Utilities Exploit Market Loopholes, Costing Midwest Consumers $350 Million in 2018 - Study Finds Nearly One Fifth of Coal Generation the Midwest Operated Uneconomically

Regulated monopoly utilities overcharged millions of U.S. ratepayers in the Midwest at least $350 million in 2018 by selling them power from coal plants instead of from lower-cost, cleaner sources, according to a study released today by the Union of Concerned Scientists (UCS).

Consumers paid an average of $5 a month and as much as $184 a year in increased electricity costs that pay for monopoly utility practices that clog up the grid with dirty, expensive coal power and deprive less polluting resources grid access and revenues.

“Our analysis shows millions of customers are forced to subsidize utilities’ coal-fired power plants without even realizing it,” said Joe Daniel, senior energy analyst at UCS and co-author of the report “Used, But How Useful? How Electric Utilities Exploit Loopholes, Forcing Customers to Bail Out Uneconomic Coal-Fired Power Plants.” “Utilities have been hoodwinking regulators and ripping off their customers to prop up their uneconomic coal plants when lower-cost resources are readily available,” added Daniel.

Power markets are set up so that the lowest-cost resources should operate when they are available. But monopoly utilities, which build and operate power plants that directly serve retail customers, are able to exploit loopholes in the market rules at the expense of consumers. One example is “self-committing,” which allows the company to sell power from its own, uncompetitive coal plants at a loss instead of from cheaper, cleaner energy sources.

If the energy resources in the Midcontinent Independent System Operator (MISO) market were dispatched economically, consumers would have saved approximately $350 million dollars in annual electricity bill costs in 2018. Furthermore, the coal fleet across MISO would run 19 percent less and allow cheaper, cleaner generation access to the market. These consumer savings stem from a reduction in regulated utilities’ fuel and operations costs.

“Power from coal plants is expensive because the fuel isn’t cheap and the plants cost a lot to operate compared to other resources available in the market,” said Daniel. “But some utilities will sell power from coal plants at a loss, banking on being able to recoup those losses on the backs of captive customers.”

Utilities and regulators are supposed to check to make sure they are truly putting the least expensive power on the grid, but in MISO, they often don’t spot the problem. The report notes that public utility commissions, which regulate monopoly utilities and determine what costs they are allowed to recover from ratepayers, also are usually unaware that they are greenlighting a utility bailout.

“Allowing uneconomic self-commitment of coal-fired power plants in those markets diverts precious consumer dollars away from improving market efficiency and wastes dollars that could otherwise reduce greenhouse gas emissions,” said Jon Wellinghoff, former chair of the Federal Energy Regulatory Commission and CEO of GridPolicy, Inc. “If we are going to move rapidly to the low-carbon future necessary to avert climate disaster we need to be as efficient as possible in the operation of wholesale electric markets.”

Daniel and his co-authors analyzed the MISO market, which provides power to 15 states. The report explored a most efficient way to use existing energy resources in the area, using the same modeling tool that MISO operators and many utility companies use when making their own market forecasts.

According to the analysis, the following utilities sold the most coal-powered electricity when less expensive electricity was available from market sources in 2018:

Cleco Power LLC, which provides power to more than 240,000 families in Louisiana, uneconomically generated electricity from its Dolet Hills and Brame Energy Center coal plants, at a $123.3 million loss in 2018. If utilities in MISO ran their power plants more efficiently, the average family in Louisiana could have saved $15 a month in electricity bills, or a total of $184 that year.

DTE Electric Company, which also provides power to nearly 2 million families in Michigan, uneconomically generated power from its five coal plants—Belle River, Monroe, River Rouge, St. Clair and Trenton Channel—at a $94.7 million loss in 2018. If utilities in MISO ran their power plants more efficiently, the average family in Michigan could have saved $5 a month in electricity bills, or a total of $61 that year.

Why did renewables become so cheap so fast? And what can we do to use this global opportunity for green growth?

Summary

...

