With a series of congressional climate hearings and U.S. EPA's public hearings on its Clean Power Plan scheduled this week, the Obama administration's climate and energy goals are in full focus in Washington. During today's OnPoint, Mindy Lubber, president of Ceres, discusses her testimony yesterday before the Senate Budget Committee on the costs of climate inaction. She also talks about a new Ceres report that ranks the United States' largest electric utilities on their clean energy investments.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Mindy Lubber, president of Ceres. Mindy, it's great to have you back on the show.
Mindy Lubber: Terrific. Thank you for having me.
Monica Trauzzi: Mindy, it's an action-packed week here in Washington for EPA's Clean Power Plan, and you testified on Tuesday before the Senate Budget Committee. Based on what you heard at the hearing, what's your sense of the thinking in the Senate on the rule and proceeding on climate, particularly among politically vulnerable Democrats?
Mindy Lubber: Right. Well, it may surprise some, but I did have the opportunity to testify before the Senate Budget Committee this morning and found the committee, the discussion was related to the EPA rules. It was what are the costs of acting or not acting on climate change, much of which is implicated in the EPA rules. I found the discussion to be actually evenhanded, less acrimonious than some people think only happens in Washington, and I think there were certain conclusions drawn in that hearing. One is climate change is real, it's substantial. Two is that we need to figure out what to do and act on it. And three, that it's man-made. Now that probably is progress. I mean, some of us have been saying that for a decade, and certainly you've been reporting on that, but the fact of the matter is that members of both sides of the fence agreed to at least those three givens. When we got to how exactly do you remedy the problem, we didn't quite have that same consensus, but perhaps we're making progress and at least accepting we've got a severe problem and it's time to tackle it.
Monica Trauzzi: So moving on to what EPA is doing, this week they have a series of public hearings set across the country in four different cities. How important are these hearings on the EPA proposal for existing power plants in shaping the direction of the debate?
Mindy Lubber: Well, they're not only important in shaping the direction of the debate. The hearings and the rules that the hearings are about are really the most important game in town. Thirty-seven percent or so of our carbon emissions come from electric utilities, a big part of existing fossil fuel power plants, and so we have to -- we have no choice but to get on top of that, to put some kind of limit on the kind of emissions we have, and the EPA created a set of rules that, in my judgment, seem eminently fair. I mean, they seek to address the problem. Some may find them stringent. I think they're relatively fair, and most importantly, they delegate most of the authority for how those rules will work to make sure that they're not overly burdensome for companies in those states. They delegate the authority to the states, so the states in many ways are going to be developing the details of how to regulate utility companies, or at least those utility companies that have power plants that are emitting carbon emissions.
Monica Trauzzi: And there's a big debate right now on how fair EPA was and, in particular, the formula that they used in assigning various targets to states. I want to move on to this new report that Ceres recently released benchmarking utility clean energy. It ranks the 32 largest electric utility holding companies on renewable energy sales and energy efficiency sales. Obviously it clearly ties into the Clean Power Plan and those building blocks, the four famous building blocks that we hear about. Are utilities generally already taking steps that will help with compliance?
Mindy Lubber: I think the report does tell us this. It tells us that utilities are taking steps, they can take steps, and that it's not an economic burden of unknown proportions. Some feel like the regulations that the EPA are putting forward are just economically not doable or highly burdensome, but the reality is of what we found when we looked at about 70 percent of the whole industry, that electric utility companies were acting in the following ways: selling more renewable energy and selling more energy efficiency options. Some of the companies, NV Energy, Xcel, they have 20 percent or so of their entire energy sales that they're selling to their customers with renewable energy. Now, that's remarkable and it tells us very clearly there's a market for it, consumers want it. We've got those energy options available, and in many ways, they're saving companies money and consumers money rather than seeing those companies, rather than investing in solar and wind and energy efficiency. Those companies could be building new power plants, which would cost far more. This is a win-win-win, and for anyone who says utility companies will never be able to comply with the EPA regulations, I think we're seeing the reality in vivid color that they can comply.
Monica Trauzzi: What about the companies that rank the lowest? You have Southern, Dominion, Entergy, they were among the lowest ranked. Is there a common mindset on power generation among the leadership at these utilities, or is their low ranking simply a function of the regions that they do business in?
Mindy Lubber: I think the region's a part of it. I think we're finding in the South there's lower ranking, but I think even those companies are about to start pivoting into renewable energy and energy efficiency because they're seeing regulations coming down the pike, because they're seeing other utility companies not only doing it, but doing it efficiently, saving money, pleasing their customers, pleasing their employees. It is -- the time has come and we're going to start seeing even the laggards move into at least a midrange position, and once the EPA rules go into effect, we'll see more and more companies, because they have to do it, but we've got the head start and we've got the evidence that they can do it and that it can work.
Monica Trauzzi: We talk a lot about the evolving utility business model on this show. How powerful are consumers in driving where utilities go?
Mindy Lubber: Utilities have lots of drivers. For those who are owned by shareholders or investors, that's a driver. For some of the utility companies, they tell us their employees and recruiting the best and the brightest, smartest people to work for them is a driver. And then finally consumers are their driver, and of course, their regulators. It's a combination of things, but no doubt consumers want more reasonable prices and consistent and reliable energy, and they're happy to get it from energy efficiency and renewables rather than investing in major new fossil fuel plants.
Monica Trauzzi: So what would you prescribe for those utilities who maybe have not made those big investments yet? I mean, many of them operate in states that will probably sue EPA for its Clean Power Plan.
Mindy Lubber: Well, I would urge them to stop and think before they sue EPA. I think these rules are pretty airtight as it relates to litigation. I guess you -- and they're going to go into effect. I mean, one could try and get them rolled back in years later in litigation. No. 2, I think they need to look at the models of the companies that are winning the game, that are out there pleasing their customers, their employees, their shareholders by selling more renewable energy and more efficient and more energy efficiency and doing just fine at it.
Monica Trauzzi: All right, we'll end it there. Thank you for coming on the show. Nice to have you on.
Mindy Lubber: Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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