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.    


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