Fossil fuels dominate the global power supply because until very recently electricity from fossil fuels was far cheaper than electricity from renewables. This has dramatically changed within the last decade. In most places in the world power from new renewables is now cheaper than power from new fossil fuels.

The fundamental driver of this change is that renewable energy technologies follow learning curves, which means that with each doubling of the cumulative installed capacity their price declines by the same fraction. The price of electricity from fossil fuel sources however does not follow learning curves so that we should expect that the price difference between expensive fossil fuels and cheap renewables will become even larger in the future.

This is an argument for large investments into scaling up renewable technologies now. Increasing installed capacity has the extremely important positive consequence that it drives down the price and thereby makes renewable energy sources more attractive, earlier.... Falling energy prices also mean that the real income of people rises. Investments to scale up energy production with cheap electric power from renewable sources are therefore not only an opportunity to reduce emissions, but also to achieve more economic growth – particularly for the poorest places in the world.

...

Today fossil fuels – coal, oil, and gas – account for 79% of the world’s energy production and as the chart below shows they have very large negative side effects. The bars to the left show the number of deaths and the bars on the right compare the greenhouse gas emissions. My colleague Hannah Ritchie explains the data in this chart in detail in her post ‘What are the safest sources of energy?’.

This makes two things very clear. As the burning of fossil fuels accounts for 87% of the world’s CO2 emissions, a world run on fossil fuels is not sustainable, they endanger the lives and livelihoods of future generations and the biosphere around us. And the very same energy sources lead to the deaths of many people right now – the air pollution from burning fossil fuels kills 3.6 million people in countries around the world every year; this is 6-times the annual death toll of all murders, war deaths, and terrorist attacks combined.1

It is important to keep in mind that electric energy is only one of several forms of energy that humanity relies on....2

What the chart makes clear is that the alternatives to fossil fuels – renewable energy sources and nuclear power – are orders of magnitude safer and cleaner than fossil fuels.

...

Fossil fuels dominate the world’s energy supply because in the past they were cheaper than all other sources of energy. If we want the world to be powered by safer and cleaner alternatives, we have to make sure that those alternatives are cheaper than fossil fuels.

The price of electricity from the long-standing sources: fossil fuels and nuclear power

The world’s electricity supply is dominated by fossil fuels. Coal is by far the biggest source, supplying 37% of electricity; gas is second and supplies 24%. Burning these fossil fuels for electricity and heat is the largest single source of global greenhouse gases, causing 30% of global emissions.3

The chart here shows how the electricity prices from the long-standing sources of power – fossil fuels and nuclear – have changed over the last decade.

To make comparisons on a consistent basis, energy prices are expressed in ‘levelized costs of energy’ (LCOE). You can think of LCOE from the perspective of someone who is considering building a power plant. If you are in that situation then the LCOE is the answer to the following question: What would be the minimum price that my customers would need to pay so that the power plant would break even over its lifetime?

We Energies to retire 1.8 gigawatts of fossil fuel; utility adding solar, wind, battery storage

Wisconsin’s largest utility plans to replace nearly half its coal-fired generation with a portfolio of solar, wind, batteries and natural gas plants as part of a $16.1 billion spending plan that the company says will generate profits for investors and save money for ratepayers.

WEC Energy Group plans to retire 1,800 megawatts of fossil fuel generation — including the South Oak Creek coal plant near Racine — over the next five years while adding 1,500 megawatts of clean energy and storage capacity along with 300 megawatts of natural gas generation.

Oak Creek, Wis., coal-fired electrical power stations. 

Coburn Dukehart/Wisconsin Watch

https://www.wpr.org/states-largest-utility-will-retire-1-800-megawatts-fossil-fuel-generation

Utility chairman Gale Klappa announced the capital plan during a call with investors Tuesday, in which he said it would help WEC meet its goal of carbon neutral electricity by 2050 and achieve a 55% reduction in carbon emissions by 2025.

