Monthly Archives: September 2014

Coal Related News from Around the Nation

Texas Committee Hears of ‘Severe Threat’ From EPA Carbon Plan

A committee of Texas lawmakers gathered yesterday to hear what’s becoming a familiar refrain in the state — that U.S. EPA’s plan to slash carbon dioxide emissions at existing power plants is a costly and expansive threat.

“This rule’s not about technology solving environmental problems inside the fence,” said Mike Nasi, general counsel for Balanced Energy for Texas, a coalition whose website touts the role of oil, natural gas and coal. “It’s about the federal government telling us how to run our electric market.”

The comments came during the first day of a hearing on EPA’s carbon plan before the state House of Representatives’ Environmental Regulation Committee, with more testimony expected today. Nasi described an outlook for dramatically higher electric prices and what he called disproportionate treatment of Texas.

Earlier in the day, Brian Lloyd, executive director of the Public Utility Commission of Texas (PUC), issued his own warning. He said average retail prices in Texas have dropped since 2005, bucking an increase in the United States. The EPA discussion is “disheartening” for many people, he said, because Texas has tried to be attractive and have low power costs.

“And now all that is, I think, under severe threat,” Lloyd said.

EPA’s proposed Clean Power Plan seeks a 30 percent reduction in carbon dioxide emissions from U.S. power plants by 2030 compared with 2005 levels. Targets vary by state, and the goal for Texas is about a 39 percent decline compared with 2012 in pounds per megawatt-hour.

The EPA plan was announced in June, with a comment period deadline extended to Dec. 1. The agency is seeking progress toward reductions by 2020. EPA’s proposed building blocks for states include making coal-fired plants more efficient, boosting the use of efficient natural gas-fueled plants, producing electricity from low- or zero-emission facilities, and energy efficiency.

Lloyd said some building blocks work against each other, and he said more use of gas-fueled plants and a drop in using coal-fired plants would have a big effect on Texas. That includes a possible boost to 70 percent of energy coming from gas plants from 43 percent, he said. Lloyd also noted a potential 20 percent renewable energy standard and large use of energy efficiency.

Yesterday’s hearing followed a meeting last month of Texas regulators that also focused on EPA’s proposal to reduce greenhouse gas emissions from existing generating plants (EnergyWire, Aug. 18). That workshop was organized by the PUC, which invited members of the Texas Commission on Environmental Quality (TCEQ) and the Railroad Commission of Texas.

Commissioner Toby Baker of TCEQ said the Clean Air Act was designed to push states, but he took on assumptions related to reliability, cost, enforceability and timing of the carbon proposal.

“They’re highly questionable, and they’re extremely challenging,” Baker said yesterday. He said regulatory oversight, given various aspects of the proposal, also would need to be sorted out.

As with the earlier Texas regulatory meeting, the possibility of challenging the U.S. government loomed over yesterday’s hearing at times.

“What if we just said no?” Rep. Jason Villalba (R) asked. “You know, there is precedent in Texas for telling the federal government that we are not going to be under the boot of the federal government’s authority.”

Staff members from TCEQ indicated that EPA’s authority came from the Clean Air Act, although Texas could challenge a plan if the agency created one for the state. Villalba then brought up the idea of “efficient breach,” or not complying after examining the possible consequences.

Environmental groups see benefits

Sam Newell of the Brattle Group, a consulting firm, said added pressures could make it harder for Texas to meet reliability standards, but perhaps not as hard as some people suggest. He said Texas might be better prepared to deal with reliability issues than many other places because of its setup that provides a signal for prices to be high during times of scarcity.

Some backers of the carbon plan held a conference call with reporters before yesterday’s hearing to tout potential health and climate benefits, as well as flexibility for states. Representatives from the Sierra Club, Public Citizen and Environment Texas said the state is positioned to meet the reduction target set for it by EPA.

“We don’t think that’s going to be that difficult to meet, and it’s actually going to be of great benefit to Texas,” said Cyrus Reed, conservation director for the Lone Star chapter of the Sierra Club.

Tom “Smitty” Smith, director of Public Citizen’s Texas office, said legislators may not need to do much to make a state plan work, but they could amend some language and come up with a way to trade credits. While Texas likely will become involved in litigation, Smith said the record on carbon litigation has favored EPA.

“Unless there’s some new wrinkle that we’re not seeing, it’s in all likelihood that we’re going to be having to complying with it,” Smith said, “and we might as well get ahead of it and … not violate the first rule of holes, which is quit digging.”

But the PUC’s Lloyd said EPA hasn’t provided the sort of flexibility suggested by supporters. He noted that Texas has multiple power grids, not just the region managed by the Electric Reliability Council of Texas, or ERCOT.

If Texas were to try to meet the EPA proposal, it would need to look at the building blocks set out by the agency, he said. An energy efficiency piece alone could rise to cost more than $1 billion a year, according to Lloyd.

“It’s faux flexibility,” he said.

Read the full article here. [Subscription required]

Electric Bills Heading Up This Winter

Massachusetts consumers will pay significantly higher electric bills this winter as a persistent shortage of natural gas for generating plants drives power prices to record levels.

The cost for a typical household could top $150 a month, based on an announcement this week from one of the state’s two dominant utilities, National Grid. It said its rates will increase by a whopping 37 percent over last winter’s, solely because the cost of buying electricity from power plants has soared to the highest level in decades, according to a company spokesman.

Do you want to pay hundreds of dollars to heat and power your home this winter? No, none of us do – so join us in the push back against higher electricity bills by urging your lawmakers to oppose the EPA’s new power plant rules. Let’s keep electricity reliable and affordable. Take Action now! Click here.

Other utilities, including NStar, are also warning customers to brace for higher electric bills this winter, but they have not determined final rates for the winter.

“This is pretty bad, and it’s going to really have a bearing on a lot of Massachusetts households’ abilities to just make ends meet this winter,” said John Howat, senior energy analyst at the National Consumer Law Center in Boston.

For poorer consumers and the one in 10 Massachusetts households that still heat with electricity, the price increases will be devastating, said Jerrold Oppenheim, director of a Gloucester-based consultancy that focuses on pocketbook issues facing low-income consumers.

The price shock is driven by New England’s increasing reliance on natural gas as a source for both heating homes and making electricity. The pipelines that ship natural gas into New England do not have enough capacity to meet the increased demand, and during winter, electric plants often end up paying much more for the fuel.

Other factors include the closing earlier this year of the coal-burning Salem Harbor Power Station and the planned shutdown of the Vermont Yankee nuclear plant, which will reduce the amount of electricity available to utilities this winter, said Dan Dolan, president of the New England Power Generators Association.

After several instances in which some power plants ran out of backup fuel during the deep cold spell last winter known as the polar vortex, many electric generators were making arrangements to have supplies of liquid gas and oil to tap in a crisis, Dolan said.

“A lot of this is a reaction to the fact that we had the polar vortex last winter,” Dolan said. “It was a really nasty, cold, long winter.”

The new rates for National Grid take effect in November. National Grid provides electricity to about 1.3 million residential and business customers in the state.

The average household in Massachusetts uses about 630 kilowatts of electricity a month, according to the most recent US government data. With National Grid’s new winter rate of 24.24 cents per kilowatt-hour, a typical monthly bill would run slightly more than $150.

A National Grid spokesman, Jake Navarro, said that two-thirds of the cost comes from the purchase of electricity from power plants, compared to just over half last winter.

Northeast Utilities, which owns the Commonwealth’s other major providers, NStar and Western Massachusetts Electric Co., said that it would not file its new electricity prices with state regulators until later this fall, as its winter season does not start until January.

However, Northeast spokesman Mike Durand said the generating companies that supply it with electricity are experiencing the same issues with high natural gas prices.

“We’re still in the process of gathering and evaluating bids from generating companies,” Durand said. “We anticipate [electricity prices] will go up, as well.”

Energy industry officials have been warning for several years that New England’s growing dependence on natural gas could result in price spikes if steps such as the expansion of the pipeline system are not taken. About two-thirds of the electricity used in Massachusetts is made with natural gas, up from about 40 percent just six years ago.

Meanwhile, many more consumers have switched from oil to gas to heat their homes.

Despite the alarms, the region’s reliance on the fuel has only grown. Power plants that formerly burned coal or oil have been overhauled to use natural gas as their primary fuel because it costs less and causes less pollution.

“Consumers are at the mercy of market forces,” said Oppenheim.

The supply issues should not have as much of an effect on heating bills for households that use natural gas.

National Grid, for example, estimated that natural gas heating costs for consumers would drop 1 to 3 percent. That’s because gas supplies for home heating are purchased under long-term contracts arranged far in advance, so utilities have the advantage of locking in lower rates. Power plants, on the other hand, often buy shorter-term and are more exposed to price movements in the spot markets.

