Sunday, January 30, 2011

Some Notes on IBM and Yankee. How I Found Vermont's Energy Plan.

The Puzzle

On Wednesday, IBM said they might close their large plant in Vermont if Vermont Yankee closes and their electric bills rise. A day later, the governor said he thought there was a plan for electric supply for Vermont: a plan that did not include Vermont Yankee. But, according to VPR, the governor says he can't find such a plan. The plan never existed, or it has gotten lost.

Seek and ye shall find. I am proud to say that I found the plan. Yes I did. Keep reading.

IBM Makes An Announcement about Energy Use and Continued Operations

The background about IBM:
  • IBM has a huge wafer fabrication plant in Essex Junction, Vermont. It employs thousands of people.
  • IBM spends $35 million a year for electricity.
  • On Wednesday of last week, IBM said that they were very concerned about Vermont Yankee closing.
  • IBM further said that they would not be able to operate in Vermont if their electricity prices rise and they expect the prices will rise without Vermont Yankee.
At that point, high-up people in the Vermont government responded.
  • Legislators suggested to IBM that they could build their own power plant on the IBM wafer fab plant site.
  • IBM answered that they were in the wafer fab business, and had no intention of building and operating power plants.
  • Governor Shumlin tried to deal with the IBM announcement by saying "the statement I read was ‘We’re out of here,’ meaning we’re out of business, not that they’re moving somewhere else.” (Yes. You read that right. I often scratch my head about Shumlin's statements.)
  • Shumlin further stated that he had been shocked, shocked to find out that the state had no energy plan for the future that did not include Vermont Yankee
C'est Moi, the Energy Sleuth

Well, gosh, I was shocked too. So I did a little digging on my own blog, and I found the missing plan.

As a matter of fact, the plan for going forward without Vermont Yankee was explained during a recent debate which I posted on my blog: Howard Shaffer and I debated James Moore of VPIRG and Vermont Senator Dick McCormack.

Senator McCormack sits on both the Senate Natural Resources Committee and the Finance Committee. The Natural Resources Committee deals with energy issues, and the Finance Committee deals with utility regulation (among other things). Therefore, McCormack's authority and his explanation of the Vermont energy plan are very credible. You can hear him explain it in his own words on the video below:

The Energy Plan on Video

To hear the energy plan, you have to move the slider to about 22 minutes in to the tape.

At this point, I have just finished explaining the possible grid-level consequences of closing Vermont Yankee, as described by ISO-NE, the grid operator.

Senator McCormack does not dispute my description of post-Yankee grid problems, and adds that he is on the Senate Finance Committee which reviews ISO-NE reports. He says that people ask him about "where will the electricity come from without Yankee" as if nobody in the legislature ever thought of it before. People who want Yankee's license to be extended will ask that question, and his tone of voice implies that they are a bit silly.

McCormack says the transition will be difficult, but the utilities have assured the legislature that the grid has plenty of excess power and can make up the loss from Yankee. He also says energy efficiency is important.

At this point, I thought I had a pretty clear idea of the energy plan. I thought it was that Vermont would buy from the grid and also improve energy efficiency. McCormack understands there will be grid problems and other problems, but that is the plan. Buy from the grid at market prices. Okay. I don't like this plan particularly, but it seemed realistic at least.

Now we are around 24 or 25 minutes into the tape, and McCormack begins to to describe the long term plan, not the transition energy plan. In all honesty, this may not be the official plan, but only McCormack's own plan. But since McCormack describes the earlier plan as "the transition," I think this is the official longterm plan. Also, he is on all the relevant committees in the Senate, and he is describing the longterm plan, so I think this is it. I think I found it.

We DO Have A Plan

As McCormack explains, the long-term plan is about cutting back on our electric use. (I got the impression these will be big cut-backs, not some little wimpy measures.) Vermonters will cut back voluntarily, or at least McCormack hopes we cut back voluntarily. If not voluntarily, we will still cut back. (McCormack does not outline the mechanism for non-voluntary cutbacks.) He further says that that the idea that everyone can have all the electricity they want is outmoded. If you listen for about five minutes, between 21 and 26 minutes on the video, you can hear the entire conversation.

