Energy's Wicked Witch

 | Nov 16, 2013 | 1:30 PM EST
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In the no-good-deed-goes-unpunished department, we discover a powerful group of interveners who have popped up to oppose the building of a gas-fired power plant in energy-starved New England. This is not just any new gas-fired power plant. This is an environmentally friendly combined-cycle gas turbine. It is energy-efficient, and it produces far less greenhouse gas than do oil or coal.

This high-tech plant is replacing an inefficient 60-year old power plant that used coal for some boilers and costly oil for others. Called the Salem Harbor Power Station, the plant was determined to be essential in order to assure that Massachusetts consumers have reliable sources of energy.

The plant has had a series of owners. Salem was originally constructed by New England Electric System, the predecessor company to the current National Grid (NGG). After the state restructured its utilities, Salem was bought by U.S. Generating, an independent power unit of PG&E (PCG). When U.S. Gen filed for bankruptcy in 2005, Dominion Resources (D) picked up its Salem and Brayton Point. In 2008, Dominion wanted to retire Salem, only to find it was a "must-run" resource for New England's grid.

Jim Bride, president of Energy Tax Experts, writes, "Dominion actually wanted to retire this plant in 2008 and submitted a de-list bid to ISO New England, but its bid was rejected since the plant was required to ensure reliable electric service. Units No. 1 and No. 2 were allowed to retire in 2011, but units No. 3 and No. 4 were required to run until 2014."

Nevertheless, for years, Salem and Brayton Point had been the target of wealthy environmentalists. Not only did these groups have financial resources, but they had political power as well. According to the Conservation Law Foundation's website, "In 2003, then-Governor [Mitt] Romney stood in front of the [Salem] plant and said that the plant was killing people."

Numerous environmental and community organizations, public health advocates and political leaders campaigned continuously to end Salem Harbor Station's operations. During that time, the Conservation Law Foundation fought legal and policy battles to curb water and air pollution from the power plant. At the same time, Conservation Law Foundation leveraged its role -- as a participant in the New England energy markets -- to advocate for regional system planning that would hasten New England's transition to clean, renewable energy.

Finally, the Conservation Law Foundation and HealthLink secured an agreement that required Salem's owner to retire half their units by December 2011 and the other half by June 2014. The settlement also prohibited any future owner from burning coal at the site. There was no agreement about natural gas.

Investors should be relieved that Dominion decided to withdraw from New England. The company recently sold its coal-fired Brayton Point station, and the 804-megawatt Salem station was sold to Footprint Power.

Footprint, a green energy company, plans to invest $800 million into Salem and convert it into a state-of-the-art combined-cycle gas facility. According to the company website, "This new facility will provide an unprecedented level of efficiency and flexibility that will provide a bridge to a future of higher levels of renewable generation and a gradual transition to a marketplace that relies on gas-fueled facilities as back-up power to be used only as needed."

Two groups embrace Footprint's plans. One is the city of Salem, which is looking to sustain a critical tax and job base. The other is ISO New England, which announced that power from Footprint's new plant is needed to meet the region's reliability standards.

Then there is the Conservation Law Foundation. The Salem News reports that this organization opposes Footprint's plan, claiming New England does not need new base loaded power generating facilities.

Groups like the Conservation Law Foundation are systematically killing nuclear, coal and now natural gas. Apparently, they believe it socially responsible to limit energy supply so their fellow New Englanders will be forced pay more for energy. It seems like an economic assault on the poor and middle classes.

As an alternative, they want to force renewable energy into the grid to support critical base load needs. Unfortunately, New England does not have enough renewable energy. Today, less than 9% of New England's power originated from renewable energy sources. Worse, more than 85% of that power originated from burning landfill gas, waste wood and trash. These energy sources produce particulate matter, organic compounds, carbon dioxide and other toxins. It all seems surreal -- a logical disconnect.

This is why New England's infrastructure costs too much. Investors needing a return are forced to wait as one group after another bleeds them with lawsuits, hearings and unnecessary legal expenses. In the end, the returns are not worth it, and companies like Dominion are exiting the region. Hopefully, Footprint can hang in there.

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