Reid has plan to leave coal in the dust

By Lisa Mascaro, Phoebe Sweet

Sunday, Aug. 5, 2007 | 1:13 a.m.

In the week since Senate Majority Leader Harry Reid said he would do everything he could to block three proposed coal-fired power plants in Nevada, this much can be said:

He probably can carry off his threat, especially since they would be constructed on federal land. Just look at how he has stalled a waste repository at Yucca Mountain, where so much more is at stake for the nuclear power industry, which is clamoring for a place to bury radioactive fuel rods.

Environmentalists are embracing Reid's bold pronouncement, welcoming the high-profile addition to their campaign to shift the country away from fossil fuels at a pivotal moment.

But as the Democrat joins a growing chorus of politicians and environmentalists trying to distance the nation from coal, skeptics say he is putting his own state at risk because the nascent alternative-energy industry isn't ready to take on all of Nevada's energy needs.

Doug Fischer, a utilities analyst with the investment firm A.G. Edwards, said coal opponents, including Reid, could "put us in a bind where we're not going to have the energy we need."

"The Al Gores and Harry Reids of the world need to get real with how we're going to deal with our need for power," Fischer said, "because we're not going to get there solely with conservation."

The utility industry simply scoffs at the notion that Nevada could be the first state powered mainly by renewable energy: wind, solar and geothermal.

"To go cold turkey and say we're going to do it all with renewables right now? You could never bring the amount of resources on in the time necessary," said Tom Johns, senior vice president of development for Sithe Global, the power developer proposing a 750-megawatt coal-fired plant in Lincoln County.

Power plant builders LS Power and Dynegy Inc. also proposed a 1,590-megawatt coal plant outside Ely in White Pine County, one valley over from a proposed 1,500-megawatt Sierra Pacific Resources plant. Through two subsidiaries, Nevada Power and Sierra Pacific, the company provides power to Southern Nevada and the Reno area, and is regulated by the state, unlike the other three developers, who would sell their power on the open market.

The three plants would create enough power for almost 3 million homes.

So an ideological joust is under way, the outcome of which could turn Nevada into the greenest state in the nation - or leave it energy-starved.

On the one hand is Reid, the latest voice urging dramatic measures to battle global warming. On the other hand is the conventional power industry, emphatic that today's coal plants are not your father's pollution monsters and are needed to keep the lights on.

Ray Lane, a former chief operating officer at Oracle Corp. who now represents clean energy companies at the venture capital firm Kleiner Perkins Caufield & Byers, said, "What's happening in this battle is going on in just about every state ... What do you do as a politician? Do you come out strongly in allowing the power needs to be met through coal or do you say renewables are ready?"

In a letter to Nevada's three coal plant developers, Reid laid out a vision - one observer called it a manifesto - of an energy independence plan for the state. He calls for systematically abandoning coal in favor of conservation measures and enough renewable energy generation to power 4 million homes by 2024.

The three power plants in Reid's cross hairs would produce 35 million tons of polluting carbon emissions, the key culprit in global warming, each year.

As he has on other issues, Reid seemed to seize the stage for no clear reason other than he believed the time had come.

Reid has long agitated for renewable energy development in Nevada, but the issue has taken on a sense of urgency as Americans awakened to the repercussions of global warming.

The senator is also a great tactician. He timed his anti-coal message as Congress is deeply engaged in energy policy debates and lawmakers are preparing for what could be a showdown this fall on global warming.

Reid essentially set down one of the boldest markers yet in the energy debate: If the Senate majority leader can kick coal, maybe other lawmakers could think about it, too. But that's not his objective, Reid told the Sun.

His plan to eliminate dependence on coal, he said, "has nothing to do with the nation. My involvement in Nevada has everything to do with Nevada. I think that we have a worldwide problem, a nationwide problem, and I don't want a Nevada problem.

As Congress tackles global warming, he said , getting rid of Nevada's dependence on coal "is only one part of it."

