Wednesday, July 24, 2024

Cleco energy plan calls for tougher scrutiny from Louisiana regulators

by BIZ Magazine

The long-range energy plan that Cleco submitted to the Louisiana Public Service Commission (PSC) this year is incredibly flawed and needs to be fixed. Every scenario in the utility’s energy plan assumes that expensive carbon capture and sequestration is needed at its Madison coal plant.

Meanwhile, Cleco’s energy plan fails to use industry-standard, competitive bids to assess the affordability of different energy generation and storage options. Cleco’s plan also fails to consider the public health impacts its decisions will have on its customers, including the environmental justice implications of its pollution. The PSC regulates monopoly electric utilities like Cleco, and as such, needs to hold the utility accountable for the shortcomings in its energy plan.

The most disappointing omission from Cleco’s energy plan is how the utility’s decisions, including CEO Bill Fontenot, will impact public health in the communities it serves. For each of its planning scenarios, Cleco needs to consider the public health impacts of its coal and gas plant emissions for sulfur dioxide, nitrogen oxide, particulate matter, and mercury. There needs to be a special emphasis on environmental justice communities.

It’s not difficult to do this either. Air pollution can be a major factor in morbidity and mortality, especially for vulnerable populations like the elderly, children and communities of color. It is reasonable that Cleco include these considerations in its energy plan, as existing modeling tools can be used to translate and monetize air pollution into social cost estimates.

Cleco assumes it will build a nearly $1 billion carbon capture project, called Diamond Vault, in every modeled energy scenario. The resulting financial risk to Cleco’s captive ratepayers remains uncertain because the utility has failed to share how much of the costs, if any, will be added to customers’ bills.

Cleco refuses to say who will foot the bill if its carbon capture project fails like the Kemper boondoggle in Mississippi, which ultimately cost ratepayers $7 billion for carbon capture technology that never worked. Cleco’s energy plan then proposes a new gas plant because the carbon capture project is so energy intensive that should it become operational, more than 30% of the electricity currently delivered to customers from Madison 3 would be used to sequester carbon. Ratepayers will most certainly have to pay for a new gas plant.

The carbon capture project also poses a massive environmental threat to Louisiana’s precious groundwater and our environment. Ultimately, Cleco’s proposed carbon capture scheme is a false solution to the very real threat of climate change because it takes away resources that could be deployed on affordable and reliable clean energy, storage, and transmission.

Cleco may find that clean energy is a more affordable option to meet its energy demands over the next twenty years if it were to issue an industry-standard request for competitive bids to identify the least-cost energy generation options. This is common practice in many industries because it allows real-world bids to consider options like cost and reliability.

An Indiana utility performed its first competitive bid process and utility executives were surprised by the findings. As reported by The New York Times:

[In] Indiana, the Northern Indiana Public Service Company, or Nipsco, opened bidding to outside energy developers and found that adding a mix of wind, solar and batteries would be cheaper than building a new gas plant to replace its retiring coal units. “We were surprised by that,” said Joe Hamrock, the chief executive of the company that owns the Nipsco. “Renewables in our particular situation were far more competitive than we realized.”

A competitive bidding process should include the selection of an independent entity to conduct and oversee the process on Cleco’s behalf. This would ensure the process is as transparent as possible in order to achieve increased and diverse bids.

The Sierra Club intervened in Cleco’s energy planning process, yet the utility dismissed many of our recommendations. Where Cleco chooses not to follow the recommendations of community members and energy experts, the Louisiana PSC should require the electric utilities it regulates to follow best practices. For example, Cleco was ordered by the PSC to incorporate how the Inflation Reduction Act could influence its energy planning, and the PSC must go further.

We need strong, robust regulatory oversight of our monopoly electric utilities because captive customers do not have the ability to shop around for a utility provider. If utilities will not voluntarily engage in energy planning that prioritizes customers’ financial and health interests, then it’s incumbent upon the PSC to require monopoly utilities to do so.

Emma Hopkins is an organizer for the Sierra Club in Louisiana.

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