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Highwood/RUS lawsuit

MEIC Challenges Federal Subsidies For Dirty New Coal-Fired Power Plants

RECENT UPDATE:

MEIC Appeals Federal Decision to Fund Highwood

(August 2007)  As Montanans face another year with record-breaking temperatures and rampant wildfires, the question should arise whether the federal government ought to make the problems worse by funding projects that increase global warming. That question is at the heart of the lawsuit that MEIC, EarthJustice, Citizens for Clean Energy, and Sierra Club filed against the federal Rural Utility Service in July 2007 (Read complaint).

The Rural Utility Service (RUS)—a part of the U.S. Department of Agriculture—was established during the Depression to electrify rural America. Since that time rural America has been electrified. Now this anachronistic agency is preparing to provide billions of dollars in low-interest loans for a new wave of coal-fired power plants—the very same power plants that will put millions of tons of global warming pollutants into the atmosphere each year.

RUS insists that its funding of any one plant will have a negligible effect on worldwide global warming emissions. It refuses to consider the cumulative effects of emissions from all of the plants it may help fund.

The lawsuit aims to compel RUS to take a hard look at the
environmental harms caused by new coal plants before it commits billions of taxpayer dollars to under-writing these risky investments (especially as Wall Street is down-grading coal stocks, citing anticipated regulation of greenhouse gas emissions that is certain to increase the cost of burning coal).

Highwood is the first coal-fired power plant that RUS has proposed funding in many years, although there are seven other plants currently being considered. The analysis conducted by RUS for Highwood proves that the agency decided to fund this plant regardless of its environmental, economic, and cultural impacts. And RUS acts as if it has unlimited money, as it has said it will fund 85% of the project even though the cost keeps escalating. RUS has put no dollar figure on that 85% share.

RUS ignored the myriad impacts and refused to consider any less polluting alternatives to a large coal-fired power plant. The impacts that were given short shrift in the RUS analysis include:

  • millions of tons per year of global warming pollutants;
  • thousands of tons of other air pollutants including sulfur dioxide, fine particulates, nitrogen oxides, and hazardous substances including mercury;
  • about 80,000 tons of solid waste per year that will contain toxic metals including mercury, lead, cadmium, chromium, and arsenic, which will be dumped on the site in unlined landfills that are exempt from regulation under State law; and
  • the effect the plant will have on a National Historic Landmark.

RUS ignored these issues, in part, because it assumed that the rural electric co-ops involved in SME need the electricity. But RUS never actually analyzed whether this was the case. The environmental analysis assumed that SME has 120,000 customers. In fact, the five co-ops involved in SME only have 25,000 members. RUS assumed this plant would also serve the city of Great Falls. But the City is prohibited by law from selling the electricity to residential customers, and is now searching the state for customers to buy its 15% share of the plant’s output. In fact, the City of Great Falls, in its desperate search for additional customers, recently asked the Cities of Helena, Missoula, and Bozeman to purchase its power. The Helena City Commission, citing global warming impacts and other issues, said no. The Missoula City Council said yes, although it is unclear whether the members really understood what the City was signing up for. MEIC is leading an effort to have this decision reversed. The Bozeman Commission has not yet made any decision.

The five co-ops have never needed 250 MW of electricity. The annual peak usage of all of the co-ops combined is only 124 MW. Even this figure is inflated because the co-ops experience peak demand at different times. Coal plants aren’t even supposed to serve peak loads, as they don’t have the ability to vary the amount of electricity they generate. They are either on or off, which makes them a poor choice for serving peak loads that vary over the course of the day and year. Instead, coal plants have always been used to serve base load (i.e., the demand for power that doesn’t fluctuate by time of year or time of day). The electricity need of the five co-ops is actually 54 average megawatts. Since the Western Area Power Administration provides these co-ops with 20 MW of electricity each year, their unmet need is closer to 34 average MW a year. That is a far cry from 85% of a 250 MW plant. Although these issues were raised with RUS, they were brushed aside in the economic analysis of the plant.

So what is the actual demand for electricity by the five co-ops, and how much is it expected to grow over time? RUS never answered that question. It assumed that all of the figures SME prepared were accurate. RUS never double-checked this incorrect assumption, and is planning on spending hundreds of millions of dollars to fund what will likely become mainly a merchant plant ­­(i.e. one that sells its power to the highest bidder on the open market).

Should the federal government really be funding a merchant plant that will pollute the air around Great Falls and contribute to global warming? At the very least, MEIC believes that RUS should consider these factors before opening its checkbook for a risky venture involving outdated coal-burning technology.

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