So there it is. The Vermont energy plan, on video, in the words of a ranking Senator from both significant Senate committees. The long-term plan for replacing VY is simple: Vermont just can't keep using all that electricity.

Look, I know IBM won't like this. I don't like this. However, I only stated that I found the plan and I am happy to share it with Governor Shumlin. I never said I liked the plan, I just said that Vermont has a plan. The Governor can start with that knowledge, and go on from there.

Vermont will just stop using so much electricity. This will be easier, of course, if IBM shuts down and stops drawing all that power.

The Backstory on this post: Standing on the Shoulders of Giants

In building this post and finding the plan, I acknowledge and thank many writers and reporters, as well as other reporters linked within the text above.

My first and foremost tip of the hat is to Rod Adams, for his two posts:

The second tip of the hat is to Jack Harding of Vermont Tiger for his post

And finally, for the WCAX reporting (with video) that first covered the story.

And finally, I appreciate VPR for Bob Kinzel's interview with Shumlin, and especially for these quotes:

"The extraordinary thing to me is that I stand here as your governor - 16 months before the shutdown date that was scheduled when we approved it 40 years ago - and state government has one plan. That's to continue to operate it beyond its design date. There was never a second plan, which might have been: What if it is actually shut down when it was scheduled to be shut down?"

"I sit here with my team frankly scrambling to put together a shutdown plan that should have been designed over the years."


Howard Shaffer said...

It would appear that the Governor has never read VPIRG's report "Repowering Vermont." It shows what to do without Vermont Yankee. Unfortunately this report is no longer on VPIRG's website. Perhaps it should be put on the Coalition for Energy Solutions website, so that it can be compared to the report "Vermont Electric Power in Transition" by the Coalition.

Given the opposition to wind power in many places in Vermont,the behind schedule progress in insulating homes as reported at the RENEW Vermont conference, and VPIRG's apparent failure to show up to convince local citizens to stop opposing wind and biomass, it appears that Vermont will be buying a lot of power from the grid.

Martin Langeveld said...

Where, exactly, did the WCAX story say that IF Vermont Yankee closes AND their electric bills rise they WOULD not be able to operate in Vermont? Nowhere, actually.

What WCAX actually reported was that IMB competes head-on with outfits in Taiwan and China that enjoy government-subsidized energy, and "So if we are going to be in these markets, we have to be cost competitive or we won't be here," Bombardier said. Cost-competitive, not "energy-cost competitive."

Then Bombardier says that IBM estimates that without VY, their energy costs would go up 25%. Based on what? VY has offered Vermont power post-renewal at 6.2 cents per KWH, versus Hydro Quebec's offer of 5.8 cents. The current VY rate to Vermont (for 1/3 of its total energy) is 4.2 cents. By the time this sugars down to IBM's retail rate, neither of these offers means a 25% increase, but if VY wants to be in the game, it needs to shave its offer.

By the way, even with the favorable electric rates IBM enjoys, it has cut its employment in Vermont from around 8,000 a decade ago to around 5,000 today. Clearly, saving jobs at IBM is not simply a matter of keeping their electric bill from rising, because there has been no correlation in the past between IBM employment and electricity cost.

Finrod said...

Plan? Plans to source lots of electricity are outmoded, just like that outmoded idea that everyone is entitled to all the electricity they want, whenever they want it. You're old fashioned, Meredith. Plan indeed! Everyone needs to modernise their thinking about this issue. For instance, do you realise that as well as encouraging large business concerns to relocate, the Vermont state government could well also provide incentives for private residents to do likewise? That would naturally lead to a realignment of power demand with available supply in the post-nuclear era.

Meredith Angwin said...

Thank you all for your comments.

Howard, I can't put the VPIRG report up on this site because I don't own the copyright of course. I can quote (fair use) but I can't put their report up. Here's a link to our report which also summarizes their report:

The VPIRG scenario was completely unrealistic and I think that is why VPIRG took the report down. It's easy (as VPIRG did) to say that 145 3 MW wind turbines should be built in Vermont. But then, why aren't isn't VPIRG out in the trenches helping the wind developers? It is easy for them to say "add 100 MW of biomass" but I haven't seen them showing up in Pownal to help the biomass developers.

