Lexington, KY - Kentucky power utilities have realized an odd quirk in the proposed taxation on carbon emissions: Making no changes to the type of energy produced and bearing the full brunt of the tax will still cost significantly less money than going green - or even just slightly greener.
The abundance of coal and the lack of renewable energy sources in Kentucky makes it cost prohibitive to make major changes, according to Chris Hermann, senior vice president of energy delivery for KU's parent company E.ON US. Any different energy technology, ranging from carbon sequestration, in which coal-fired power plants would "bury" their emissions rather than dispersing them into the air, to solar power and everything in between, would cost Kentucky energy customers significantly more than we pay now and what we will pay with the proposed tax.
"The government could mandate the switch and we'd just have to do it, Ö (but with the tax alone) we wouldn't switch because of it for the foreseeable future," Hermann told a gathering of local business and industry interests in early June.
Congress has been debating instituting a tax on carbon emissions aiming at "creating an economical rationale for utilities to move away from coal," according to Hermann. While a range of $10 to $50 per ton of carbon tax has been thrown around, Hermann is basing his numbers on a $20-per-ton tax, which he said is appearing to be the consensus.
That would mean an increase of just 2.5 cents more per kilowatt hour in production costs to the utility and a 12 percent to 23 percent increase in customers' bills once the tax takes effect, which is anticipated in 2012. A switch to a renewable energy source would tack an extra 10 to 15 percent more to that increased bill, according to Hermann's numbers.
All of that is coming, Hermann warned, at a time when the demand for energy is also on the rise, outpacing population growth. Flat-screen HDTVs use around three times the amount of energy to operate than conventional tube televisions, and when high-resolution games are being played on the screen, that goes up to fivefold the amount of energy a standard definition television would require. And while consumers are to be commended for seeking out Energy Star appliances for their homes, Hermann noted that many consumers often keep their less energy-efficient appliances, like refrigerators, and put them in garages and basements for excess storage, canceling out the efficiency savings of the newer device.
Hermann said following his presentation that he wanted the company to be informative in these types of situations when changes are on the horizon and give some of their largest customers and the public an overview of the decisions the company has to make and all the factors that figure into them.
"We don't think it's fair to see these things coming and not be open and transparent and share with (our customers) upfront," he said. "We're not advocating a particular solution; we are advocating fact-based knowledge so people cannot be surprised and not feel they've been blindsided."
While talk over the last couple of years has pointed at finding ways to sequester carbon emissions in the ground - "burying the problem," Hermann said, to keep coal as a viable energy source - the technology is still in the early stages of development. Once technology makes the process possible, one major question remains in E.ON's eyes: "Once it's there, once it is sequestered and once it's buried, who has the liability for it?" Hermann questioned during his presentation. He said that's a topic of discussion among his colleagues and legal counsel.
Another problem regarding the sequestration of coal emissions is the amount of energy required to do so. Hermann said if the 2,000-megawatt KU Ghent Generating Station, by far KU's largest, were to begin sequestering its emissions, 30 percent of the station's energy output would be used for its own operations. Ghent already is its own largest customer, and that would just be exacerbated with sequestration, requiring more energy generation on the grid.
As popular as the idea of renewable energies like solar, wind, hydro and geothermal are, Hermann said Kentucky is not well suited for any of them, and he feels they can be relied on as a supplement at best. KU operates two hydroelectric facilities, one on the Ohio River and one at Lake Harrington. But Hermann said the Army Corps of Engineers controls when KU can operate the plants depending on flow and water levels. A vast majority of the time, Hermann said, those facilities are idle.
As for wind, the only area Hermann identified as suitable for a wind farm is in Harlan County's Black Mountain region, which he said is in an FAA radar field and therefore unable to place wind turbines.
For solar to match a 500-megawatt plant - one quarter of the output of Ghent - Hermann said, "It's 2,000 football fields of solar arrays to offset unit that is available Ö 8 to 15 percent of the time, and will vary from period to period throughout the year. It's not going to be available all the time, and importantly, it is not predictably available when we need it at the peak times."
Geothermal is not an option in the state as geysers don't exist here, and biomass and the burning of biomass is a possibility in the western portion of the state, he said.
"If carbon free is the goal, nuclear would be the solution," Hermann said, with one major caveat: Kentucky currently won't allow a nuclear plant to be built. A moratorium passed a quarter century ago requires a High Level Waste Disposal Site, such as Yucca Mountain, to be online or planned to be opened by the federal government before Kentucky's Public Service Commission can even consider an application for a nuclear plant.
Though two reactors have come into service in the last decade, no new nuclear facility has started construction since two years before the 1979 Three Mile Island near-meltdown in Pennsylvania. However, plans for a new nuclear plant in Piketon, Ohio, 25 miles north of the Kentucky border on U.S. Route 23, were announced this month by Ohio government officials and Duke Energy in collaboration with French nuclear energy company, Areva.
In November, Gov. Steve Beshear proposed eliminating the moratorium as a part of a comprehensive energy plan.
Even if allowed, Hermann said it would take 15-20 years to begin operating a new nuclear facility in the state.
"I don't think as we stand today that we have the interest in building or solely owning a nuclear plant," he said, citing E.ON US's lack of experience in operating a nuclear facility. "If we were going to look at that, we would want to find a partner."