Monthly Archives: May 2018

Thoughts On The PRC Election

Thoughts on the PRC Election by Peter Burrows, – 5/18/18 

I attended the forum last week for the two Democrats running in the primary for Public Regulations Commission, District 5, Stephen Fischmann and incumbent Sandy Jones.  The Grant County Beat and the Daily Press covered the meeting with excellent articles. 


As would be expected at any forum of Democrats, both candidates made ritual genuflections at the alter of “the little guy” and then proceeded to defend a program, net metering, that favors wealthy electricity users at the expense of all other rate payers. (See my recent article, “What is ‘Net Metering’ and Why Should You care.”)


When asked if net metering was a good thing, my question, both said it was a good thing — wrong answer — but both also said it was something that needed to have a cost-benefit review.  We can hope such a review would look at Vermont, where the Public Utility Commission recently estimated that net metering costs rate payers $21 million a year, most of which subsidizes homeowners wealthy enough to afford solar panels. 


As an aside, earlier this month I asked two of the Republican candidates, Ben Hall and Chris Mathys, the same question: Is net metering a good idea.  Neither one knew what I was talking about. Hall tried to tell me it was some sort of Federal program, and he was a PRC commissioner from 2010 to 2014! 

While Fischmann showed an impressive familiarity with all of the issues discussed, several things he said made my BS Meter go off.  The first was something he said about electricity storage, which is the big bottleneck to using more solar and wind-generated electricity.    

Fischmann made the incredible statement, as reported in the Beat article, that such storage was “substantially cheaper” than natural gas-generated electricity, currently the cheapest fossil fuel-based electricity.  


Jones correctly said that there is no storage technology that can supply large scale electricity at reasonable prices. 


Fischmann doubled down, claiming there was a large-scale storage project underway in New Hampshire that subsidizes homeowners because it saves the utility moneyA quick Internet search revealed the “large-scale” project to be a pilot program that would install Tesla Powerwall batteries in about 300 homes initially and up to 1000 homes if the project proves economical. (Liberty Utilities Proposes Battery Program for Lebanon, Valley News 4/4/18.)


There are 7,500 homes just in little Grant County, so the above project is hardly large scale. Furthermore, the Tesla batteries are subsidized to the tune of about 80 percent, something that wouldn’t be needed if it made economic sense for homeowners to buy their own batteries. The project will test the assumption that distributed storage makes more sense, somehow, than centralized electric storage.   


Regardless, it’s a little premature to herald this as proof that electricity from storage is cheaper than electricity from natural gas plants. A recent article in Forbes favorably commented on two small storage projects in Arizona, but also noted that they benefited from the 30% Federal investment tax credit that all solar projects get. (“Energy Storage is Coming But Big Price Declines Still Needed,” Joshua Rhodes, Forbes, 2/18/18.) 


Fischmann also cited a recent Colorado case where bids to provide power from wind and solar plus storage were “substantially cheaper than the cheapest natural gas.” Once again, Fischmann hadn’t done his homework. 


The utility, Xcel Energy, received proposals to provide electricity from wind-plus-storage and solar-plus-storage that, to quote an article in Carbon Tracker, “highlight the incredible cost reductions in renewable energy with storage.” The article cited the median for wind-and-storage as 21 cents per kWh and that for solar-and-storage as 36 cents per kWhneither of which compares favorably with the 11-12 cents you and I pay here in New Mexico.


What is absolutely mind blowing is that the article then states: “Details on the bids are sparse. Crucially, the amount of storage is unknown. The combination of renewables plus storage bids are $3-$7/MWh higher than standalone wind and solar bids, suggesting a limited amount of storage.”


How can the bids show “incredible cost reductions in renewable energy with storage” if the amount of storage involved in the bids is unknown?  If Tesla dropped the price of an electric car from $35,000 to $10,000 but only had a 12-volt battery in the latter model that would get you to the corner before it died, would that be an incredible cost reduction in the cost of electric powered transportation? 


The Investment banking firm Lazard, a BIG backer of “alternative energy technologies,” mainly solar and wind, had this to say in their latest annual Levelized Cost of Energy Analysis, November 2017, emphasis mine: “Although alternative energy is increasingly cost-competitive AND STORAGE TECHNOLOGY HOLDS GREAT PROMISE, alternative energy systems WILL NOT BE CAPABLE OF MEETING THE BASE-LOAD GENERATION NEEDS OF A DEVELOPED ECONOMY FOR THE FORESEEABLE FUTURE.”


Fischmann also claimed that San Antonio, Texas, was getting cheap energy from Austin Energy, “which is 50 percent renewable.” That is wrong on two counts: San Antonio doesn’t buy electricity from Austin. Each city has its own municipally owned utility, and neither is 50 percent renewable, although San Antonio’s CPS Energy plans to be 50 percent by 2040. 


