Power. “The costs of these plants were previously recovered in the rates of customers in Ohio. As that state moves to a competitive market, both American Electric Power and FirstEnergy are looking to recover their costs for these plants from West Virginians,” said Van Nostrand. “Without a rigorous process of integrated resource planning, “it is impossible to determine whether these plant additions are in the best long-term interests of West Virginia ratepayers.”

Van Nostrand’s discussion paper also provides support for possible legislation to require utilities in West Virginia to engage in integrated resource planning.

“Legislation was proposed last session to address this important issue, and it failed to clear the Judiciary Committee in the Senate,” said Van Nostrand. “This discussion paper shows why this legislation is needed, and how it could lead to lower energy costs for West Virginians.”

James Van Nostrand
November 7, 2012

New York Times Dot Earth Blog
November 5, 2012

How Natural Gas Kept Some Spots Bright and Warm as Sandy Blasted New York City
Andrew C. Revkin

My former colleague at Pace University, Andrew Revkin of New York Times Dot Earth fame, wrote an excellent post praising the role of natural gas in keeping the lights on in some parts of New York City in the aftermath of Hurricane Sandy. The well-kept secret, and one that deserves more attention, is the use of natural gas-fired combined heat and power (CHP) facilities to generate electricity and heat. New York University, for example, was able to go into “island mode,” and thereby maintain essential services on its Washington Square campus as the electric grid around it went dark. NYU had the foresight to install a grid of its own – referred to as a “micro grid” – which allows it to rely on natural gas-fired cogeneration facilities to provide a large portion of its electricity supply. More important, the heat that is produced in generating electricity, which is simply released into the atmosphere in typical large electric generating plants, is captured and used to heat and cool NYU’s buildings. Hence, the name combined heat and power, or recycled energy.

Two other former colleagues from my days at Pace Law School, Tom Bourgeois (Deputy Director of the Pace Energy and Climate Center) and Bill Pentland (a frequent contributor to Forbes.com) make the case for CHP in Revkin’s blog post. According to Pentland,

Today’s electric grid was not designed to survive strong winds, storm surges, falling trees and flying debris and seems ludicrously inadequate for the demands of America’s increasingly digital and connected economy. The costs of hardening the electric grid will be vast. One widely cited study by the Brattle Group estimated that the electric utility industry will need to invest a $1.5 trillion to $2.0 trillion in infrastructure upgrades by 2030.

Despite spending epic sums of money on the so-called “smart grid,” the electric power grid seems as stupid as it was before spending billions in federal stimulus dollars.

Why throw good money after bad if we have a compelling alternative? And make no mistake about it, we have a compelling alternative to the conventional electric grid. It is commonly called the North American natural gas infrastructure.

Bourgeois, for his part, is a lifelong CHP advocate, and co-directs the DOE-funded Northeast Clean Energy Application Center, which is charged with promoting CHP and district energy throughout the Northeast. Here is the vision of the future electricity system articulated by Bourgeois:

We need a new vision of the electric generation, transmission and distribution system rather than one that moves electricity generated at remote locations, arriving at the point of end use . . . with a loss of 67 percent of otherwise valuable thermal energy. We need some pilots of operating micro-grids and district systems with combined heat and power that ought to represent the energy system of the future. Go beyond thinking of individual building efficiency to zero-energy blocks or neighborhoods. A vision of optimally creating a suite of resources, efficiency, photovoltaics, clean distributed generation, demand response, storage, all managed in synch with the larger transmission and distribution system.

The 67 percent figure to which Bourgeois refers is the energy efficiency of a typical large, central electric generating station, which reflects the discharge of the “waste” heat into the atmosphere instead of capturing it and using it to heat and cool buildings, as CHP systems do, thereby allowing them to achieve efficiencies that reduce the loss to less than 30 percent.

One can hardly disagree with Revkin’s conclusion: “[G]iven the role natural gas played in keeping the lights on in otherwise darkened parts of the city after this storm, it’s clear that this resource can play an important part in building a robust, resilient and flexible electricity and energy grid for the city and region.” This solution has even greater relevance in West Virginia, where we have an interest in stimulating demand for natural gas as a means of stabilizing natural gas prices, which in turn will allow the Marcellus shale resource to be tapped for the benefit of West Virginians. Policymakers in West Virginia should be pursuing measures that encourage the development of CHP facilities in the State. Large industrial facilities, for example, are prime targets for CHP installations. In addition to consuming large quantities of natural gas – which helps the “demand” side of the natural gas market in this State – the electricity produced by CHP facilities can provide some insulation from the inevitable electricity price increases that electric ratepayers in the State will continue to pay for the foreseeable future as a consequence of previous decisions by investor-owned utilities (AEP and First Energy) to rely almost exclusively on coal for electricity generation. We need our manufacturing and heavy industry to be competitive, and natural gas-fired CHP can play a huge role in that. And this is all in addition to the undisputed reliability and efficiency benefits of CHP noted by Messrs. Revkin, Bourgeois and Pentland.

