Acadiana Business

Coal vs. Renewables

by Patrick Flanagan

Plans are under way to invest millions in Lafayette's existing coal plant, but a growing number of residents are calling for an alternative approach.

Natural Gas
More than 30 percent of Lafayette's electricity is produced by three outdated natural gas power plants, and the majority of that, about 20 percent, is coming from the Doc Bonin plant.

Doc Bonin Plant


Developing at least one advanced natural gas power plant would increase efficiency and therefore be more cost-effective.

Redirect funds currently allocated to the Rodemacher overhaul and instead invest in wind and solar power technology.

Create an LUS solar installation grant program to help residents pay the remaining 20 percent of the costs not covered by existing federal and state tax credits.

The Rodemacher II coal plant produces 60-70 percent of Lafayette's electricity. Lafayette's coal supply comes from Wyoming at an annual cost of $40-$50 million.

Rodemacher II coal plant

*Note: Huval says LCG's decision to make such a huge investment in coal power stems from a council-commissioned study conducted by consulting firm Burns & McDonnell. The 500-page review explores all possible options for Lafayette's energy future and ultimately recommends upgrading Rodemacher II to EPA's new standards as the best avenue.

**PHASE I (Nitrogen Oxide Emissions Project)
**     COST: $14 million
     The project already is underway, and should be complete by summer.
     Will reduce nitrogen oxide emissions by 80 percent.

PHASE II (Mercury Emissions Project)
     COST: $130 million
     Project will reduce Mercury emissions by 92 percent, acid gases by 70 percent, and will put Rodemacher II among the top 10 percent of the nation's cleanest coal plants.

Coal Call
Coal is still being touted by local officials as the best investment for Lafayette's electrical future, despite calls from a growing number of residents to consider alternatives. By Patrick Flanagan

Lafayette is mostly powered by coal - about 60 percent. And based on a plan recently put in motion by Lafayette Consolidated Government, it appears that will continue to be the case in the decades ahead, despite calls from a growing group of concerned locals for an alternative plan, one that doesn't rely so heavily on coal.

Spearheading LCG's push for a coal-powered future is Lafayette Utilities System Director Terry Huval. The plan, says Huval, involves a more than $65 million investment to bring the Rodemacher II coal plant up to new federal standards.

On the other side of the argument is a coalition of residents formed by the Lafayette League of Women Voters and the Sierra Club Acadian Group. Acting as a voice for the group during a public forum held in November was Lafayette resident Simon Mahan, a renewables advocate who also works for the nonprofit industry watchdog Southern Alliance for Clean Energy. Mahan's proposal includes a multi-faceted approach that would use the $65 million dedicated for the Rodemacher project to invest in solar, wind and advanced natural gas technologies.

"Lafayette's reliance on coal and inefficient natural gas puts its citizens at financial risk," Mahan argued during November's forum. "The residents of Lafayette should have a say in how these decisions are made. We want a citizens advisory committee sanctioned by the council. The committee would study options and present findings to the council."

Yet, according to Huval, Mahan's plan may not be in touch with the actual reality of the situation, which ultimately boils down to money. The reason, Huval tells ABiz:

"We didn't go into this with a bias. We went into it asking what's the best deal possible for our community. Natural gas prices are a big issue. They pop up and down all over the place, and that makes our customers' bills jump up and down all over the place. Coal has stayed consistent."

So each side gets a full say on the matter, ABiz has given Mahan and Huval the opportunity to make their case, in their own words. So check out their opposing guest editorials below and decide for yourself whether coal is a wise investment for Lafayette's electrical future.

**Coal: Really?
**Making such a huge investment in a future powered by coal is, simply put, a bad idea. By Simon Mahan

Lafayette has a long history of being at the forefront of economic development in Acadiana. At the city's beginning, residents decided to create their own utility in order to electrify the city and parish. Those forward-thinking citizens faced criticism but ultimately succeeded by creating Lafayette Utilities System. To this day, we continue to benefit from their prudent decision nearly a century ago.

Simon Mahan

More recently, with the creation of LUS Fiber, Lafayette's citizens proved once again that this community has a passion for progress and economic growth. We need to take that kind of initiative when it comes to our sources of electricity, too.

