Candidate Shoots Hole in Typical Politics

Political ironies abound in many states. One example is West Virginia, where the Democratic governor running for a U.S. Senate seat is"taking aim" at the White House, health care reform and cap and trade. Longtime election traditions may see a change on Election Day.

If there’s any doubt that West Virginia Gov. Joe Manchin is trying hard to convince voters that he’s not a typical Democrat, just look at the latest ad from his Senate campaign…

Manchin is doing everything he can to remind voters that he’s a conservative Democrat who cares about the issues they do, even as Mr. Raese tries to paint him as a “rubber stamp” for President Obama, who is deeply unpopular in the state. Manchin was expected to coast to victory, and in July had a 16-point lead in the polls. But anger against Mr. Obama seems largely responsible for his precipitous drop in popularity.

Still, Manchin was handed a gift of sorts in a Raese ad that aired last week. In it, West Virginia voters are shown saying that Manchin should “stay right here in West Virginia.” Except that the men turned out to be Philadelphia actors who answered a casting call for actors with a “hicky, blue collars look” and encouraged them to wear “John Deer” hats.

Raese’s campaign pulled the ad and pointed out that the casting company, not the campaign, was responsible for the wording – and that ads from both parties often use hired actors – but Manchin has lost no time highlighting the fumble in an ad of his own.

“John Raese thinks we’re hicks,” his spot says, adding that Raese moved his family to Florida “to avoid paying West Virginia taxes" and that, "obviously, we’re not good enough for him.”

Too Much Wind a Bad Thing?

Trying to find a compromise when it comes to wind power has proven difficult. Few can argue with the fact that wind turbines and the power they generate are a good thing, diversifying our energy mix. The point of contention has been between those who believe wind and other renewable can replace coal (and other traditional sources) and those who are not "blown away" by the wind or "overheated" by solar’s potential.

Now there is a new argument, courtesy of a recent study, that the unpredictable nature of wind is causing an actual increase in carbon dioxide emissions. I’ll let the expert, James Taylor of the Heartland Institute, explain. The bottom line, as Taylor points out, is that Washington just might need to slow down on the emission regulations and the renewable mandates.

Government policies designed to fight global warming by encouraging, subsidizing, or mandating renewable power may be making global warming worse.

In a published paper, electrical engineer Kent Hawkins shows when wind power surpasses 5 percent of power generated, the frequent ramping up and ramping down of other power sources to compensate for wind’s unpredictable variability causes such inefficiency in power generation that overall carbon dioxide emissions rise.

For a good analogy, consider this: A driver who keeps his or her speed at a consistent 60 miles per hour will get better gas mileage than one who frequently accelerates and decelerates between 45 and 75 miles per hour. The inefficiency of frequently ramping up and ramping down vehicle speed is substantial enough that the vehicle driving at variable speeds will burn up more gasoline than many vehicles with a lower fuel economy rating.

The same appears to hold true for power generation. Power plants in the Netherlands, Colorado, and Texas switched some of their generation from coal and natural gas to wind power. Because wind speeds are variable and unpredictable, plant operators were forced frequently to vary the ordinarily steady, constant generation of baseload power to back up variable wind power. Whereas a small amount of wind power generation helped reduce carbon dioxide emissions, those emissions began surpassing prior levels once wind power exceeded 3 percent of the power mix.

If the proponents of federal legislation to force reduction of carbon dioxide emissions are sincerely concerned more about alleged global warming than the accumulation of government power to hand out money and favors to preferred industries and contractors, these real-world carbon dioxide facts should put an immediate freeze on renewable power subsidies, renewable power mandates, and cap-and-tax global warming plans. How Congress responds to these new findings will tell us much about the true motivation behind proposed global warming legislation.

In the lawmaking process, as in life itself, rushing to enact "solutions" to speculative problems before the facts are known usually produces more harm than good. Keeping this axiom in mind, Congress need not rush to enact carbon dioxide restrictions on the American economy. After all, total U.S. carbon dioxide emissions are falling, not rising, and they have been declining for the past decade. To the extent global emissions are rising, the fault does not lie with the United States. 

Stanley: Duke Energy’s New Edwardsport Plant to Contribute to Affordable Electricity

Jim Stanley, President of Duke Energy Indiana, relays the status of the company’s new Edwardsport coal gasification facility.

