CBT’s Power Lunch: The new Center of Power
Kraig Kahler will lead Columbia’s task to solve its looming electricity supply shortage
Kahler talks with Bill Watkins at the Power Lunch on the top floor of the Tiger Hotel.
Between now and next summer, the city must decide whether to meet its electricity supply needs by replacing worn-out coal-fired generators with newer models or finding other ways to maintain a reliable source of electricity, including ramping up renewable energy use and ramping down consumer demand.
During a CBT forum at the Tiger Hotel, City Manager Bill Watkins said the desire to limit the environmental impact of burning coal and using more renewable energy sources must be tempered by the need to keep electrical bills affordable.
“It’s a balance,” he said to the gathering of Power Supply Task Force members and other local leaders involved in energy issues July 30. “People want to get involved in sustainable energy, but there comes a point where the cost becomes unacceptable.”
If the city decides to continue local power generation, Watkins said, “then we have to find the best technology we can that has the best (balance) in terms of impact on the environment versus cost.”
The Power Supply Task Force will meet Aug. 19 to review a consultant’s study of Columbia’s power supply and demand options, a report called the Integrated Resource Plan. The City Council will hold a work session on the report and a public hearing. The report is now being reviewed by utility administrators.
The consultant, Kiah Harris, of Burns & McDonnell in Kansas City, said in comments relayed to the forum participants that aggressive energy conservation, or demand management, could forestall the need to significantly expand supply.
With energy costs going up—both utility bills and gasoline—consumers are more receptive to conservation efforts, Harris pointed out.
“When energy is cheap not much interest is in conservation,” Harris said. “We’ve got to get out of that boom bust cycle. That’s where the government has to step in.”
Are Columbians willing to conserve?
Harris said the city’s utility, under the leadership of former director Dan Dasho, has a good supply portfolio and is in the position to “really focus on conservation and demand-side management.”
“Quite a bit is in the public’s lap now,” Harris said.
Kraig Kahler, middle, and John Conway look on as Bill Watkins opens the discussion at the Power Lunch on the top floor of the Tiger Hotel
The city offers numerous energy efficiency and load reduction programs and low-interest loans for improving efficiency. The loans can be made for insulation and air conditioning, high-efficiency heating, solar water heating and energy-saving doors and windows. Commercial customers can also get loans for energy efficient motors and equipment, reflective films for windows, energy-saving roofing and energy management systems.
Jan Weaver, Mike Crist and Steve Mahfood.
The city also has had a relatively successful program enticing customers to switch to fluorescent lighting instead of incandescent and gives a price reduction to customers who agree to let the utility shut of their air conditioners for short periods of time during peak loads.
Bill Watkins talks to Jan Weaver.
Columbia Power & Light can get more aggressive in enticing customers to conserve electricity, and the city could strengthen codes to make buildings more energy efficient, but the level of activity will depend on the public’s receptivity, Harris said.
Bob Roper and Keith McLaughlin.
“CWL can only put the carrot out there…It’s all up to whether the public is willing to elevate their interest in demand-side management,” Harris said. “All the advertising in the world is not going to pay off to reduce levels of use.”
While several forum participants favored aggressive conservation measures such as building codes requiring higher energy efficiency, Bill Roper, a member of the Power Supply Task Force, said he favors relying on free market forces.
Ernie Gaeth, vice president of Riback Supply and a task force member, said increasing building costs could have a negative impact if it stymies growth. And Richard Malon, former CWL director and a task force member, said he doubts most Columbians will be willing to aggressively conserve or pay significantly more for renewable energy.
However, voters have indicated a willingness to move in that direction.
In November 2004, Columbians approved a renewable energy ordinance for the city’s power supply portfolio. By the end of this year, the city will already have met the target for 2013, 5 percent, with energy produced from wind and landfill gas. The renewable energy requirement goes to 10 percent in 2017.
City faces numerous supply options
Hank Ottinger, Richard Malon, Adam Heflin, Ernie Gaeth and Nick Peckham.
The city supplies electricity to more than 44,000 customers: residential, commercial and industrial. Under current conditions, demand for electricity will increase about 2 percent a year, which is about the same as the population has been growing. The peak demand is projected to increase from 278 megawatts to 317 by 2015, when two of the city’s coal-fired generators will need to be retired. The city also has two natural gas generators and an option to purchase another, as well as expensive diesel generators that are rarely used. The majority of electrical generation is purchased from utilities that owned coal-fired plants outside Columbia.