Keith Martin, who co-heads the energy finance group at Chadbourne & Parke in Washington, sees the senator's position as part of the arc of coal's journey this past year.

Coal, once the reliable workhorse of the energy industry by supplying half the nation's power, is now its bad actor.

Utilities have abandoned plans for coal plants in Florida, Texas and other states. As they factor in the enormous costs of pollution-control technology, potential legislation limiting greenhouse gas emissions and public opposition, the bottom line no longer makes sense.

"You'll look back on the year and Reid is just another voice that's consistent with what's coming out of Washington," Martin said.

But what sets Reid apart from other pro-green voices is his ability to kill plans for Nevada's three coal power plants. Witness his efforts to derail a nuclear waste repository at Yucca Mountain.

Reid has staved off construction of the nuke dump 90 miles northwest of Las Vegas for decades using stall tactics and budget maneuvering.

His strategy to fight the power companies could be similar - bleed the coal projects of the federal government support they need to plug in.

For example, he could introduce legislation to block federal agencies from spending money to permit the plants. Or he could offer bills requiring that new utility development include a sizable amount of renewables.

But unlike its stance on the nuclear dump, the state's political class is not united behind Reid's plan to kill coal.

Gov. Jim Gibbons has said he supports coal as a component of a diverse energy portfolio and an economic development measure for rural Nevada, despite a petition by seven environmental groups last week asking him to suspend permitting of new coal-fired power until a cap is in place on the amount of carbon dioxide plants could emit.

And Reid's Nevada colleague in Washington, Republican Sen. John Ensign, supports the proposed coal plants and vowed to fight Reid, doing "whatever we can do to try to make sure the process is fair.

"It's kind of like the idea, 'Do cars pollute today?' Yes, but they pollute a lot less than cars of yesterday," Ensign said. "These are new power plants with new technology coming on line that will pollute a lot less."

Utility executives remain confident.

Last week Sierra Pacific Resources Chairman Walt Higgins, whose company is proposing a plant in White Pine County, told investors and Wall Street analysts that Reid is trying to influence state and national policy.

Reid indicated no intention to participate directly in the Sierra Pacific plant's approval process, but simply to oppose plants that don't store the greenhouse gases emitted by coal-burning plants.

Higgins said his plant will store greenhouse gas once technology is available.

Coal plant developers say they support renewable energy development as one piece of the energy picture.

LS Power's plans for a White Pine County plant include a 500-mile transmission line that would connect Northern and Southern Nevada's power grids for the first time, which the company believes would stimulate renewable energy development near their plants.

"We understand that there is a need for a push for renewable resources. But at the same time we don't think that replaces the need for coal-fired power generation," said Eric Crawford, director of project development for LS Power.

State regulators say they embrace alternative energy, but worry that Reid's plan goes too far.

Jo Ann Kelly, chairwoman of the Nevada Public Utilities Commission, said that with 1,000 megawatts of new electric demand under construction on the Strip, an increasing population in Southern Nevada and utility plans to retire older coal plants by 2013, the state needs to take advantage of every power generation method - including coal.

"I don't want anyone to think we didn't look at the issues of greenhouse gas emissions," Kelly said.

But she said she is sure the state needs at least one more coal power plant.

Sierra Pacific generates 19 percent of its power from coal. Nine percent comes from renewable energy, conservation and energy efficiency programs.

"We know solar works. We know geothermal works. We know wind works. What's the risk?" Reid spokesman Jon Summers said. "We should be asking, 'What's the risk of building another dirty coal plant?'

"We need to look beyond today and into the future," Summers said. "That's what his vision does - both from an environmental perspective and looking down the road to Nevada's economic future."

Venture capitalists, who have more than tripled their renewable energy investments to $4 billion in recent years, are measuring the effect of Reid's alternative-energy challenge.

Mark Heesen, president of the National Venture Capital Association, said that although "one statement is not going to change the way we invest," Democratic leadership in Congress has "made it very clear there needs to be a major change in energy policy."

Sun reporter Mary Manning contributed to this story.

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