Klappa said the spending plan, which is $1.1 billion larger than the previous five-year plan, will increase company profits by 5% to 7% a year while also saving ratepayers what amounts to $50 million a year over the next two decades.
...
In broad terms, the plan calls for building 800 megawatts of solar generation and 100 megawatts of wind generation coupled with 600 megawatts of battery storage, which can be used to balance those intermittent renewable resources.

“The data show that battery storage has now become a cost-effective option for us,” Klappa said.

The announcement comes as Wisconsin’s first utility-scale solar plant came online. Jointly owned by WEC subsidiary Wisconsin Public Service Corp. and Madison Gas and Electric, the 150-megawatt Two Creeks Solar Farm in Manitowoc County began commercial operation Monday.

Curtis Waltz Wisconsin Public Service Corp

WEC also intends to purchase a 200-megawatt share of Alliant Energy’s new West Riverside natural gas plant and build 100 megawatts of natural gas-powered peaking plants.

The company said those acquisitions will allow it to retire the 1,100-megawatt South Oak Creek power plant, whose four generators are all more than 50 years old, in 2023 and 2024.

WEC’s oldest coal-fired plant, South Oak Creek is the single largest source of toxic metals dumped into Lake Michigan, according to a Chicago Tribune analysis of federal data.

Last year, the Department of Natural Resources gave WEC until the end of next year to stop using water to remove ash from the boilers, a process that can lead to mercury and other toxins seeping into groundwater.
...
Klappa said closing an older plant like South Oak Creek could save $50 million a year in operational and maintenance costs.
...
Consumer advocates cautioned that ratepayer savings will depend on how regulators handle the hundreds of millions of dollars WEC has invested in fossil fuel plants over the past two decades.
...
On Thursday the Public Service Commission approved a plan for WEC to refinance $100 million of its remaining investment in pollution controls at its Pleasant Prairie coal plant, which WEC retired in 2018 saying it would save millions of dollars for ratepayers.  The financing arrangement, known as securitization, is expected to save ratepayers about $40 million.  Consumer and environmental advocates, as well as regulators, say securitization could be a key tool for paying off plants that are no longer economic to run.

Despite attempts by the Trump administration to prop up the coal industry, South Oak Creek is the 329th U.S. coal plant targeted for retirement since 2010, according to the Sierra Club.  Over the past decade, U.S. utilities have retired or replaced 95,000 megawatts of coal-fired capacity in response to tighter air pollution standards and increasingly unfavorable economics, according to the Energy Information Administration. Another 25,000 megawatts of coal capacity are expected to retire by 2025.  In the first six months of 2020, the U.S. electric power sector consumed 30% less coal than in the first half of 2019, according to recent data from the EIA.
...
Alliant Energy, which plans to add 1,000 megawatts of solar generation in Wisconsin, this year has announced plans to close its 415-megawatt Edgewater plant in Sheboygan by the end of 2022, while the company’s Iowa utility said last month it would also close a 275-megawatt coal plant in Lansing on the Mississippi River.

FOR FULL STORY GO TO:

https://www.kenoshanews.com/news/state-and-regional/we-energies-to-retire-1-8-gigawatts-of-coal-replace-with-solar-batteries-gas

by Chris Hubbuch 
Kenosha News https://www.kenoshanews.com

November 6, 2020

also see https://www.wpr.org/states-largest-utility-will-retire-1-800-megawatts-fossil-fuel-generation

Economic And Clean Energy Benefits Of Establishing A Southeast U.S. Competitive Wholesale Electricity Market

Executive Summary

Seven Independent System Operators (ISOs) or Regional Transmission Operators (RTOs) serve close to 70 percent of all United States electricity consumers. One region of the country, the Southeast, is particularly devoid of this type of market competition. This report details the impacts of enhancing competition for wholesale electricity transactions through a theoretical organized market in the Southeast region. We use a combined production-cost and capacity expansion model of the electric power system in seven Southeastern states (Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, and Tennessee) out to 2040. ...