“There’s a gap,” Watkins said, “and what we as a community have got to determine is how do we fill that gap? The gap is fill-able, that’s not a problem.”
The consultant used computer modeling to analyze nearly a dozen supply options and finding “the optimal portfolio of resources to meet the energy needed.”
Since Congress is seriously considering passing a tax on carbon, the computations were done again assuming there will be a tax of either $10 or $30 per ton of coal by 2015.
Options the consultant looked at included:
—Replacing all coal energy with wind energy purchased from the Blue Grass Ridge Wind Farm in King City, Mo.
—Replacing turbines at the coal-fired plant with models that can burn renewable biomass materials with coal. (the Columbia Power Plant is already seeking a permit to continue burning a 10 to15 percent wood mixture with the coal.)
—Replacing the turbines for biomass use and installing 10 megawatts of solar generation on existing commercial buildings in the city.
—Adding no supply resources and relying on market purchases.
Market energy is always available through a regional organization that the city belongs to. Price fluctuates due to the time of day and season and other factors, ranging from under $30 to $100 per megawatt hour.
Both Watkins and Jim Windsor, the Water & Light department’s rates and fiscal planning manager, said the city should put a high priority on keeping local control over a significant amount of its power supply.
“We already buy a bunch,” Watkins said. “Another concern is that the power grid that gets power from one place to another isn’t exactly the most reliable in the world. Remember the outage in the northeast? It was a grid problem… Does Columbia have enough control over the generation that in an emergency we can still keep our critical services going?”
Windsor pointed out that the vast majority of money that Columbia residents pay for their electricity is sent to companies and municipal utilities outside the city that sell us the energy.
“Energy should be looked at as an economic development issue,” Windsor said. “Efficiency is the key for economic development.”
Free market reality checks
Mike Crist, director of Enterprise Development Corp. and co-founder of a carbon trading company, said, “A lot of the drivers in utility prices are out of our control. When gas hits $5 a gallon it’s going to affect people across the board. When people’s home heating increases by 30 percent, it’s going to affect people across the board.”
The higher costs of burning coal and gas “could easily double our electrical rates,” Crist said. “The more efficient we can get, the more we can lessen the problem. In Europe, they use a third of the fossil fuels we use.”
Crist pointed to standards implemented in Europe as the reason for their success in cutting down on their fossil fuel consumption to a third of U.S. levels.
“The more we delay those, the farther we fall economically,” he said.
However, forum participants said unsuccessful efforts to reduce energy use in Columbia’s rental properties is an example of the difficulties in government-imposed conservation efforts. The problem is significant, because more than half of the residential properties in Columbia are rented.
Watkins said energy used in government-subsidized duplexes for low-income residents has been historically high, but a program to improve their energy efficiency had very low participation.
Jan Weaver, director of the University of Missouri’s Environmental Studies Department, said most potential renters look at the cost of renting the home and rarely take energy prices into account.
“Then they get that heating bill, and it’s $400,” Weaver said. “There are no incentives for the renter to make the home more energy efficient.”
Roper said, “I’m such a believer in the free market, but I don’t know what you do if you have an owner that has no incentive to change and a renter that bears the cost.” ?
Power Lunch participants received elegant portfolios provided by The Bank of Missouri that were filled with background information on energy issues and included additional gifts from Kaleidoscope Videoconferencing.
Power Lunch Participants
• Mike Crist: Director, Enterprise Development Corp., Tantanka
• John Conway: Manager, Bartlett & West; Chairman, Power Supply Task Force
• Ernie Gaeth: Executive Vice President, Riback Supply; Power Supply Task Force
• Adam Heflin: Senior Vice President & Operations Chief, AmerenUE Callaway Plant
• J. Kraig Kahler: Director, CWL • Richard Malon: Former Director, City Water & Light Dept., Power Supply Task Force
• Keith McLaughlin: Senior Vice President of Small Business Lending, Bank of Missouri
• Hank Ottinger: Vice Chairman, Osage Group; Sierra Club; Power Supply Task Force
• Nick Peckham: Peckham & Wright Architects
• Bob Roper: CEO, Central Trust & Investment Company; Power Supply Task Force
• Bill Watkins: City Manager, City of Columbia
• Jan Weaver: Director, University of Missouri: Environmental Studies Department
• Jim Windsor, Rates and Fiscal Planning Manager, CWL