WildEarth Guardians

Tuesday, March 11, 2014
Federal Power Agency Subsidizing Coal, Shirking Environmental Reviews

Guardians Takes Aim at Wholesale Energy Sales Incentivizing Fossil Fuels
Contact: Jeremy Nichols (303) 437-7663

Denver—WildEarth Guardians today called on the federal government to start completing legally required environmental reviews and ensuring protection of endangered species before selling wholesale power to utilities that burn coal in the American West.

“Cheap power from the federal government is being used to subsidize coal throughout the western United States,” said Jeremy Nichols, WildEarth Guardians’ Climate and Energy Program Director.  “Throughout the West, coal-fired power plants are threatening our climate, our clean air, and our waters.  It’s time for our federal power agencies to start taking this into account before selling power to the utilities that operate these power plants.”

In a letter sent today to the Western Area Power Administration, Guardians put the agency, an arm of the Department of Energy, on notice that it’s failing to conduct legally required environmental reviews and to protect endangered species before selling cheap power to utilities throughout the western U.S.

The Western Area Power Administration sells power generated from federally owned power plants in the western U.S., including mostly hydroelectric dams.  These facilities account for approximately 10,400 megawatts of generating capacity.  This power is sold at cost, primarily to co-ops and public and municipal utilities. 

By law, however, the Administration can only sell power if customers demonstrate they are minimizing the adverse environmental impacts, including impacts to endangered species, of their power generating activities.

In spite of this, the Administration has for years been entering into contracts with utilities without assessing if they are actually minimizing adverse environmental impacts.

“The deal is simple, utilities who have the privilege of buying wholesale power have to show that they’re limiting the environmental impacts of their power generation,” said Nichols.  “Western, however, is simply ignoring this requirement, selling cheap energy to utilities whose power generating activities are taking a tremendous toll on our air, water, and land.  Put another way, cheap federal power sales are effectively encouraging environmental destruction.”

Although hundreds of entities buy power from the Administration, its customers include utility corporations that own and operate some of the West’s largest coal-fired power plants, including Tri-State Generation and Transmission based in Colorado, Basin Electric Power Cooperative based in North Dakota, Deseret Power Electric Cooperative Based in Utah, and Salt River Project Power and Water based in Arizona.

The concern is that by selling power at cost to these and other companies, the Western Area Power Administration is effectively subsidizing the cost of operating and maintaining coal-fired power plants.  The U.S. Energy Information Administration reports that hydroelectric power is one of the least expensive forms of energy generation, approximately three times less than coal, in large part because of no fuel expenses.

By availing themselves of cheap, hydroelectric power, utilities can effectively offset the higher costs of coal, incentivizing them to either continue burning or even to invest in new coal-fired power plants.

In the case of Tri-State, more than 60% of its power comes from coal, while at the same time 12% comes from the Western Area Power Administration.  The company is the third largest customer of the Administration and owns all or portions of six coal-fired power plants in Arizona, Colorado, New Mexico, and Wyoming. 

Guardians’ letter today calls on the Western Area Power Administration to immediately start reviewing the environmental impacts of its customers coal-fired power plants and ensure that its power sales are not inappropriately subsidizing coal use.

“Ultimately, this is about ensuring our federal government is playing a role in advancing clean energy, not sustaining dirty fossil fuels,” said Nichols.  “All we’re asking is for the Western Area Power Administration to live up to its basic legal obligations to ensure its power sales do not support utilities that refuse to limit the environmental impacts of their energy generation.”

Today’s letter further calls on the Administration to consult with the U.S. Fish and Wildlife Service to ensure endangered species are protected under the Endangered Species Act, as well as to provide public notice of its environmental reviews.

Guardians’ has called on the Western Area Power Administration to respond within 30 days.