NRECA believes the Clean Power Plan exceeds EPA authority

The Environmental Protection Agency (EPA) Clean Power Plan to reduce carbon dioxide (CO2) is “illegal and imprudent” and “should be withdrawn in its entirety,” according to the National Rural Electric Cooperative Association (NRECA).

That’s the crux of Feb. 18 written comments delivered to the Federal Energy Regulatory Commission (FERC) by NRECA Vice President of Regulatory Affairs Jay Morrison. The comments were filed in connection with a technical conference held by FERC on the EPA plan to have states cut power sector CO2 30% by 2030.

NRECA’s Morrison argued that electric cooperatives would be especially hard hit by the EPA CO2 proposal as currently drafted. In 2012, 70% of the co-op generated kilowatt hours came from coal.

In addition, nearly 70% of the co-op-owned coal generation was built from 1975 to 1987 during the Oil Embargo and Fuel Use Act years when Congress essentially banned the use of natural gas for electricity, Morrison said.

Most of the coal units have much useful life remaining and cooperatives have invested billions of dollars in new pollution control equipment, according to NRECA. Morrison also said that cooperatives are small and don’t have a diversified portfolio. Also cooperative utilities are not-for-profit entities and have limited financial flexibility.

“At a minimum,” EPA should eliminate the interim goal reduction requirements set for 2020. In addition, EPA must adopt a dynamic (as opposed to static) reliability safety valve – “That is, a safety valve that provides the States the ongoing flexibility they will need to ensure affordability and reliability,” the NRECA official said.

EPA should also extend the ultimate compliance deadline from 2030 until 2035.

The American Public Power Association (APPA) and other parties have called for elimination of the 2020 interim targets. Ameren (NYSE:AEE) has also proposed the five-year extension for the ultimate CO2 deadline.

NRECA also called upon FERC to “help EPA understand the great degree to which it has overestimated the ability of utilities to achieve 6% reductions in coal-plant heat rates, to achieve 70% utilization rates of all [natural gas combined cycle] NGCC plants, to adopt environmental dispatch, and more,” the cooperative association said.

While it may be possible to “keep the lights on” from a physics and technical standpoint, but the economics and the ultimate cost to the consumer in many cases will be prohibitive. “The choice for many [customers] may be between paying an electric bill or paying the mortgage,” NRECA said.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.