Regulations:

NARUC's Wright discusses challenges facing regulators on air pollution standards

How are utility regulators managing the new set of air rules introduced by U.S. EPA? During today's OnPoint, David Wright, chairman and president of the National Association of Regulatory Utility Commissioners, discusses the lack of clarity and concern surrounding EPA's air pollution standards. He explains how EPA and NARUC are working together to educate regulators on the new rules.

Transcript

Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is David Wright, chairman and president of the National Association of Regulatory Utility Commissioners. Commissioner Wright is also vice-chairman of the South Carolina Public Service Commission. Commissioner, thanks for coming on the show.

David Wright: Well, thank you for having me.

Monica Trauzzi: Commissioner, you've just wrapped NARUC's winter meeting here in DC. With new air pollution standards coming out of EPA for power plants and more expected, described the scene for regulators right now. Is there confusion? Is there some worry about reliability?

David Wright: Well, site regulators ,we're like on the middle of both sides of it. You've got the EPA silo and them making their decisions. You've got the FERC doing their thing and then we have to worry about the company's side and then the customer. And when you've got all these regs coming down at the same time, you're going to be competing for vendors, you're going to be competing for craft labor and all this drives cost and, you know, what we're worried about is that it's a perfect storm setting up for the customer on the backend. Because you're not just competing -- you know, we're not talking utility MACT and CASPR per se, you're also looking at competition for investment for water, for gas pipeline, for electric, for telecom, and it's all coming out of the same pot and it's coming at the same time.

Monica Trauzzi: So, the way you see it from where you're sitting and also from sitting in that meeting, are we at risk for some serious reliability issues?

David Wright: Well, I don't think anybody knows that right now. I know they're all talking about it now and they're talking more about it because of what NARUC is doing. We just finished a collaborative with FERC, that everybody was at the table and yesterday afternoon had a great discussion during the afternoon from all sources. Gina McCarthy was there from EPA. We had the FERC commissioners, all of our people from the commission were there and utilities were there too. And we talked about that because that's the one thing that hasn't been happening, is everybody getting together and understanding each other and really getting a handle on what the issues are and how can we best solve it. So this is just the beginning of what we hope will be a multiyear dialogue about it.

Monica Trauzzi: And whose fault is that, that lack of communication, lack of direction? Is that EPA's fault for not being clearer on what they were looking for?

David Wright: I'm not into pointing fingers. I don't really care whose fault it is. I don't care if it EPA's, I don't care if it's the White House, the Congress, the commissions, I don't care if it's utilities fault. The person whose fault it's not is the one person getting thrown under the bus and that's the ratepayer, the consumer, and they had nothing to do with it. So, what we really need to try to do is to mitigate the compliance issues that utility companies are going to have to meet the standards, while at the same time -- and the cost and at the same time mitigating the cost impact to ratepayers.

Monica Trauzzi: You've mentioned ratepayers, consumers, many times so far. So I'll ask you this. Republicans say that EPA has misled consumers when it comes to the effects of these air rules. Is there some truth to that? Did EPA mislead consumers saying that there would not be any negative impacts on their bills?

David Wright: You know, can't go there. As a regulator, you know, we are charged with taking the law and enforcing the law. And from a regulator point of view, it's not an R or a D issue, it's not a red or a blue issue, it's a cost issue for us. You know, we've got people in states, especially in the South and Southeast where we're below the national average for income, where our ratepayers are already hurting. The customers are hurting and if these things, the rules come too quickly, you know, and the cost is too high, you know, there's a $10 billion fix and maybe there's a $100 billion fix, I'd rather do it at 10 than 100. So that's what we're trying to do, is to keep that cost as low as possible so that the ratepayer can still afford their power.

Monica Trauzzi: Sounds like there's some communication and discussion happening now between the different parties.

David Wright: Yes.

Monica Trauzzi: So, where do you see the reliability issue going from here on out?

David Wright: Well, that's one of the issues that we're really trying to focus on. There is no question, based on what we've heard, that there could be pockets of concern around there, around critical units. And it's all over the country, it really depends. We have been pushing for something like a study to be done a little deeper in the weeds to get to the critical units and to really assess it, because you've got more than just problems with a coal plant. You've got transmission issues that are there and then if you try to switch too quick to one fuel, like gas because it's cheap, the infrastructure cost to do that and what might -- you may have a -- it's not a quantity issue, but it's a delivery issue. And that's what the industry is trying to grasp right now and grapple with and regulators have to be concerned with that too.

Monica Trauzzi: So, the solution for some utilities is to switch to natural gas. Is natural gas sort of this magic bullet that it's been painted as?

David Wright: No, it's not a magic bullet. I mean one thing that you learn through life is don't put all your eggs in one basket. But you do have cheap gas right now and it does keep bills low. So switching, for some it's cost, it's economical. So it makes sense to do that a little bit for some people. But you still need to be careful that you have good planning so that you have a good mix of generation in case there's, you don't know, a problem, a spike, an EPA rule, something like that or some other interference or intervention. So, I think it's smart to do smart planning.

Monica Trauzzi: So, talk a bit about what else was discussed in the winter meeting. What were the key resolutions that the board of directors decided on?

David Wright: Well, there wasn't anything really controversial that came out of there this time. It was a very good meeting and I think the Blue Ribbon Commission report, there was a resolution there and then there will probably be more coming because the waste issue is something that we've got to address and deal with in a responsible way. Because, again, the ratepayers pay in for something they haven't got. The government has the money, we still have the waste.

Monica Trauzzi: All right, we'll end it there. Thank you for coming on the show, nice to see you.

David Wright: OK, thank you.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

[End of Audio]

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