In a state that relies heavily on coal to produce the majority of electricity used by consumers, the Environmental Protection Agency’s final rules regulating greenhouse gas emissions will have a significant impact on rates and jobs and could determine who can keep their lights on and their homes cool.
These rules, known as the Clean Power Plan, have been developed under the Clean Air Act, an act of Congress that requires the EPA to take steps to reduce air pollution that harms the public’s health.
The new rules from the EPA will reduce carbon emissions from power plants. The emissions are considered to be a significant factor in global warming. Power plants account for nearly 40 percent of the carbon dioxide emissions in the U.S.
The rules are expected to hit Missouri’s electric cooperative members especially hard because 80 percent of the electricity used by them comes from coal, the generation fuel source singled out by the new regulations. That is troubling to electric co-op leaders because they serve some of the poorest counties in the state. Counties where affordable and reliable power could be jeopardized.
The National Rural Electric Cooperative Association is one of the groups on a national level challenging the EPA ruling, saying it exceeds the EPA’s legal authority under the Clean Air Act. The NRECA commissioned a study that underscores the devastating relationship between higher electricity prices and job losses.
The study, Affordable Electricity: Rural America’s Economic Lifeline, measures the impact of a 10- and 25-percent electricity price increase on jobs and gross domestic product (GDP) from 2020 to 2040. Even a 10 percent increase in electricity prices results in 1.2 million jobs lost in 2021 across the country with nearly 500,000 of those lost jobs in rural communities.
Under the proposed EPA regulations released in 2014, Missouri had to reduce emissions of carbon dioxide from power plants by 26 percent. The new rules increased those levels to 37 percent. Missouri was one of 22 states that now have to meet more stringent reductions than were proposed.
NRECA and other cooperative organizations are concerned the impact of the new rules will hit rural areas the hardest, hurting the economy and making it a hardship for lower income families to afford electricity. They, along with some state and federal legislators have taken a vocal stand asking the White House to delay the rule.
NRECA CEO Jo Ann Emerson said any increase in the cost of electricity most dramatically impacts those who can least afford it, and the fallout from the EPA’s rule will “cascade across the nation for years to come.”
In Missouri, there are 40 distribution cooperatives which provide electricity to individual homes, farms and businesses. Some co-ops are quite large while others may serve just one county. Missouri’s smallest electric cooperative has just over 2,000 member-owners while the largest has more than 40,000 members.
“There is a lot at stake with these final rules,” says Barry Hart, CEO of the Association of Missouri Electric Cooperatives. “Electric cooperatives are not-for-profit and member owned. We are focused on the affordability and reliability of electricity because that is what our members have told us to do.”
Hart said the final rules make it far more likely electric rates will dramatically increase.
Jim Jura, CEO of Associated Electric Cooperative, which supplies wholesale power to electric co-ops in Missouri and parts of Iowa and Oklahoma said the final rule is much worse for Missouri than the draft rule was.
“Coal generation has been a significant factor in providing our members with reliable electricity at low rates,” Jura said.”Unfortunately, these regulations will significantly impact that.”
Missouri is home to 13 rural counties with persistent poverty, according to the U.S. Department of Agriculture. Each of these counties are served by a rural electric cooperative. Rural electric cooperatives serve 93 percent of the nation’s persistent poverty counties and are almost 80 percent dependent on coal-fired power.
Although electric cooperatives have made strides when it comes to use of renewable energy sources, they are nowhere near being able to provide affordable and consistent service.
Wind is playing an increasingly larger role in generating the electricity used by electric cooperative members in Missouri.
Members of electric co-ops who are served by Associated Electric Cooperative are the beneficiaries of wind power generated by five wind farms in Missouri and Kansas. A sixth project located in Oklahoma is expected to add considerably to the mix soon.
CoMo Electric Cooperative Communications Manager Ryan Cornelius said power from renewable sources, wind and hydro generated power, accounted for about 15 percent of the total used last year. Solar is also a source to be utilized, he said.
While those are renewable sources, Cornelius said they are not necessarily affordable nor reliable on a consistent basis. Coal continues to be the most reliable and affordable.
Over the last 20 years, Cornelius said AEC has spent $1.1 billion on reducing emissions and improving emissions from coal powered plants.
Consistently Cornelius said what coop members identify as their top priority is affordability.
That’s important to cooperatives where 20 percent of the members have an annual household income in the neighborhood of $25,000.
In the end, consumers will pay the price for higher regulation, CoMo member Jane Boyce said.
“I haven’t done a lot of research, but I have attended several county functions here and have heard from several ranchers, farmers and even mennonites concerning the EPA regulations on coal,” she said. “It will affect the rural communities especially the farms and ranches. Coal is the cheapest source of energy we have here in Missouri.”
Boyce said she has talked to friends who are own farms and raise cattle, Those agribusinesses are already paying large utility bills. She worries about the impact of higher utility costs on them. Several may be forced to sell off land to stay afloat.