And so it goes. Protest against everything, all the time.

Martin. Usually you make excellent comments, but this one seemed a little bit below your usual standards. Of course IBM didn't SAY "We will leave if VY closes." That would be a threat, and big companies don't do that. The only businessman I know who made such a threat recently was a renewable developer. He made a direct threat. He said would move his company out of the state because he didn't get enough state contracts. This did NOT play well with most people. Big companies don't do this kind of thing.

As a newspaperman, you should be aware that the audience is supposed to do a certain amount of reading-between-the-lines with official company statements. And official statements about "worried about costs" and so forth while talking about Vermont Yankee and the company's power supply and its costs--Most of us will "get" what they are saying. As we were meant to "get it."

Also, as I pointed out in my blog about the HQ deal, the deal is opaque and it is a variable rate deal. The Entergy offer was fixed rate. There is a difference. If you don't know much about the deal, please read my late-December blog about it. Nothing in this blog post changes because HQ has offered a better "teaser" (going-in) rate

Finrod. You echo my husband. He read my post and said: "So the Vermont plan is freeze-in-the-dark?" Men are sometimes far more direct than I would be, me being such a lady and all ;-)

Jim Rogers said...

Meridith, I was amazed at Senator McCormack's comments and the cavalier attitude he's taken toward electricity usage. He certainly is old enough to have known people who lived their lives without the readily available electrical energy we have today and should understand, although he appears to be oblivious, the wonders of the modern electrical grid.
The electrical grid is the greatest invention in human history and everything pales in comparison to the gifts that electricity on demand has provided. I assume that he is a native of Vermont and should have some familiarity with the condition of the state before the availability of electricity but assuming that he is not, I suggest that he tour the Tennessee Valley Authority's Chattanooga headquarters. While there he should study closely the pictures of the Tennessee Valley prior to the gift of electricity. The pictures from the 1930's and the view of the valley today tell all that is needed regarding the wonders of the electrical grid.
We are the recipients of a wonderful gift which we once treasured before public utilities became a political issue. There is certainly no doubt that we stand on the shoulders of the giants who came before us who built this wonder. It is terrifying that people with as little vision as that demonstrated by Senator McCormack are in any position of influence and could destroy it.

Willem Post said...

I was in the Netherlands during WW2 and the Germans cut off electricity, gas and water in 1944 and 1945. All us Dutchman thought nice things about Germans in those days.

We got water from a fire hydrant 3x per week. We cooked with a wood stove; a lot of our food was eaten raw. The trees were "taken" from the city parks, or we used the inside trim and doors of our house. My mother and I did the dishes by candlelight. My father was out hustling up food from the farmers using our fine goods, gold and silver for trading.

Shumlin makes $1 million per year. He can afford his own generator and a big diesel fuel tank.

You mean since WW2 we have been spoiled with steady electricity and all. What do you know?
You mean when I flip a switch there is no expectation of power at all times? Oh, my solar panels are covered with snow. Oh, there is no wind or too much wind for my windmill.

Will I still be able to get on the internet whenever I want to?
Will power be rationed? Only on certain hours?

My lord, what have we wrought?

Anonymous said...

There is a major winter storm sweeping through the country as I write this. There is a wind turbine a few miles away from me and it is frozen solid. Solar panels are covered by ice and snow. The neighbor's woodpile is a frozen mass of ice and wood.

The nuclear plants in my area are still humming along, snow and ice be damned. When I throw the switch I get electricity. My lights, heat, refrigerator, and range are all working. My family is warm and fed, safe from the winter storm outside. All because of reliable electricity. Any political figure who threatens that should be held accountable.

Jim Rogers said...

One thing I did note in the video that wasn't remarked on by either you or Howard was that the VPIRG spokesman said that VT utilities were buying 100 Mw of wind power from New Hampshire. This seemed strange to me since there aren't many of these wind farms in NH and there is a lot of opposition. About 5 minutes of searching brought this link to NH windfarms:
Only one that is built and quite a bit less than 100 Mw. I guess if you're a lawyer and represent a public interest group the truth isn't that important.