Gov. James Douglas
Gov. James Douglas painted a dark picture of the state’s economy for reporters at his weekly press conference on Thursday.
Douglas announced that revenue figures for January have come in $5.5 million below the most recent revenue forecast, or 4.5 percent less than expected.
“That underscores the fact that we’re in very uncertain territory from an economic standpoint and emphasizes the need to take important steps to right our fiscal condition as quickly as we possibly can,” Douglas said.
He also made reference to a recent White House report that indicates unemployment in the United States will remain at 10 percent in 2010 and projects an ongoing rate of 6 percent for the next five years.
This makes passage of the “Challenges for Change” bill, S. 238, all the more imperative, Douglas said. He thanked the Senate for passing the bill this week, and asked the House to push the $38 million plan forward.
“Moving quickly on this $38 million plan will allow us to proceed with certainty on the $151 million challenge that we’re facing,” Douglas said. “The effort goes beyond next fiscal year’s budget. If we can achieve state budget efficiencies now we’ll realize even greater savings in the future. That’s essential because the effects of this recession are going to continue for a few more years.”
The ultimate solution, however, Douglas said, is “growing our tax base and ensuring Vermonters have access to good jobs that pay good wages.”
Douglas also urged the Legislature to pass the so-called jobs bill, which would infuse $8.7 million in federal stimulus dollars in the economy, before Town Meeting Day. He said the money would be used for what he called “critical economic development needs,” such as workforce training, spring planting grants for farmers, capital for companies, tourism marketing and broadband investments.
He also called for a roll back of capital gains and estate tax changes that “the Legislature imposed last year.”
“We’ve to make our state more competitive economically,” Douglas said. “If we’re going to avoid a slow and halting recovery we have to have a competitive tax burden and provide incentives for creating more jobs.”
When asked whether he thought the jobs bill should have been pushed through the budget adjustment bill for fiscal year 2010, so that $1 million of that funding could have been made available for dairy farmers, Douglas said he had hoped the jobs bill would have been passed by the end of January. Sen. Vince Illuzzi, R-Essex-Orleans, had tried to attach the bill to the budget adjustment act, but the House objected, Douglas said.
“We can talk about process all we want, whether it’s budget adjustment or the jobs bill, farmers need the money to plant their crops very soon,” Douglas said. “And 40 companies need that job training money on March 1, VEDA can get some more low cost loans out to create more jobs as soon as possible. We can start expanding broadband as quickly as we can do it. I don’t think Vermonters care about the legislative process, they need the money.”
Douglas said the $8.7 million in stimulus dollars is being used for economic development programs instead of filling the budget gap because they are “one-time” dollars, funds from the federal stimulus bill from February of last year, that won’t be available next year.
“One-time dollars should be used for one-time purposes,” Douglas said. “Remember, the purpose of the recovery act was to create jobs. Last year I was critical of legislators for … building (some of those funds) into the budget base. They put money in Public Safety and we need the state police every year and we don’t want those dollars to go away so I think this is exactly the purpose for which these were intended.”
Re-structuring what? Every time he mentions re-structuring I get scared that more people will be thrown out into the cold so that even more rich people can get nice tax breaks.
There is no restructuring. Just cutting. The State has gone through more efficiency plans than you can throw a stick at; anyone see any actual restructuring or efficiency come out of the blue ribbon commission, or strategic enterprise initiative? Challenges for Change is just another excuse to gut our State government disguised as an efficiency exercise. But the catchy name isn’t fooling most people.
The double speak continues.
Revenues are down so let’s reinstate the 40% capital gains tax. This will cost the state tens of millions in lost revenue. Good plan.
But he says it will make VT more “competitive economically.” Interesting. Only four states have such an exclusion. Exactly who are we competing with?
Moreover, there is no evidence that the assets giving rise to the gains are producing jobs in VT. Most such assets are invested elsewhere (Fortune 500 stocks and various types of public & corporate bonds).
But this governor never lets the facts get in the way of his effort to mislead the public as he seeks (again) to transfer public funds to the wealthy.
Does the public get to know what 40 companies are getting this job creation money?
