Sierra Club pressures utilities to find alternatives to coal

Downstate coal miners might come to regard him as the devil.

It’s unlikely he’ll get Christmas cards from electric utilities or from coal-friendly Gov. Mitch Daniels.

David Menzer has a use for coal, all right—as a stocking stuffer for electric utilities who’ve made the state No. 2 in use of coal to generate electricity.

"The days of coal being cheap are over… . We believe that renewable energy and efficiency is good for business." Dave Menzer, Sierra Club Indiana director (IBJ photo/ Perry Reichanadter)

The director of the Sierra Club’s new “Beyond Coal” campaign in Indiana aims to spark discussion about the health and environmental costs of the state’s bituminous bounty that for years has brought relatively cheap electric rates.

Menzer and Beyond Coal also are promoting renewable-energy and electric-efficiency measures as an alternative to burning coal.

Now here’s the Dave-is-the-Devil part: He’d like to see one-third of Indiana’s coal generating plants retired.

Utilities in Indiana operate about 90 coal-fired units at 30 locations.

Menzer, 40, best known locally for his work on utility matters for Citizens Action Coalition, reasons it’s just not worth the money to comply with ever-more-stringent environmental rules for coal.

Indianapolis Power & Light, for instance, warned recently it might need to tap ratepayers for up to $900 million to upgrade its coal-fired generating plants to comply with federal rules on mercury and other emissions. IPL might also retire some older units or convert others to natural gas.

“It really makes sense to put that money into something cleaner, in our view, than into something past the point of its useful life.” Menzer said.

On that point, the Sierra Club and electric utilities might agree.

In fact, such have the economics changed under a plethora of new rules proposed by Environmental Protection Agency that utilities are busy reviewing which older plants should be retired and which should be converted to burn other fuels such as natural gas, said Stan Pinegar, CEO of the Indiana Energy Association.

The percentage of electricity generation from coal in the U.S. plummeted to 36 percent in the first quarter from nearly 45 percent during the same time in 2011, according to data from the Energy Information Administration.

Conversely, the percentage of electricity made from natural gas rose to 28.7 percent from 20.7 percent, said the EIA.

“The focus is going to be on gas. That has become real obvious,” Pinegar said.

Spurring economic development

But converting boilers to burn natural gas isn’t the end game for the Sierra Club campaign.

Sure, Menzer, said, it’s great that companies such as Citizens Energy Group are converting a steam plant just upwind of downtown to burn gas rather than coal. But renewable-generation sources, such as wind and solar, have more potential as clean sources and as economic development generators, he said.

IPL, Duke and other utilities within the last five years have begun to obtain a greater percentage of their electricity from wind farms in the northern third of Indiana.

Those projects also have drawn economic development, such as Italian firm Brevini Wind’s plant in Muncie building gearboxes for wind turbines. Menzer also rattles off names of companies elsewhere making gears and other components for such generating units as they become more common in the United States.

There’s also the potential to equip major industrial firms with so-called combined heat and power units that convert heat from the manufacturing process into electricity.

“There’s just a tremendous economic development opportunity, job development opportunity,” Menzer said.

More recently, local companies such as Johnson Melloh Solutions have landed deals to deploy solar farms, such as one planned for Indianapolis International Airport.

Some electric utilities worry they’ll make less money purchasing power from small-scale generators than making it themselves. Menzer insists that so-called feed-in tariffs could be structured that properly compensate utilities.

Such talk of a sudden, widespread conversion to renewable power is frustrating to some in the electric utility industry.

Indiana is making progress on both alternative energy and energy efficiency but “you have to have dependable base load generation,” Pinegar said, noting wind's and solar’s intermittent natures and lack of cost-effective energy-storage methods.

Moreover, there are still uses for coal, such as when Duke Energy soon switches on its controversial new Edwardsport generating station.

The $3 billion facility—about $1 billion above initial estimates—will convert coal to gas, which burns cleaner than coal.

“Coal’s not going away quite yet,” Pinegar said.

But it is fading. AEP Energy said last year it would retire a coal-fired generating unit in Lawrenceburg. NIPSCO said it would shut a Gary unit.

Last year, Duke closed an old coal plant in Edwardsport. The year before, the federal government ordered Duke to shut down three units at its Wabash River Generating Station.

And three years ago, Ball State University said it would phase out its coal-fired energy plant in favor of a massive geothermal system being bored under Muncie.

Menzer would like to see Duke close its Gallagher generating station and said he hopes IPL shutters its ancient coal-fired unit in Martinsville.

Accumulating clout

Sierra Club said that since it launched its Beyond Coal campaign around the country two years ago, about 106 coal-fired generating units have been retired. It’s hard to say for sure to what degree its campaign played a role in those retirements.

Beyond Coal got a big boost last year when New York City Mayor Michael Bloomberg said he’d contribute $50 million of his own money to Beyond Coal.

Sierra Club lawyers have quietly won some victories in Indiana that could portend doom for coal burning units here.

Last month, the Indiana Office of Environmental Adjudication denied all seven objections IPL had filed in Sierra Club’s request for administrative review of environmental permits the state granted the utility to operate its Harding Street station.

Sierra Club argued that IPL made upgrades to the plant that should have required it to comply with best-available pollution control technologies. Because IPL didn’t seek construction permits, there was no opportunity for groups to weigh in, the court found.

In 2009, the EPA issued IPL a notice of violation alleging it made upgrades at several of its plants over 23 years without adding the most modern pollution controls.

The EPA has been in talks with IPL since then and could issue fines or the shut-down of some of its coal-fired units.

Menzer said Sierra Club is now evaluating how it will proceed next regarding IPL’s permits.

The Beyond Coal campaign isn’t about challenging permits, per se; it’s an effort to encourage community discussion about coal’s effects and alternatives to the fuel.

Menzer also plans to work closely with other groups long involved in energy matters, such as Hoosier Environmental Council and Citizens Action Coalition.

The Rockville, Md., native graduated from Frostburg State University in Maryland in 1994 with a political science degree. Right out of college, and much to the dismay of his parents, he began knocking on doors to raise money for a community advocacy group.

The Sierra Club has about 7,000 members in Indiana, a number Menzer wants to grow substantially.•