Leslie lindo-sbap-june-2011-presentation-hour-one

June 25, 2011

Energy v.
Electricity; What is
the AZ Corporation
Commission
Nancy LaPlaca, J.D.
Advisor to AZ Corporation
Commissioner Paul Newman, Esq.
Arizona Corporation Commission
nlaplaca@azcc.gov
602-542-3682

Agenda – Hour One
• What is the AZ Corporation Commission and
why should I care? Bio’s
• Energy v. electricity: emissions from electricity v.
transportation
• Energy: net energy is key
• What about fossil fuel depletion?
• Global warming: what does it mean?
• 4 minute YouTube of Richard Heinberg: 300
Years of Fossil Fuel History in 300 Seconds

The AZ Corporation Commission
(ACC) – Why Should I Care?
• The ACC is one of 7 ‘constitutional’ and 13 elected
Public Utilities Commissions (PUCs) in the U.S.
• The ACC has authority over power plants
• Generally, participants at the ACC are the (monopoly)
utilities, the large energy users (such as mines), utility
shareholders…not many public interest participants.
• Bottom line: ACC has enormous authority over
energy policy, and clean energy needs only THREE
votes out of FIVE elected Commissioners….
• See www.azcc.gov for more information…or call our
office 602-542-3682 and come visit us!

Arizona Corporation Commissioner
Paul Newman
• Commissioner Paul Newman is
one of the five elected Comm’rs,
see www.azcc.gov
• Newman was elected in 2008, and
is up for re-election in 2012
• Strongest solar supporter at the
ACC
• Nearly 20 years as state legislator
and Cochise County Supervisor,
long history of environmental work.
• Committed to transparency,
disclosure, fairness

Nancy LaPlaca, Policy Advisor
• Policy Advisory to Comm’r Paul Newman
• Help with issues ranging from water and
wastewater utilities, AZ cooperatives,
electricity, gas, new technologies, solar, wind,
natural gas; rate cases – many complex
issues.
• Background: JD from ASU (1993), Fine Arts
(ASU 1990); worked for 2 AZ
Congresspersons, state legislature, Court of Please contact me and
Appeals, Supreme Court; lots of research and visit us at the ACC:
writing; private companies in research, writing, nlaplaca@azcc.gov
IT, systems integration. 602-542-3682

• Exciting time to be working in energy policy!

Agenda – Hour One
• What is the AZ Corporation Commission and
why should I care? Bio’s
• Energy v. electricity: emissions from
electricity v. transportation
• Energy: net energy is key
• What about fossil fuel depletion?
• Global warming: what does it mean?
• 4 minute YouTube of Richard Heinberg: 300
Years of Fossil Fuel History in 300 Seconds

U.S. Energy Consumption

Hydro

NOTE: most RE is biomass or
existing hydro; solar is
Source: www.doe.eia.gov fraction of 1%

U.S. Electricity Generation

Energy Administration Information www.doe.eia.gov

Arizona: GHG Emissions

Does not
include
GHGs
from
exported
power.

Includes
GHGs
from
exported
power.

Arizona Republic, CO2 Pollution Soars in Ariz., new study says, Shaun McKinnon,
11/13/09; http://www.azcentral.com/arizonarepublic/news/articles/2009/11/13/20091113air-carbon1113.html

Arizona Republic, CO2 Pollution Soars in Ariz., new study says, Shaun McKinnon,
11/13/09; http://www.azcentral.com/arizonarepublic/news/articles/2009/11/13/20091113air-carbon1113.html

Net Energy is Key Concept
• Net Energy = the energy left after using energy to drill,
mine, transport, compress, combust, build, etc.
• Also called E-ROI (Energy Return on Investment)
• Energy costs are going to rise: Should we invest in
renewables, with higher capital (building) costs, or
fossil fuel, with increasing fuel costs and high
Operation and Maintenance (O&M)?
• “Externalities” increasingly important: global warming,
water scarcity; also enormous health effects from fossil
fuels we’ve ignored for decades
• Environmental justice issues: local, U.S., global

Energy balance (EROI) is critical
Input Output
Ethanol from corn

Kerogen from marlstone;

? oil from tar sands SAGD
?