Duke Energy’s new power plant using advanced integrated gasification combined cycle, or IGCC, technology that is being built in Edwardsport, Indiana, is an investment in the local community, the state and our future. 

When local, state and community leaders offered their support for Duke Energy’s decision to move forward with the project, they did so knowing the positive impact that reliable, affordable electricity could have on our state, the local community and the people we serve. When completed in 2012, the plant will produce 10 times as much power with significantly less environmental impact than the much smaller and older plant it will replace. It will be the first major new power plant built in Indiana in more than 20 years and serve as a critical starting point to modernize the state’s aging electrical systems.

Some will say now is not the time to build an expensive new power plant. But by investing now, we can ensure our children and grandchildren will have the infrastructure they need for a better future. And by spreading out the cost of the plant over time, we can meet our future energy needs and pay for our investment without a dramatic increase in our family energy bills.

Furthermore, in these challenging economic times the impact the construction and eventual operation of the plant is having and will have on our economy is dramatic, generating good-paying, high-skilled jobs and spurring economic growth across the state. 

Currently about 1,400 electrical workers, iron workers, plumbers, carpenters, laborers, and other professionals are working on the construction site.  This number is expected to grow to about 2,000 this summer. And when completed, the plant will employ about 100 full-time workers with high-skilled well-paid jobs. In addition, the 1.4 million to 1.7 million tons of Indiana coal the plant will use each year will contribute to an estimated 350+ new mining and railroad jobs. And, as one of the largest construction projects in Indiana, the Edwardsport plant has generated approximately $468 million dollars through contracts with 141 Indiana businesses, such as Bowen Engineering, BMW Constructors, F.A. Wilhelm, Gribbins Insulations and Solid Platform, just to name a few.

In these economic times, when Indiana workers are hard-pressed to find work and businesses are cutting back, supporters of the project should be commended for supporting high-value construction projects like Edwardsport that have an immediate economic impact on our state and local economies and serve as a catalyst for further growth and investment in the future.

Editor’s UPDATE: Congrats to Mr. Stanley on his new position as Duke Energy’s Senior VP of power delivery for U.S. operations.

Rogers Staying in Energy Game for Next Five Years

Duke Energy’s Jim Rogers has spent 20-plus years as a CEO in the energy industry (starting with PSI Energy in Plainfield in 1988). And despite his wife’s reaction of "what the heck were you thinking?," he acknowledged today at the Indiana Chamber’s Indiana Conference on Energy Management that he’s signed up for five more years.

"I love this industry," he told the conference attendees. And while he has seen many changes in his career, he adds, "The next five years are going to be more transformative for our industry than the last 20 have been."

Rogers shared 10 facts about the current and future energy outlook before answering numerous questions. Among his revelations:

  • By 2050, Duke will have to retire or replace virtually every power plant it is operating today
  • The company is the third largest generator of both coal and nuclear energy. It is currently building new coal and natural gas facilities, has two nuclear proposals being reviewed and is also active in various areas of renewables
  • While there will always be skeptics, he says the majority of scientists have spoken in favor of climate change and that he is a believer

Rogers thinks that the cap and trade legislation that passed the House earlier in the summer "will be improved by the Senate to minimize the cost impact to consumers. The transition, however, is not going to be free, not going to be easy and not going to be quick. It will take decades to make the transition, but we have to get to work on it now. Our mission has changed. We have to modernize and decarbonize our fleet to help our communities become the most energy efficient in the world."

Rogers’ take on three other issues:

  • China: "They’re moving fast. The reality is that China gets it. They’re the number one producer of solar panels; number one producer of wind turbines. They have 14 nuclear plants under construction. That’s why we’re partnering with them. We want to move at China time."
  • Industry employment: "Real jobs are going to be created if we rebuild the nuclear industry in the United States. There are no such things as green jobs; every job is a green job. It’s all about improving productivity and becoming more efficient. Let’s quit trying to draw lines."
  • Smart grid and energy efficiency: "I believe this will turn out to be the greatest enabler, and I can’t even envision today what it will enable." He explains that while Duke and other companies are currently focused on generation of power to the meter, the future includes writing software for specific energy uses. "Our energy efficiency will be driven by technology. The same way you throw the switch today and the lights come on, you will throw the switch and it will optimize your use of energy. The boundaries of our business are being fundamentally redrawn."

