Ameren (NYSE:AEE) has published a white paper that outlines its alternative to the Environmental Protection Agency (EPA) Clean Power Plan, and the St. Louis-based utility-holding company said its approach would save $4bn while still achieving 30% carbon dioxide (CO2) reductions.
The Ameren option would take only five years longer than the EPA proposal, but be far less costly and not jeopardize grid reliability, the company said.
Ameren said its “common sense” and “pragmatic” modifications to the EPA proposal would avoid premature closure of key coal power plants. Ameren also noted that the EPA proposal will continue to be open to legal challenges.
Under the Ameren GHG strategy, by 2035 Ameren would retire more than 1,800 MW (about one-third) of its coal-fired fleet, add about 500 MW of renewable generation, extend the license of its 1,200 MW Callaway nuclear plant, add a 600 MW natural gas combined-cycle unit, and continue to offer robust energy efficiency programs.
Ameren’s greenhouse gas (GHG) strategy would remove EPA’s interim targets that begin in 2020. Currently, Ameren would be required to meet 62% of Missouri’s 2030 target by 2020 and that is “too much, too soon,” the company said.
A top EPA official, Janet McCabe, also told a Senate panel Feb. 11 that the interim targets are something EPA is studying seriously.
Ameren also favors enhancing interim reporting requirements by the states to ensure that progress is being made toward CO2 targets; allowing full credit for the retirement of coal plants; and allowing for a reasonable extension of the 2030 deadline if utilities are making substantive progress toward achieving the EPA’s final goals.
Based on Ameren’s projections of long-term regional supply-and-demand dynamics, Ameren’s GHG strategy relies on a diverse mix of coal, nuclear, natural gas and renewable energy resources, as well as the continuation of robust energy efficiency programs.
Ameren’s plan would call upon regional transmission organizations (RTOs) to work with EPA and power providers to determine the level of dispatch “that can reasonably be achieved.” By contrast EPA recommends state plans that seek 70% dispatch of combined-cycle gas power plants. But states cannot ensure that level of dispatch for these plants, Ameren said.
“The Ameren plan would save our customers billions of dollars while helping avoid substantial economic costs and consequences related to the potential degradation of electric reliability, long a bedrock component of America’s economic prosperity and widely admired standard of living,” said Ameren’s Chairman, President and CEO Warner Baxter.
“Ameren’s solution also substantially reduces greenhouse gas emissions and will, in the long run, achieve the same emission reductions as EPA’s proposed rule at a significantly lower cost while safeguarding our customers’ electricity supply,” Baxter said.
Here is a rundown of some of the Clean Power Plan modifications proposed by Ameren:
•2020 Targets: Replace EPA’s interim target goals beginning in 2020 with a more flexible approach that provides states greater leeway in determining the proper glide path to achieve the agency’s final GHG goals by 2030.
•Interim reporting: The EPA should establish enhanced interim reporting requirements by the states to facilitate monitoring and to ensure progress is being made to achieve the final 2030 targets.
•Performance Metrics: Revise the compliance formula to provide proper credit under EPA’s rate-based method for retiring, and not replacing, existing coal-fired power plants with fossil generation – thus giving full credit where credit is due.
•Graduation Dates: Offer states the flexibility to extend the 2030 deadline if a clear path to meaningful reductions is evident in a reasonable time frame.
NRDC does not like the idea of deadline extension
“Ameren’s report shows that they are ready to start tackling the issue of carbon pollution, but we think they can do it faster and cheaper,” the head of Midwest policy for the Natural Resources Defense Council (NRDC), Rebecca Stanfield, said in a statement.
NRDC would like to see Ameren go with “a deepened embrace” of energy efficiency and renewable energy.
“We disagree that more delay is needed for implementation of the Clean Power Plan – the EPA has already built in flexibility and up to 3 years additional time for states and power companies to fully develop their plans to reduce dangerous carbon pollution,” said NRDC’s Stanfield.
“We are in discussions with Ameren, stakeholders throughout the state and regulatory agencies regarding Ameren’s 20-year resource plan and its three-year energy efficiency plan,” said NRDC’s Stanfield. The NRDC official said organization was looking forward to working with Ameren on CO2 policy.