“On a really cold day, which the market is predicting a few of this year, so much gas is going to people fueling their homes that there’s not really enough gas going to fuel generators,” Navarro said.

Moreover, this winter is projected to be milder than last season, so consumers should not need to crank up the heat as much.

Several projects have been proposed that would vastly increase the capacity of New England’s natural gas pipeline network. If approved, it would still take several years for any one of those projects to come on line.

There are also new power plants proposed for the region, but they are not scheduled in be in service in the near future, either.

ISO New England, which regulates the day-to-day operation of the region’s electric-power grid, had put in place a program to make sure generating plants do not run out of fuel again. Earlier this year, the regional authority said it would help power generators cover the cost of keeping backup fuel supplies on hand.

But there is little government officials can do in the face of high prices. Federal and state funding is available to help lower-income ratepayers. And Navarro, the National Grid spokesman, said customers could ask to have their bills spread over a longer period throughout the year.

Read the full article here.

Fla. Utilities Cite Geography, Fuel Diversity in Criticizing EPA Rule

Florida’s electric utilities have rather profound thoughts about U.S. EPA’s proposed rule to cut carbon emissions from existing power plants, a survey of documents submitted to state utility regulators shows.

Mostly, the utilities think EPA’s rule as it pertains to Florida is unfair, unachievable and costly.

“The level of reductions projected by the EPA in Florida is unreasonably burdensome and potentially costly to Florida consumers, given the resources mix and the balance of cost, fuel diversity and practical limitations for use of renewable resources,” Duke Energy Florida wrote in response to Florida Public Service Commission staff questions about EPA’s Clean Power Plan.

The PSC staff solicited comments for regulators to consider and submit to EPA by Dec. 1, the new public comment deadline for the proposed rule. The state’s investor-owned electric utilities as well as some municipal utilities and electric cooperatives submitted comments.

Also responding to the PSC staff were environmental and public interest groups as well as the political action committee NextGen Climate, funded by billionaire environmentalist Tom Steyer, and the industry group American Coalition for Clean Coal Electricity (ACCCE).

ACCCE, which includes Associated Industries of Florida as a member, challenged EPA’s authority over the proposed carbon rule and says the agency should not be picking electricity sources for each state.

Broadly, EPA is asking states to meet carbon emission targets that would result in a 30 percent CO2 reduction nationwide compared with 2005 levels by 2030. For Florida, that means slashing emissions by 34 percent in 2020 and by 38 percent in 2030.

Florida has the 11th-most-stringent targets, angering industry groups that have already criticized the rule. They argue it will be too difficult and costly for Florida to meet those goals because of the state’s geography and an existing overreliance on natural gas.

The peninsula state gets more than half its electricity from natural gas. Under EPA’s proposal, the state likely would have to close its coal-fired plants and add renewables.

This means EPA’s proposal would make the state’s electricity mix less diverse, threatening reliability and driving up customer bills, many of the electric companies argued.

“Forcing existing coal-fired power plants to retire early will lead to increased costs for consumers and will jeopardize the reliability of Florida’s electric grid unless sufficient time is allowed to build new generation,” wrote the Florida Electric Cooperatives Association.

Then there’s Florida Power & Light Co., the state’s largest investor-owned electric utility. FPL is taking the stance that it will be in a good place to meet the EPA requirements to curb carbon emissions.

FPL “expects to be well positioned to meet the compliance requirements of the rule considering the low CO2 emission rate of our existing electric generating fleet and our current plans for future generation,” the company said in a filing with the Florida PSC.

This is different from the typical arguments from the electric utility industry, which is grappling with meeting other environmental rules and trying to adapt to adding distributed forms of generation such as solar.

EPA has four suggestions, or “building blocks,” to help states figure out the best way to meet their targets. These areas include improving the heat rate at coal-fired plants, dispatching more natural gas, adding renewable energy and nuclear generation, and curbing energy use through energy efficiency and demand-side management.

FPL says it is taking steps to meet the first three of those.

The utility wants to build two nuclear reactors and add utility-scale solar and is part of a massive natural gas pipeline project. It also has taken steps to make its power plants more efficient.

“They’ve gone through significant modernizations in the past five years ago — to their natural gas plants,” said Andrew Bischof, a Morningstar Inc. analyst who follows FPL and its parent company, NextEra Energy Inc.

Read the article here. [Subscription required]

Electrical Grid: GAO Report Raises Concern

As more coal-fired power plants are shuttered across the nation, the greater the impact will be on the nation’s economy and electrical grid. That’s the conclusion of an alarming new report from the Government Accountability Office, which recently examined the impact of retiring coal-fired power plants in response to crippling new Environmental Protection Agency standards.

Push back on the EPA’s rules that are shuttering reliable coal-fired power plants across the U.S. – TAKE ACTION now and urge your lawmakers to oppose the EPA’s new power plant rules. Click here.

According to the report, approximately 13 percent of coal-fueled generating capacity has either been retired since 2012 or is planned for retirement by 2025, which surpasses the previous estimates in 2012. The report found that West Virginia, Ohio, Pennsylvania and Kentucky represented 38 percent of the planned closures, U.S. Sen. Joe Manchin, D-W.Va., said.

“The number of coal-fired plants that are being forced to shut down is alarming, and I truly believe we are setting ourselves up for a major electric stability crisis in this country,” Manchin said. “The GAO report verifies the dangerous impact the EPA’s proposed rules are having on our electrical grid and our economy, and it should be an eye-opener not just for West Virginians, but for hard working individuals and families across America who depend on coal for reliable and affordable energy, especially during the harsh winters when the grid is pushed to capacity.”

The GAO report found that the Department of Energy, the Environmental Protection Agency and the Federal Energy Regulatory Commission have all responded inadequately regarding the potential electric reliability impacts of regulations proposed by the EPA, Manchin said. The study concluded that in the last two years, only “initial steps” have been taken to establish interagency interactions.

Manchin is correct. The GAO report should be an eye-opener. And he believes the coal-fired plant closures will not only threaten the stability of the nation’s electrical grid, but will also cause electrical rates for everyday consumers to climb. He says the GAO report demonstrates that it is time for the Department of Energy to accelerate available grants and loan guarantees for advanced fossil fuel projects.

“It is long past time that these agencies recognize that we will rely on fossil fuels for decades to come, and rather than simply forcing plants to close, we need to figure out how to help them run more efficiently,” Manchin said. “If we don’t, prices will soar and the grid will fail.”

We agree. And lawmakers across the country would be foolish to not consider the far-reaching ramifications of the new EPA rules, and the alarming conclusions of the new GAO report as it relates to the nation’s electrical stability.

Read the article here.

Will EPA Rules Leave Americans Out in the Cold this Winter?

Imagine what good could have occurred if the United States Senate had followed suit last year after the House of Representatives passed the Regulations from Executive In Need of Scrutiny (REINS) Act?

The REINS Act, an idea offered by retired Campbell County Judge-Executive Lloyd Rogers, requires congressional approval for regulations deemed to cost more than $100 million.
No one, of course, knows the real price tag of the Environmental Protection Agency’s mandate forcing Kentucky to reduce carbon emissions by a whopping 18 percent.

Still, it’s reasonable to assume that any regulation designed to “bankrupt” the entire coal industry – as then-candidate Barack Obama in 2008 insisted he intends on doing – could be stopped by the REINS Act.

***If you want to Stand Up for Affordable Energy,  please TAKE ACTION now and send a letter to your lawmakers urging them to oppose the EPA’s power plant rules — the rules that could leave Americans out in the cold this winter. Click here!***

However, Senate Majority Leader Harry Reid, who regurgitates that coal and oil “makes us sick” and that we’ve “got to stop using fossil fuel,” isn’t about to let such a government-limiting idea gain traction on his watch.

Perhaps of even greater consequence than Reid’s lunacy is that this attempt to bankrupt coal fails to answer important questions about consequences of the EPA’s ongoing bout with coal:

• What’s the agency’s plan to keep energy affordable while it hammers on Kentucky’s plentiful sources of it without proven alternatives for providing the quantity needed to keep our economy going?

Tucked in with this month’s Warren Rural Electric Cooperative Corporation bill was a letter encouraging members to “join together to send our message to the EPA, whose recent actions will raise your electric bill.”

In the 15 years I’ve been getting such bills in Bowling Green, I’ve never received such an urgent message from the generally-benign WRECC.

CEO Scott Ramsey warns: “If the EPA has its way, these regulations will increase the cost of electricity and have serious consequences for our communities.”

Ramsey points to what happened in Germany a few years ago when its leaders “decided to move aggressively to renewable energy, such as wind and solar, with plans to shut down coal-fired power plants.”

Germany also decommissioned nuclear power plants following the earthquake and tsunami-driven meltdown at Japan’s Fukushima facility in 2011.

