More on Illinois’ Clean Coal Portfolio Standard 2

Now that I’ve had time to review the legislation [PDF] that begat Illinois’ Clean Coal Portfolio Standard, I offer a few tidbits.

Short version: We’re not even going to pretend that coal is clean or cheap anymore. The bill actually defines “clean coal” as high-sulfur coal, and defines “cheap” as being that which doesn’t raise electricity rates too fast.

Specifics:

“Clean,” as used herein, shall be understood to mean dirty

Eligibility for the CCPS is limited to power generation facilities or synthetic natural gas facilities that are derived from coal and sequester at least 50 percent of their CO2. (Synthetic natural gas is coal that has been gasified, then stripped of its impurities, and upgraded to produce something that is chemically similar to natural gas; it is essentially the front end of a coal gasification/combined cycle plant, plus a bit of chemical upgrading.)

With respect to the synthetic natural gas facilities, a plant may only be deemed a clean coal facility if the coal it uses has “... greater than 1.7 lbs sulfur per million Btu content.”

As you might imagine, Illinois coal tends to pass this test. But come on! We’re defining cleanliness by the amount of acid rain we can make? Can I try this at home? (“Take off your shoes, they’re dirty.” “No they’re not. In fact, they have 10 ounces of mud caked on their soles. And I have defined clean as being more than 8 ounces of mud. Time to dance on the couch!”)

“Cost-effective,” as used herein shall be understood to mean not-so-bad-in-small-doses

The preamble to the legislation makes much of the need to lower electric costs, procure cheaper energy, recognize that restructuring hasn’t delivered benefits to Illinois consumers ... the usual spiel. These preambles don’t carry weight, but typically signal why the bill is being passed. As you may recall, new coal-fired generation is massively expensive.  If nothing else, it raises the question of how the legislature was going to square that circle. To wit, how do you possibly subsidize coal in the name of its cheapness?

Easy! You just re-define the term “cost-effective.”

Specifically, the legislation says that utilities who are mandated to buy clean coal power are only obliged to do so to the extent that it does not cause them to increase their rates by more than 0.5 percent per year.

This requires a bit of math. Let’s say that I am currently selling 1,000 units of power at an average price of $1 per unit. So the total cost to my customers is 1,000 x $1 = $1,000. Now suppose I sell one more unit for $5. The total cost to my customers is now $1,000 + $5 = $1005, but I’m selling 1,000 + 1 = 1,001 units, so my average price is now $1,005/1,001 = $1.0039 per unit. That marginal unit was monumentally expensive—five times what I used to pay for power. But through the magic of averaging, my customers rates have only gone up by 3.9 percent.

To be sure, this does provide a certain level of consumer protection—the cheaper the stuff gets, the more utilities will be obliged to buy. But this is tantamount to redefining “sugar” as “sulfuric acid” based on the fact that when you add small amounts of H2SO4 to a candy bar, you hardly notice the burn in your throat.

Come to think of it, that might make it that much easier to pass bills like this in other jurisdictions. Why, after all, do we simply define this bill as a Clean Coal Portfolio Standard? Is that really the limit of our creativity? Why not call it the Clean Awesome Tasting Coal Portfolio Standard? After all, it makes sugar rain from the sky!

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