Unfortunately, Lafayette's dependence on coal-fired power poses financial risks to the community. The city gets approximately 60-70 percent of its electricity from the Rodemacher 2 coal-fired power plant (which is located nearly 100 miles due north of Lafayette). The power plant is operated by CLECO, but we pay for its operation and we buy the coal from Wyoming (some 1,200 miles away). Another nearly 20 percent of our electricity comes from the Doc Bonin natural gas power plant in town. This power plant's age and inefficient use of natural gas make it an expensive source of electricity.

Over the next 20 years, we might spend between $3 billion and $3.5 billion to keep our coal and old natural gas power plants running. Just recently, the Lafayette City-Parish Council opted to spend tens of millions of dollars to retrofit our aging coal-fired power plant to bring it up to federal pollution standards. It should be obvious that over the next four years, more federal regulations on burning coal are coming. We have no idea what those regulations will require and if we can even meet (or afford) those regulations. But instead of planning to move off this financially risky source of electricity, Lafayette Utilities System has plans to retain this coal-fired power plant for the next 20 years - or maybe longer.

LUS is arguably the most powerful tool we have to drive economic development within the parish. By modernizing and diversifying our electricity resources, Lafayette could protect itself from costly coal regulations, potentially save hundreds of millions of dollars and create hundreds of jobs locally. In the same way that LUS Fiber is attracting new high-tech industry to Acadiana, investing in local resources such as advanced natural gas, energy efficiency, wind energy and solar power would also draw new business interest to the region. We need to form a citizens' task force to look at alternatives - and soon.

Some pertinent questions that this task force should address include:

  1. What are the known financial risks associated with the Rodemacher 2 and Doc Bonin power plants?

  2. How much will it cost to maintain our dependency on coal and inefficient natural gas?

  3. What alternatives exist that could help Lafayette Utilities System to minimize its financial risk?

  4. What is the price, cost, reliability and risk associated with these scenarios? The citizens' task force would not need to look far for help to answer some of these questions.

Entergy New Orleans, New Orleans' primary electricity provider, just recently implemented a new energy efficiency program. The program provides instant rebates or cash incentives to residential, commercial or industrial electricity consumers to reduce energy consumption. Generally, for every $1 spent on energy efficiency, residents may expect about $2 in energy savings.

Louisiana is also home to 59 combined heat and power sites. These highly advanced power systems can use combined cycle natural gas power stations for electricity generation, and couple those power stations with extensive steam transportation infrastructure.

According to the Gulf Coast Clean Energy Application Center, a project of the Department of Energy, combined heat and power systems are used for college campuses (LSU and Tulane), chemical production, agricultural processing, paper mills and petroleum refining.

Several companies across the state are also familiar with renewable energy. CLECO, for example, has several alternative energy projects evaluating biomass, solar, biogas and small-scale wind energy resources. Larger scale solar and wind energy assessments could be made available by wind turbine and solar installation companies. The prices for these and other renewable energy resources have plummeted over the past five years, making them extremely cost competitive with other sources of power generation.

All of these resources would be good starting points for a citizens' task force to evaluate. But the clock is ticking. The longer Lafayette takes to evaluate its alternatives to the Rodemacher 2 and Doc Bonin power stations, the more likely it is that we will be on the financial hook for whatever mandates the federal government hands down to us. After being the leader of economic development for Acadiana, Lafayette may be forced into an uneconomic power infrastructure that we just cannot afford. Let's ask our elected officials to establish a citizens' task force to evaluate our electricity alternatives.

Simon Mahan is renewable energy manager for the Southern Alliance for Clean Energy and previously worked as an advocate and energy analyst for Oceana in Washington, D.C., addressing offshore wind economics, wind manufacturing opportunities, energy efficiency and mercury reduction policies. He earned his B.S. in political science at Missouri State University with minors in biology and communications. Mahan penned this column at the request of ABiz; it reflects his personal views.

Coal: It's All About the Money
Of all the possible options explored when determining how to best invest in Lafayette's energy future, coal proved the most fiscally sound. By Terry Huval

Terry Huval

Lafayette Utilities System is a citizen-owned utility that has a long successful history of providing highly reliable, high quality electric utility services at competitive rates. Our most recent initiative has been to continue to do so while striving to comply with Environmental Protection Agency regulations.