Such decisions are not made in a vacuum – in Germany or in America.
Ramsey notes “the fundamentals of supply and demand” resulted in Germans paying 36 cents per kilowatt hour, up from the previous 10 cents.

He says that while the cooperative believes in a balanced electric supply, “we should not eliminate any one element in the near future, as it will have negative consequences.”

Too many global-warming extremists think no consequence warrants bringing some balance to the discussion. They need to put their Kool-Aid aside and explain such a hyper-ideological approach to the elderly Kentuckian deciding between heat and medicine this winter, or to the coal miner facing the distinct possibility of standing in the unemployment line at Christmas.

• Even if Americans are willing to pay the higher costs for Obama’s utopian energy policy, will there be enough of a supply to meet this winter’s heating demands?

“Prepare for a Major Power Outage This Winter,” screams a recent Wall Street Daily headline over an article in which writer Tim Maverick warns: “With another polar vortex looming, the public should prepare for potential blackouts caused by the Obama administration’s plans to shut down coal-fired power plants.”

While last winter’s record-breaking low temperatures “put a never-before-seen strain on the energy grid,” disastrous blackouts did not occur “thanks to back-up power supplied by less-frequently used coal-burning plants,” Maverick writes.

In fact, nearly 90 percent of the coal electricity capacity due to go offline because of Obama’s regulations was used to meet last winter’s back-up demands.

Where will that supply of resources come from during this winter’s “Polar Vortex: The Sequel?”

Read the article here.

EPA Rules for Coal-fired Power Threaten Midwest Reliability — Grid Operator

A wave of coal plant closures in the Midwest tied to new U.S. EPA clean air rules is squeezing critical reserve margins — the excess power that’s provided a buffer against reliability problems — in Michigan, Kentucky, Iowa and Indiana, a top grid expert warned yesterday.

Clair Moeller, who supervises transmission and technology for the Midcontinent Independent System Operator, told federal regulators in Washington, D.C., that the Midwest is not on pace to achieve a goal of 14.5 percent reserve margins in 2016.

Moeller said capacity will be tight in MISO, which oversees the grid in 15 states from the Gulf Coast to Manitoba, in 2016 and beyond. The region is slated to retire 12,600 megawatts by the end of 2016 to comply with EPA’s Mercury and Air Toxics Standards (MATS).

“My job is to be the canary in the coal mine,” Moeller said during an interview at the Federal Energy Regulatory Commission. “It’s the coal plant closures and the time required to replace them.”

Moeller, referencing a survey released this summer, told FERC members yesterday that MISO will see a 2.3-gigawatt margin shortfall in its north and central regions. A lack of adequate transmission will prevent those areas from tapping into a capacity surplus in MISO’s southern footprint, he added, meaning the region will likely rely more heavily on “emergency procedures,” including demand response, backup diesel generators and various contracting methods.

The tight reserve margins mean balancing demand and supply will become more critical, he said.

“During the past decade, we haven’t had to care very much because we had such a surplus of capacity that loss of load risk was trivial. Thirty percent reserve margin meant you could mail it in, frankly,” Moeller said. “It’s time to sharpen the pencil and make sure we’re not making assumptions within our math that are too risky. These are forecast and statistical kinds of numbers, so we’re not going to be right.”

Moeller said it’s unclear whether operators in MISO will need more time to comply with MATS.

FERC Chairwoman Cheryl LaFleur said the agency has heard a number of requests are “in the pipeline” from companies seeking a fifth year to comply with MATS, but none in MISO.

“We are aware of a couple of projects that are … retiring a coal facility and replacing it with a gas facility. They’re still talking about their construction schedule,” Moeller said. “If the construction schedule looks like we’ve got a gap there, we’ve told those two projects we would support their request.”

Separately, MISO released a report this week that showed EPA’s carbon proposal could put an additional 14,000 MW of coal capacity at risk of retirement (EnergyWire, Sept. 18).

“We are concerned as we move through the next tranche of environmental regulations, we expect this tight capacity situation to persist for a long time,” Moeller said. “That is causing us to relook at some of our rules.”

Going forward, MISO will examine tightening its definitions about what constitutes emergency resources and availability. MISO is also looking at adjusting market rules — or possibly changing business practices — to ensure entities that come to the market short are taken offline first, he said.

Other panelists were more optimistic but acknowledged 2016, the compliance year for MATS, will be tricky.

Eric Callisto, a member of the Public Service Commission of Wisconsin, reminded FERC that reserve margins will be low but sufficient in 2016, and states have been working with MISO for months to address the problem, including constructing new projects and upgrading facilities. Callisto also noted the concern is concentrated in pockets throughout the Midwest.

“This is not a footprintwide problem,” he said.

John Quackenbush, a member of the Michigan Public Service Commission, said most of that state’s concern is focused on the Upper Peninsula, where the only baseload plant is slated for retirement. “We also have contentious relationships between parties up there,” Quackenbush said.

Callisto and Quackenbush said they’re relatively comfortable with MISO’s model for ensuring the region has enough power, a point Moeller said boosted his outlook.

“There’s no doubt that we’ve gotten to a spot that is tight, that’s absolutely tight, you can’t contest that,” Callisto said, but he added that the region has been resourceful at ensuring reliability with tight margins.

“My confidence springs from the answers of these two gentlemen,” Moeller said.

See the article here. [Subscription required.]

17 State Utility Commissioners Say EPA Plan Would be Bad for Reliability

U.S. EPA should reconsider its proposal for existing power plants in order to keep a reliable supply of inexpensive power flowing to consumers, a group of 17 current and future utility commissioners said today.

In a letter organized by the National Mining Association’s Count on Coal campaign, the officials called EPA’s June 2 proposal an assault on reliable and affordable power.

“Our concern with the EPA’s proposed carbon rules is that they fail to adequately forecast the serious economic and reliability impacts of dramatically reduced or even elimination of coal-fired generation,” they wrote.

The proposal relies on four so-called building blocks in setting state carbon intensity targets — including a state’s capacity to ramp up the use of existing combined-cycle natural gas power plants to replace power from coal-fired units. The draft’s supporting documents estimate that up to 19 percent of the nation’s coal plants will become “uneconomical” as a result of the rule, though it does not compel states to achieve their standards by reducing reliance on coal.

But that did not comfort the utility commissioners, many of whom could have a role in crafting their state responses to the federal rule.

The letter pointed to an analysis by the Public Utilities Commission of Ohio, which predicted that the rule would drive up power rates in the Buckeye State by 30 percent, mostly as a result of reduced coal use.

EPA officials say any increase in power rates due to the rule will be offset by reduced demand, keeping electricity bills steady.

See the article here. [Subscription required.]

Senators: Higher Energy Costs Could Force Almost 1 Million into Poverty

A 10-percent increase in home energy costs could push 840,000 people into poverty, according to a new white paper by two GOP senators.

Republican Sens. Lisa Murkowski (Alaska) and Tim Scott (S.C.) argue that lawmakers should consider the impact of policy changes and federal regulations on the energy expenses incurred by households.

“Too many Americans suffer from energy insecurity; they cannot afford the energy required to heat or cool their homes or secure other basic needs such as refrigeration,” Murkowski and Scott argue in the paper, which they will unveil Thursday at a Washington, D.C., event.

The senators recommend the use of Indicators of Energy Insecurity (IEIs), which estimate how policies would impact energy prices.

The indicators look at three things: The number of households that incur a significant cut in their spendable budget, the number of households pushed below the poverty line and the average household energy burden, which is estimated based on average gross income.

“Any policy proposal that would tend to increase the cost of energy should therefore be fully evaluated for its impact on energy insecurity, in order to give policymakers a complete picture of its potential consequences,” the senators write.

“Pushing more families into poverty triggers a number of significant socioeconomic issues, including increased government spending and a growing dependence on government social and safety net programs.”

The paper estimates the impact of what a 10-percent increase in energy costs would look like based on the indicators, claiming that such a spike in price is possible.

A town in Alaska, Murkowski says, has experienced a 66-percent increase in heating oil costs over the last seven years.

An analysis from the Energy Information Administration, the Energy Department’s stat shop, says electricity prices will increase an average of 3.1 percent this year, accounting for only currently enacted policies.

While Murkowski and Scott make no mention of the Environmental Protection Agency’s proposed rule on carbon emissions from existing power plants, their analysis implies it is considered.

“A 10-percent increase in energy costs was chosen because it is realistic, and could be the result of the enactment of public policies, shifting market conditions, or unexpected events. Higher increases are also possible,” the senators write.

According to the EPA’s proposal, the new rule, which requires the nation’s Power plants cut pollution 30 percent by 2030, should cut electricity bills by 9 percent by the time it goes into effect.
That is based on the cooperation of states, which are expected improve their energy efficiency, which in turn will lower energy use.