We find that a competitive Southeastern RTO creates cumulative economic savings of approximately $384 billion by 2040 compared to the business-as-usual (BAU) case. In 2040, this amounts to average savings of approximately 2.5¢ per kilowatt-hour (kWh), or 29 percent in retail costs compared to BAU. 2040 retail costs in the RTO scenario are 23 percent below today’s costs. In the RTO Scenario, carbon emissions fall approximately 37 percent relative to 2018 levels, and 46 percent compared to the IRP Scenario, in which emissions increase. Other major criteria pollutants impacting human health, such as NOX, SO2, and PM2.5, drop dramatically, largely as a result of eliminated coal generation. Emissions gains are driven by a vast deployment of renewable energy resources replacing coal.

Employment benefits begin accruing immediately after the RTO comes into operation, as lost jobs in coal and natural gas generation are replaced by construction jobs related to wind, solar, and battery deployment. By 2040, the RTO scenario creates 285,000 more jobs relative to the business-as-usual scenario, owing to the construction of 62 gigawatts (GW) of solar, 41 GW of onshore wind, and 46 GW of battery storage.

Our BAU case relies on the Integrated Resource Plans of the major investor-owned utilities in these states, in which utilities prescribe a coordinated set of new generating and transmission capacity necessary to meet future load projections. Vibrant Clean Energy’s WIS:dom®-P model then optimizes operations for these projected resource additions and retirements based upon historical dispatch estimates, assuming no further public policy intervention. In this case, the model assumes that each utility must meet its specified load projections and planning reserve margins independently, assuming limited import/export capacity from neighboring utilities and limited transmission expansion.

We compare this scenario to a fully competitive wholesale electric market, in which an RTO administered open market determines the most cost-effective capacity mix and resource dispatch, regardless of where that generation is located or who owns it. The RTO scenario assumes an integrated transmission planning scheme in which all seven Southeastern states share resources and expand transmission in order to meet one regional planning reserve margin at least cost. The competitive RTO Scenario modeled here grants planners and operators in the region the opportunity to co-optimize generation, distribution, and transmission benefits while planning to meet capacity in the most economically efficient way. 

A companion policy report additionally details key policies to help achieve competition’s benefits in the Southeast region. We focus on incremental policies that introduce competition into regional dispatch and utility resource planning and procurement. We cover principles for market design to help ensure a regional market is compatible with a cost-effective variable resource mix.

We outline policies that enable regional utilities with net-zero carbon goals to meet those goals effectively while respecting and supporting the fossil-dependent communities that supported economic development in the region.

Despite the fact that new renewable energy and battery storage resources are the least-cost forms of generating electricity, the Southeast region is largely beholden to monopoly utilities that rely on existing coal fleets and new gas-fired power plants to meet consumer electricity needs. This report finds that these utilities continue to inefficiently plan the power grid at great expense to consumers. Wasted excess capacity leads to wasted consumer dollars while stifling clean energy deployment, employment gains, and public health benefits.

Policymakers considering a regional market or state-level competitive procurement should be encouraged by this analysis to keep pressing in legislative and regulatory forums. State stakeholders where utilities block competitive reforms now have new quantitative findings to challenge the assumption that the way utilities have traditionally done business is in the public’s best interest. 

By Eric Gimon and Mike O'Boyle, Taylor McNair, Christopher T M Clack, Aditya Choukulkar, Brianna Cote and Sarah McKee

https://energyinnovation.org/publication/economic-and-clean-energy-benefits-of-establishing-a-southeast-u-s-competitive-wholesale-electricity-market/

Energy Innovation https://energyinnovation.org/  August, 2020

"To Rid The Grid Of Coal, The Southeast U.S. Needs A Competitive Wholesale Electricity Market" by Sarah Spengeman in Forbes on August 23, 2020 https://tinyurl.com/y67co45m notes that:

The Southeastern United States, one of the country’s only regions without a competitive wholesale electricity market, is dominated by monopoly utilities, which have favored expensive and polluting fossil fuel generation over cheap clean energy. Nearly all Southeast coal plants cost more to run than replacing them with new wind and solar, so continuing to run these uneconomic resources forces customers to foot the bill and inhale dirty air. ...

