Blue Mass Group

Power and enviro expert stomv drops some knowledge on Ryan’s earlier post. Bottom line: Keenan’s Section 42 of the energy bill is bad, but salvageable.

I just read Section 42

of what I believe is the most current version…

http://www.mass.gov/legis/journal/desktop/Current%20Agenda%202011/H4225.pdf

A few points:
1. It requires but doesn’t define “quick start” capability in (ii), to facilitate further development of intermittent renewables (wind). That’s helpful, although without defining quick start well, it’s open to lots of interpretation.
2. (iii) requires site demolition and remediation. That’s a good thing, though I’m not sure why the state doesn’t compel the current owner to do the site remediation or make remediation [to residential/school levels, not low-remediation industrial] as a condition of sale. As it reads now, (iii) looks like a bail out of the current owner, who owns the benefits of the assets but also the liabilities.
3. (iv) includes “such new facility is reasonably expected to result in net benefits in terms of costs to electricity customers in the commonwealth.” This appears to ensure that this isn’t corporate welfare — that is, the project must have merit by reducing the cost of electricity to MA customers — it must be cheaper to operate than something else. This may also be the poison pill. ISO-NE generates on a merit stack — the most efficient plant goes first, then the next most efficient, etc. This means, loosely speaking: wind and solar, then hydro, then coal and gas [used to be coal then gas, but with recent price changes its not so cut and dried], then combustion turbines and oil. Thing is, there’s so much gas on the system now that the part of the bid stack where a new CC plant would land is quite flat — so even if it is slightly cheaper than most gas, it’s unlikely to change the winning bid on very many hours, and if it does, it’s unlikely to change it by very much. This means that the expected savings to ratepayers [across New England, not just MA] would be quite low. But that’s if it’s just bidding into the real time pricing. If utilities have to sign a PPA, then ratepayers hold all the risk. There’s a non-zero chance that gas prices go up, that renewables prices go way down, etc. In those cases, the utilities would have been legislatively forced to sign a contract to purchase power which is now more expensive than the alternatives. Not good.

Bottom line: I stand by my earlier post. I think that a great outcome for Salem and the Commonwealth would be full site remediation, a combined cycle natural gas plant [pipe fed, not LNG] with a much smaller footprint located there, and the rest of the lane used for a combination of public park space, “harborwalk” retail and tourism, LEED certified commercial office space, and LEED residential, all getting steam heat+cool and hot water from the waste heat from the power plant. If that happened, Salem would retain the significant property tax base, gain employment and population, gain tourism dollars, and have a total development which has a lower GHG emission rate than most other electricity generation in New England *and* gain building space with a lower GHG emission rate than most other built space in New England.

How to get there?
1. Make the current owners responsible for remediation. If they want to “sell” that responsibility to a new developer, fine — but site remediation must happen before the gas plant is built, not afterward. No weaseling out through bankruptcy, etc.
2. Don’t require utilities to sign PPAs. There’s no reason to force the hand of the utilities, who are already obligated to behave prudently.
3. Let Salem and the Commonwealth work together to figure out how to help the big project happen. The CC will happen if they can also sell their steam — they’ll be able to out-bid lots of other natural gas plants due to a higher efficiency. The key is to get the rest of it built, so that the CC plant has a buyer. This development I envision would be great for Salem. Salem and the Commonwealth could help by streamlining zoning, permitting, setting up an affordable housing portion to cross-subsidize in an appropriate manner, get any infrastructure upgrades nearby [roads, underground local (non-utility) gas and electric and CATV and telco lines all set, sidewalks, etc] good to go, etc.

This could be a success story worthy of textbooks in engineering, urban design, government, public health, and so on. Section 42 not only doesn’t accomplish that, it makes it impossible to accomplish.