Read the article here.

JEA: Obama’s Pollution Reduction Plan ‘Most Disruptive Energy Policy in Modern Times’

Jacksonville utility says the proposed EPA rule could cause rate increases to local customers and across the state

JEA casts a critical eye toward President Barack Obama’s proposal seeking to curb pollution from the nation’s power plants, using unusually pointed language to say the regulations would imperil local ratepayers, strip Florida utilities of needed fuel flexibility and have major impacts on the state economy.
Jacksonville’s electric utility says the complex Environmental Protection Agency rule, aimed at reducing carbon emissions 30 percent by 2030, is too soon and unnecessarily expensive and that interim goals starting in 2020 are “crazy, unnecessary and unattainable,” according to a draft outline of comments JEA is preparing to send to the EPA.

In sum, the utility makes its position clear: The rule is “the most disruptive energy policy proposal in modern times.”

JEA says the EPA’s aggressive goal would quickly render coal-fired power plants obsolete in favor of cleaner natural gas plants, nuclear and renewable sources. Though the industry, as well as JEA, has invested in natural gas for electric generation, coal remains a major fuel source.

With utilities potentially scrambling to comply, ratepayers across Florida would likely pick up the bill.

The state’s efforts to coordinate a compliance plan could also put utilities at political odds — pitting private, investor-owned utilities that have been able to more nimbly invest in cleaner technology against public utilities like JEA, which are largely limited to revenue generated by ratepayers.

“You’re restricting the way utilities prefer to do business,” said Ted Kury, director of energy studies for the University of Florida’s Public Utility Research Center. “It’s going to raise costs.”

JEA has said its compliance costs could top $1 billion.

“Practically eliminating coal as a generation source will result in undue reliance on natural gas in times of supply deficits or disruptions and price spikes,” JEA’s draft comments say. “It would be impractical and economically irresponsible to mothball coal plants needed to meet such events.”

The EPA says the rule is a “commonsense plan” to cut pollution and, because it gives states the discretion to decide how they will meet the goals, solutions can be tailored to the needs and interests of each state.

UNCERTAINTY

The debate is taking place amid much uncertainty.

Republicans could retake the U.S. Senate in November and the White House in 2016, recasting the political balance against Obama’s plan.

Federal regulators are accepting comments through Oct. 16, which could sway some aspects of the finalized rule. The proposal has also sparked legal challenges — lawsuits are already underway.

Some environmental activists don’t think the rule goes far enough, while large segments of the industry echo JEA’s concerns.

“If the EPA moves forward with regulations that call for too much change too fast, we will likely see unnecessary coal-plant retirements without long-term plans for viable, cost-effective alternatives; higher electricity prices; and potential shortage of electricity supply,” the American Public Power Association, of which JEA is a member, said in a statement on the rule.

Should the proposed rule be finalized, state governments will face their own set of political and industry pressures as they set up compliance plans.

For example, Florida Power & Light, the state’s largest utility, already uses far more natural gas and nuclear power for electric generation — those sources generated about 87 percent of FP&L’s power in 2013 — than JEA or other Florida utilities.

That means those utilities could face larger costs, and potential rate increases, than the better-positioned FP&L.

In the competitive utility industry, that could rankle.

JEA says the rule will create “winners/losers among states and among utilities.”

“Since municipal utilities may face unique challenges that the investor-owned utilities may not, adjustments to the proposed rule specific to these rules are warranted,” JEA says.

Kury said, given the uncertainty, it’s too early to know what the economic impact will be or for consumers to worry about massively higher utility bills.

Assuming the rule moves on its proposed timeline, states would have to begin submitting compliance plans in June 2016, with the potential for a one-year extension or two years if states group together on a plan.

‘ENTRAPMENT’

One particularly frustrating aspect of the EPA rule, JEA says, can be seen in its Northside Generating Station.

In 2002, JEA unveiled the revamped Northside Station, a $630 million project built with significant help from the federal government because it fell under the “clean coal” program, aimed at reducing air pollution from coal-powered plants. The Department of Energy contributed $72 million to the construction.

The Northside station allowed JEA to increase electric generation by 250 percent while reducing air pollution by 10 percent, even as environmental advocates said federal policies should discourage the use of coal-powered plants because they contribute to global warming.

Now — with the political tide shifting substantially in the years since — the future of Northside is in doubt. JEA and industry groups say facilities like Northside will have to be retired too early. Retrofits would not be economically feasible, said Bud Para, JEA’s chief public affairs officer.

Paul McElroy, JEA’s chief executive officer, said it’s akin to “entrapment.”

OTHER ISSUES

JEA details a laundry list of concerns with the proposal, many of which are technical but several that include broad worries about its potential impact locally and statewide.

■ Forcing a large-scale shift toward natural gas will rob Florida utilities of flexibility.

For example, this year, about 65 percent of the power JEA generated came from its coal plants, a ratio that depends on the price of natural gas. The utility can use either one to generate a majority, but not all, of its electricity.

If it loses the ability to use coal, the flexibility will no longer exist, meaning price spikes in natural gas could have big impacts on customers’ electric bills.

“It puts Florida more at risk to higher prices,” Kury said.

In the event of a natural disaster, like a hurricane, natural gas lines could be disrupted, causing serious problems with no comparably large fuel source available.

■ Florida’s natural gas pipeline network is inadequate to accommodate the additional surge in use the rule will require. FP&L is pursuing a project to construct the state’s third natural gas pipeline that will stretch from Alabama to Central Florida.

It would improve natural gas access in the state — Duke Energy, for example, expects to use it for a planned $1.5 billion natural-gas power plant in Citrus County — but JEA doubts even that will be enough to satisfy demand.

■ JEA does not have access to nuclear energy and other renewables to meet the interim or final goals.

“JEA has no reasonable access to significant wind resources,” the draft comments say. “Solar energy for electric power generation in Florida is inadequately reliable, difficult and costly to scale for baseload.”

See the article here.

The EPA is More Concerned with What Sounds Good than What Actually Works

The Clean Power Plan is an extraordinary and unprecedented government overreach

In this hyper-partisan environment, it is good to know that a majority of Senators can still agree on an issue. When such a rare moment happens, the rest of us should pay attention, as it is probably something very important.

On September 11, 53 Senators (43 Republicans and 10 Democrats) signed a letter to Gina McCarthy, Administrator of the Environmental Protection Agency (EPA), begging for a 60-day extension of the comment period for the “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Generating Units”—also known as the Clean Power Plan (CPP). The original 120-day comment period—which is already longer than the traditional 60-day comment period—is coming to a close within the next 30 days (October 16).

Regarding the EPA’s new plan, the letter calls the coordination needed between multiple state agencies, public utility commissions, regional transmission organizations, and transmission and reliability experts: “Unprecedented, extraordinary, and extremely time consuming.” The Senators ask for more time so that states and stakeholders can “fully analyze and assess the sweeping impacts that the proposal will have on our nation’s energy system.” It also points out: “The EPA proposal provides no mechanism for adjusting the state emission rate targets once they are adopted”—which makes it imperative that the states can fully “digest” the rule, review the 600 supporting documents, and collect the data and justification for the states’ responses.

It is not just the majority of Senators who have concerns about the EPA’s proposed rule, a diverse and growing coalition, including the Exotic Wildlife Association, the Foundry Association of Michigan, California Cotton Growers Association, Texas Aggregates and Concrete Association, The Fertilizer Institute, Georgia Railroad Association, Nebraska Farm Bureau Federation, electric utilities and co-ops, and city and state Chambers of Commerce from coast-to-coast, has sprung up in opposition to the plan. Yet most people are unaware of the potential impacts or of the pending deadline for public comment.

I have written on the CPP twice in the past few months—originally when it was first announced on June 2 and then after I gave testimony in Atlanta at one of the EPA’s four scheduled “listening sessions.” Upon release, we didn’t really know much—after all, it is, as the Senators’ letter explains, complex and sweeping. But as more and more information is coming out, we see that the impact to the economy and U.S. energy security will be devastating.

Despite my efforts to spread the word—with my second column on the topic being one of my most popular ever, I find that the CPP isn’t even on the radar of the politically engaged (let alone the average person). Because this is an issue of utmost importance, I am, once again, bringing it to the attention of my readers with the hope that you will share it with everyone you know. At this point, we don’t know if the EPA will extend the comment period, so please take time now to get your comments in. The Hill reports: “Adding 60 days to the comment period could make it harder for the EPA to finalize the rule by June 2015, as President Obama has ordered.”

I’ve written this week’s column with the specific intent of giving you verbiage that you can simply cut and paste into the comment form.