What are other impacts,
like Gulf Oil spill?
U. S. oil industry today

The easiest-to-get
resources are extracted
first. Example:
deepwater v. onshore
drilling for oil.

Two-thirds of Energy From Coal Plants
Lost as Heat; Natural Gas Combined Cycle
More Efficient
Waste
Waste Waste

Inefficient gas Inefficient
Generation electric
and appliances
appliances
distribution

Fuel for
electricity

Power,
light,
and
Natural usable
gas heat

Source: A Micro-Grid with PV, Fuel Cells, and Energy Efficiency, Tom Hoff, Clean Power Research.com

02458605

National Renewable Energy Laboratory Innovation for Our Energy Future

Energy Slaves?
• Fossil fuels are extremely dense form
of energy
• ~8 calories of oil embedded in every
calorie of food delivered
• Oil runs our just-in-time economy
• Renewable energy (solar, wind) not
nearly as dense, not available ‘on
demand,’ difficult to store energy
• We will likely continue to electrify our
transportation system – running a car
on coal-fired power emits less
pollution than gasoline because car
engine is so inefficient.

“Peak” Oil:
Means Peak in Production

Gap Between Oil Discovery and
Production

Energy Export Databrowser
• Very interesting energy database at:
http://mazamascience.com/OilExport/
• Shows timeline of energy use by country
and resource
• Can combine countries and/or resources

Many Countries Are Starting to Use
Natural Gas That Was Exported

NOTE: Egypt oil net
exports peaked before 2000; but
consumption continues to rise;
while overall production falls…

IEA World Energy Outlook
Current and Predicted World Oil and Gas
Production levels

U.S. is Counting on Increase in
Shale Gas Production

Indicators of a Warming World

John Cook, “The Scientific Guide to Global Warming Skepticism,”
skepticalscience.com, December 2010

The Water Cycle

The Economist, “For want of a drink,” May 20, 2010

10 Vital Systems for Spaceship Earth

Grist article about “Planetary Boundaries: A Safe Operating Space for Humanity,” 9/09

The Earth is Warming


Climate Change: Expected Impacts

http://news.bbc.co.uk/2/hi/science/nature/8324428.stm, October 2009

Water Availability: Stressed Areas

http://news.bbc.co.uk/2/hi/science/nature/7821082.stm, Dec. 8, 2009

Climate Change Impact on Water in U.S.

Analysis by Tetra Tech for the Natural Resources Defense Council (NRDC), July
2010Climate Change, Water, and Risk

The Carbon Cycle: Human Contribution


What is Arizona’s Electricity
Mix, and How Much Solar?

Total solar PV Total in-
capacity: 21
MW installed state
in 2009, Electricity
54 MW Coal: use
installed in 49%
Is 50% coal,
2010; v total 32% NG,
in-state
capacity of 17%
16,000 MW, nuclear
it’s a tiny
amount…

TOTAL AZ
generation =
~120,000 GWhs
because AZ
exports 25-30%
of power
Source: US Energy Information Agency October 15, 2010

AZ’s Electricity Mix
• Total in-state generation: 25,000 MW
• Total in-state consumption: 16,000 MW
– 50% coal
– ~28% natural gas
– ~22% nuclear
– Less than one-tenth of 1% solar
• 54 MW installed in 2010
• Total in-state solar: ~100 MW

Coal, Nuclear, Natural Gas, Solar,
Wind, Solar Hot Water….
• Issues are complex and confusing because different types
of power plants have pro’s and con’s
• Coal and nuclear plants run 85-90% of the hours in a year
• Solar only makes electricity when the sun shines;
however, AZ has the best land in the U.S. for solar
because it is very flat and we have consistent sunshine
• KEY: we don’t include all the life-cycle costs of electricity
generation, such as pollution, acid rain, health effects from
burning coal, possible water pollution from natural gas
drilling etc.
• We are at crossroads on energy policy – what do YOU
think we should do?

