It was a little telling when Brian Fagan, mayor pro tem of the City Council, quickly looked into the audience at Friday’s State of the City speech when asked about the future of what had been a low-cost steam energy system for the downtown and vital industries and others nearby.
And Fagan drew plenty of chuckles when he saw Eliot out there and asked if he wanted to take the question on.
Eliot is Eliot Protsch, the chief operating officer of Alliant Energy, the utility which had provided that cheap steam from its aged and now flood-damaged and disabled Sixth Street Generating Station.
Amy Reasner, the local attorney who was moderating the event, wasn’t sure if the State of the City speech was designed to have those in the audience help define the city’s current situation. But in any event, Protsch came to the stage and took to the microphone.
In short, Protsch put it this way:
There might be a solution for the “very large industrial customers” located near the plant. But customers in the downtown and even farther from the Sixth Street plant will need to look for another solution.
“I believe at the end of the day, what I just asserted to you, will end up being where we find ourselves in Cedar Rapids,” Protsch told the audience of about 300 gathered in The Ballroom at the Crowne Plaza Five Seasons Hotel.
He added a caveat: “… absent a very large subsidy from somewhere, with the emphasis on very large.”
In an interview at the end of the Friday event, Protsch broke the issue down this way:
The 100-year-old Sixth Street Generating Station worked to provide low-cost steam to eight large users and another 200 smaller ones in and around downtown because the plant had few capital costs and it burned relatively cheap coal without any giant burden required for emission controls.
In fact, it was sufficiently cheap to burn coal to boil water to produce steam that piping the steam through an old, inefficient, poorly insulated and sometime-leaky piping system didn’t matter much.
All that changed with the June flood, which disabled the plant.
Now Alliant and its customers, he said, face two choices, neither attractive.
Protsch said the coal alternative would require huge capital costs — $52 million to retrofit the plant and likely $150 million or more in the years ahead to add emission controls to it to meet the changing and emerging environmental regulations. The capital costs, which would be built into the utility rates, make the idea unworkable, he said.
The natural gas alternative is different: It doesn’t require high capital costs upfront, but he said the cost of natural gas is both higher and more volatile. Suddenly, producing steam with natural gas has a much higher cost, and one too high to be able to ship steam great distances through an old, inefficient piping system. Short of digging up downtown streets and replacing the steam pipes, this idea won’t work, he said.
Protsch said Alliant has been telling smaller users, including all of those steam users in the downtown, that they should look at another solution for their steam needs. Many customers already have converted to their own systems, he said.
“I believe they all should be looking hard at that,” he said. “Because absent -– again absent a big subsidy from somewhere –- I just don’t think it’s going to be economic for anybody to restore the steam service the way it was burning coal.”
The story could be different for large industrial users like Quaker and Cargill –– Alliant continues in ongoing discussions with them, he said — next to the Sixth Street power plant. He thought “a natural gas facility of some sort” could work for them. Alliant wouldn’t have to be part of that solution, but “we’d like to be,” he said.
“Mostly, we want our customers to put in the most efficient steam production capability that they can so that they remain viable,” Protsch said. “So that’s our goal. Whether we have a role in it or not is less of an issue.”
For some months, there has been much discussion at City Hall, from local legislators and from Alliant itself about the lobbying effort in Washington, D.C., and in Des Moines and even at City Hall to find some kind of short-term and/or long-term subsidy to solve the downtown steam matter.
Asked about that, Protsch said Alliant representatives were in Washington, D.C., in recent days was being discussed with Iowa’s Congressional offices about the building of a $200-million power plant that would burn biomass to produce energy in and near the downtown.
Protsch noted that such an idea had been studied in the past.
If any such federal grant would surface, he suggested that it would be made to the city of Cedar Rapids, who then might lease land from Alliant to build such a biomass facility.
“We’re open to that,” he said.
For those looking at the big national and global energy future, Protsch said they need look no further than Cedar Rapids.
“Look at Obama’s budget bill,” he said. “It’s got carbon trading. Coal generates more carbon than natural gas, and you’ve got to build that into the cost.
“This is a microcosm of national energy policy, right here in Cedar Rapids. Because it’s an economic analysis associated with burning coal, biomass or some other fuel versus natural gas.
“It’s a microcosm of putting energy production closer to where it is utilized or moving energy greater distances either in a pipe or wire. It’s a manifestation old infrastructure being replaced by new infrastructure with vast differences in capital costs …”
In short, it isn’t good news in any event for those who had loved the low-cost steam from the disabled Sixth Street Generating Station.
It will cost too much to retrofit the Sixth Street Generating Station and add emission controls – Protsch doubted the small plant could win any environmental waiver — to burn coal.
And it cost too much to pipe more expensively produced steam from natural gas though an old, inefficient system of pipes.
“Absent” some big subsidy, Protsch repeated along the way.