Red Tape Coming
Even if Congress grants a reprieve on greenhouse gas regulations, red tape from other EPA rulemaking efforts will trigger higher electric bills.
By Perry Stambaugh
The cost of electricity hinges on several things — availability, prices for power plant fuels and materials, and the amount of power consumers demand. Now a slew of volatile federal rulemaking has hit power producers.
Perhaps the most pressing challenge facing electric utilities involves U.S. Environmental Protection Agency (EPA) regulation of carbon dioxide and other greenhouse gases as pollutants under the federal Clean Air Act. On January 2, EPA began restricting the amount of greenhouse gases emitted by fossil fuel-burning power plants and other stationary industrial sources.
This action will significantly impact electricity production. Fossil fuels like coal and natural gas fuel 70 percent of America’s electricity generation. Since electric co-ops are more dependent on coal than investor-owned utilities and municipal electric systems, the end result will be higher electric bills.
“Clearly, EPA is wielding the Clean Air Act as a bludgeon, pressing it into service because the outgoing Congress was unable to agree on how to curb greenhouse gases emissions blamed for contributing to climate change,” notes Glenn English, CEO of the National Rural Electric Association (NRECA) based in Arlington, Va.
By failing to pass legislation addressing carbon dioxide and greenhouse gases, Congress essentially left the decision-making up to the EPA. But the Clean Air Act was never intended to regulate carbon dioxide. It was enacted to fight smog and acid rain with proven technologies. No viable, commercially tested solution exists to remove carbon dioxide emissions from power plants.
“Co-ops expect EPA’s rulemaking will eventually have the practical effect — absent breakthrough technology — of eliminating coal as a power plant option,” remarks English. “On top of this, the cost of switching from coal, which has traditionally been plentiful and affordable, to other fuels will be high.”
Only two alternate baseload generation sources can meet America’s demand for safe, reliable, and affordable electricity — natural gas, which is priced on a volatile commodities market (and has carbon dioxide emissions to contend with), and nuclear power, requiring a long lead time for construction.
“Electric co-ops are urging Congress and the White House to approve a two-year moratorium on EPA regulation of carbon dioxide greenhouse gases — a delay giving lawmakers the opportunity to fashion climate change legislation that protects consumers and keeps electric bills affordable,” English stresses.
Even if Congress grants a reprieve on greenhouse gas regulations, red tape from other EPA and various government rulemaking efforts — the Clean Air Transport Rule, cooling water intake requirements, and a decision on treating coal ash as hazardous waste, for starters — will trigger higher electric bills.
Clean Air Transport Rule
Released in 2010, EPA’s Clean Air Transport Rule aims to cap emissions of sulfur dioxide and nitrogen oxides from power plants across 31 eastern states and the District of Columbia. The regulation enables “downwind” areas whose air quality is compromised by power plants to their west to meet federal standards. By 2014, EPA claims the Transport Rule, when combined with other state and federal measures, will reduce power plant sulfur dioxide emissions by 71 percent and nitrogen oxides emissions by 52 percent from 2005 levels — at a cost to utilities of $2.8 billion per year.
The Transport Rule requires 180 coal-fired power plants to install new pollution-control technology, activate existing pollution controls, or shut down. A second-round version under consideration could impose even tighter standards.
“We’re expecting a number of existing power plants to simply be retired,” notes Kirk Johnson, NRECA vice president of energy & environmental policy. “The cost to comply with the regulation will simply be too much.”
Cooling Water Intake Requirements
Power plants use water from lakes or rivers to cool generating equipment. The federal Clean Water Act Section 316(b) sets standards for cooling water intake structures, requiring plant operators to use “best available technology” to protect the environment.
EPA began reviewing the standards in 2010, launching a cost-benefit analysis of imposing stricter regulations. The rule is expected to be unveiled in February.
The North American Electric Reliability Corporation (NERC), the nation’s bulk power grid watchdog, estimates this EPA rule will have the greatest potential impact on American energy reserves. If strictly enforced, NERC contends one-third of U.S. electricity capacity may need to be retired.
Coal Ash Debate
To ensure the safe disposal of fly ash and other residues produced by coal-fired power plants, the EPA is considering designating the materials — for the first time — as hazardous waste.
Classifying these “coal combustion byproducts” (CCBs) as hazardous could cost billions and force increases in electricity rates. Each year, the U.S. electric utility industry produces about 130 million tons of CCBs.
“In previous analysis, EPA determined CCBs do not warrant regulation as hazardous waste under the federal Resource Conservation and Recovery Act; oversight was generally in place at the state level to ensure adequate management,” points out Johnson. “Nothing about CCBs has changed since then. Electric co-ops contend coal ash is appropriately regulated and oppose efforts to have it branded as hazardous waste.”
Carrying the hazardous label in any form (EPA could classify CCBs as “special wastes,” making them subject to all permitting, handling, and disposal requirements that apply to toxic items) will severely hamper beneficial uses of CCBs, Johnson warns.
Currently, one-third of fly ash (used as a cement replacement) and more than one-fourth of scrubber sludge (converted into synthetic gypsum for wallboard manufacturing) are recycled. For every ton of cement replaced by fly ash, a ton of greenhouse gas emissions is avoided.
More than 10,000 co-op consumers sent letters to the EPA in 2010 voicing their concern and asking EPA not to brand coal ask as hazardous. EPA had not reached a final decision as of press time.
“Rest assured, local electric co-ops are working together to keep your electric bills affordable,” relates Duane Noland, President & CEO of the Association of Illinois Electric Cooperatives. “We’re controlling costs through innovation, and no matter what government mandates come our way, we’ll continue to put you, our members, first.”
Noland urges Illinois co-op members to learn more about the issues facing their co-op and energy costs by attending co-op annual meetings, reading co-op newsletters and joining other involved members by signing up on www.ourenergy.coop. “Our democracy works when citizens are informed and involved at the grassroots level,” says Noland.
Sources: U.S. Department of Energy, U.S. Environmental Protection Agency, North American Electric Reliability Corporation, National Rural Electric Cooperative Association, ECT.coop
Perry Stambaugh writes on consumer and cooperative affairs for the National Rural Electric Cooperative Association, the Arlington, Va.-based service arm of the nation’s 900-plus consumer-owned, not-for-profit electric cooperatives. Megan McKoy-Noe, CCC contributed to this article.