How will U.S. EPA's new- and existing-source air regulations affect states with large coal portfolios? During today's OnPoint, Tim Echols, commissioner at the Georgia Public Service Commission, explains why he thinks states should have more control over the regulation of their emissions and talks about the impact of EPA's regulations on the future of coal. Echols also addresses his state's plans for nuclear.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Tim Echols, elected commissioner of the Georgia Public Service Commission. Commissioner Echols, thank you for coming on the show.
Tim Echols: Great -- great to be here in Washington, D.C.
Monica Trauzzi: Commissioner, recently Georgia joined 18 other states in sending a letter to EPA urging the agency not to dismiss the authority that state regulators have to limit their own emissions. The Supreme Court has upheld portions of EPA's authority to use the Clean Air Act. Is EPA overstepping its authority, especially when we look towards that existing-source standard that we're expecting early next year?
Tim Echols: You know, we really need the flexibility as state regulators in this. And I wish the EPA would take context into mind when they do these -- when they pursue these regulations, because we've got such a shortage of craft labor out there. We've got to upgrade all of these coal plants that we choose to keep online. We've got new construction for the scrubbers. We've got so much work that needs to be done that we can't possibly meet these deadlines. And we just need some flexibility.
Monica Trauzzi: But the agency says that it is engaging stakeholders, in particular the states. Is that your feeling on it? Are they engaging the states?
Tim Echols: Yeah, I think they're doing their job. I think they're doing the best that they can with what they have. But I'm concerned that we are not getting the flexibility that we need, and the resulting impact is going to financially hurt our states, our power companies, eventually our ratepayers, and that we're going to lose any competitive advantage that we have right now because of our cheap energy.
Monica Trauzzi: What is Georgia doing specifically right now that you believe could essentially butt heads with the standards for new sources and existing sources?
Tim Echols: Well, look, I don't think our power companies want to be seen as rogue or butt heads with any federal agency. That doesn't help them with their stockholders. So I think as an elected commissioner we -- obviously, we want to comply, but we want to appeal anytime that we can, and we want to slow down the implementation of these rules. So yes, we are going to close a third of our coal units in Georgia. We're going to take advantage of cheap natural gas, and we're going to fuel switch a lot of these units. And of course Georgia and South Carolina are leading the way with building new nuclear power, and I think that's going to pay great dividends for our ratepayers in the future.
Monica Trauzzi: So this brings us to your recent trip to Germany as a guest of the German government to take a look at their energy policy. They've done a lot there over the last few years. After the trip you said you were stunned by the Germans' willingness to put big utilities at risk by taking them out of the decisionmaking model, and that this reminded you of EPA's posture towards coal-generating companies. What do you mean by that? I mean, because coal contributes to about 30 percent of the U.S.'s emissions, and like I said, EPA has been given that authority; the Supreme Court has acknowledged that. Should coal not be regulated in the way that they're trying to?
Tim Echols: Well, first let me say that if -- I own a Porsche. I love German products. The Germans are phenomenal at engineering. So for them to essentially bring these four utilities that were running nuclear power plants to their knees and destroy their stock value, with all the political parties in Germany united against nuclear power, that's baffling to me with a country that has the kind of engineering that Germany has. And go across the pond to America, and here we have coal projected to be the same price -- at least Powder River Basin coal -- for 50 years, at $15 a ton from the mine mouth. And here we're taking measures, because of regulations from the EPA, to essentially shut down most of the coal that we have in this country. We're taking an indigenous fuel source that's going to be cheap for a very long time and we're driving it across the sea. Germany's building new coal. Other European countries are building new coal. I don't think new coal's going to happen here in the United States, even with what Southern Company's trying to do with the Kemper plant in Mississippi. I think we're essentially closing the door on coal in America.
Monica Trauzzi: But the industry has acknowledged that there are no real plans to build new coal for at least another 10 years. Don't you think by that time that the CCS technology will be up to speed and ready to be implemented at any potential new coal power plants?