Competitive wholesale electricity markets, or Regional Transmission Operators (RTOs) and Independent System Operators (ISOs), are public-benefit corporations serving 70% of U.S. electricity customers that arose from electricity restructuring during the late 1990s-early 2000s to cut costs and encourage innovation.

Competition in these markets has reduced wholesale energy costs while creating an entry point for low-cost renewable energy to provide power to the grid. They have also been critical to integrating variable renewable energy – wind and solar – and capitalizing on resource diversity over larger geographical areas. ...

Despite ambitious long-term climate announcements, Southeast utilities are still heavily reliant on expensive-to-run coal plants and are doubling down on risky new gas infrastructure investments, instead of clean technologies of the future. ...

Comparing a competitive regional Southeast market through 2040 to a business-as-usual scenario based on existing monopoly utility Integrated Resource Plans reveals remarkable findings. Introducing a Southeast regional competitive market that optimizes regional transmission and shares resources (key features of other RTOs) would save $384 billion dollars with approximately $17.4 billion average yearly savings through 2040 - 23% lower electricity costs compared to today.

These enormous savings come from cheaper wind, solar, and storage displacing more expensive-to-run coal, along with an RTO-led regional transmission planning scheme where all seven states share power resources and expand transmission to most efficiently meet regional electricity demand. VCE’s WIS:dom model also incorporates electricity distribution infrastructure savings from deploying distributed storage and solar resources.

The Bar graph above shows cost reductions reach nearly 32% by 2040 in the competitive scenario compared to just 10% compared to business-as-usual. 

In contrast, the current utility-led planning regime is an inefficient patchwork system. Monopoly utilities plan their electric grids independently from their neighbors and impose fees called “wheeling charges” to ship power across successive utility transmission systems. This incentivizes monopolies to over-build power plants, thereby increasing profits for their shareholders. Together, this significant duplication and overbuild of infrastructure costs customers billions....

An online data explorer https://energyinnovation.org/2020/08/25/southeast-wholesale-electricity-market-rto-online-data-explorer/ allows users to compare scenarios and understand state-level impacts:

The Private and External Costs of Germany's Nuclear Phase-Out

Abstract:

Many countries have phased out nuclear electricity production in response to concerns about nuclear waste and the risk of nuclear accidents. This paper examines the impact of the shutdown of roughly half of the nuclear production capacity in Germany after the Fukushima accident in 2011. We use hourly data on power plant operations and a novel machine learning framework to estimate how plants would have operated differently if the phase-out had not occurred. We find that the lost nuclear electricity production due to the phase-out was replaced primarily by coal-fired production and net electricity imports. The social cost of this shift from nuclear to coal is approximately 12 billion dollars per year. Over 70% of this cost comes from the increased mortality risk associated with exposure to the local air pollution emitted when burning fossil fuels. Even the largest estimates of the reduction in the costs associated with nuclear accident risk and waste disposal due to the phase-out are far smaller than 12 billion dollars.

https://www.nber.org/papers/w26598

by Stephen Jarvis, Olivier Deschenes and Akshaya Jha
National Bureau of Economic Research (NBER) www.NBER.org
NBER Working Paper No. 26598; Issued in December 2019

Indonesia Policy on Electricity-Generation Buildout in Java-Bali Means US$16 Billion in Unnecessary Coal Costs - Institute for Energy Economics

State-Owned Utility Would Pay an Estimated USD $76 billion Through Ill-Advised 25-Year Power Purchase Agreements

Halting planned expansion of coal power generation in Java-Bali could save the Indonesian Government USD$16.2 billion in unnecessary expenditure, according to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA).

The report—“Overpaid and Underutilized: How Capacity Payments Could Lock Indonesia Into a High-Cost Electricity Future”—analyses Indonesia’s 2017-26 national energy plan and shows how long-term coal power contracts will require the country to pay for energy it is not using.

By contrast, a greater focus on renewable energy would likely result in multi-billion dollar savings.