The CPP will radically alter the way electricity is generated, transmitted, distributed and used in America—all with dramatic cost impacts to the consumer. It is based on the discredited theory that climate change is a crisis caused by the use of fossil fuels emitting carbon dioxide into the atmosphere. It aims to reduce overall carbon dioxide emissions by 30 percent below 2005 levels by 2030. The combination of the CPP and previous regulation will shut down more than 40 percent of coal-fueled generation—representing 10 percent of all electricity-generation capacity—within the next 6 years.

What will this forced, premature elimination of America’s electric capacity do?

The proposed EPA plan will seriously threaten America’s electric reliability

Unless the EPA backs down on its harsh regulations and coal-fueled power plants get a reprieve, blackouts are almost guaranteed—especially in light of the projected cold winter. About the 2014 “polar vortex” that crippled the U.S., Alaska Republican Senator Lisa Murkowski, at an April Senate hearing on grid reliability, stated: “Eighty-nine percent of the coal electricity capacity that is due to go offline was utilized as that backup to meet the demand this winter.” Murkowski’s comments were referencing coal-fueled power plants that are already due to be shut down based on regulations from five years ago, before the proposed CPP additionally reduces supply. Affirming Murkowski’s comments, Nicholas Akins, president and CEO of Ohio-based American Electric Power Company Inc., sees the 2014 near crisis as a warning sign. At that same hearing he said: “The weather events experienced this winter provided an early warning about serious issues with electric supply and reliability. This country did not just dodge a bullet—we dodged a cannonball.” And, Federal Energy Regulatory Commissioner Philip Moeller said: “the country is undergoing an unprecedented energy shift in a very short time frame.” And added: “grid operators in the Midwest are struggling to gauge whether they will have sufficient capacity to handle peak weather during the next five years.” While these comments are about the 2014 severe cold, Texas experienced a similar scare in 2011, when a protracted heat wave resulted in razor-thin reserve electric capacity margins. A Reuters report titled: “Heat waves pushes Texas power grid into red zone,” stated: “Texas has the most wind power in the country, but the wind does not blow during the summer.” Just a few months earlier, Texas ice storms forced rolling blackouts for hours because electric supplies dropped below demand.” All of these reports are before the projected closure of an additional 75 megawatts of coal-fueled electricity generation due to the new regulations. If McCarthy was serious when, prior to the release of the proposed regulations, she stated: “Nothing we do can threaten reliability,” she’d withdraw this plan, as it will do just that.

The proposed EPA plan will chase away more American industry

While the CPP appears to be about forcing the power sector into reducing carbon-dioxide emissions, there are spillover impacts of higher electricity rates on overall economic activity—especially energy-intensive industries such as steel, manufacturing, and chemicals. America’s abundance of affordable, reliable energy provides businesses with a critical operating advantage in today’s intensely competitive global economy. The EPA’s proposal will reduce America’s advantage, as it’s acknowledged that the proposed regulations will raise electricity rates in the contiguous U.S. by 5.9% to 6.5% in 2020. Europe, and especially Germany, is threatened by an industry exodus due to its higher energy costs that have been created by its move to increase green energy. Germany’s pharmaceutical and chemical giant Bayer is already making significant investment in its Chinese manufacturing operations, with expansion also taking place in Brazil and India. If industry continues to leave the U.S., the CPP will have the opposite effect. Emissions will increase as companies move to countries with lower labor costs, cheaper energy, and lax environmental policies. An additional unintended consequence will be more jobs lost in manufacturing.

The proposed EPA plan will kill hundreds of thousands of jobs

In late July, the International Brotherhood of Electrical Workers (IBEW) International President Edwin D. Hill said: “If these rules are implemented as written, dozens of coal plants will shut down and with no plans to replace them, tens of thousands of jobs will be lost and global carbon emissions will rise anyway.” Investor’s Business Daily reports: “The IBEW has now joined the United Mine Workers of America, the Boilermakers and several other unions opposed to the new anti-carbon rules.” The United Mine Workers of America has estimated that the rule will result in 187,000 direct and indirect job losses in the utility, rail, and coal industries in 2020 and cumulative wage and benefit losses from these sectors of $208 billion between 2015 and 2035. The EPA rules hitting industry in rapid succession create uncertainty—and, as we’ve seen with Obamacare—uncertainty thwarts investment and hiring. The same industries that will be taking the regulatory hit from the CPP, are expecting additional impacts from the follow-on rules that are yet to be promulgated. No wonder the economy is sluggish and the jobs picture is bleak.

The proposed EPA plan will cause harsh economic consequences while having virtually no impact on the reported goal of stopping global climate change

From increased energy costs to job losses, the CPP will damage the economy. A statement from the International Brotherhood of Electrical Workers on the EPA proposal, points out: “estimates regarding the damage to jobs and the economy created by poorly planned climate regulations have consistently been shown to be true in comparison to the overly optimistic predictions made by the EPA.” Perhaps these economic consequences would be worth it, if they actually did anything to really reduce carbon-dioxide emissions—assuming what humans breathe out and plants breathe in is actually the cause of global warming. But even the EPA acknowledges that the CPP is less about reductions and more about being a global leader to “prompt and leverage international decisions and action.” In Hillary Clinton’s September 4 speech at Senator Harry Reid’s National Clean Energy Summit, she stated that the U.S. needs to lead other countries in green energy and that we need to show the world we are committed. Yet, the U.S., which did not ratify the Kyoto Protocol, is the first country to actually reduce carbon dioxide emissions and meet the Kyoto requirements. We are already a leader, but the other countries aren’t following—instead they are abandoning the sinking green ship and Germany, which claims to still be committed to the green ideology, is actually increasing its number of coal-fueled power plants and CO2 emissions. Carbon dioxide emissions from non-Organisation for Economic Co-operation and Development countries—such as China and India—are projected to grow by nine billion tons per year. The Partnership for a Better Energy Future reports: “for every ton of CO2 reduced in 2030 as a result of EPA’s rule, the rest of the world will have increased emissions by more than 16 tons.” Our reduction in 2030 would offset the equivalent of just 13.5 days of carbon-dioxide emissions from China. The CPP will become the definition of “all pain and no gain.” Or, as economist Thomas Sowell calls it: “replacing what worked with what sounded good.”

The EPA’s October 16 deadline will be upon us before you know it. Take a few minutes now to send them your comments here, here or directly to the EPA. Pick any of the above suggestions, customize them as you please, and send them on to the EPA. For America to grow, we need energy that is effective, efficient, and economical, rather than that which is threatened by the EPA’s flood of excessive and burdensome regulations.

Murkowski: GAO Findings Reinforce Reliability Concerns

Accountability Office Finds Limited Coordination, Higher-Than-Projected Plant Retirements

WASHINGTON, D.C. – At the request of U.S. Sen. Lisa Murkowski, R-Alaska, the Government Accountability Office (GAO) today released a report documenting federal agencies’ inadequate response to concerns about the potential electric reliability impacts of multiple federal regulations proposed by the Environmental Protection Agency (EPA).

The report is an update to GAO’s previous work in 2012 on electric reliability. The nonpartisan GAO found that federal agencies have in the last two years taken only “initial steps” to establish interagency interactions and have failed to develop a formal, documented process to track industry compliance efforts, while focusing primarily on just one of several new federal regulations that could impact reliability. GAO also reported that coal plant retirements are now on track to be considerably higher than projected just two years ago.

“GAO’s findings should renew and reinforce our concerns about the impacts that new federal rules could have on electric reliability,” said Murkowski, the top Republican on the Senate Energy and Natural Resources Committee. “Plant retirements are higher than projected. Electricity prices are rising. Even factors beyond our control – such as last winter’s weather – are on a collision course with the shutdowns caused in part by new federal regulations.

“Despite it all, the agencies in charge still have not fully adopted GAO’s recommendation for a formal, documented process to protect reliability. In reading this report, their actions come across as a check-the-box exercise, rather than a robust effort to protect families, consumers, and businesses across the country. What we need, instead, is an even-handed, transparent, and independent expert analysis of the cumulative effects of EPA’s regulations – one that must include the new rules proposed for carbon dioxide emissions,” Murkowski said.

GAO’s analysis is an update to its July 2012 report entitled, “EPA Regulations and Electricity: Better Monitoring by Agencies Could Strengthen Efforts to Address Potential Challenges.” Murkowski requested the update earlier this year, in the wake of last winter’s polar vortex events, ongoing announcements of plant retirements, and the promulgation of additional environmental regulations.

Interagency Coordination

In 2012, GAO concluded that the Department of Energy (DOE), Environmental Protection Agency, and Federal Energy Regulatory Commission (FERC) “have begun taking steps to monitor industry’s progress in responding to [four key EPA] regulations but have not established a formal, documented process for joint and routine monitoring….” GAO described a series of reasons why such a process should be implemented, and a number of consequences that could result from its absence. (For more, see GAO’s 2012 report.)

