What does electricity from coal really cost?

It’s becoming increasingly clear that the fees and charges on our utility bills cover just a fraction of the true, societal costs from burning coal.

A new report (pdf) from the Environmental Integrity Project (EIP) says pollution from the nation’s 51 dirtiest coal plants last year caused between 2,700 and 5,700 premature deaths.

A standard, government risk-management formula would peg the social cost of those lives lost somewhere between $23 billion and $47 billion, the report says.

Using those figures, the societal cost of premature deaths associated with at least 18 power plants — including four in the Midwest — exceeds the retail value of electricity they produce.

“It may sound callous to weigh a human being’s life against the sales price of a product, even one as valuable as electricity,” the report says. “But no form of energy is risk-free, e.g., we continue to drive cars despite thousands of highway deaths every year, and we often weigh competing values when making decisions without consciously evaluating the tradeoffs.

“Our analysis makes clear that pollution from plants without up-to-date emission controls imposes significant social costs that can outweigh the retail value of the electricity they provide.”

The report is based on research by Dr. Jonathan Levy of the Boston University School of Public Health, who has done extensive research on the relationship between emissions, pollution and mortality.

More than 130,000 Americans die each year from heart and lung diseases caused by inhaling tiny particles that are smaller than the width of a human hair, and coal-burning power plants are a major source of these fine particulates.

Modern scrubbers and other pollution controls can significantly cut down on the amount of fine particulate pollution from power plants, but some owners have resisted installing them because of the expense.

EIP identified the 60 most-polluting power plants in the country that didn’t have public plans to upgrade pollution controls. (It later excluded plants with data that wasn’t compatible with Levy’s model.)

Levy estimated the number of premature deaths caused by each plant based on state and EPA emissions data and downwind population figures from 2010 Census reports.

He then calculated the cost of those lives using the EPA’s Value of Statistical Life of $7.4 million in 2006 dollars ($8.3 million in 2012 dollars).

What does that number mean?

It’s not easy to place a dollar figure on how much we’re collectively willing to spend to protect our lives.

Many of us would pay for smoke detectors in our home but might stop short of buying a state-of-the-art sprinkler and security system. Somewhere in between is what we’re willing to pay for health and safety.

The federal government’s statistical life values are largely based on research by a Vanderbilt University economics professor, W. Kip Viscusi, who studied wage premiums required for dangerous jobs.

The New York Times explained last year:

The idea he and others have since developed in a long string of studies is that differences in wages show the value that workers place on avoiding the risk of death. Say that companies must pay lumberjacks an additional $1,000 a year to perform work that generally kills one in 1,000 workers. It follows that most Americans would forgo $1,000 a year to avoid that risk — and that 1,000 Americans will collectively forgo $1 million to avoid the same risk entirely. That number is said to be the “statistical value of life.”

Agencies and politicians use the statistic to justify the cost of proposed policies, such as environmental regulations or worker safety rules.

Industry groups tend to criticize the numbers as too subjective, while others say they understate costs by defining impacts too narrowly.

EIP notes that Levy’s calculations say nothing about other social costs, such as lost work days due to respiratory ailments, or damage caused by acid rain or climate change.

At least 18 power plants had social costs greater than the total retail value of the electricity they produced in 2011. They include four Midwest power plants:

Trenton Channel Power Plant in Riverview, Michigan, (owned by Detroit Edison) caused 56 to 100 premature deaths in 2011, a social cost of $460-$950 million, compared to $358 million in retail electricity sales.

Meramec Power Station
in St. Louis, Missouri, (owned by Ameren) caused 57 to 100 premature deaths, a cost of $470-$950 million, compared to $457 million in retail sales.

Eastlake Power Plant
in Eastlake, Ohio, (owned by FirstEnergy Corp.) caused 120 to 240 premature deaths, a cost of $980-$2,000 million, compared to $605 million in retail sales. (FirstEnergy plans to shut down the plant in September.)

Nelson Dewey Generating Station in Cassville, Wisconsin, (owned by Alliant Energy), caused 29 to 61 premature deaths, a cost of $240-$500 million, compared to $108 million in retail sales.

EIP’s conclusion: “Power plants that cost society so much more than the revenues they earn for their owners have outlived their purpose, and need to make way for the cleaner and more cost-effective alternatives already at hand.”

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