James Van Nostrand
November 7, 2012

On Friday, November 2, Associate Professor Jamie Van Nostrand led a group of students on a trip to Washington, D.C. to visit the Federal Energy Regulatory Commission (FERC). As part of Professor Van Nostrand’s Siting and Permitting of Energy Facilities class, the students analyzed three particular types of energy projects over which FERC has jurisdiction: natural gas pipelines, electric transmission lines, and hydroelectric facilities. Professor Van Nostrand arranged for his class to spend part of the day at FERC talking with senior FERC staffers who work in these areas. Nils Nichols, a WVU Law alum, made the arrangements for the trip.

In the picture: Anne Marie Hirschberger, Energy Analyst, FERC; Tyler Reseter, Travis Brannon, Joshua Cottle, Matthew Chase, Jeffrey Blair, James Van Nostrand, Ed Amos (all WVU Law); Nils Nichols, Director, Division of Pipeline Regulation, FERC Office of Energy Market Regulation.

The FERC staffers who briefed the class were: Nils Nichols: Director, Division of Pipeline Regulation, Office of Energy Market Regulation; Jacqueline (Susie) Holmes, Associate General Counsel, Energy Projects, Office of the General Counsel; Merrill Hathaway, Office of General Counsel, Energy Projects; and Anne Marie Hirschberger, Energy Analyst, Office of Energy Market Regulation.

“It’s great to take advantage of Morgantown’s proximity to Washington, D.C.,” according to Professor Van Nostrand. “And it also helps that we had a WVU Law alum, Nils Nichols, in a senior position at FERC who could make arrangements for our students to meet with FERC staffers who work in the areas that we studied in our class. I think it was very instructive for our students to meet the people who actually make the decisions, and to understand how a regulatory agency oversees the energy industry.”

According to Van Nostrand, his Energy Regulation, Markets and the Environment class will make a similar trip to Charleston, WV in mid-November to meet with Commissioners and senior staff at the West Virginia Public Service Commission.

James Van Nostrand
August 17, 2012

NY Times
August 11, 2012

Hundred-Year Forecast: Drought
Christopher R. Schwalm, Christopher A. Williams and Kevin Schaefer

These authors deny that climate change should be perceived as a “threat” that will manifest itself sometime in the future; rather, they state that “it is increasingly clear that we already live in the era of human-induced climate change, with a growing frequency of weather and climate extremes like heat waves, droughts, floods and fires.” According to the Fifth Assessment of the Intergovernmental Panel on Climate Change (IPCC), droughts of the length and severity currently being experienced in the United States will be commonplace through the end of the century unless human-induced carbon emissions are significantly reduced. This article reports that the Northern Hemisphere has just recorded its 327th consecutive month in which the temperature exceeded the 20th-century average. This year had the fourth-warmest winter on record, with record-shattering high temperatures in March. And 2012 has already seen huge wildfires in Colorado and other Western states. More than 3,200 heat records were broken in June alone. These authors conclude, along with many others, that:

“[T]his extreme event could become the new normal: climate models point to a warmer planet, largely because of greenhouse gas emissions. Planetary warming, in turn,
is expected to create drier conditions across western North America, because of the way global-wind and atmospheric-pressure patterns shift in response.”

The problem will be particularly acute in the American West, where the allocation of water resources is a serious and contentious issue. As stated in this article, “[v]irtually every drop of water flowing in the American West is legally claimed, sometimes by several users, and the demand is expected to increase as the population grows.”

James Van Nostrand
August 17, 2012

NY Times Magazine
August 9, 2012

Here Comes the Sell: The Secret to Solar Power
Jeff Himmelman

This article from the Sunday New York Times Magazine contains a few noteworthy nuggets:

• “Enough sunlight falls on the earth’s surface every hour to meet the entire world’s energy needs for one year. A plot of roughly 100 miles by 100 miles in the American Southwest, if covered with today’s industry-standard 15-to-20-percent-efficient solar panels, could generate enough power for the entire United States. This is not the whole story, of course; the sun shines only during the day, and as yet we have no efficient way to distribute and store the power that such a plot would generate (so that the energy could be used at night, for example). But the potential of the sun as a power source is nearly unlimited”
• “[O]ver the last five years, revenue in the global solar-energy industry has increased to $93 billion in 2011 from $17 billion in 207.”
• “[T]he [solar] installers would much rather lease you a system than have you buy one, even though buying one is usually a better deal if you can afford it. The average price of a system has come down to $25,000 or so from $50,000 over the last five years.”
• “People don’t buy gas stations. People don’t buy utilities. Why are we having them buy solar equipment?”
• “[T]he basic value proposition is this: Say you have been paying your utility, on average, $100 a month. The solar company installs solar panels on your roof, maintains them, monitors them and repairs them for the life of the lease. The output will reduce your utility bill to roughly $20 a month, and you pay around $65 a month to lease the equipment (and the power the equipment produces, along with maintenance). You’re now paying $85 a month total, 15 percent less than you were, the installer has a revenue stream that it can use for cash flow or sell off to an investor and everybody is playing his part in reducing the burning of fossil fuels.”
• “[T]here is something truly disruptive about solar: a fully distributed model of energy generation. We currently rely on the centralized hub-and-spoke delivery systems of the utilities, many of which are outdated and suffer tremendous losses as electricity travels from power plants, along transmission and delivery lines and into our businesses and homes. There is a massive infrastructure of regulation and enforcement in the energy market to underwrite the utilities; it’s one of the most highly regulated and noncompetitive markets in the country. Imagine a world in which homeowners and business owners are miniature power plants, with the full ability to sell power back to the grid at retail prices — power, literal and figurative, would be wrested from the hands of monopolistic, polluting utilities and their ancillary industries: mining, fracking and the like.”
• “The advantages of such a system are obvious. Not only would Americans pay less for energy, but with solar they would also provide power back to the grid at peak hours, when utilities are the most taxed — and when they turn to their most expensive and dirtiest ‘peak’ power plants, which are standing by for just such occasions. We would also avoid some blackouts, because fewer houses would be reliant on the grid, and transmission failures wouldn’t cascade in the same way.”

James Van Nostrand
July 30, 2012

Los Angeles Times
August 24, 2011

Nation’s Weather Extremes May Be the New Normal
Julie Cart and Hailey Branson-Potts

Climatologists are warning that the extreme weather events experienced this year may become the new “normal” in the future. In addition to hundreds of deaths from cold and heat and tornadoes, the national economic toll for extreme weather so far this year is estimated at $35 billion, more than five times the average annual loss. According to a story in yesterday’s Los Angeles Times, “[c]limate scientists point to the predictable and cumulative effects of climate change — both hot and cold — to account for much of the extreme weather, although the connection between tornadoes and climate is not clear. In any event, scientists caution that the future will hold greater temperature extremes, and for longer duration.” Officials at the National Oceanic and Atmospheric Administration (NOAA) say that extreme weather events have been more frequent since 1980. According to NOAA’s National Climatic Data Center, one way climate changes can be assessed is by measuring the frequency of events considered “extreme” (among the rarest of temperature, precipitation and storm intensity values). The Climate Extremes Index (CEI) value for the contiguous United States is an objective way to determine whether extreme events are on the rise. The number of extreme climate events (those which place among the most unusual of the historical record) has been rising over the last four decades.

James Van Nostrand
July 26, 2012

NY Times
July 21, 2012

There’s Still Hope for the Planet
David Leonhardt

The United States is now enduring its warmest year on record, and the 13 warmest years for the entire planet have all occurred since 1998, according to data that stretches back to 1880. Atlanta has recorded its hottest day in history this year. Dallas endured 40 straight days above 100 degrees last July and August — and this year so far has been even hotter than last year. As David Leonhardt acknowledges in this column, “[n]o one day’s weather can be tied to global warming, of course, but more than a decade’s worth of changing weather surely can be.” Although the country is moving further away from doing something about climate change through legislation at the federal level, the nation’s energy supply is nonetheless becoming de-carbonized. Low natural gas prices, as a result of the new supplies that can cost-effectively be extracted through hydraulic fracturing and horizontal drilling, have stimulated rapid growth in gas-fired electricity generation, to the point where natural gas-fired generation is virtually tied with coal-fired generation in recent months.

Leonhardt observes in this column that “[g]overnments have played a crucial role in financing many of the most important technological inventions of the past century,” including hydraulic fracturing, nuclear and hydropower, all of which have combined to reduce the carbon emissions associated with America’s electricity supply. Leonhardt makes the case for increasing the federal support for clean energy. At the recent peak, in 2009, all federal spending on clean energy — including money for research and subsidies for households and businesses — amounted to $44 billion. This year, Washington will spend about $16 billion. The scheduled expiration of the production tax credit for wind would help reduce the total to $14 billion next year. According to Leonhardt, the sums for clean-energy research that many scientists and economists support are not huge. A politically diverse group of experts recently set a target of $25 billion a year in federal spending on research and development (some of which could come from phasing out ineffective programs).