(The cost per kWh in Austin is 10.7 cents, in San Antonio, 10.8 cents, about what we pay here in Silver City.) 


To Fischmann’s credit, he did acknowledge that renewable energy is subsidized, but claims that renewables are cheaper even without subsidies. He also told me privately that Renewable Portfolio Standards are not needed if renewables are cheaper than fossil fuels, something I would agree with. 


The problem with Mr. Fischmann is his uncritical acceptance of renewable energy claims.  He wants a PRC that is “passionate about fact-based renewable energy” but wants his own facts. He also appears to have his lips firmly planted on the derriere of Mariel Nanasi, the director of New Mexico’s most intransigent environmental group, New Energy Economy, in Santa Fe.  


I think he would make decisions that favor environmentalists at the expense of the rest of us. He would say there is no conflict, but some of us would strongly disagree.  The only way I MIGHT vote for him is if he was running against Republican Ben Hall next November.  


At the moment, Sandy Jones has got my vote. He knows the issues, knows how to listen, works hard and is not a “true believer” environmentalist.  He is not a fan of Mariel Nanasi, either. That’s a big plus in my book.  


I’ve requested that the editor of the Grant County Beat give both Jones and Fischmann the opportunity to comment on this article should they care to.      


Correction to my article on the PRC election by Peter Burrows 5/19/18 

My subconscious has been grinding away for couple of days about something I wrote in my article on the PRC elections.  I rechecked, and sure enough, I had made a big mistake when I wrote that Xcel Energy had received bids for wind-plus-storage electricity and solar-plus-storage electricity at 21 cents and 36 cents per kWh respectively.   

The proper numbers should have been 2.1 cents and 3.6 cents per kWh, which explains the enthusiasm those numbers generated in the press, as they are far lower than what would be expected of bids that included storage, even after the 30% investment tax credit.   

Regardless, since the amount of storage included in those bids was not disclosed, and since the bids were only 15-20% higher than stand-alone solar and wind, one commentator wisely noted that there was probably only “a limited amount” of storage involved. 

I should have caught my decimal point error – too many zeros! –and used 2.1 cent and 3.6 cent per kWh to illustrate a larger point: Even if solar and wind electricity was free, the current cost of storage makes 100% reliance on wind and solar prohibitively expensive.  

Tesla has just completed a $50 million battery project in Australia that can provide electricity to 30,000 homes for one hour.  Since there are 7,500 homes in Grant County, one of these Tesla “batteries” would give us four hours, and we would need three to get through the night, nothing to spare.  That’s $150 million capital cost, and at 5% interest and 5% depreciation/debt reduction, we would have a bill of $15 million per year.   

That would add about $167 per month to the electricity bill for each of the 7,500 homes.  That’s just for storage, zero cost for the electricity.  

Someday storage costs may be low enough to lower our electricity bills, not increase them, but that is not the case today.    

Ethanol’s Lessons for New Mexico

Ethanol’s Lessons for New Mexico by Peter Burrows 5/10/18 –              

Last March, New Mexico’s Senator Tom Udall introduced a bill that would revise the Renewable Fuel Standards to virtually eliminate blending corn ethanol into gasoline.  It would drop the current 10 percent standard to 9.7 percent and begin a ten-year reduction of the required use of corn ethanol from 15 billion gallons in 2018 to 1 billion by 2029. The Sierra Club and the National Wildlife Federation strongly support the bill.    

This is very good news.  The evidence has been piling up for over 20 years that using corn as a biofuel source has been wasteful, unnecessary and counter-productive.  Here’s what Michael Bruce, Executive Director of the Sierra Club said about the proposed bill and its supporters:   

“The Sierra Club applauds Senator Udall, Congressman Welch, and all the members of Congress who are putting common sense first rather than continuing to permit a dirty and destructive policy to remain intact. Instead of continuing to play political games with our environment and public health, these legislators are moving policies that will help undo the damage caused by the ethanol mandate. We urge Congress to pass this legislation immediately rather than continuing to push false theories about ethanol.”  

As the saying goes, “Strong letter to follow.”  The above statement could have been made 10 years ago, but hey! Better late than never.     

One of the “false theories about ethanol” was that its use would reduce CO2 emissions. Study after study has shown just the opposite: producing and using corn ethanol actually increases CO2 emissions.  Furthermore, using corn has increased the world-wide cost of food by billions of dollars while increasing, not decreasing, the cost per gallon of gasoline.   

The conclusion that ethanol increases CO2 emissions is what has earned the environmentalists’ wrath. In the Church of Global Warming, to increase CO2 emissions is to sin. The fact that it is also very costly is of no concern. After all, they have a world to save.   