About $21,000,000 of federal stimulus funds were added to the Clean Energy Development Fund, CEDF, to subsidize solar, wind, methane, hydro projects that produce expensive alternative energy which make Vermont LESS competitive RELATIVE to other states and the world.
The normal budget of CEDF is about $7 million that is a payment from Vermont Yankee.
STUDY OF IMPACT OF CLOSING VERMONT YANKEE by Willem Post; January 18, 2010
http://www.coalitionforenergysolutions.org/
INTRODUCTION
The New England Electric Grid, NEEG, capacity about 32,000 megawatts, power supplied about 130,000 GWh/yr, includes over 350 central power plants and 8,000 miles of high-voltage transmission lines to provide power to about 6.5 million customers. The NEEG power is 62% from CO2-producing fossil fuels, 26% from CO2-free nuclear, 6% from CO2-free hydro, 4% from CO2-producing wood waste, 2% from CO2-producing solid waste and 1% other (i.e., CO-free wind, solar, etc.). Almost all of this power is STEADY power and the NEEG is designed accordingly. The reason the few New England nuclear plants produce so much electricity is because their capacity factors, CFs, are about 0.92, much higher than of most plants on the grid.
Vermont Yankee, VY, Mark 1 boiling water reactor, BWR, rating 620 MW, replacement cost about $5 billion, produces 4,500-5,000 GWh/yr of LOW-COST, CO2-FREE STEADY power. VY’s license expires in 2012. Entergy, the owner of VY, has requested that VY’s license be extended to 2032. An unusual request? In the US, 17 of 36 plants with BWRs had their license extended from about 40 years to about 60 years; 12 of 31 decommissioned power reactors are in Safestore. All of the extensions, except one, were for Mark 1 reactors. Are license extension opponents, aided by vendors and advocates for expensive PV solar and wind power, making a mountain out of a mole hill?
The closing of VY in 2012 would immediately require increased power purchases from Hydro-Quebec, HQ, and from the NEEG, and ultimately would require spending billions of dollars for the construction of PV solar and wind systems to provide 2,086 GWh/yr to replace the power provided by VY to Vermont. Other states also will have to increase their purchases and, if so inclined, raise billions of dollars for PV solar and wind systems to provide about 2,500-3,000 GWh/yr. Removing VY, a LOW-COST, CO2-FREE, STEADY power producer, fully paid for, from the CO2-free column into Safestore for 60 years is an unwise waste of CO2-free resources. We should be ADDING steady power plants to the CO2-free column to reduce global warming.
Vermont and other New England states will have deficits for some years to come. People, including voters, are suffering; the Great Recession is here and now. Closing VY by a unilateral act of the Vermont Legislature is irrational exuberance and hubris to the nth degree. Vermont would be shooting itself (and other states) in the foot at the worst of times. Vermont will become a pariah state in New England at exactly the time it needs to coordinate with other states to integrate PV solar and wind power into the NEEG.
During the VY Forum at Norwich, VT, Mr. Gundersen, a nuclear consultant, said … that is a three-year problem.” He was referring to buying CO2-producing fossil power from the NEEG until sufficient renewables are built in Vermont to fill the hole of VY.
I think CO2-producing, fossil fuel power purchases from the NEEG by Vermont (and others currently buying from VY) will last longer than 3 years, because it will take longer to construct the renewables capacity that would roughly equal the 40% of VY’s output that Vermont used in 2008. This means the CO2-producing plants have to increase their outputs to provide power to Vermont and other states on the NEEG; the nuclear plants on the NEEG already are operating near maximum capacity. A step backwards for global warming.
SUMMARY OF STUDY RESULTS
Closing Vermont Yankee will increase power cost by $620,500,000 during the 6-yr period after VY is closed.
Closing Vermont Yankee will raise electric rates from $0.120/kWh to $0.137 kWh, or 14.2%. Closing Vermont Yankee will require a capital expenditure to implement renewable power systems in 6 years = 2,086/3,595 ($2.49 billion + $5.14 billion) = $4.43 billion, as proposed by VPIRG “Repowering Vermont” report, Strong Case.
Closing Vermont Yankee will add 66 billion lbs of CO2 to atmosphere, because of CO2 power purchases from the grid for 6 years.
