Nothing ‘Commonsense’ About EPA’s Proposed Rule

The U.S. Environmental Protection Agency this summer billed its proposal to cut carbon emissions from power plants as a “commonsense plan.” Unfortunately, what the EPA considers common sense actually defies that definition. Even worse, it will hurt families and the region’s economy.

Simply stated, this is a vital policy struggle about keeping your lights on and keeping your light bill affordable. The mission to reduce carbon emissions is being considered without regard to cost or effect on reliability.

A key factor in customers’ electric bills is the cost of fuel used to generate electricity. For most utilities, fuel strategy has changed over the years. Natural gas shortages in the 1970s, rising costs and an act of Congress forced us to find an alternative to natural gas. We turned to coal, which remains relatively inexpensive and abundant today.

SWEPCO’s strategy of fuel diversity continues to benefit our customers, with coal helping to moderate volatile natural gas prices. Fuel diversity was and is a good decision for our customers’ finances.

The EPA’s proposed rule assumes the shutdown or restricted use of all of the SWEPCO power plants that provide our most reliable and economic 24/7 electricity in Arkansas, Louisiana and Texas. In addition, the rule would give priority to natural gas plants over coal, no matter the impact on reliability or costs for customers. Fuel costs may not matter to the EPA, but they matter to us and to our customers who will pay for the EPA’s plan in their electric bills.

The Southwest Power Pool, which ensures the reliability of the electric grid in nine states, assessed the impact of the EPA’s plan. Unless the plan is modified, the region faces the real possibility of rolling blackouts and cascading outages, according to the analysis. New power plants and transmission lines would be needed to maintain system reliability. However, the EPA’s plan does not allow sufficient time to build the needed infrastructure.

Another consideration is pancaking environmental regulations on top of one another — with no regard for the costs and time to comply with one set of rules before another set is imposed. SWEPCO and our power plant co-owners are upgrading emission controls at several facilities at a cost of $900 million — to comply with existing EPA regulations by 2015-2016 and to keep the lights on for our customers. With its aggressive targets and compliance dates, the EPA’s proposed carbon rule places those investments — and electric system reliability — at risk. It then leaves customers with the prospect of paying for higher-cost replacement generation and transmission to maintain reliability. If that sounds like paying for your power plants twice, that’s because it is.

At SWEPCO, we are encouraging folks to talk to the EPA. We are urging EPA to reconsider and modify its unrealistic assumptions; extend its schedule to allow a reasonable opportunity for compliance, and allow flexibility for continued operation of 24/7 base load power plants as needed to support reliability. We believe that is a commonsense approach that should be taken as the EPA receives public comment through Dec. 1 and then begins to finalize its latest rule.

— Venita McCellon-Allen is president and chief operating officer of Southwestern Electric Power Co.

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