To that point, Udall’s bill maintains a cellulosic biofuel mandate.  Cellulosic biofuel uses waste organic plant material, from corn stalks to grass clippings. In theory, it’s a good idea, but the reality is that It is ridiculously expensive.  The Energy Independence and Security Act (EISA) of 2007 mandated a goal of 9 billion gallons of cellulosic ethanol by 2017. The actual production: 540,000 gallons.   

This lack of cellulosic ethanol didn’t deter the EPA from attempting to punish refiners of gasoline for not using the mandated cellulosic feed stocks that did not exist!!  Fortunately, that EPA effort was struck down by a federal court.     

To Udall’s credit, his bill eliminates the ridiculous cellulosic ethanol mandated by EISA, which rises to 21 billion gallons in 2022, and replaces that with a cap of “only” two billion gallons, which doesn’t have to be reached until 2037, at which time the mandate ceases to exist.  I think this is essentially a small concession to the ethanol “true believers” to get their support for the overall bill.   

Regardless, Udall’s bill is a big first step toward curbing an industry, ethanol, that would not exist in anything near its present size without government mandates and subsidies.  Will Udall’s bill get through Congress? It will face opposition from the owners of the over 200 distilleries that have been built to produce ethanol, and opposition from thousands of corn farmers.    

Even if Congress can overcome the millions that will be spent to stop Udall’s bill, President Trump, wearing his RINO hat, has said he will “protect” the corn farmers. “Corn farmers” of course means Iowa, and Iowa means “first primaries,” which in turn means, “Kiss those corn farmers’ tractors, cows and asses.” A wag once noted that if Florida had the first primaries, we’d be making ethanol out of orange juice.     

You’re probably thinking, “OK, Burro, what’s all this got to do with New Mexico.”  Here’s the answer: Every politician in New Mexico, regardless of party, top-to-bottom, thinks that New Mexico has a great future with renewable energy.  All the winners and losers in the upcoming primaries, all the winners and losers next November, all of them, will tout solar panels and windmills as great businesses for New Mexico’s future. If you know of one who doesn’t think that, please tell me who.  Please.  

You’re thinking, “Well, what’s wrong with that?”  What’s wrong is that, like the ethanol industry, windmills and solar panels are almost wholly dependent on government mandates and subsidies.  I would guess that solar is about 90% dependent on government, and wind 100%.    

The second or third largest owner of windmill farms in America is Berkshire Hathaway. The chairman of Berkshire Hathaway is life-long liberal and mega-billionaire Warren Buffett, who is famous for his blunt-spoken opinions. Without tax credits, he said, wind-generated electricity “doesn’t make sense.”    

Without those tax credits, New Mexico has no wind farms and no future as a big producer/exporter of windmill electricity.   

At this point, some of you are saying, “But Burro, New Mexico is so sunny! We should encourage people to put solar panels on their roofs, in fields, on buildings, along the road sides, everywhere! And then we could export all that solar electricity which would save the world from global warming and we’d get rich in the process!”  

The problem with that fantasy is the hard reality of costs.  Even if solar electricity was free, which it isn’t, the cost of storing solar electricity so it can light your house at night is very expensive.  Tesla, the electric car company, is a leader in battery technology and recently completed a project Tesla’s owner, Elon Musk, called the “world’s largest battery.”   

It is a $50 million electric storage facility in Australia that will power 30,000 homes for —-Drum roll please ––one hour.  There are about 7,500 homes in Grant County, so Musk’s “battery” would provide us four hours of electricity.   If we only occasionally had a cloudy day and never had two cloudy days in a row, we would need 36 hours of storage. (No sun from 6 PM through 6 PM the next day is 24 hours, and until 6 AM the next morning is an additional 12 hours.)  

That means we would need nine of Tesla’s batteries at a cost of $450 million.  Financed at 5% and depreciated over 20 years, or 5% per year, means this “battery” will cost Grant County $45 million per year. The cost per 7,500 households would be $6,000 per year, or $500 per month.  

How does $500 per month compare to your current electricity bill?  This is with only 36 hours of storage when at least triple that would be needed. This is with zero cost electricity, i.e. free solar panels that last forever, producing electricity with no transmission costs on free land that is not taxed.    

Last year, a couple of New Mexico’s legislators proposed that 80 percent of NM’s electricity be from renewables by 2040, a huge increase from the 20 percent mandated by 2020.  Some environmentalists want to be 100 percent by 2035. Either option would require massive amounts of storage and a massive increase in your electricity bill.      

Someday, I don’t know when, even in New Mexico it will be recognized that renewable energy is ridiculously expensive. When that day comes, and it will, wind and solar will face a “Udall bill” that will end mandates and subsidies.  Does New Mexico really want to invest its future in industries that depend on subsidies and mandates that will someday end?        

