Uncertainty about the future of coal power plants could prevent Arizonans from tapping the inexpensive and abundant resource to meet their growing electricity demands, and likely will mean higher energy bills.
Coal powers a hefty portion of American appliances for electric utilities and their ratepayers.
But coal releases more carbon dioxide than other energy sources, and with growing agreement that those emissions must be capped, cut or taxed to address global warming, utility companies see coal as a low-hanging yet forbidden fruit. With legislation pending in Congress and other parts of the world to charge utilities for CO{-2} emissions, utility officials are hazy on the future of traditionally cheap coal power.
Companies such as Arizona Public Service Co. and Salt River Project are wary of committing to new coal projects that might seem inexpensive now. New global-warming laws could make those plants much more expensive to operate down the road.
They predict they either will have to pay more for the emissions or pay more for yet-to-be-invented equipment to catch those emissions. Or they could rely on more expensive sources of electricity.
Like all other utility expenses, those would be passed on to ratepayers in monthly bills.
For example, Sens. Joe Lieberman, I-Conn., and John Warner, R-Va., support legislation that aims to cut greenhouse-gas emissions 19 percent below 2005 levels by 2020, and 63 percent by 2050.
APS officials used some assumptions to calculate that would cost them $180 million a year in 2012 in operating expenses, based on the coal plants they operate. That would add 5 percent or more to customer bills. SRP officials declined to offer such estimates.
A separate analysis of the bill by the U.S. Environmental Protection Agency estimates that if utilities could pass on the expenses, customers could see bills go up 44 percent in 2030 and more afterward.
Whether that bill or similar legislation gets passed, and when, is completely up in the air. Lenders already are setting new guidelines for coal plants, though, to make sure the potential expenses are accounted for in business plans.
Filling the gap
The uncertain future of coal generation is revealed in the blueprints for the proposed Desert Rock coal-fired power plant outside Farmington, N.M.
Developer Sithe Global Power would be happy to see APS or SRP sign agreements to buy the plant's electricity for Phoenix customers. But the utilities are holding off on new big coal plants until they know about the costs.
A huge gap in the middle of the 1,500-megawatt Desert Rock plant's design could be the deal breaker or deal maker.
Sithe is leaving space for equipment that can capture CO{-2}, but nobody knows how to do that very well yet.
"When you take coal into consideration, you have to take in CO{-2} as part of the equation," said Nathan Plagens, vice president of the Desert Rock Energy Project. "When we get this carbon regulation straightened out, we can put something in that gap."
Plagens takes in the sweeping landscape of the high-desert site near the Four Corners for the proposed plant, with monumental Shiprock and Colorado's snow-capped peaks on the horizon.
The site is on the vast Navajo Reservation and has the endorsement of the tribal government.
A few miles away, draglines work around the clock digging coal for another generator, the Four Corners Power Plant run by APS, and stand ready to fuel Desert Rock if it gets built.
Plagens has a few other hurdles before that happens. His company just sued the Environmental Protection Agency for delays in getting an air permit for the plant. He said the EPA is stalling because coal is "politically incorrect" amid the growing concern over global warming.
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