Closing Vermont Yankee will eliminate 635 high-paying union jobs PLUS at least that many more in the VY area, because of the lesser spending by these laid-off workers who will find it difficult to find work that pays as well, who will be paying LESS in state taxes, who will be collecting MORE in state benefits for some years, all while the state is dealing with deficits during the Great Recession.
- Vermont, a marginal state for PV solar and wind power, will have to offer a PV solar FIT of at least $0.30/kWh and a wind FIT of at least $0.08/kWh and a 20-year power purchase agreement, PPA, to attract the resources to build the PV solar and wind systems.
- The quantity of variable and intermittent power cannot be fed into the Vermont grid, unless an economical way is found to store it. That means Vermont has to feed it into the NEEG. But the NEEG is not designed for large variable and intermittent power inputs.
- PV solar power in Vermont has a capacity factor, CF, of about 0.143, the output varies with the sunlight, of not much use on cloudy days, at night, during the winter, requiring CO2 power purchases from the grid throughout the year. Solar power, without major financial incentives, is expensive relative to utility power, especially for residences.
- Big wind power on high ridgelines in Vermont has a CF of about 0.30, the output varies with the wind strength, steadiness and duration, of not much use on windless, too little and too windy days, requiring CO2 power purchases from the grid throughout the year. Big wind power cost is about 1/6th of the PV solar power cost.
- Small wind, 10 kW or less, usually located away from high ridgelines, has a CF of about 0.10; its power is even more expensive than PV solar power. Subsidies for small wind are poor policy, an egregious waste of scarce taxpayer money. See attached spreadsheet.
ANALYSIS OF ALTERNATIVES
Before rushing into closing VY, some questions need to be answered: What is the installed capital cost of the renewable power systems? What is the electric rate increase? How much additional CO2 is produced due to closing VY? What is the impact on the economy in the vicinity of VY and on the State of Vermont.
We will study two alternatives to answer these questions and use the following assumptions: it will take at least 6 years to produce the renewables; a new PPA with VY is at $0.06/kWh (the current PPA at about $0.042/kWh expires in 2012); NEEG power is sold to utilities at $0.06/kWh; to simplify the analysis, Vermont’s power prices and, due to efficiency measures, its 2008 consumption of 6,134 GWh/yr will stay about the same until 2018.
Per VPIRG “Repowering Vermont” report, Strong Case, renewable power is to be 15.4% solar and 27.4% wind, for a total of 42.8% = 3,595 GWh/yr by 2032. The installed capital costs of the VPIRG Strong Case is about $2.49 billion for small and big wind and about $5.14 billion for small and big solar (2010$). Vermont uses about 40% of VY’s output = 2,086 GWh/yr = 34% of Vermont’s 2008 electricity consumption. See attached spreadsheet.
Let us study the impact of providing the 2,086/3,595 fraction of the VPIRG Strong Case. For study purposes, I assumed, with an all-out effort, it would take about 6 years to build the PV solar and wind systems and integrate them into the NEEG.
BASE CASE: VY CONTINUES OPERATING
Consumer cost of power consisting of: 34% VY power + 66% other power for 6 years = $4,416,500,000. See note 1.
Consumer statewide average unit cost of power for 6 years = $4,416,500,000/(6,134 GWh/yr x 6 yrs) = $0.120/kWh
Capital cost is ZERO dollars.
CO2 impact is unchanged.
ALTERNATIVE CASE: VY CLOSED
Build, own, operate, maintain renewable power sources which are assumed to come on line from 2012 to 2018; Vermont to have an FIT of $0.30/kWh for solar and $0.08/kWh for wind, and 20-year PPAs to attract capital, i.e., billions of dollars.
Consumer cost of power consisting of: NEEG power to replace VY + renewable solar and wind power to replace VY + 66% other power for 6 years = $5,0370,000,000. See note 2.