AZ Renewable Energy Standard
(RES) is 15% by 2025
AZ’s RES means that 15%
Year Requirement
of the kilowatt-hours
generated by regulated 2008 1.75 %
utilities come from ‘clean 2011 3.00 %
energy’: solar, wind, 2014 4.50 %
biomass, solar hot water,
concentrating solar etc. 2017 7.00 %
by 2025… 2020 10.00 %
2024 14.00 %
AZ’s RES is far lower than After 2024 15.00 %
Colorado (30% by 2020),
California (33% by 2020),
Nevada (25% by 2025).

The Effect of Much Higher EE Savings
AZ 2008 AZ 2020
6% 0% 0%
20% 19%
Coal
24% Natural Gas
37%
Nuclear
Conv. Hydro
Renewables 15%
Energy Eff. 24%
Other 4%
33%
18%

- Energy Efficiency becomes one-fifth of the energy “pie” in 2020
- Lower total costs, lower utility bills, more jobs, less pollution
- Deferral of 3 large baseload plants 2020’s to 2030’s (by then more
renewables, storage, electric vehicles)
-$9 billion in lower customer bills (2011-2030; APS, TEP, Coops)
46

Solar Hot Water (SHW):
Total Huge Potential for AZ!
U.S.,
not
just AZ

How much does AZ spend on
fossil fuels every year?

AZ Imports Most Fossil Fuels
• AZ imports all its Natural Gas and 2/3 of coal
• AZ spent $1.5 billion importing Natural Gas
(NG) for electricity in 2009
– Another $800 million spent on NG for heating
– Shale gas has been a game-changer, brought the
price of gas way down, but ultimately depleting
– During Katrina, cost of NG doubled; also doubled
from 2007 to 2008 when oil peaked at $147/barrel
• AZ spent $500 million in 2007 importing
coal

Cost of Natural Gas -
More Volatile Since 2000

U.S. Currently Imports 5-12% of
Natural Gas Consumed

Coal Capacity Factor Much
Higher Than Natural Gas:
AZ Can Hybridize NG plants!

U.S. Natural Gas and Coal Fleet Capacity Factors, 1976-2007

his graph from the IEA shows the production levels - and
predicted production levels - of oil and gas in the world. IEA
World Energy Outlook

Why doesn’t AZ have more
clean energy?

Why doesn’t AZ have more
clean energy?
• Many reasons, but here are a few:
– Monopoly utilities granted geographic territories (APS,
SRP, TEP etc.)
– Large central-station power plants
– Distributed generation is a new player, and solar has
only recently come down in price
– Politics and the corrupting influence of fossil fuel $$$
– Utilities don’t want to give up sales to ‘disruptive’
technologies.
– The more distributed solar, the LESS revenue for
utilities; lost ‘fixed’ costs…

Kevin Phillips, Bad Money
From ASPO-USA Conference, October 12, 2009

Financial services increased
from less than 10% to nearly
50% of corporate profits

Manufacturing declined from
60% to less than 10% of
corporate profits

Local v.
Out-of-
State
Dollars

$73 out of
every $100
spent
on locally-
owned
businesses
stays local

Local v.
Out-of-
State
Dollars
Only $43 out
of every $100
spent
on non-local
businesses
stays local

What are ‘externalities’ and
why should I care?

“Externalities” in electricity
• Uncounted costs are called “externalities” and include:
– Subsidies
– Air pollution, water use and pollution
– Mercury contamination
– Lost productivity, morbidity and mortality
– Health effects from fossil fuel burning
• 12/08 coal ash spill in TN cost $1.2 billion
• Power plants are big water users: nuclear the most, then
coal; solar PV and wind use zero water; Concentrating
Solar Power can be wet or dry. Wet CSP that uses a
steam turbine uses as much water as a coal plant but
does not pollute the water.