“Indonesia’s rapid coal power expansion plan locks the country into decades of paying for power it isn’t using. It’s literally money for nothing,” said the report author, Yulanda Chung, an IEEFA energy finance consultant. “Capacity payment is used in the name of energy security, but simple changes can be made today that will save the Indonesian government billions of dollars.”

Indonesia’s state power authority, Perusahaan Listrik Negara (PLN), has stipulated that 24GW of coal-fired power and mine-mouth power generation capacity needs to be supplied by Independent Power Producers (IPPs) as part of the utility’s 2017-26 plan (Rencana Usaha Penyediaan Tenaga Listrik, RUPTL).

Aiming to attract power producers, PLN is offering 25-year power-purchase agreements (PPAs) by guaranteeing payment for all electricity produced, even if it is not actually used by consumers. In aggregate, PLN will pay an estimated USD $76 billion through 25-year PPAs.

The problem is most acute in Java-Bali, where IEEFA calculates current capacity, supplemented by renewable energy, is already sufficient to cover energy needs until 2026.

“There is no need to build new coal plants in Java-Bali when those that exist today are running at just over half-capacity,” said Chung.  “Rushing into new deals will lock in 25 years of paying for over 5GW of coal power supply which will remain idle.”

Friends of the Earth International http://www.foei.org http://tinyurl.com/yazubbp6

A further consequence of the country’s long-term gamble on coal is that it mitigates against the uptake of cheap renewable energy.

The levelized cost of electricity (LCOE) for solar in Indonesia is estimated at USD 17 cents/kWh in 2016. IEEFA conservatively forecasts solar PV becoming grid competitive at around USD 8 cents/kWh in 2021 in line with rapidly falling costs.

“Renewable energy is already cheaper than coal in multiple markets around the world,” Chung said. “Changes Indonesia can make today to its energy plan would see it benefit from this opportunity and avoid the fate of locking itself in to billions in excess expenditure on high cost coal.” 

Full report: “Overpaid and Underutilized: How Capacity Payments Could Lock Indonesia Into a High-Cost Electricity Future”

http://ieefa.org/ieefa-report-indonesia-policy-electricity-generation-buildout-java-bali-means-us16-billion-unnecessary-coal-costs/

IEEFA www.IEEFA.org conducts research and analyses on financial and economic issues related to energy and the environment. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.

Press Release dated August 10, 2017

G20 Nations Sending Billions in Finance to Fossil Fuels

Each year, G20 countries provide nearly four times more public finance to fossil fuels than to clean energy, according to a new report released July 5, 2017. Each year, G20 countries provide nearly four times more public finance to fossil fuels than to clean energy, according to a new report released July 5, 2017 by Oil Change International, Friends of the Earth U.S., the Sierra Club and WWF European Policy Office. In total, public fossil fuel financing from G20 countries averaged some $71.8 billion per year, for a total of $215.3 billion in sweetheart deals for oil, gas, and coal over the 2013-2015 timeframe covered by the report. Fifty percent of all G20 public finance for energy supported oil and gas production alone.

The report, for the first time ever, details public support for energy projects from G20 public finance institutions (such as overseas development aid agencies and export credit agencies) and multilateral development banks. It finds that just 15 percent of this energy finance supports clean energy, while tens of billions of dollars are funneled to oil, gas, and coal producers annually. The best available science indicates that at least 85% of fossil fuel reserves must remain in the ground to meet the aims of the Paris Agreement on climate change. Yet of the $71.8 billion in fossil fuel finance, $13.5 billion goes to activities that supercharge the exploration phase for even more unburnable reserves of oil, gas, and coal.These findings directly contradict the goals espoused in the Paris climate agreement — touted by these same governments — which specifically calls on countries to align financial flows with low-emission development.

The report, entitled “Talk is Cheap: How G20 Governments are Financing Climate Disaster,” can be found at http://priceofoil.org/2017/07/05/g20-financing-climate-disaster. In addition to the authoring organizations, it has also been endorsed by CAN-Europe, Urgewald (Germany), FOE-France, Re:Common (Italy), Legambiente (Italy), Environmental Defence (Canada), FOE-Japan, Kiko Network (Japan), JACSES (Japan), and KFEM (Korea).