Consumer statewide average unit cost of power for 6 years = $5,0370,000,000 /(6,124 GWh/yr x 6 yrs) = $0.137/kWh
Capital cost to implement renewable power systems in 6 years = 2,086/3,595 ($2.49 billion + $5.14 billion) = $4.43 billion
CO2 charged to Vermont (40%) = 620,000 kW x 8,760 hrs/yr x 0.9 x 6 yrs/2 x avg 1.8 lb CO2/kWh = 26,395,632,000 lbs
CO2 charged to other states (60%) = 1.5 x 26,395,632,000 lbs = 39,593,448,000 lbs
Vermont utilities buy their power at an average of about $0.06/kWh and sell it at an average of about $0.12/kWh. The “$0.06/kWh added by utility” is for distribution, various utility costs and return on investment.
Note 1. $0.12/kWh ($0.06 +$0.06, added by utility) x 2,086 GWh/yr x 6 yrs + $0.12/kWh ($0.06+ $0.06 added by utility) x (6,134 GWh/yr – 2,086 GWh/yr) x 6 yrs = $4,416,500,000
Note 2. $0.12/kWh ($0.06 + $0.06, added by utility) x 2,086 GWh/yr x 6 yrs/2 + [$0.36/kWh ($0.30 + $0.06, added by utility) x 0.154/0.428 x 2,086 GWh/yr + $0.14 ($0.08 + $0.06, added by utility x 0.274/0.428 x 2,086 GWh/yr] x 6 yrs/2 + $0.12/kWh ($0.06+ $0.06 added by utility) x (6,134 GWh/yr – 2,086 GWh/yr) x 6 yrs = $5,0370,000,000
IMPACT ON ELECTRIC RATES AND CO2 EMISSIONS
During the 6 year period, the ALTERNATIVE CASE will:
- increase electric costs by $5,037,000,000 – $4,416,500,000 = $620,500,000, equivalent to raising the unit cost from $0.120/kWh to $0.137 kWh, or 14.2%; this is in addition to future increases due to rising energy prices and any additional acts of the Vermont Legislature that will raise energy prices. If all of the VPIRG Strong Case were implemented more power would be bought at $0.30/kWh for PV solar and more at $0.08/kWh for wind which would increase electric rates by at least another 10% after the 6 year period.
- add CO2 to atmosphere = 66 billion lbs; a step backwards for global warming.
Rushing into expensive, variable, intermittent wind and solar power without, what engineers call, systems planning (in this case NEEG-wide planning, including HQ) is unwise; each state acting on its own to encourage renewables will not lead to a desired overall result. Vermont acting on its own to shut down VY is unfair to the CO2 reduction efforts of the people in other states.
THE DANISH MODEL
Denmark has huge wind power potential. It started to develop it after the oil shock of 1973. In 1996, Denmark, Norway, Sweden, and Finland created Nord Pool, which trades in and manages power flow between these nations. The main sources of power are hydro (56.9%), nuclear (21.9%), coal (6.3%), biofuel (5.1%) and wind (2.6%, mostly Danish); only abour 13% is from fossil fuels. As the generating modes differ and are distributed differently in the various nations, the need for power will vary from nation to nation and at different times. Nord Pool helps to optimize the use of available power and reduce local deficits. Electricity prices would be higher if all the Nordic nations had to build enough generating capacity to be individually self-supporting.
Denmark has about 5,500 wind turbines (about 89% are from VESTA), total capacity about 3,125 MW; this capacity has not changed by more than 1% since 2004. Denmark has two electric grids: West grid (about 4,300 wind turbines, capacity 2,430 MW, output 5.6 TWh/yr) and East grid (about 1,200 wind turbines, capacity 695 MW, output 1.6 TWh/yr). They are not interconnected. The West grid has robust connections to Norway, Sweden and Germany. The East grid has robust connections to Sweden and Germany.
As a result of Denmark’s early start in wind power, VESTA has become the No. 1 turbine supplier in the world with about 19.8% of the world market; GE is No. 2 with 18.6%. VESTA has about 4,900 wind turbines with a total capacity of 2,434 MW in Denmark. It has about 39,000 wind turbines worldwide with a total capacity of 35,400 MW. It installs one turbine every 3 hours around the clock, as does GE.
