When the EPA Targets Electric Utilities

The hearing today by the House Energy and Commerce Subcommittee on Energy and Power on recent EPA regulations on industrials boilers, cement manufacturing plants and utilities included strong and substantive testimony from representatives of affected industries. (Background memo) Below we’ve cited the testimony from Dirk Krouskop with MeadWestvaco on the Boiler MACT regs. In addition …

Thomas A. Fanning, the Chairman, President and CEO of  The Southern Company, testified on the Utility MACT rule. His prepared statement included this summary:

EPA has proposed Utility MACT rules under timelines that we believe will put the reliability and affordability of our nation’s power system at risk. EPA’s proposal will impact plants that are responsible for nearly 50 percent of total electricity generation in the United States. It imposes a three-year timeline for compliance, at a time when the industry is laboring to comply with a myriad of other EPA mandates. The result will be to reduce reserve margins—generating capacity that is available during times of high demand or plant outages—and to cause costs to soar. Lower reserve margins place customers at a risk for experiencing significant interruptions in electric service, and costs increases will ultimately be reflected in service rates, which will rise rapidly as utilities press ahead with retrofitting and projects to replace lost generating capacity due to plant retirements.

The solution is to allow the industry the time to make a smooth transition to the next generation of emissions control technology required by the Utility MACT standard. A more deliberate schedule for promulgating the standard, coupled with a more realistic compliance schedule, would ease the strain on the industry and reduce risks to consumers. Anything less will put at risk the economic growth and job creation that depends on reliable and affordable electricity every day of the year.

Anthony F. Earley, Jr.,Executive Chairman of DTE Energy, also focused on the EPA’s plans to further regulate electric utilities. From his prepared statement:

Because electricity is essential to our quality of life, we must be an industry that is totally focused on meeting our customers’ needs for affordable and 100 percent reliable electricity. We must not let the current wave of environmental regulations focused on electricity generation — the transport rule, the EGU MACT, cooling water intake (or 316b) regulations, coal ash regulations, and climate change — to prematurely shut down coal generation, without a clear transition strategy, and in some cases with little or no corresponding environmental benefit. We are especially concerned about the narrow compliance window associated with some of these regulations, particularly the EGU MACT. We believe it will result in more short-term thinking and approaches that will cost our customers much more in both the near and long term. This is a result that we know our customers in Detroit cannot afford.

Although most of the regulations are not yet final, our analysis and that of many others show that the regulations will drive Detroit Edison and many companies in the Midwest and Southeast to retire up to 20-30 percent of our existing coal fired capacity over a short period of time. This will result in job losses and reduced tax base for many communities. When plants are rushed into retirement, jobs disappear. When plants are rushed into retirement, local tax base shrinks. This will come at a time when many communities across the country – but especially in the Midwest and Southeast – are continuing to struggle with high unemployment and declining local tax revenues.

DTE Energy’s Earley also provides an excellent summary of how industry has contributed to the nation’s environmental progress through increased efficiency, innovation and investment.

Join the discussion One Comment

Leave a Reply