Tim Echols: Well, as a regulator looking at what's happened in Mississippi at the construction of their goal gasification plant, I would be very hesitant as a commissioner to want to sign on to that, because they've gone over budget. They've struggled. It's been a real issue. I don't know that we are going to have this technology done in 10 years. I think natural gas is essentially driving a stake in the heart of the nuclear renaissance and driving a stake in the heart of any kind of new coal technology because natural gas is so cheap and everybody -- every state's moving towards natural gas as fast as they can go.
Monica Trauzzi: OK. So what are the negatives there, then? Because that means more natural-gas-related jobs, so can't some of those jobs from the coal industry transfer over to natural gas then?
Tim Echols: Well, maybe. I mean, we've got a shortage of craft labor. You know, to build these kind of plants -- so you think about machinists, you think about concrete finishers, you think about metalworkers, you think about welders -- we've got a shortage of these people. Companies in Georgia tell me that half the welders that interview for jobs can't pass a drug test. So if we've got this issue with these very important players, welders in particular, and we can't get enough of them, we're going to -- we're either going to hire people that aren't qualified and have shoddy workmanship, or we're not going to be able to meet the timetable.
Monica Trauzzi: So let's go talking about nuclear now. We've seen, as you mentioned, the retirement of four major nuclear facilities this year, and this, many believe, is the direct result of the industry's inability to compete with low natural gas prices. So despite all of that, your state continues to place an emphasis on nuclear. Why? What's the rationale there to continue on a path towards nuclear when it's maybe not as financially viable?
Tim Echols: Well, for one, we're halfway done with the project. So you've got five Republican elected commissioners in the state of Georgia who are very committed to seeing this project through. So to not finish this project would be bad stewardship, and I -- so I think it's very important for us to complete these two new reactors at Plant Vogtle. The first two, they've really served our ratepayers well. And if natural gas does go up in 10 or 15 or 20 years, we're going to be really glad that we have this carbon-free nuclear power sitting there in Augusta, Georgia.
Monica Trauzzi: But in your commission you've delayed the debate to 2018 over who will pay the cost, because the cost of that specific plant continues to go up. Why the delay? Why not handle it now?
Tim Echols: Well, for me -- and I can only speak for myself -- I voted for the stipulation to delay any kind of amendment to the cost of this plant because I didn't want to fatigue our ratepayers. I don't want to be nickel-and-diming our ratepayers every six months or every year when we have a cost overrun on that plant. I would rather wait and get Unit 3 up and running, and then we'll make any necessary changes that we need to make as a commission and we'll vote on that.
Monica Trauzzi: But does that mean that they will see the price jump in 2018?
Tim Echols: Don't know. We don't know whether those expenses are going to be prudent or not. But look, when you're an elected commissioner, your constituents and what they say, it means something. And I've got two commissioners that are sitting for re-election next summer; I'm up for re-election in 2016. And we certainly don't want our ratepayers out there wanting to jump ship on this plant. We want this plant completed. If we were to stop construction on this plant, which some interveners want us to do, this would cost our ratepayers a fortune. We've got to finish this project, and we need to be successful because that's going to determine whether other states look to us and say: "Well, Georgia did this. Georgia did this close to on budget and close to on time. We can do this." I think we're going to motivate other people by finishing this.
Monica Trauzzi: Let's get one last question in on solar. You recently ordered Georgia Power to add 525 megawatts of solar energy to its electricity portfolio over the next three years. Is this essentially a renewable portfolio standard?
Tim Echols: You know, I think a lot of people tried to spin it as a renewable portfolio standard. Look, the ratepayers of Georgia, they didn't elect me to rubber-stamp the power company's plan. So just because the power company comes to me and says, "We want to do this with this plan," or "We don't want to add any solar," people are electing me to have judgment and make decisions on what's best for the state. I'm not going to rubber-stamp the power company's plan. If I don't like what they're doing, I'm going to vote against what they want to do.
Monica Trauzzi: All right, commissioner, we're going to end it right there. Thank you for coming on the show. I appreciate your time.
Tim Echols: Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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