“The Mennonites operate hot houses, growing vegetables in winter to sell to grocers in the area,” she said. They are already beginning to close some down. They can’t afford the bill.”
Senator Roy Blunt, who has been an outspoken opponent of the new rules uses similar numbers in his discussions about the EPA ruling. Blunt said particularly in the last decade, the power industry has made great strides in producing cleaner emissions from coal.
Blunt said the new rule will impact the poor who are barely able to pay their bills now.
In May 2015, Blunt co-sponsored the bipartisan Affordable Reliable Energy Now Act, legislation to rollback President Barack Obama’s burdensome EPA greenhouse gas regulations for both new and existing power plants.
In December 2014, he filed comments urging the EPA to withdraw the proposed CPP rule for existing power plants. In January 2014, he led a bipartisan group of 21 Senators in sending a letter to President Obama urging him to stop punishing the most vulnerable American families with higher utility bills.
Blunt recently visited Camdenton and other areas of the state to meet with electric cooperatives to discuss the ramifications of the new rule and the challenges ahead.
While the rules have been issued, Missouri is still in the process of developing a state plan. State Rep. Rocky Miller, R-Miller County, is chairman of the Energy and Environment Committee developing the state’s compliance plan.
The committee has been meeting and talking with stakeholders about the rules, the impact on the state and what Missouri needs to do.
Miller said the consistent concerns are ensuring reliability, sustainability and cost efficiency.
“As a state with a power profile that includes 80 percent coal, we have to plan to have a more diverse mix. It only makes good business and policy sense to not put all of our eggs in one basket,” he said. “However, Missouri must be careful on how it moves towards this mix, we cannot put an undue burden of cost on the consumers of the energy in our state. In addition, we cannot move to unstable forms of energy production that can cause a substantial cost increase due to higher production costs.”
While natural gas is currently inexpensive and is looked upon as a favorable power source by the federal government, that appears to be very short sighted. Miller said in the early 1990’s when natural gas spiked in cost and caused a lot of hardship on consumers and he would be concerned it could happen again.
His belief is that depending too much on natural gas as a dominant source of energy would be unsound.
“In the move to diversify we must also realize we have a large resource available to us, coal. The United States has years of this resource available to us and technology is being researched and proven at a pace that must not be overlooked,” Miller said. “Clean coal technology must be part of the energy plan for Missouri, otherwise we are ignoring a proven, existing technology. Also, to remove coal from our power profile would be too expensive for the citizens of our state.”
Moving forward, the state must have a plan that is economically sound, reliable, protect the environment and be open to and support technological advances in the energy field.
“One of the largest growing segments of the economy is emerging energy fields and Missouri must not be left behind as the sector continues to grow,” Miller said.
The Energy and Environment Committee has a last public meeting scheduled for Thurs., Sept. 17, at noon at the Willmore Lodge in Lake Ozark. The state plan is due Oct. 15.
Cost: Retail electricity prices and expenditures will rise under the Clean Power Plan, according to the U.S. Energy Information Administration in an analysis of the draft plan. Most of the increase will likely to come in the early 2020s in response to initial compliance measures. The EIA analysis showed increased investment in new generating capacity and increased use of natural gas for generation would lead to electricity prices that are 3-7 percent higher on average from 2020-25 – based on the analysis of the draft Clean Power Plan (which some say was less stringent than the final rule) versus baseline. Prices are forecast to return to near-baseline levels by 2030 in many regions. Electricity expenditures also generally rise with Clean Power Plan implementation, but expenditure changes are expected to be smaller in percentage terms than price changes as the combination of energy-efficiency programs pursued for compliance purposes and higher electricity prices tends to reduce electricity consumption relative to the baseline. By 2040, total electricity expenditures in the Clean Power Plan case were expected to be nearly the same or lower as decreases in demand offset price increases, according to the EIA. Demand-side energy efficiency plays a moderate role incompliance, relative to the early role of natural gas and the eventual role of renewables. The economics of increased natural gas generation and expanded renewable electricity capacity vary regionally, the key determinants being: 1) the natural gas supply and combined cycle utilization rates by region; and 2) the potential for penetration of renewable generation in regions including states that have no (or low) renewable portfolio standards.
Emissions: In the EIA analysis of the impact on greenhouse gases, the draft Clean Power Plan would reduce projected power sector CO2 emissions. Reductions in projected emissions in 2030 relative to baseline projections for that year range from 484 to 625 million metric tons. The projected power sector emissions level in 2030 ranges from 1,553 to 1,727 million metric tons across the cases, reflecting a reduction of between 29 and 36 percent relative to the 2005 emissions level of 2,416 million metric tons.
• 80 percent coal dependency in the state of Missouri
•13 number of counties in Missouri with persistent poverty levels where rates would likely rise
• 15 percent of power came from wind and hydroelectric sources
• 40 percent of the carbon dioxide emissions from from power plants
•500,000 potential job loss in rural communities nationwide
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- On August 28, 2015