Tuesday, March 6, 2012

Sumas Energy 2, EFSEC and a Corn Field

I recently had a work trip to Sumas. Sumas is a small border town in Whatcom County. On the west side of the town between the roofing manufacturer and the lumber shipping facility is a vacant corn field. A few years back I spent weeks learning about this corn field.
Site of the SE2 Natural Gas Power Plant

Back in 2000 through 2004 I spent days sitting through hearings on natural gas power plant proposals located in Sumas, Washington and at Cherry Point near Ferndale, Washington as a member of the Washington State Energy Facility Site Evaluation Council (EFSEC). The first proposal killed off all summer vacation plans. The permit reviews involved weeks of hearings in Olympia and Whatcom County followed by days of deliberations and never mind the boxes of files and binders that filled a fair chunk of my humble office. That said, I very much enjoyed the technical aspects of reviewing the project proposals as well as the strategies used by the proponents and opponents to the project.

The first proposal I was involved in reviewing was Sumas Energy 2 (SE2). The short story is that EFSEC voted "no" on the power plant proposal. This was the first time EFSEC had every voted no on a power plant proposal.

EFSEC did not simply vote no on the SE2 proposal. A long legal order was issued with the no vote. This order presented a long list of reasons why we voted no. The biggest issue was a scheme to be able to switch fuel from natural gas to diesel during high peak demand for natural gas. This would happen whenever it would get extremely cold in Washington State. Much testimony revolved around this issue. SE2 proposed to switch to diesel fuel during cold spells.

The idea of fuel switching was to that during cold spells natural gas demand goes way up to heat homes and switching to another fuel would ease short term market pressure on natural gas demand. At the time I had three clients that did fuel switching at industrial sites for running boilers. One would switch to diesel and the other two would switch to wood saw dust. This ability allowed them to get less expensive contracts on natural gas.

For SE2 using diesel would require trucks to bring fuel to the plant if the clod spell lasted for more than a few days. Being a resident of Whatcom County I enjoyed very much asking witnesses to describe conditions in Sumas during a Washington State cold spell. Sumas is located right at the mouth of the Fraser River canyon - the source of cold Arctic air during deep freezes that periodically hit Washington State. The micro climate at Sumas during an Arctic outflow event is unique to the rest of western Washington. Sub zero temperatures with steady winds ranging from 40 to 100 mph for days at a time. If there is snow, huge snow drifts form making travel in the area impossible. This issue was not well understood by the applicant, and I took my role of as a more local person on the Council seriously. (As a side note, EFSEC was to base our decision on the record of information presented to us - hence I added to the record by asking questions about climate and weather conditions during cold periods. I did a similar thing in regards to subsurface soils having completed a geotechnical investigation on the property immediately to the north.)

The interesting thing about the fuel switching scheme was from a state-wide energy policy the scheme made sense. The problem was fuel switching at this site did not make sense. So SE2 did a great job of convincing us that fuel switching was "essential" for building a power plant, but at the same time the very said fuel switching and everything that went with it made the site not a good site. Hence, the plant permit was denied.

SE2 asked us to reconsider stating that fuel switching was not essential and the project could proceed without fuel switching. My view of this argument was that they had lied to us and the record we based our decision on was based on the fuel switching being an essential component of the project and essential to good energy policy. We did not reconsider.

This vote took place in February 2001 in the middle of what the larger media was describing as a west coast energy crisis. EFSEC members had a pretty good handle on the fact that there was no energy crisis and that it was likely market manipulation. Of course, the denial of the project brought out an immediate firestorm from the State Legislators and a variety of Very Serious People highly critical of EFSEC for turning down a power plant during an energy crisis. EFSEC's authority was pulled back and a new chair was appointed by the Governor. The new chair made it very clear he did not think that the decision to vote no was a good one. However, over the coming months the ENRON scandal and the purposeful profiteering by electric power market manipulation came to light.

And SE2 submitted a new application. This time without fuel switching and they also addressed essentially every issue raised by EFSEC during the first application. This time the proposal was approved. I voted yes, but with a concurring opinion regarding CO2 emissions and assurances on how CO2 emission off sets would be guaranteed.

SE2 faced some other very difficult challenges. Most notable was the power line route up into Canada. Politically the Canadians hated this project for two reasons: 1) most of the air emissions would go into Canada and 2) the project would undermine a British Columbia natural gas power plant that was less efficient (and by the way a much more polluting plant). Canada denied allowing the power lines to be constructed and with that the SE2 site remains much as it did 10 years ago, a corn field. The company has since withdrawn the site as a project.

Locally in Whatcom County SE2 was enormously controversial. It was strongly opposed and strongly supported. In the long run though SE2 set an important precedent in Washington State energy policy. It was the first power plant that proposed off setting all of its air pollutants and the first power plant to propose an  off set of CO2 emissions. This CO2 offset approach led to a significant shift in state policy on CO2. Those long deliberations and crafting of the order saying no to the original plant was in the end a worthwhile exercise and other members of EFSEC went on to be instrumental in establishing CO2 policy in Washington State.

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