Denmark’s 5-yr average windpower PRODUCTION is about 19-21% of its total production; wind varies year-to-year. Denmark’s 5-yr average windpower CONSUMPTION is about 9% of its total consumption. After 30 years of rebuilding its two electric grids and using nationwide electric demand/supply management (smart meters, smart appliances, load control switches), Denmark’s grids are capable of accommodating about 10% of variable, intermittent wind power. During windy times when electric demand decreases in Denmark, etc., selected wind farms are idled, as part of electric supply/demand management. Any production increases beyond about 9%, due to a good wind year, or due to future increases of Denmark’s wind capacity, currently mostly offshore, are/will be exported. Denmark’s production cannot rise quickly because modifications to the grids of Germany, Sweden and Norway would need to occur in tandem requiring major coordination and “horse trading” to move forward.
Denmark has a population of 5.5 million with about 2.5 million households connected to district heating loops. Denmark has about 550 distributed small (coal, gas, biomass) combined heat power, CHP, plants, aka cogeneration plants. Instead of exporting all of the excess wind power, it has been proposed to use some of it for heating HTHW loops of the district heating sytems, i.e., a form of thermal storage. Denmark’s announced goal of 50% of its electricty PRODUCTION from wind by 2025 means that nearly all of it will be exported and/or used for augmenting hydro power in Sweden and Norway, for heating HTHW loops (proposed), and for charging hybrid/all-electric vehicle batteries (far into the future).
Graphs of the daily power supply profiles and the daily production and exports of wind power for both grids show that more than 50% of all windpower is exported to the grids of Norway (total production 137 TWh/yr of which 27,528 MW of hydro provides 98% = 135 TWh/yr) and Sweden (total production = 135 TWh/yr of which nuclear provides 47% = 63.5 TWh/yr and 16,209 MW of hydro provides 44% = 59.4 TWh/yr) and Germany (total production = 606 TWh/yr of which thermal provides 62% = 375.7 TWh/yr and nuclear provides 28% = 169.7 TWh/yr).
The only reason Denmark’s high level of windpower production “works” is because robust connections exist to LARGE nearby grids that are willing to cooperate (by modulating the outputs of their hydro plants and pumped storage) and because the exported windpower is mostly sold about 5-10% below spot prices; i.e., a mutually beneficial arrangement.
However, the spot prices for wind are below Danish production costs, i.e., Danish households are subsidizing wind power exports which has contributed to Denmark having the highest RESIDENTIAL electric rates in Europe (energy $0.15/kWh + fees, taxes, transmission 0.19/kWh = 0.34/kWh, about double the price in the UK and about triple the price in France which gets about 80% of its power from its load-following nuclear plants and most of the rest from hydro. France has one of the lowest residential electric rates in Europe. The Danish COMMERCIAL rate is kept at about 1/3 of the residential rate for international competitive reasons; an illegal trade subsidy?
If it took Denmark, the paragon of energy efficiency in Europe, 30 years to accommodate about 10% of variable power with help from Norway and Sweden, how will all this play out within the NEEG? Where is the mutually beneficial arrangement? Is Hydro-Quebec, HQ, needed for “smoothing” variable power? Will NEEG-wide supply/demand management systems be needed? See IMPACTS OF VARIABLE, INTERMITTENT POWER ON GRIDS by Willem Post.
IAEA data for 2004, 2005; Danish Annual Energy Statisitcs 2007; Danish Energy Authority October 2008.
http://www.claverton-energy.com/danish-wind-power-and-electricity-export-in-2007.html
http://www.windaction.org/documents/262
http://incoteco.com/upload/CIEN.158.2.66.pdf
http://en.wikipedia.org/wiki/Wind_power_in_Denmark
http://www.world-nuclear.org/info/inf19.html
http://en.wikipedia.org/wiki/Boiling_water_reactor
I agree with Doug. this Governor has spent all his terms trying to figure out how to transfer Vermont’s wealth from the poor and middle classes to the wealthy. That has been the Republican strategy since Ronald Reagan. He has been doing it all along and, at least until last year when Shap Smith called his bluff, the legislature has merrily gone along. All of these tiger teams, these panics over budgets, etc. are merely veils to hide what he, and his party, are doing. The rich, flush with their reprieve from taxes on capital gains, spend it on condos in florida or investments in various funds, not in something so stupid as job creations. Yet, so many rank and file Vermonters buy this line, like they would a new hunting rifle.