$72.5 billion
for Fossil
Fuels

$12.2
billion for
Wind and
Solar

National Academy Estimates Criteria*
Pollutants from 406 Coal Plants Cause
$68B/Year Damage
NOTE: CLIMATE
CHANGE DAMAGES
NOT INCLUDED,
ONLY SO2, NOx, PM
2.5 &10

Damages from these plants exceed $500 million a year
68

Coal’s Externalities / True Costs
Coal-fired power plants produce 50% of U.S. electricity.
Coal costs the U.S. $500B annually over its life cycle
(extraction, transport, processing, and combustion)
•$74B in public health burdens in Appalachian communities
•$187.5B from health costs of cancer, lung disease, and
respiratory sickness in other parts of the U.S.
•$29.3B from mercury impacts
•$205B from carbon emissions’ climate impacts on land use,
energy consumption, and food prices
•$18B from the costs of cleaning up spills of toxic waste,
the impact of coal on crops, property values, and tourism

Externalities would raise costs of electricity from coal-fired
plants, from $0.10 / kWh to $0.28 / kWh, shifting it from one of
the cheapest sources of electricity to one of the most expensive.
Dr. Paul Epstein, Harvard study, Feb. 2011
“Full Cost Accounting for the Life Cycle of Coal”,

gal/MWh
Co
Cal
o, s

500

0
1,000
1,500
2,000
ste alt,ea
am m
Oi Nu
Co l/g Nuc cle
Ga m Oil as arle
Tu s, C sbtus /gaste , ar
rbi om eaio s, a t
ne bu m m
Ga Co stin t u
m onrb
cyc s, C bin ine
Co le o m b e d
Generation
c
Conventional
al in e y
,I
G
dcle

Source: Western Resource Advocates
Co C C C
ca al, IG alo ,w Co
ptu , P ith a
re CCC, car Col, I G
Co N ww it b a C
G th o C l
ca al, P C ih caIrGn cC , C
ptu C C c b a
, it
re wwh arb on ptu
NG i o r
ca CC, t h carbn ca eca o
ptu w
re ith rbo n ptur
ca n
So rboca e
la nptu
Emerging

rC re
Technologies

So SP
So
co lalr C , w
Im oi a S
pr Song r CS P, ewc t
ov o
ed co lar C P, d etolin
Bi olin SP ry
g

“The Energy-Water Nexus: A Case Study of the Arkansas River Basin” 2008
bi , dc g
om om o
ry o
a as
s s, l in
Bio s-ba ste So g
c m se am la
So r
Im ool ass, d s P
larV
e
co proved G sttea e
pla
PV
nt
ole
d d B eo am m ,w W
Geiom the plpla et iW
nd
ot as rm an nt, co ind
Ge h s sa t, w o
tl
co oth erm e, am wet etled
bi
a np c
Water Intensity of Electricity Generation

Ge olin G erm l
,,
oth geo alb aryl,ant,oole
co b
olin erm the inairna dry wed t
Geg al,rm y, ry, c
o
ban hy dryo
i l ,a
co o th br
Renewables

bry id ling
in ,
olin erm
g al, aryhybrcoo
bin , w id lin
ary e t g
, wco
etoli
Water Intensity of Electricity Generation

ng

APS’ RW Beck Study on the Value
Of Distributed Energy
Operating Impacts and Valuation study

RW Beck
study says
the value of
distributed
solar is 7.9
to 14.11
cents/kWh
in avoided
costs for
fuel, trans-
mission,
line losses,
etc.

1

“With public
sentiment
nothing can
fail; without it,
nothing can
succeed.”

Abraham Lincoln

National Renewable Energy Laboratory Innovation for Our Energy Future

Thank you!

Paul Newman
Arizona Corporation Commissioner
pnewman@azcc.gov
602-542-3682

Leslie lindo-sbap-june-2011-presentation-hour-one

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