Energy Leader Ready and Willing to Adapt to New Rules

Companies and business leaders want to know the rules. Take out the controllable surprises (tax rates, energy expenditures and other costs of doing business) and they will find a way to achieve success.

You can count Duke Energy’s Jim Rogers among that crowd. Duke is one of the largest energy companies in the country with four million customers receiving power that is primarily generated by coal. While cap and trade legislation in Congress is seen as devastating to the coal industry, Rogers would rather know what lies ahead (and find a way to deal with it) than be faced with the uncertainty of patchwork regulations or making investments today that could become obsolete in a few years.

Coal will not go away. Rogers told "60 Minutes" earlier this year that carbon capture and sequestration absolutely have to happen. If Democrats in Congress and the Obama administration are successful in putting their blueprint for reducing emissions in place, Rogers and Duke can make more investments like the current groundbreaking project at Edwardsport in southwestern Indiana.

Rogers will undoubtedly share updates on the progress at Edwardsport, his passionate views on federal legislation and more when he keynotes the Indiana Chamber’s September 2 Indiana Conference on Energy Management. A critical Washington perspective will be shared during the luncheon portion of the event from Ross Eisenberg, environment and energy counsel for the U.S. Chamber of Commerce.

A Closer Look at the Climate Change Vote

Late last week, the U.S. House voted 219-212 to pass climate change legislation. It is one of what will be a long series of contentious debates and votes during the current session. Although Democrats have a strong majority in the House, this was not a party-line vote. A few of the facts:

  • Forty-four Democrats voted against the measure, with 211 voting for it. Thus, it took some of the eight Republican "yes" votes for the bill to pass
  • Those numbers may be slightly misleading, however, as some of the Dems switched their votes when the total reached 220. House Speaker Nancy Pelosi says some of those 44 would have been with her party’s majority to ensure the bill’s passage
  • This topic has often been referred to as geographical rather than political. According to analysis from the National Journal, 30 of the 121 Democrats from states that generate at least 40% of their power from coal (think Indiana and its 95% coal use) voted against the bill. Only 14 of the 134 Democrats from states that are less reliant on coal joined in the opposition
  • On the political side, Sen. John McCain carried 49 districts last year in which Democrats were elected to the House. Twenty-nine of those reps voted against the measure. In the 207 districts that voted for both Democratic reps and President Obama, only 15 voted against the bill

Political dynamics will continue to be at play — they always are. But each issue, each vote, will prove interesting with different legislators and regions coming to the forefront. Stay tuned for plenty more to come.

The Environmental Debate: Expect a Whole Lot of Gas in Washington

The Environmental Protection Agency (EPA) released an endangerment finding on Friday for greenhouse gases. What does that mean? Two members of Congress have decidedly different views.

Edward Markey (D-Massachusetts), Energy and Environment Subcommittee chairman in the House: "History will judge this action by EPA, along with the Supreme Court decision (which led to the EPA review)  … as the environmental equivalent to what Brown v. Board of Education meant to our nation’s civil rights laws."

James Inhofe (R-Oklahoma), Environment and Public Works ranking member in the Senate: The finding "is the beginning of a regulatory barrage that will destroy jobs, raise energy prices for consumers, and undermine America’s global competitiveness."

President Obama and Democratic leaders want to move forward legislatively with a cap and trade plan, along with renewable energy and efficiency mandates. The House Energy and Commerce Committee will hold four days of hearings this week on a draft plan, including an expected 80 witnesses.

The impact on Indiana, and its reliance on coal, would be enormous. Yes, protecting the environment is important. Doing so at the expense of business and economic development would be devastating. 

Spinning Windmills and Movie Reels for Michigan?

Give Michigan Gov. Jennifer Granholm credit for truthfulness. Her State of the State speech included this statement: "Any honest assessment of our state’s economy has got to recognize that things are likely to get worse before they get better."

As for some of the specifics in the address, Granholm appears to have adopted the "promise everything and see what sticks" approach. A few examples from this Detroit News summary:

  • Following the lead of several people currently in power in Washington, she is denouncing coal. A potential moratorium on new coal-fired plants and a "45 by 20" plan that calls for a 45% reduction in fossil fuels by 2020 sounds nice, but doesn’t pass the realism test.
  • As for no utility shutoffs, a one-year freeze on car insurance rates and no home foreclosures without 90-day notices. These are great for consumers to hear, but can businesses survive and thrive with those restrictions?
  • In education, "Promise Zones" to help provide college tuition for the needy and "Algebra for All" to better prepare teachers offer hope for improvement.
  • And, if the green energy industry doesn’t help the auto woes, there is state money proposed for an $86 million animation movie studio in Detroit, and a $54 million movie studio in Detroit. What?