“Our research shows that the G20 still hasn’t put its money where its mouth is when it comes to the clean energy transition. If other G20 governments are serious about standing up to Trump’s climate denial and meeting their commitments under the Paris Agreement, they need to stop propping up the outdated fossil fuel industry with public money,” said Alex Doukas, Senior Campaigner at Oil Change International and one of the report’s authors. “The best climate science points to an urgent need to transition to clean energy, but public finance from G20 governments drags us in the opposite direction. We must stop funding fossils and shift these subsidies.”

https://en.wikipedia.org/wiki/Petroleum

As Interior pivots to fossil fuel extraction, reports shows it costs taxpayers bigly - Taxpayers lose $7 billion a year due to U.S. subsidies for fossil fuels. The Trump administration might increase that.

In the months since he took office, President Donald Trump has taken steps to uphold some of his campaign promises, namely by deregulating oil, gas, and oil extraction. The Trump administration's newly proposed budget includes new steps in the process of deregulation, specifically by removing significant mechanisms of polluter oversight and boosting the production of fossil fuels on public lands. Despite claims of fossil fuel leasing having a net-negative impact, the Department of the Interior is expecting to find ways to increase government revenue from fossil fuel leases. A new study from Oil Change International reported that current subsidization for fossil fuel production on public lands costs taxpayers more than $7 billion. Interior Secretary Ryan Zinke said that the newly proposed budget is intended to bring in more money for the public.

Democrats in Congress have vowed to oppose the increase in fossil fuel extraction on public lands. “Once again, the Trump Administration has turned its back on Teddy Roosevelt-style conservatism and is instead trying to allow special interests to pillage our natural resources so a wealthy few can make themselves even wealthier,” Senate Energy and Natural Resources Committee ranking member Maria Cantwell (D-WA) said in a statement. “We won’t let him.” The Trump administration is taking other steps to forming a better partnership with industry. The Department of Interior, which is able to issue permits for pipeline right of ways through public lands, has been given a $16 million increase to its oil and gas programs as part of the proposed budget. The budget document, which relies on opening up the Arctic National Wildlife Refuge, also states that "onshore energy mineral leasing" will bring in $330 million more in 2018 than 2017 and that offshore mineral leasing will bring in $450 million. 

https://upload.wikimedia.org/wikipedia/commons/c/ce/Oil_well.jpg

However, it is unclear as to how the Trump administration will be able to reach these goals, and Zinke has stated that testing still needed to be done. The increased revenues was another example of “crazy math in the budget,” said David Turnbull, a spokesperson for Oil Change International. “Those sorts of increases in the royalties received are definitely not attributed to raising the royalty rate, but rather… a totally unrealistic expectation of opening up new oil and gas drilling that will wreck the climate.” The Oil Change International report, which concludes in the $7 billion cost only looks at direct costs to taxpayers. Then, health and climate impacts would merely add on to the existing costs. According to the report, fossil fuel companies are ripping off taxpayer in several ways, including undervaluing leases.“For example,” the report says, “the BLM set rates for ‘renting’ federal lands for oil and gas leases in 1987 to $1.50 per acre, or a fraction thereof, for the first five years of the lease term and $2 per acre, or fraction thereof, for any subsequent year. This rate has not been raised in 30 years — not even to reflect inflation.” In 2011, around 20 percent of offshore leases for oil and gas development completely avoided royalty payments, the report found. The government's decision to support the industry greatly impacts the climate as well -- the report found that “cutting off subsidies to Big Coal in Wyoming would save the same carbon emissions over 20 years as shutting down 32 coal-fired power plants.”

FOR FULL STORY GO TO

https://thinkprogress.org/budget-fossil-fuel-taxpayers-interior-164d4e7d9ed7

by Samantha Page, Climate Reporter at ThinkProgress www.thinkprogress.org

June 25, 2017