New EPA Clean-air Rules Threaten Rural Power CAo-ops
By this fall, the federal Environmental Protection Agency is expected to march the nation’s energy consumers into new territory on the frontier of controlling carbon emissions.
Representatives of the big power companies are flooding Washington, D.C., in a desperate effort to mitigate the impact of the EPA’s venture, known as the Clean Power Plan.
Debates between environmental activists and politicians over its implications are heating up.
But few have looked at the EPA’s new carbon plan with quite the riveted sense of alarm as small utility companies that serve rural customers.
The president of a small cooperative serving rural customers in Arizona, New Mexico and Nevada is blunt about that impact:
“The people throughout rural Arizona that we serve will be screwed more than anybody else in the country,” Patrick Ledger, CEO of the Arizona Generation and Transmission Cooperatives, told the Environment and Energy news service.
Unless the EPA’s plan includes substantial revisions, Ledger is not exaggerating.
His energy co-op, serving some 500,000 rural customers, operates one natural-gas-fired and two coal-fired units at the Apache Generating Station in southeastern Arizona.
One of the coal-fired units is scheduled to convert to gas in 2018 to accommodate recent EPA rules governing haze. But under the draft plan proposed by the EPA, the co-op would be forced to shutter its coal-fired unit altogether, stranding around $230 million in recent upgrades and investment.
In addition, the co-op would have to take on between $450 million and $600 million in additional debt to rebuild capacity to serve its customers.
All told, that would push the price of the energy Ledger’s cooperative sells to distributive cooperatives to 38 percent above market rates. And that, says Ledger, spells the end.
“We will be put out of business,” Ledger told the Republic editorial board last week. “We go into bankruptcy.”
Arizona Generation’s debt is owed to another federal agency. Repeat this story with multiple rural co-ops, and taxpayers will be stuck with an enormous bill.
Ledger and his colleagues understand that coal’s future is limited, so they are lobbying the EPA to give the nation’s 100 smallest utilities more flexibility in meeting the carbon goals.
Ledger doesn’t hold much hope for that, so he’s also working with Arizona’s other utilities. This state faced the most ambitious goal to reduce carbon under the draft plan; utilities are urging the EPA to give them a longer glide path to ease the transition away from coal.
Concerns over enormous amounts of stranded debt is a near-universal one as the Clean Power Plan approaches.
Arizona’s major utility companies, including Salt River Project and Arizona Public Service Co., recently invested hundreds of millions of dollars to bring their coal-fired plants into compliance with existing EPA regulations.
Much of that investment will be lost if the EPA does not revise the draconian carbon reductions written into the Clean Power Plan, much of which the agency expects to occur no later than 2020.
A battle among giants, the debate over the Clean Power Plan is scarcely considering the dire consequences for little-guy energy providers like the Arizona Generation and Transmission Cooperatives.
It needs to start.
See the article here.
- On July 28, 2015