Opponents File Expert Finance Testimony: Sutherland 4 the Most Expensive Coal Plant In the Country
By Plains Justice
An independent financial expert testifying for a coalition of Iowa clean energy, environment, farm and public health organizations says that Alliant Energy's proposed Marshalltown coal plant will be the most expensive in the country and gouge ratepayers for decades to come.
Soon, the Iowa Utilities Board will determine the rates that Alliant subsidiary Interstate Power and Light (IPL) can earn on its proposed Sutherland 4 power plant in Marshalltown. According to Thomas Sanzillo, IPL hasn't addressed four major risks sufficiently: the cost of construction, weak demand, likely regulation of greenhouse gases in the near future, and the rising price of coal.
“The company has decided to place the risk for this plant squarely on the ratepayers. This is costly for Iowans, and in the long-term risky for shareholders,” Sanzillo said. He is a former First Deputy Comptroller for New York State who has reviewed the management and operation of the New York Power Authority and the Long Island Power Authority and supervised New York State's $150 billion public investment fund.
“IPL's plan could double the cost of electricity consumers pay to keep the Marshalltown plant solvent.” Sanzillo said. “This does not mean the monthly household bill doubles. It does mean a stiff monthly increase. This is not the time to build a coal plant. There are just too many risks and the plant is not needed.”
IPL is asking for the highest rate of return on equity—that is, the annual return on an investment an investor can expect to receive—of any new generating plant currently under review, reflecting their concern about the substantial financial risks of the project.
IPL's cost estimates for its 660 MW plant are confidential, but Sanzillo's public testimony states that it may be the most expensive coal plant in the United States.
“The final cost of this plant cannot be projected with any certainty,” says Sanzillo. ” What is certain is, all of the most important costs are rising at the same time. Construction prices. Coal costs. And the costs of carbon dioxide, the major contributor to global warming, are all rising.”
“It's a real insult to consumers to pour billions into an unneeded coal plant, then make us pay huge fuel and regulatory costs on it for the next 50 years, when for less money we could implement aggressive energy efficiency measures that would decrease demand, encourage innovation, and pump money into the state's economy,” said attorney Carrie La Seur, president of Cedar Rapids environmental law center Plains Justice and counsel for the intervenors.
Sanzillo also counters IPL's claim that the plant is needed to meet future demand, saying that IPL does not base its projections on actual electricity usage. IPL forecasts a surge in demand between 2010 and 2030, but Sanzillo points out that the U.S. Census Bureau predicts a decline in Iowa's population during that time. IPL also counts on an increase in industrial demand from new ethanol plants, but many facilities have stopped or abandoned construction since the plant was proposed, as predicted by the intervenors' previous witnesses.
“Even IPL acknowledges that the need for the plant has diminished,” Sanzillo said. “IPL has made important gains in its energy efficiency program. Utilities, government at all levels and citizen groups across the country are using this kind of achievement to do more. IPL is well positioned to do the same.”
With greenhouse gas regulation on the horizon, Sanzillo testified that the cost of retrofitting the plant with carbon capture and storage technology could be enormous, further driving up the price Iowans pay for electricity.
The intervenors (Community Energy Solutions, Iowa Environmental Council, Iowa Farmers Union, Iowa Renewable Energy Association, and Physicians for Social Responsibility Iowa Chapter) argue that energy efficiency has received short shrift in IPL's planning.
Sanzillo points to Pacific Gas & Electric, one of the largest utility companies in the country, as a role model. PG&E plans to decrease its overall electricity usage by 2,500 MW in the next ten years, meeting 50% or more of its demand growth simply through improved energy efficiency. PG&E has achieved enough savings from its past efforts to avoid 24 power plants.
[Public version of Sanzillo's testimony available upon request.]
Carrie La Seur, Ph.D., J.D.
President and Founder
100 First Street SW
Cedar Rapids, Iowa 52404