What is “Net Metering” and why should you care?

What is “Net Metering” and why should you care? By Peter Burrows 5/4/18 – 

 To encourage homeowners to install solar panels, most public utilities, including Public Service of New Mexico (PNM), are required by law to pay homeowners for any excess electricity the solar panels produce.  This doesn’t happen all the time, but when it does, the excess electricity is fed into the utility’s grid for sale to other customers. 

Imagine that homes with solar panels have two meters, one that measures the electricity coming into the home from the electric utility, and another that measures the excess solar electricity that goes into the utility grid on those occasions when the solar panels produce more electricity than is being used.  The net of the two is the “net metering” that determines the electric bill.  

In reality, when excess electricity is fed into the utility’s grid, the homeowner’s meter runs in reverse, lowering the electric bill in real time. 

A very important feature of net-metering is that the utility is required to pay the homeowner the same price it charges the homeowner, i.e. the retail price.  At first glance, this sounds fair.  If you’re paying the utility $.11 per kwh for the electricity they sell you, the utility should pay you $.11 per kwh for the electricity you sell them.  

There are two problems with that thinking. The first is that when the utility buys a kwh from you for $.11 and then resells that kwh at for $.11, the utility loses money.  Even a co-op run by pathological profit haters will realize that there must be a markup over the cost of something to cover heat, lights, taxes, accounting and so on.  

You may say, “Oh no, the utility doesn’t need to charge for all that because it’s only giving me back my own electricity when I need it.”  In essence, the utility has stored your excess electricity so you can use it at a later time. Conceptually, that is perfectly accurate.  In practice, that is hugely inaccurate. 

This is the second problem with net metering: It allows the homeowner to use the electric grid as though it was a huge COST-FREE storage battery when there is no such thing as cost-free electric storage, battery or otherwise.   

To illustrate the point, if you disconnect your home from the utility’s power, go “off the grid,” any excess electricity generated by your solar system will be wasted unless you can store it.  The most economical way to do that today is to buy a Powerwall battery from Tesla Motors. Tesla’s 7-kilowatt/13.5-kilowatt-hour storage system costs $5,900, plus “supporting hardware,” whatever that is, and installation.   

You’ll probably need several of these, depending on the size of your solar array, how much sunshine you get, and how much electricity you need.  Regardless, it’s hardly free.  

Bottom line: Net metering is a subsidy to homeowners who have solar installations. If you think this subsidy is paid by the electric utility, you are sadly mistaken.  Look at your electric bill. You will note that there is a “Renewable Energy Rider” which is an addition to your bill, not a reduction. On my bills, this adds about five percent to my electricity cost, before taxes.  

This is how WE, not Public Service of New Mexico (PNM) help to pay the monthly electric bills of people wealthy enough to install solar panels. This is in addition to the subsidy we paid, indirectly, through tax credits given to people as an incentive to buy the solar systems. Tax credits are a reduction in income taxes owed, which means somebody else must pay higher income taxes.   

A case can be made that such subsidies are necessary in order to get a new industry up and running.  I don’t agree but, regardless, it would be a great victory for transparency if candidates for public office would say: “I am in favor of raising your taxes so that rich people can install solar systems and have lower electric bills in order to save all of us from global warming.”   

Or something like that.  

Until recently, 41 states required net metering at retail prices. In Michigan, the Public Service Commission, the equivalent of our Public Regulatory Commission, just last month replaced retail pricing with something closer to wholesale pricing, a step in the right direction.  Montana is considering a similar change. 

In New Mexico the chances of anything so sensible are remote.  Politicians of both parties are enamored of renewable energy, and the Public Regulatory Commission (PRC) will do what is necessary to help PNM meet the renewable fuel standards mandated by New Mexico’s legislators, something the PRC should do, even if that means raising our electric bills. 

Considering its importance, one would hope that candidates running for election to the PRC would be familiar with net metering.  There are five candidates running to represent our district, District Five, two are Democrats, three are Republicans. 

I have met two of the Republicans and neither was familiar with net metering.  One, Ben Hall, was on the PRC from 2010 to 2014 when he was defeated for reelection, and I think he should have been knowledgeable about net metering. Instead, he tried to tell me that it was some kind of Federal mandate.  Ben Hall should withdraw from the race.  

The other candidate I have met, Chris Mathys, also didn’t know about net metering but at least he didn’t try to BS me. There’s hope for him.  I have not met the third Republican candidate, Joe Bizzell, but I did email him yesterday, “Is net metering a good idea?”  

No answer yet. I plan on asking the two Democratic candidates the same question, and I’ll let you know how all three respond.