CLIMATE:

EPA plan gives no credit for Southern states' strides, utility regulators say in Atlanta

ATLANTA -- Mississippi Power invested $600 million to outfit coal-fired Plant Daniel with pollution controls.

The state's Public Service Commission approved one of the most aggressive energy-efficiency programs in the Southeast (EnergyWire, June 26).

Entergy Nuclear's Grand Gulf Nuclear Station is the largest single-unit power plant in the United States after a power uprate so it could produce more electricity.

But Mississippi doesn't get credit for those actions when it comes to meeting U.S. EPA's proposed carbon plan for existing power plants. That was the message from state utility regulator Brandon Presley, and he made that clear to EPA officials who held daylong hearings on the rule here yesterday.

"This rule is flawed; it is not taking into account good steps that have been taken into account by states like Mississippi. It's going to end up costing money," Presley told EnergyWire after testifying yesterday morning.

"States like Mississippi, who have fought to pull themselves up and get a program to help customers reduce energy costs and reduce energy consumption, kind of get slapped away from the table," he said.

Other utility regulators shared Presley's frustration, saying their states have made steps to cut carbon emissions or shift toward cleaner, emission-free sources of fuel such as nuclear or solar. Georgia utility regulators who spoke at a morning news conference touted the state's rapidly growing solar market, upcoming $500 million investment in programs to reduce energy demand and construction of two, emission-free nuclear reactors (EnergyWire, July 14).

They are frustrated that that is not enough in the eyes of EPA.

Broadly, EPA is asking states to meet carbon-emission targets that would result in a 30 percent CO2 reduction nationwide compared with 2005 levels by 2030. For Georgia, that assumes that utilities will have to shutter another 3,900 megawatts of coal-fired plants by 2025, said Georgia Public Service Commission Chairman Chuck Eaton.

"We're basically requiring a redesign of our entire system," said Eaton, adding that the carbon rule would intrude on the state's electric regulatory authority.

"The EPA is acting well outside its area of expertise," he said.

Each state has its own goal, and there are four main target areas, including adding nuclear energy and reducing demand through energy efficiency, to get there.

EPA laid out those four building blocks as a road map that states can follow. States aren't limited to those options, EPA Administrator Gina McCarthy told reporters on a conference call Monday.

"There's a wealth of opportunity to reduce carbon solution, and states have the opportunity to do whatever standard they can reasonably justify," she said.

The idea of flexibility is flawed, said Scott Segal, a partner in the Policy Resolution Group at Bracewell & Giuliani and director of the Electric Reliability Coordinating Council. This is because the regulation already places too many constraints on the states.

"The agency makes technical assumptions when they formulate the rate that was assigned to each state," Segal said in an interview here. "It's as if the agency said, 'You can drive from Washington to Atlanta, and you can only have X gallons of gas, but you are free to take whatever route you want.' Well, that's not flexibility. They put physical constraints on your behavior."

Southeast's slow recovery plays into opposition

There's been plenty of pushback from the Southeast, where utilities are heavily regulated and once got the bulk of their electricity from coal (EnergyWire, June 3). Much of the region is also rural and based on traditional economies such as agriculture and manufacturing.

This means swift changes to the way states are to get their electricity end up touching -- and punishing -- large industries, small businesses and low-income households the most, according to the wide swath of opponents who spoke at a number of news conferences and rallies yesterday.

The Southern economy has been slow to pull out of the nation's economic recession, and shutting down coal plants would make the region fall even further behind, they said.

"Eliminating coal-fired power plants in Alabama and the South will be devastating to thousands of middle-class working families, mostly union members who mine coal, truckers and railroad workers who haul coal, farmers, electricians and laborers. ... These are solid, middle-class jobs in the poverty-ridden South," said Al Henley, president of the Alabama AFL-CIO, speaking at a Consumer Energy Alliance (CEA) press conference.

The industry-backed CEA, self-described as the "voice of the energy consumer," supports increased use of natural gas as a way to keep energy prices low for consumers.

Some who were opposed to the rule said it isn't a black-and-white issue of coal versus solar or fossil fuels versus green energy. The issue is more complicated than that.

For example, state Rep. Mike Dudgeon, a Republican who represents part of the northern Atlanta suburbs, showed up at an Americans for Prosperity rally to speak out against the rule. Dudgeon also is pushing for a solar bill that would make it easier for residents and businesses to install rooftop solar panels by letting customers finance them over the long-term instead of paying all of the costs upfront (EnergyWire, Feb. 28).

"I think that solar has got to the point now where it is cost-competitive, and that is the right time, where you want to make sure there are no government regulations," Dudgeon said in an interview. "So I'm pushing that, because I'm a big believer in the free market. At the same time, any environmental gains gotten from the CO2 reduction [in the EPA rule] are completely dwarfed by the cost to the economy."

Clean energy jamboree

Clean energy advocates had their share of events here as well, including a vibrant march with chanting, bagpipes and plenty of banners, through downtown Atlanta. More than 1,000 clean air advocates traveled to the Georgia capital for EPA's hearings, which continue today (EnergyWire, July 28). Police held traffic as bystanders watched and took photos.

Some applauded, others stared. One person, annoyed by the stopped traffic, referred to the group as "a bunch of tree huggers."

At an afternoon rally, an Americans for Prosperity official took a shot at the environmental community, saying the Sierra Club lured them to Atlanta by paying for their bus rides and hotel stays.

Mary Anne Hitt, director of the Sierra Club's Beyond Coal campaign, fired back.

"Nobody needs to tell the moms, kids and concerned citizens here today to stand up for safeguards that protect clean air and healthy families all over the country," she said in an emailed statement to EnergyWire.

"It's laughable that a group funded by the fossil fuel baron Koch Brothers is resorting to these kinds of desperate attacks, while only a handful of people turned out to their pro-polluter event," she said.

From the environmentalists, clean energy boosters and others at the rallies, there was nothing but optimism.

"[The Clean Power Plan] saves lives, creates jobs and finally tackles climate disruption," said Hitt, amid cheers and applause.

Cause for collaboration

One area that the South lags in is energy efficiency. While 35 percent of the U.S. population lives in the Southern states, the region consumes 43 percent of the nation's electricity, according to Marilyn Brown, a Georgia Institute of Technology professor and a board member of the Tennessee Valley Authority, the nation's largest publicly owned utility.

"We have not been motivated to use electricity wisely," said Brown, citing flawed public policy.

Stephen Smith of the Southern Alliance for Clean Energy said the rule will force collaboration between utilities, regulators and other state policymakers.

"This is going to make them have to be on their game," Smith said. "If it's done properly and done constructively, it could lead to a better integration of policy and energy policy with regulatory policy, with the way that we produce and consume energy."

Alan Hancock, program director at the Conservation Voters of South Carolina, said the state already has seen that type of collaboration in putting together a renewable energy policy that was recently signed into law.

Some South Carolina leaders even called the bill (S.B. 1189) the "consensus" legislation because it was born out of several competing interests -- utilities, environmental advocates, consumer groups, business organizations and nonprofits -- that spent months working on a compromise (EnergyWire, April 1).

Hancock said that will carry over into forming a plan to meet EPA's rule.

"You can trust that the relationships that the folks were able to build ... we're able to understand that all of the folks have come to the table and make their arguments in good faith and try to take the issues seriously," he said.

Twitter: @BizWriterKristi | Email: kswartz@eenews.net

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