Coal-heavy electric cooperatives take hard line on EPA Clean Power Plan

The nation's electric cooperatives have choice words for U.S. EPA and its proposed rule to curb greenhouse gas emissions from existing power plants.

In nearly 200 pages of provocative comments, the National Rural Electric Cooperative Association takes EPA to task for what it sees as unlawfully usurping the states' proper role in regulating the electric sector.

The "ill-advised proposal" is rife with "misinformed statements and Pollyannaish judgments," NRECA wrote as it drew a hard line very different from its brethren in the investor-owned utility and public power sectors.

Investor-owned utilities are represented by the Edison Electric Institute, and the American Public Power Association is the trade group for more than 2,000 not-for-profit publicly owned utilities.

"I think there are a lot of similarities on substance" with EEI and APPA, argued Kirk Johnson, NRECA's senior vice president for government relations, in an interview.


"You may be noticing some differences in tone among the comments. We used some stronger language in these comments than we often do, in part, to make a point. The point is that proposal is so far out of bounds," said Johnson, a former energy and environment adviser to Sen. Kent Conrad (D-N.D.) who spearheaded formulating NRECA's comments.

The harsh NRECA tone may be explained by the fact that most co-ops have a much steeper climb than other electric utilities to get their CO2 emissions levels to where EPA wants them to be in 2030.

The nation's co-ops are extremely dependent on coal-fired generation -- the de-facto target of EPA's proposed rule -- with coal producing an estimated 70 percent of power sold by the far-flung network of more than 800 cooperatives. By contrast, less than 37 percent of all electric utility power in the United States is produced by coal.

Also, the fundamentally rural geography of many cooperatives is a challenge to the extent of capital expenditures that may be needed to meet EPA's rule. Not only are there fewer customers over a co-op's service territory than for an investor-owned or public power utility, but NRECA members provide service in 327 of the nation's 353 "persistent poverty counties," the trade group says.

NRECA wants EPA to take a mulligan

NRECA's comments repeatedly address the ways in which the EPA proposed rule allegedly violates the Clean Air Act.

That leads Johnson, an avid golfer, to in effect urge EPA to take a mulligan.

"In golf, if you hit a tee shot out of bounds, you have to go back to the tee box and do it again. And that's what we're essentially saying that EPA needs to do. And that's what EEI is saying and what APPA and others are saying, as well," Johnson said.

"And it's in large part due to that very common thread that you're reading -- not just in utility comments but in other areas, as well -- that the rule goes far beyond what the Clean Air Act authorizes them to do," Johnson said. "The lawyers will sort some of that out in court; we're hopeful that the administration will listen to that before it has to get to that point."

While APPA does ask EPA to withdraw and re-propose the rule, the bulk of its comments offer modifications to improve the rule to make it easier for states and public power utilities to eventually comply.

And EEI -- some of whose members applauded the EPA proposal when it was unveiled -- tailors most of its comments to "suggestions to help ensure that the final emission rate goals can be achieved without compromising the reliability and affordability of electricity."

Cooperatives silent on climate change

Another significant difference between co-ops and their investor-owned or public power counterparts is the organization's silence on the need to reduce carbon dioxide emissions to address the impacts of climate change.

EEI has been on record about the need to tackle climate change ever since it supported a cap-and-trade bill in Congress several years ago. And its website touts that concern. "Global climate change presents one of the biggest energy and environmental policy challenges this country has ever faced. EEI member companies are committed to addressing the challenge of climate change," the group says.

Similarly, APPA in its comments on the Clean Power Plan said it "agrees that the electricity sector needs to reduce CO2 emissions to address the adverse impact of climate change," expressing a preference for congressional action. But acknowledging that Congress is "unlikely to act in the foreseeable future," APPA offered recommendations to improve the rule and "make it more workable for industry" while "still allowing substantial progress towards the agency's ultimate goal."

But NRECA chose to not address climate change. "We are silent on that question," said Johnson. NRECA makes no judgment on the issue, only saying on its website that its members "have a keen interest in proposals to mitigate climate change."

"We have a legal question in front of us about what is in the Clean Air Act and what the law allows them to do," Johnson said.

NRECA "believes the Clean Air Act was never intended, and should not be used, to regulate stationary source greenhouse gas emissions such as CO2," it says on its website. "The unique regulatory framework EPA is using to develop greenhouse gas requirements in no small way contributes to their challenge in developing a regulation that is either reasonable or achievable," NRECA says.

"Ultimately, our members think that if we're going to have a carbon policy, that that policy should be written by Congress, not shoehorned in, pounding a square peg into a round hole," Johnson said.

Avoid the big 'no-nos'

A chief concern for Johnson and NRECA's members is the potential for EPA's rule to leave "stranded" a large amount of investment that has been made in cooperative generation and environmental controls to comply with previous EPA rules.

"There are some big no-nos we need EPA to avoid. One of those big no-nos is creating stranded assets. We have a number of members who built coal plants in the late '70s and early '80s during the time of the Fuel Use Act, when pretty much gas was off the table" and "nuclear, thanks to price increases and Three Mile Island, was off the table," Johnson said.

Cooperatives were "growing rapidly at that stage and needed to build new power plants, and so we built what was available at the time" -- coal plants, Johnson said, noting that roughly two-thirds of all co-op-owned coal generation facilities were built during that period.

"They still have useful life. And we need to make sure this rule doesn't force our members to scrap those with remaining mortgages on those units and environmental controls that have been added since they were constructed.

"We think it is utterly ridiculous that it is a potential outcome. It would potentially force some of our co-ops to really no longer exist. And that's an unacceptable outcome," Johnson said.

Hint of possible compromise?

A close reading of NRECA's comments, as well as those of some individual co-ops, offers a glimpse of a possibly acceptable outcome on the EPA rule.

"Our comments are designed on sort of a cascading fashion," Johnson said. "The first point is the legality of the overall scheme; second point is the assumptions underlying the building blocks and trying to improve those assumptions; and then the third layer is if the rule goes forward as it is, here are things that must be improved in the rule, and a reliability safety valve is very much our priority for a whole bunch of folks. The last thing anyone wants is for the lights to go off in the short or the long term."

Johnson wants EPA to push back the final compliance deadline of 2030 to 2035. "Give us a goal and deadline, but don't start that with a big cliff; that's not a glide path," he said, echoing language used by numerous critics of the EPA rule as proposed.

"If EPA listens closely to our comments, there's an endpoint that doesn't result in significant rate increases and reliability threats. But we can't be going down the road of doing things that the law doesn't allow. That's not what this democracy is about," Johnson said.

Twitter: @RodKuckro | Email:

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