In its update, GAO found that “… DOE, EPA, and FERC have taken initial steps collectively and individually to monitor industry progress responding to EPA regulations including jointly conducting regular meetings with key industry stakeholders.” However, GAO reported that the agencies’ efforts are primarily focused on just one of at least five rules that could impact electric reliability. GAO accordingly determined that, “Recent and pending actions on the four existing regulations, as well as EPA’s recently proposed regulations to reduce carbon dioxide emissions from existing generating units, may require additional agency effort to monitor industry’s progress in responding to the regulations and any potential impacts on reliability.”

Plant Retirements

In 2012, GAO “reported estimates that 2 to 12 percent of coal-fueled capacity could be retired, and that some regions, particularly the Midwest, could see more significant levels of retirements.” In its update, GAO wrote that, “According to our analysis of SNL data, planned retirements of coal-fueled generating units appear to have increased and are above the high end of the estimates we reported in July 2012. Specifically, power companies retired or plan to retire about 13 percent of coal-fueled net summer generating capacity (42,192 MW from 238 units) from 2012 through 2025.” GAO further noted that, “… in April 2014, EIA projected that retirements from 2012 through 2020 could reach approximately 50,000 MW or about 16 percent of net summer generating capacity available at the end of 2012.”

These estimates stand in stark contrast to EPA’s projection that its Mercury and Air Toxics Standards (MATS) rule would result in the retirement of 4.7 GW (4,700 MW) of generating capacity. And EPA’s proposal to reduce carbon dioxide emissions from existing power plants – which could be its most consequential rule affecting existing generating capacity – does not appear to be factored into any current retirement estimates. GAO did note, however, that EPA has “projected an increase in the national average retail electricity price between 5.9% and 6.5% in 2020 compared with its base case estimate” as a result of that rule.

Murkowski’s Efforts to Protect Electric Reliability

Murkowski is a leading congressional proponent of greater attention to, and awareness of, threats to electric reliability. She began to call attention to potential reliability impacts in 2011, has spoken repeatedly about the need to empower FERC to protect against those impacts in the years ahead, and issued a white paper on the subject (“Powering the Future”) in Feb. 2014. Later this week, she and Sen. Tim Scott, R-S.C., will release a white paper on energy insecurity, which documents the impacts that rising home energy costs have on individuals and families throughout the country.

Read the press release here.

ND Expects to Face Challenges Adapting to EPA Rules Requiring Reduced Power Plant Carbon Emissions

FARGO, N.D. – North Dakota faces the prospect of having to significantly expand its electricity generation at the same time the nation’s utilities are grappling with looming regulations to restrict coal-fired sources.

Utility representatives and regulators Wednesday expressed concerns about maintaining the reliability of the electricity supply as power reserves dwindle and a wave of coal plant retirements looms.

The crunch is apt to be most severe over the next five or six years as utilities prepare to meet new Environmental Protection Agency regulations calling for a 30 percent reduction in power plant carbon emissions from 2005 levels by 2030.

A key problem, experts and utility executives told the North Dakota Public Service Commission meeting in Fargo, is the high degree of uncertainty in predicting the impacts on power reliability from the carbon reduction targets.

“This is the most challenging time I can think of in our industry,” said Gerry Cauley, who heads the North American Electric Reliability Corp., which oversees reliability of the U.S. bulk electricity system.

The carbon regulations are forcing utilities to “completely flip” the sources of their power in a “massive change out” in the shift from coal to other fuels.

“Everyone wants us to do all of that and keep prices law,” Cauley said.

Because utilities and regulators cannot predict the impact of carbon regulations on power reliability, it would be irresponsible to implement the rules, he said.

“You can’t make stuff up,” said Cauley, a 35-year power system veteran. “This is a great unknown, and we don’t do unknowns.”

The Red River Valley came uncomfortably close to a “rolling blackout” when an ice storm struck in November 2005, knocking out several major power lines, utility executives said.

Cass County Electric Cooperative drafted an order, never carried out, directing its control center to shut down part of its system in the midst of a winter storm, said Brad Schmidt, the co-op’s vice president of engineering and operations.

“Thousands of people would have been without power involuntarily,” Schmidt said. “Thank God that order never saw the light of day and we went on.”

Last winter, the “polar vortex” sent temperatures plunging, causing concerns in January that some parts of the country could experience power shortages.

Randy Christmann, Public Service Commission member, said North Dakota hasn’t really been tested by temperature extremes in recent decades. He noted that in 1935 North Dakota shivered with a low of 60 below and five months later Steele sweltered in a high temperature of 121 degrees.

“I wonder if we could handle it in 2014, much less 2016,” when the system’s margin of reserve electricity supply is expected to drop, Christmann said. “It really concerns me.”

Tony Clark, a former member of the North Dakota Public Service Commission who now serves on the Federal Energy Regulatory Commission, said the balance between affordable and reliable power is becoming much more difficult to attain.

He recited a raft of forces that threaten the reliability of the electricity supply, citing risks as diverse as terrorist attacks on power substations, cyberattacks by hackers to electromagnetic pulses by solar flares.

Now, on top of those challenges, state regulators and utilities are struggling to prepare for the new carbon regulations to limit greenhouse gases, with some slated to take effect in 2020, Clark said.

“That’s when the really big consumer costs come in,” he added. He hopes the EPA will allow a “safety valve,” such as a time extension for implementation of regulations.

North Dakota, a major energy exporter, derives 68 percent of its electricity from coal, almost double the national average of 37 percent, according to federal figures.

The challenges from the carbon limits are made more difficult in North Dakota because of the ballooning demand for electricity due to the oil boom, Public Service Commission members said.

Estimates of the state’s increased demand for electricity range from 2,000 megawatts to 3,000 megawatts by 2025, said PSC member Julie Fedorchak. She estimated the capacity of the state’s fleet of coal-fired plants is around 4,000 megawatts.

“So we’re looking at replacing half to three-fourths of that fleet,” she said.

If the EPA’s proposed carbon rules are implemented, the Big Stone power plant, which serves Otter Tail Power and Montana Dakota Utility customers, could be shuttered by 2025, company executives told the North Dakota Public Service Commission.

Tammy Eberle, MDU’s director of regulatory affairs, called the proposed carbon restrictions “unworkable” and said the utility would be forced to find higher-cost power elsewhere for its customers if Big Stone is shut down – after millions have been spent on pollution controls.

The EPA rules are slated to become final next June. The public comment period on the proposed rules closes Oct. 16.

See more here. 

Electric Rates Will Skyrocket Under EPA Plan

Mississippians should be aware of what’s brewing in a new proposal from the U.S. Environmental Protection Agency (EPA). If implemented as planned, the added costs to Mississippi households, businesses, and the overall economy will be shocking. Hopefully, good sense will prevail, but we should not assume such.

EPA’s unprecedented plan to alter fuels used for electric power generation in states under the guise of carbon dioxide (CO2) emissions reductions is simply not economically feasible. The economic impacts will be ruinous to U.S. competitiveness. Further, by EPA’s own admission, CO2 levels will not be significantly reduced by the proposed scheme, so this appears to be the next jab in the ideological fight against traditional energy sources that provide about 95 percent of American energy.

Instead of reaping the benefits of the most diverse energy supply in the world, the Administration, through EPA, is proposing a plan I estimate will result in $14.2 billion in unnecessary power plants constructed in Mississippi between 2018 and 2025. Mississippi electric ratepayers will pay the costs off with added interest over a couple of decades through higher electricity rates, much higher.

Virtually overnight, innovation in American oil and natural gas production has made our country the most energy rich in the world when also including abundant U.S. coal reserves, the world’s largest nuclear power fleet, and the variety of renewable energy assets. Coming out of a painful recession still mired in recovery, the logical policy direction is to leverage American strengths, like innovation, our people, and now an abundance of energy, into manufacturing growth and a 21st century industrial economy. Energy and manufacturing jobs typically pay 2-3 times the average private sector wage. However, EPA is proposing a contrary direction.

Here’s how it could go if they get their way. All conventional coal plants in Mississippi will be prematurely retired. These plants are largely paid off and producing affordable power because coal is an inexpensive fuel for power generation. Next, 13 percent of all electricity produced in Mississippi will be required to come from renewable sources. A fair economic case may exist someday for this scenario, but today, the added costs total $14.2 billion.

To put this in perspective, Mississippians altogether pay slightly less than $2 billion each year in state individual income tax. Of course, low income families will be hit the hardest as the economy is dragged down. Energy costs like electricity, natural gas, and gasoline, make up a much higher share of low-income household budgets than higher income households.

There’s also a fairness issue among states. Kentucky’s targeted emissions level for the regulatory period is nearly 3 times higher than Mississippi’s, so clearly, the proposed CO2 standards are not about health.