Sure, Indiana might compete with our neighbors to the north in some business aspects. But in looking beyond state borders, a stronger Michigan would likely mean a stronger region to the benefit of all.

The economic hole is a deep one. Good luck! You’re going to need it.

Coal Making Comeback for Some Businesses

America’s new likely Energy Secretary, nominee Steven Chu, is on record saying coal is his "worst nightmare." Well, he obviously hasn’t been locked in solitary with a stereo looping that migraine-inducing terror of a song, "Bad Day." That is my worst nightmare, and I’d contend it’s far worse than anything coal will ever provide.

But Chu’s (and Obama’s) aversion to coal is hardly music to the ears of the nation’s coal producers, namely the top five producing states (Wyoming, West Virginia, Kentucky, Pennsylvania and Texas). This is likely why the Small Business & Entrepreneurship Council has a different take on coal:

For good measure, coal is affordable. On December 27, the New York Times ran a fascinating story titled "Burning Coal at Home Is Making a Comeback". While still a tiny fraction of the market, the story explained how the number of homes using coal as a heating fuel has risen. Coal consumption as a heating fuel, it was reported, hit a low in 2006, then rose by 7 percent in 2007 and more than 10 percent during the first eight months of 2008.

Opportunities have expanded for some small businesses. For example: "Dean Lehman, the plant manager for Hitzer Inc., a family-owned business in Berne, Ind., that makes smaller, indoor coal stoves, said his stoves were on back order until March. And Jeffery Gliem, the director of operations at the Reading Stove Company and its parent, Reading Anthracite, in Pottsville, Pa., which supplies coal and stoves to 15 states in the Northeast and Midwest, said the uptick in interest was the largest he had seen in 30 years. ‘In your typical year you might have five, six, seven thousand stoves being sold,’ Mr. Gliem said. ‘This year it was probably double that.’"

To get an idea on the cost differential, consider the following: "Coals vary in quality, but on average, a ton of coal contains about as much potential heat as 146 gallons of heating oil or 20,000 cubic feet of natural gas, according to the Energy Information Administration. A ton of anthracite, a particularly high grade of coal, can cost as little as $120 near mines in Pennsylvania. The equivalent amount of heating oil would cost roughly $380, based on the most recent prices in the state – and over $470 using prices from December 2007. An equivalent amount of natural gas would cost about $480 at current prices." 

UPDATE: The Heritage Foundation just released this series of questions for Chu, as well.

Energy/Environment Hot Topic of Friday Conference Call

In today’s First Friday Conference Call, Indiana Chamber VP of Energy & Environmental Affairs Vince Griffin chimed in via phone all the way from Ireland. Ok, it was Ireland, Indiana near Jasper, but it still sounded quite magical. (And we don’t have to claim Colin Farrell in the Hoosier version.)

At any rate, Vince offered some key tidbits on the state of energy in Indiana. Here are just a few of the items conveyed in the hour-long call:

  • By 2013, experts from Purdue University have forecasted that Indiana will need close to 5,000 additional megawatts of power; today we produce just over 20,000.
  • The Great Lakes contain 20% of the world’s fresh water.
  • Indiana has seen droughts in the 1940s, 1960s, 1988 and is due for another. Vince says these tend to follow periods of heavy rain and snow, which Indiana has seen the last couple of years.
  • Water is critical. No water = no electricity.
  • Indiana consumes over 60 million tons of coal per year, second only to Texas. Vince also expressed hope that President-elect Obama will back off his campaign rhetoric regarding the impending downfall of coal. "We’re hopeful that Obama understands how important coal is to the United States. It provides a large number of jobs and Indiana has 95% of its electricity come from coal."
  • Indiana uses a lot of power. One reason is that we are the nation’s top producer of steel, which is very energy-intensive.

The First Friday Conference Call is just one of many benefits Indiana Chamber members receive. The monthly calls feature a different topic each month, and are totally interactive with 30 minutes of the hour dedicated to answering questions of listeners. If your company is a member, anyone at your business can call in and take part. To inquire about Chamber membership, call the territory manager for your area.