Thursday, March 27, 2008

Got Inflation? $998 Million is now $1.25 Billion

In a move that is beginning to suggest a pattern, Santee Cooper has revised its cost estimate for one of its two proposed Pee Dee Coal plants.

As with its decision to reevaluate its approach to mercury pollution, the revised cost for the plant announced by Santee Cooper is something that opponents of the plant have called for from the beginning.

Too bad Santee Cooper attempts to blame it on pollution control equipment and permitting, when it actuality the price hike is a result of labor, materials, and financing.

Still, its nice to see Santee Cooper moving towards the truth these days. Its clear, however, which side is providing the more reliable information.

There's room for improvement, though, as always. In the Post and Courier article below detailing the inflating price tag of the coal plant, a Santee Cooper spokesperson claims that coal is the most abundant and cost-effective source of energy.

Unfortunately, this is false.

Energy efficiency is indisputably the cheapest and most abundant source of electric capacity available (Coal, meanwhile, is fast becoming one of the more expensive ways to meet our power needs, especially once the federal government puts a price on its unmatchable carbon dioxide emissions).

Here's hoping Santee Cooper comes around to admitting this fact soon too.

Santee Cooper ups cost of coal plant
Utility increases price tag for proposed Pee Dee facility to $1.25 billion
By Tony Bartelme
The Post and Courier
Thursday, March 27, 2008

The price of gasoline isn't the only thing that's going up. Santee Cooper said Wednesday that the first phase of its proposed Pee Dee coal-fired power plant will cost $1.25 billion, up from its original estimate of $998 million.

Surging demand for electricity is driving up prices for new power plants across the world, as utilities scramble for concrete, steel and other construction materials, said Laura Varn, Santee Cooper's vice president of corporate communications.

The costs of new pollution-control equipment coupled with delays in getting state and federal permits also kicked up the Pee Dee price tag, she said. Ratepayers will pay for the increase, she said, though it's too soon to say how much it might add to people's power bills. The new estimate isn't a deal-killer for the project, she added. "Coal is still the most abundant and cost-effective fuel source."

Santee Cooper wants to build a 600-megawatt plant near the tiny town of Kingsburg in Florence County. Santee Cooper said it needs the plant by 2012 or its customers could face brownouts and blackouts.

The utility is seeking state and federal permits for two 600-megawatt generators, but the power company's board has OK'd only one.

Conservation and citizens groups say the Pee Dee project will foul the air with greenhouse gases and add mercury pollution to areas already suffering with high levels of mercury-contaminated fish. They say that focusing on conservation and renewable energy makes more sense.

Blan Holman, a lawyer for the Southern Environmental Law Center, said Santee Cooper's $1.25 billion price tag is "still a lowball" that "doesn't even include the big rise in coal prices or the Hindenburg-sized" costs that could come with proposed new taxes on carbon emissions.

Ben Moore, climate and energy project manager for the Coastal Conservation League, said that the $1.25 billion estimate is more realistic, but that it "won't be the final number."

Santee Cooper and many other utilities have long depended on coal to provide low-cost, year-round power. But amid rising construction costs and concerns about global warming and mercury pollution, utilities canceled or postponed more than 45 projects in 2007, a new analysis by the U.S. Energy Department found.

In another setback to coal interests, Wall Street investment banks said last month they would include the cost of carbon emissions in their financing calculations, a move that some analysts think will cut coal's cost advantage over other energy options,
including wind and some types of solar power.

A look at other coal projects shows Santee Cooper's estimate is on the low end of the spectrum.

Duke Power, for instance, said a new 800-megawatt generator for its Cliffside plant near Charlotte will cost $1.8 billion, plus another $550 million to $600 million in financing costs.

In Florida, a utility recently scuttled a plan to build a 750- megawatt generator for $1.4 billion. In Idaho, another utility abandoned a 600-megawatt plant tagged at $1.4 billion.

Varn said the "very distinct reason why our construction costs are lower" is that Santee Cooper serves as its own general contractor when it builds a plant.

She said this approach is "fairly uncommon in the industry," but that it keeps costs down and ensures employees "know the system inside and out."

She added that the original $998 million estimate was two years old, and that Santee Cooper revised the cost as "a good business practice."

3 comments:

Anonymous said...

A Humble Suggestion: You should read the articles you post before commenting. It just makes you look bad when I have to keep coming on here to correct you.


You said:
"Too bad Santee Cooper attempts to blame it on pollution control equipment and permitting, when it actuality the price hike is a result of labor, materials, and financing."

The article says:
"Surging demand for electricity is driving up prices for new power plants across the world, as utilities scramble for concrete, steel and other construction materials, said Laura Varn, Santee Cooper's vice president of corporate communications. The costs of new pollution-control equipment coupled with delays in getting state and federal permits also kicked up the Pee Dee price tag, she said."


Seems pretty clear to me that the Santee Cooper spokesperson indicated material costs as the primary factor in the higher price. I'm astounded that anyone could read this article differently.

It must take an awful lot of effort and intent to find something sinister everytime people who disagree with you are interviewed. Frankly, I'm not sure it's healthy.

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