After several years of significant study and numerous discussions in public meetings, LUS received the necessary council budget and bond approvals to install major air emissions reduction equipment at its Rodemacher coal plant in Boyce, La. LUS is a joint owner of this plant, along with Cleco and the Louisiana and Energy Power Authority. After independent study, all three entities agree this initiative is the most prudent move for their customers, and each has taken the necessary actions to move forward with this project.

These environmental requirements were devised by the EPA using benchmarks set by the average of the top 12 percent of environmentally-friendly coal plants in the country. Through the installation of these upgrades, LUS's emissions reductions will be significant - ranging from 70 percent to 92 percent lower than they are today. Utilizing this sound approach assures LUS customers with the same level of power delivery that has led LUS to have the best electric reliability in the state, and at the lowest possible cost.

There are some who suggest major changes to LUS's generation mix using other technologies. Prior to making its recommendations to the council, LUS had already determined such an approach would not only be very costly to customers, but it would also introduce new risks in the delivery of power upon which all our customers need to operate their homes and businesses.

In order to properly plan for the future, LUS performs periodic reassessments of its long-term generation resource strategy for the city of Lafayette. The most recent study was completed in February 2012. It evaluated several power supply strategies to provide Lafayette's energy requirements for the next 20 years while complying with existing and impending environmental regulations. Burns & McDonnell, a nationally recognized expert engineering firm in this field, was contracted to perform this study.

The study included an in-depth evaluation of the impacts of several new environmental regulations on existing generation facilities, including evaluating several options that would allow Rodemacher to meet compliance. Those options included installing emission control upgrades on the unit as it exists and converting it to burn natural gas. Additionally, the study evaluated other generation resource options such as reciprocating engines, simple cycle gas turbine, combined cycle gas turbine, biomass, onshore wind and Solar photovoltaic technology.

Rodemacher is a baseload unit, which means this unit is scheduled to run 24 hours a day, seven days a week. Lafayette receives approximately 60 percent of its energy from Rodemacher. Any viable replacement technologies for this unit would have to be able to meet this baseload requirement. Reciprocating engines, simple cycle gas turbines, and combined cycle gas turbines could function as baseload units, but the study demonstrated they were more expensive alternatives as compared to the Rodemacher unit with new emission controls installed. Biomass can serve as a baseloaded generation. However, it is the most expensive option and would also require environmental controls to comply with EPA regulations. As far as wind and solar technologies are concerned, in addition to being far more costly, those technologies cannot meet baseload requirements. They would have to be used in addition to some form of baseload generation.

Burns & McDonnell concluded that under the most likely environmental compliance scenario, continued operation of Rodemacher as a coal fired unit with the proposed emission controls upgrade would be more economical than converting it to natural gas or retiring it and replacing it with a new electric generation resource.

Operating Rodemacher as a coal unit allows LUS to continue its successful strategy of maintaining fuel diversity in its generation portfolio. This strategy has been the key reason LUS's customer rates to its customers has been so comparatively stable over the past 30 years.

Although natural gas prices have been comparatively low as of late, even today's natural gas generation costs are significantly higher than coal generation costs. For Fiscal Years 2007-2012, LUS's cost for natural gas generated electric energy fluctuated by over 600 percent while comparable coal energy has fluctuated by less than 45 percent. For this year alone, natural gas prices have fluctuated by 80 percent, while coal prices have fluctuated by only 3 percent. From these comparisons, it is easy to see that inclusion of coal in our fuel mix has been successful strategy to bring stable, low utility costs to our customers.

Some natural gas industry experts believe that today's natural gas prices are artificially low as compared to the cost of mining that gas using current technologies. Greater reliance on natural gas by LUS would be putting "all our eggs in one basket" and expose our customers to less stability in their monthly utility bills.

The proposed emission controls upgrades at the Rodemacher coal plant will provide Lafayette citizens with the most economic solution to meeting their electric energy needs while maintaining compliance with EPA regulations.

Terry Huval has been director of LUS since 1994. He is a UL graduate in electrical engineering and is a registered professional engineer in the states of Louisiana and Texas. Huval is a past board chair of the American Public Power Association, which represents the interests of the nation's more than 2,000 public power entities. He wrote this column at the request of ABiz.