Analyzing the EPA proposal causes lots of head scratching, but the absurdity is almost laughable. Because EPA seems to arbitrarily want 13 percent of Mississippi’s electricity to come from renewable sources, some 21,000 acres will need to be covered with solar panels, creating a series of ecological deserts across the state. Another 48,000 acres will need to have giant wind turbines. The area requirement is the equivalent of covering the entire City of Jackson in energy production, and because of their intermittent nature, these resources will only generate power 15-20 percent of the time.

Obviously, the EPA proposal is not grounded in reality. Emissions reductions are achievable, as evidenced over the past 30 years, but consideration of the economic impacts should be required and expected.

See the article here.

15 GOP Governors to Obama: Climate Rule Breaks the Law

Fifteen GOP governors say President Obama’s signature climate change regulation on carbon pollution from existing power plants “exceeds the scope of federal law.”

In a letter to Obama, the governors from states including North Carolina, Alaska, Arizona and Wisconsin said the rule, which requires the nation’s fleet of existing power plants to cut carbon emissions 30 percent by 2030, is an overreach of authority.

The governors argue that the Environmental Protection Agency (EPA) cannot regulate a source under two different sections of the Clean Air Act; because the EPA already regulates existing power plants under another section of the law, it cannot do so again under section 111(d), the governors argue.

They also take issue with the part of the agency’s proposal that allows states to go “beyond the fence” to cut emissions.

“In attempting to regulate outside the fence, the agency’s proposal not only exceeds the scope of federal law, but also, in some cases, directly conflicts with established state law,” the governors write.

By allowing states to go outside the fence, the governors said, the EPA “overstepped this hypothetical authority when it acted to coerce states to adopt compliance measures that do not reduce emissions at the entities EPA has set out to regulate.”

EPA chief Gina McCarthy says the agency is acting within its full authority in the proposal, set to be finalized by summer of next year.

In July, McCarthy said she is optimistic that when states “taste” the proposal for existing power plants, they will realize it is for the benefit of the nation.

“I will not go out of gate with a rule that doesn’t respect the Clean Air Act, and isn’t legally solid, just for the purpose of raising my hand and saying I fixed it,” McCarthy in July when asked about the lawsuit nine states joined onto with Murray Energy against the rule.

See the article here.

Republican Governors Urge President Obama to Promote Reliable, Affordable Energy Policy

WASHINGTON, D.C. – Fifteen Republican governors sent a letter to President Obama concerning the EPA’s June 2 proposal for reducing carbon dioxide emissions at existing power plants under the Clean Air Act (CAA).

Governors Robert Bentley of Alabama, Sean Parnell of Alaska, Jan Brewer of Arizona, C.L. “Butch” Otter of Idaho, Mike Pence of Indiana, Susana Martinez of New Mexico, Phil Bryant of Mississippi, Pat McCrory of North Carolina, Jack Dalrymple of North Dakota, Mary Fallin of Oklahoma, Tom Corbett of Pennsylvania, Nikki Haley of South Carolina, Gary Herbert of Utah, Scott Walker of Wisconsin, and Matt Mead of Wyoming signed the letter, explaining that EPA’s proposal exceeds federal authority as afforded by the CAA, and creates significant obstacles to state compliance, which the President’s Administration has failed to address.

“We knew these rules were bad when the EPA first released them, and they keep getting worse the more we learn,” said Indiana Governor Mike Pence. “The proposal is ill-conceived, poorly constructed, and will cause significant harm in the states. We should be focused on an energy policy that pursues affordable and reliable energy, rather than a climate agenda that will drive up electricity prices without any discernible impact on global carbon dioxide emissions. I am grateful that these fellow governors have joined me in identifying to the President many of the unconsidered consequences and implications of this proposal, and I hope that the President will reverse course and withdraw the proposed rules without delay.”

A copy of the letter can be found via a link HERE and is excerpted below.

Our country needs a coherent, consistent energy policy that promotes reliable and affordable energy in addition to a healthy environment. However, we cannot achieve this end without a sincere partnership between the states and the federal government, whereby EPA appropriately recognizes the limits of federal authority.

[T]he rule poses numerous practical problems for state compliance. These problems reflect your Administration’s decision to move forward with the proposed regulation without considering or understanding—among other crucial matters—our state energy markets and infrastructure needs.

We request that your Administration provides informed plans to address these significant obstacles to state compliance and that it does so well in advance of the proposal’s comment deadline of October 16. If you cannot fulfill this obligation in time for states to incorporate the new information into their comments, your Administration should withdraw the proposal until it gives due consideration to these critical concerns.

The economic health of our nation depends on accomplishing a balanced energy and environment policy. The United States should be pursuing a strategy that achieves its objectives without severely harming our economies and pitting states against one another. To help facilitate a successful energy policy, we bring these important state concerns to your attention and request thoughtful answers to our questions.

See the article here.

EPA Threatens Your Ability to get Cheap Power

In many ways, the Tennessee State Fair that begins today in Nashville is a celebration of rural life and roots.

It’s why we participate as a sponsor; those same roots are part of our DNA as electric cooperatives. In the 1930s, when no one else would, farmers and rural residents built the grids that electrified the countryside and built the cooperative model that still powers much of Tennessee today.

We never forget where we came from. And we never take our eye off the ratepayer, his or her needs, and the principles we stand for: low rates and reliable power.

The Environmental Protection Agency recently proposed new, far-reaching regulations for power plants. These are the very power plants that we depend on for the electricity that powers your home and community. The regulations seek to limit carbon dioxide emissions from existing power plants.

The EPA has repeatedly said it supports an “all-of-the-above” energy strategy. But the proposal to regulate greenhouse gas emissions is an “all-but-one” approach. It virtually eliminates coal as a source for fuel.

And that’s a big deal. Here’s why.

TVA had its highest demand for electricity in its history earlier this year in January. On the highest day of usage, 29 percent of the electricity generated was from coal. If we hadn’t had that coal, we simply wouldn’t have had enough power.

Electric co-ops support clean, renewable energy, but we also support keeping the lights on. To do that, we need every available source of generation.

As EPA proposes these drastic regulations, TVA has made great strides in providing stability and diversity in its generation mix. With EPA and other outside groups pressuring TVA to change its mix based on their criteria, it’s time that Tennesseans provide our input.

We need your help to tell EPA that it shouldn’t hurt our ability to deliver affordable and reliable electricity with new, costly regulations. We’ve made it easy to send a message to Washington. Go to www.takeactionTN.com and send a message to the EPA and TVA. We’re asking that the EPA either withdraw this proposal or provide time for other solutions. It needs to work with electric cooperatives on a commonsense solution that balances energy needs and environmental concerns.

Electricity is the lifeblood of our community. It powers our homes and businesses, and none of us can afford an increase in our monthly utility bill. The impact of these new regulations will mean that the cost of electricity will rise. Limits on fuel sources will also mean that we just won’t have enough power.

That’s not a theory. It’s simple math.

David Callis is executive vice president and general manager of the Tennessee Electric Cooperative Association.

Read the article here.

Biggest Threat to America’s Power Grid is Bad Policy

On September 4, 1882, Thomas Edison flipped a switch and energized America’s first electric grid. This breakthrough set us on a bright new path towards a future powered by reliable and affordable electricity. Today, electricity plays a crucial and growing role in our everyday lives, yet most Americans don’t think twice about where it comes from or how it gets to us.

And for good reason—the grid is always on, and electricity prices are fairly stable. But that may change as new regulations, subsidies, and mandates take effect over the next few years. These policies threaten to undermine grid reliability and to make electricity less affordable for all Americans.

These threats make it increasingly important that the American people and our lawmakers understand how our electric grid works. That is why the Institute for Energy Research recently launched the “Story of Electricity”, an education project that explains how the power grid works and provides context for the coming policy debates. A key theme is that reliability is the most important aspect of a sound electrical grid.

To ensure reliability, grid operators need to be able to call on power plants that can run when people need electricity. Power plants that run on natural gas, nuclear, and coal, which provided 86 percent of our electricity generation last year, primarily fulfill this role. However, the Environmental Protection Agency’s (EPA) latest power plant rules threaten to shut down coal-fired generation, which alone provided 39 percent of our electricity in 2013. After coal, EPA is coming after natural gas plants as well and anti-nuclear activists are trying to close nuclear plants around the country. These closings pose a serious threat to the grid as we know it. Forcing reliable sources of energy off the grid will only increase the risk of blackouts and raise electricity prices for households across America.

But excessive regulation isn’t the only issue facing the grid. Other policies undermine our electric system by subsidizing unreliable sources of power like wind and solar, which provided around 4 percent of our electricity generation last year. Subsidizing unreliable generation while wiping out reliable sources is a huge gamble—a real-time experiment to see whether or not we can keep the lights on.

