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Fuel diversity needed

Fuel diversity means having a wide variety of fuels to run the power plants   that generate our electricity. If the number of different fuel sources is large,   consumers are protected from the sometimes severe price swings of any one source.   This keeps electricity rates low and strengthens electric system reliability,   which, bolsters our economy and protects our pocketbooks.


For the record, Wisconsin’s generation capacity includes 53.5 percent coal,   28.5 percent natural gas, 11.1 percent nuclear, 4 percent fuel oil and 2.9 percent   from renewable sources, according to the Public Service Commission of Wisconsin.


Indeed, fuel diversity is an issue that is increasingly on the minds of state   regulators, power providers and environmental advocates lately. As Wisconsin   utilities replace and upgrade our aging fleet of power plants, environmental   groups are increasingly vocal in their opposition to siting them, especially   coal-fired generation, opting instead for increased reliance on renewable sources   (wind, solar, hydro, biomass) and natural gas.


Renewables and natural gas offer some promising alternatives on a limited but   growing scale, yet the economics caution that an over-reliance on any one of   these sources will raise energy prices and could subject consumer bills to volatile   price swings created by inadequate fuel supplies.


For example, natural gas-fired generators emit less and can be started on relatively   short notice to serve the load at times of peak demand to supplement the uneven   production of electricity from wind generators. However, as a commodity, natural   gas can be subject to violent price swings, such as during the winters of 2001   and 2003 when the price jumped from $2 per dekatherm to $10, sending heating   bills skyward. Natural gas as a fuel for electric generation can also compete   in the supply chain with natural gas as a home-heating fuel, putting upward   pressure on prices and rates.


Cleaner air


Fortunately, installed pollution controls and new, clean coal technologies   emit far less substances into the environment than the power plants of 20 and   even 10 years ago. In fact, according to the Edison Electric Institute, our   air is cleaner today than it has been in the last three decades, despite a 140   percent increase between 1970 and 1999 in the amount of electricity consumed.   And, even though coal makes up over half of our generation portfolio, particulate   emissions declined 84 percent between 1970 and 1997; nitrogen oxide emissions   will be reduced by 40 percent in less than a year; sulfur dioxide emissions   will be cut in half by 2010; and mercury emissions will be reduced by about   40 percent, and an additional 50 percent of the remaining amount will be cut   over the next five years by many Wisconsin utilities.


While this is certainly good news, the even better news is that coal is easily   the least expensive, most practical and most available fuel used in electricity   generation. With huge domestic reserves making up a 250-year supply, coal produces   electricity at far less than the cost of natural gas and oil. Coal’s critics   lose sight of the fact that eliminating the use of coal will mean increased   reliance on more expensive or imported energy sources. And, when coal is compared   to a wider range of sources, the economic benefits are even more apparent. In   fact, according to the PSC’s strategic energy assessment, the top range for   marginal energy costs per megawatt hour of the various sources is:


  • Nuclear, $6

  • Coal, $15.25

  • Combustion Turbines (Gas), $92.50

  • Oil/Diesel, $124

  • Wood, $15

  • Wind, $46.25


When these costs are considered, it is clear that coal must continue to play   a major role in our state and nation’s energy mix. Admittedly, no individual   fuel is capable of providing the energy required to meet all of our nation’s   energy demands. Rather, a diversity of fuels, as well as increasingly more cost-   effective and efficient ways to use and conserve energy are needed.


Bill Skewes
  Executive Director
  Wisconsin Utilities Association


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