Forest health experts gathered in Payson last week expressed dismay at an Arizona Corporation Commission decision that has dealt a heavy blow to already lagging forest thinning efforts.
The latest fear: The Corporation Commission decision could result in the eventual closure of Novo Power, the only power plant in the region that can turn millions of tons of slash from thinning projects into electricity.
The Corporation Commission on a 3-2 vote recently reversed itself and decided not to give Arizona Public Service the go-ahead to convert one unit of Cholla Power Plant from coal to biomass. Without the conversion, the Joseph City plant is slated to close, putting 200 people out of work.
But the decision could also force the closure of the 28 megawatt Novo BioPower Plant in Snowflake, said Novo Power president Brad Worsley at a conference on forest health in Payson last week. The plant employs about 40 people and has been the key to thinning some 70,000 acres in the White Mountains by providing a market for biomass.
Those thinning projects are widely credited with saving Alpine and perhaps Springerville from the Wallow Fire.
The Arizona Corporation Commission (ACC) decided not to order APS to proceed with a plan to convert Cholla to a perhaps 60-megawatt biomass plant, which means the company couldn’t recover the costs through its electrical rates.
The commission majority said they didn’t want to do anything to raise electric bills, no matter what the other benefits. Commissioners Boyd Dunn and Lea Marquez Peterson objected
This means the ACC will likely not adopt a companion rule requiring the utilities it regulates — mostly APS — to buy 60 to 90 megawatts of power annually from biomass. Burning 90 megawatts would have supported the thinning of more than 50,000 acres of forest each year.
The vital Novo Power plant got caught in the crossfire, said Worsley.
The plant only exists because of an earlier ACC mandate that power companies it regulates must produce 15 percent of their energy from renewable sources like solar, wind and biomass. At the time, wind and solar power cost about $170 per kilowatt hour, biomass cost about $100 and coal cost about $50. So power companies jumped at a chance to contract with Novo Power, the only biomass plant in the Southwest.
Burning biomass is considered a renewable energy source that makes no net contribution to carbon emissions, since the wood would decay or burn anyway. In fact, the Novo Power plant removes about 98 percent of the emissions, which means burning the slash significantly reduces net emissions, said Worsley.
However, energy markets have changed dramatically. Coal has grown more expensive, in part due to air pollution control requirements. The cost of solar and wind power has plunged, to perhaps 50 per kilowatt or less. The cost of biomass has remained about the same, with razor thin margins based on the distance you haul the bulky, low-value wood slash.
Novo Power raised the millions it needed to adapt a coal-fired plant to biomass largely because of that earlier ACC mandate. The company has a contract to sell APS and the Salt River Project a total of 28 megawatts annually. That contract expires in three years and eight months, said Worsley.
Unless something changes, APS and SRP will have no incentive to enter into a new contract — based on the lower cost of wind and solar. At that point, Novo Power would likely shut down — delivering a fresh blow to forest thinning efforts and the local economy.
But reducing the value of Novo Power and other biomass facilities to a cost per kilowatt calculation misses the entire point, said a succession of speakers at the Forest Health Conference in Payson.
Thinning projects rely critically on finding a market for the biomass, which amounts to maybe 50 tons for every acre thinned. Those thinning projects, in turn, remain the key to controlling devastating megafires.
Moreover, thinning projects hold the key to protecting the watersheds of the Salt, Gila and Verde rivers — on which not only the high country but the Valley of the Sun depend.
The two dissenting corporation commissioners expressed sorrow and frustration at the decision of the majority — Bob Burns, Justin Olson and Sandra Kennedy.
Commissioner Boyd Dunn said the key to the reversal in the commission’s policy was the resignation of Commissioner Andy Tobin to take a job in the governor’s office. Tobin had been the chief advocate for the biomass mandate.
Dunn said APS will have little incentive to move forward to convert Cholla on its own, without ACC’s permission to include the cost in its rate base and without authorization to effectively pay more for electricity from biomass.
He said the ACC majority took a much too narrow view of the benefits to ratepayers and he’ll look for opportunities to convince his fellow commissioners to change their position.
Some commissioners suggested it wasn’t a problem the commission or APS should have to solve at the expense of ratepayers. They suggested the state of Arizona or the federal government should shoulder the extra cost.
Newly appointed Commissioner Lea Marquez Peterson was also sharply critical of the majority decision.
She noted that the Museum Fire near Flagstaff has underscored the danger, burning 2,000 acres on a critical watershed where post-fire flooding could cause more than a billion dollars in damage, according to one pre-fire study. Even if the 600 firefighters with extensive air support manage to contain the fire, heavy monsoon storms on the seared slopes could cause fatal flooding. Floods after the nearby Schultz Fire inflicted hundreds of millions of dollars in damage on Flagstaff and killed a little girl.
“When I came to the Arizona Corporation Commission two months ago, I heard loud and clear from representatives in rural Arizona that the time for waiting on others is over. If there is a solution to this problem we need to act, and act now. That is why I am so disheartened that our Commission refused to voice support for an innovative effort to address Arizona’s forest fire issue when we had the chance,” Peterson wrote.
She said the increase of perhaps $1 per month in power bills would “produce massive returns on investment in the future.”
She added, “this commission voted to join a long list of those who choose to pass the buck instead of showing real leadership in taking action. While I continue to hold out hope that a biomass solution may still be possible, that we can still find a way to protect our rural communities from future devastation – that possibility seems to be slowly burning up.”
Coming soon: Look for our series on whether we can save the forest and prevent town-destroying megafires, based on this weeks forest health conference in Payson.
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