One such policy is the wind Production Tax Credit (PTC), which provides a large subsidy for wind producers (one so lucrative that wind producers can pay the grid to take unwanted electricity and still make a profit). Another set of policies designed to promote unreliable sources of power are the Renewable Portfolio Standards (RPS). RPSs have been implemented in 30 states and require that a certain percentage of electricity comes from renewable sources like wind or solar, regardless of whether it is wanted or needed.

However, none of these policies can fix the inherent problems with wind and solar power, which is intermittency and unreliability.

Wind turbines only produce energy when the wind is blowing and solar panels only produce energy when the sun is shining. But electricity is unique in that demand has to match supply, second by second, 24/7. Because the wind doesn’t always blow and the sun doesn’t always shine, these sources must be backed up by more reliable sources such as natural gas, coal, and nuclear power. However, when these reliable plants are forced to ramp up and down to account for wind or solar, grid operators struggle to match demand and reliable plants lose their valuable efficiency.

The combination of excessive regulation and subsidies is creating the perfect storm over our power grid, which could lead to skyrocketing electricity prices and even blackouts. This will not only threaten our electric grid, but our way of life.

We have come a long way in terms of electricity and technology since Thomas Edison turned on America’s first electric grid 132 years ago. Electricity now powers everything from a simple light bulb to our most advanced electronics. If we want to continue down Edison’s path towards a future with affordable and reliable electricity, we must understand our electric grid and the threats that could compromise it. Failure to do this means the future suddenly becomes much dimmer.

Fisher is an economist with the Institute for Energy Research. He previously spent seven years at the Federal Energy Regulatory Commission.

View the article here.

Kentucky Along with 11 Other States file Suit Against EPA on Carbon Regulations

ASHLAND — Kentucky Attorney General Jack Conway and West Virginia Attorney General Patrick Morrisey announced that they have joined 10 other states in filing suit against the Environmental Protection Agency which in June proposed new regulations on carbon emissions.

Conway and Morrisey appeared in Ashland on Thursday along with several eastern Kentucky lawmakers to announce the lawsuit and why the officials say the agency does not have the authority to regulate carbon emissions in the state.

“The rules that have been proposed in my opinion, are not only illegal, but they fly in the face of environmental regulation,” said Conway. “If these rules, the way they were designed, go into effect, it’s going to harm residents not only just here in eastern Kentucky or northeastern Kentucky but in every corner of the Commonwealth of Kentucky.”

Conway made it clear, that continuous regulations have crippled the coal industry and has cost the state thousands of jobs and he plans to not put up with what he says is the EPA overreaching their bounds.

“A few years ago, we had over 14,000 people employed in the coal industry,” said Conway. “At the end of last year, that number was about 7,300.”

The motion which was filed in the U.S. Court of Appeals on August 1, alleges that the EPA, in 2011, settled a threatened lawsuit by environmental groups in agreeing to create guidelines for states to reduce carbon dioxide emissions from certain power plants.

But, in 2012, the EPA enacted national standards on the same power plants, meaning the agency can’t require states to regulate the plants twice.

“A lot of the provisions which would be put into place now would be duplicative,” said Morrisey. “That’s one of the reasons why I don’t think this proposal is ever going to survive judicial scrutiny.”

Morrisey and Conway agree that they want to expedite the process to have their suit heard.

“Our people in our states cannot afford to wait two, three years to have this issue resolved,” said Morrisey. “There’s a real danger associated with these regulations now.”

Other states joining Kentucky and West Virginia in the law suit include Alabama, Indiana, Kansas, Louisiana, Nebraska, Ohio, Oklahoma, South Dakota, South Carolina and Wyoming.

See the article here.

AGs Team Up Against EPA rules

ASHLAND — West Virginia Attorney General Patrick Morrisey and Kentucky Attorney General Jack Conway joined officials from 10 other states, including Ohio, in asking for an expedited federal appellate court ruling on tougher proposed federal Environmental Protection Agency performance standards for existing power plants.

Kentucky and West Virginia, two states heavily involved in the coal industry, could see the harshest economic blows from tougher EPA guidelines requiring a 30 percent reduction in carbon dioxide emissions from coal-fired power plants, said Bill Bissett, president of the Kentucky Coal Association. It also will mean a continuing loss of coal mining jobs, he said.

“Anyone who doesn’t think there’s a war on coal hasn’t been to the coalfields,” said Bill Raney, president of the West Virginia Coal Association.

Conway, a Democrat, and Morrisey, a Republican, are seeking an injunction from the U.S. Court of Appeals for the District of Columbia on the proposed guidelines.

They stopped by Ashland on Wednesday afternoon to talk about their reasons for challenging the proposed EPA guidelines.

“Our people can’t afford to wait two or three years” for a ruling, Morrisey said. “West Virginia has experienced horrific harm. We have to stem the tide of job loss.”

Morrisey hopes to get a ruling on the request for injunctive relief in six to nine months.

“Ninety percent of our electricity comes from coal-fired power plants,” Conway said. “These proposed rules will put more miners out of work. We had 14,000 coal miners several years ago. It was down to 7,300 last year. In some areas there are 20 percent unemployment rates. Those aren’t just numbers. Those are real people.”

“We have to fight back when a federal agency overreaches,” he said. “We have to challenge it. We need injunctive relief now. This issue is about people, not politics.”

Morrisey called the challenge to EPA rules “a bipartisan effort. It’s terrific to work across the aisle. This is a common fight to protect people. This is a terrific show of unity. We have to stand up against EPA overreach. I’m concerned that electricity rates are going to skyrocket. I believe the proposed rule is illegal. I don’t think this proposal will survive judicial scrutiny.”

However, officials in 10 or more northeastern states will support the EPA in the legal issue.

The EPA challenge came too late to lead to the loss of an undetermined number of jobs at Kentucky Power Co.’s Big Sandy power plant near Louisa, Kentucky, which earlier this year announced plans to convert its largest generating unit from coal to natural gas.

“I opposed that,” Conway said. “It will result in a big rate increase. Our citizens can’t afford this.”

Conway called the federal proposal onerous. “I’m not certain it’s legal,” he said. “This is being crammed down our throats.”

“We all like clean air,” Conway said. “I believe we have to combat global warming. But in this instance, I believe the EPA overreached.”

View the article here.

Prepare for a Major Power Outage This Winter

With another polar vortex looming, the public should prepare for potential blackouts caused by the Obama administration’s plans to shut down coal-fired power plants.

You see, the record-breaking lows of last winter put a never-before-seen strain on the energy grid.

In fact, the grid nearly imploded last January, but thanks to back-up power supplied by less-frequently used coal-burning plants, it survived.

Now, though, Obama has scheduled these plants to be shut down before the start of winter.

January 2014: A Close Call

The PJM Interconnection is a regional electric transmission organization that serves a large swath of the United States from New Jersey to Illinois.

On January 7, 2014, it saw the largest-ever peak winter load of nearly 142,000 megawatts. In the rest of that month alone, 8 of the top 10 peak winter loads for PJM occurred.

PJM survived thanks to old, coal-fired power plants that are scheduled to be shut down by the U.S. Environmental Protection Agency (EPA) soon.

“Eighty-nine percent of the coal electricity capacity that is due to go offline was utilized as that backup to meet the demand this winter,” said Alaska Republican Senator Lisa Murkowski at a Senate hearing in April.

Forecast: Clean and Bitterly Cold

Unfortunately, for most of us in the eastern United States, many of the best meteorologists now say we should prepare for “Polar Vortex, the Sequel” this winter. Like last winter, intense cold and lots of snow are expected.

About 12,000 megawatts of coal-fired capacity are scheduled to be retired in January 2015 to fulfill regulations established five years ago.

Most of those coal-fired power plants are owned by American Electric Power (AEP), the country’s biggest owner of coal-burning power plants. AEP is being forced to close down almost a quarter of its coal-fired generating plants over the next 10 months.

This will reduce the total capacity available for some of the country’s most densely populated regions just when the weather may once again push the demand for power to unprecedented levels.

AEP’s Chief Executive Officer, Nicholas Akins, told Congress last April, “This country did not just dodge a bullet [this winter] – we dodged a cannonball.”

Even the Commissioner of the Federal Energy Regulatory Commission, Philip Moeller, believes the electric grid in parts of the country is “now already at the limit.”

This is not good news with regulations removing some of that already-strained generation capacity.

Will Common Sense Prevail?

AEP believes the EPA could be willing to extend the shutdown deadline date. But, the company also says that environmental groups will likely bring lawsuits under the Clean Air Act, forcing closures regardless.

Unless environmental groups give coal-powered plants a reprieve, a blackout is almost guaranteed in the event of another polar vortex winter.

Hopefully, the vortex stays out of town this winter. But if it doesn’t, look at the bright side: That frigid air you’ll be breathing is a little bit cleaner.

And “the chase” continues,

Tim Maverick

See the article here.