How could U.S. EPA's proposed new source regulations and anticipated existing source standards affect the climate and energy policies already in place in California? During today's OnPoint, Robert Weisenmiller, chairman of the California Energy Commission, explains how EPA has engaged California on the agency's air regulations. Weisenmiller also talks about the impact of the San Onofre nuclear facility closure on Southern California's electricity system and discusses the future of nuclear power and hydraulic fracturing in his state.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Robert Weisenmiller, chair of the California Energy Commission. Dr. Weisenmiller, thank you for coming on the show.
Robert Weisenmiller: Thanks for having me.
Monica Trauzzi: Mr. Chairman, EPA's proposed power plant regulations are getting legislative and legal attention here in Washington; what impact do you believe these policies could have on California and the ground that your state has already paved on energy and climate, and are you at all concerned that the policy may come down to be a bit inflexible and cause some issues in your state?
Robert Weisenmiller: Well, first, let's be clear. California has had a leadership role on this area, as with many areas of climate change, and so we've had legislation that was passed in, I'm going to say 2005-ish, that basically directed my agency to set emissions performance standards for power plants, or at least for the procurement of power in California, and really limits commitments that our utilities can make to coal plants. And so again we have put in place an emissions performance standard very similar to what EPA is talking about, which we've had in place, which is certainly affecting our utilities in terms of their operations. If you look at California, a lot of our municipal utilities made commitments to out-of-state coal plants, and so as we reviewed that, most of them are pulling back from those commitments. In part because the standards we adopted, which really limit what they can do in terms of no commitments of five years or more to a New York coal plant investments, or at least investments in plants that have high emissions, and at the same time we combine that with cap and trade. So our utilities are moving out of plants that would not be compliant with EPA. We're certainly working with EPA as they look at new and existing to make sure that that does not adversely affect our existing programs, but again, we look at that as a collaborative opportunity, and they're going to come to Sacramento the middle of this month to talk to us about some of our ideas and some of their ideas moving forward.
Monica Trauzzi: And we hear varied opinions on how close the agency is listening to the various stakeholders. Is your sense in California that EPA is listening in your state?
Robert Weisenmiller: Yes, they're certainly reaching out to us to have a partnership there. We as a state have had a very strong partnership with the EPA. As an example, it's certainly the auto standards that Mary Nichols at our air board has worked through with the EPA. So we have a pretty good working relationship with them. We don't necessarily see eye to eye on everything. Sometimes we're more aggressive than they and other times they may be more aggressive than we, but it's a good partnership.
Monica Trauzzi: The availability of carbon capture and storage technology is a key sticking point of these regulations. Do you think there's enough being done by federal and state governments to push the advancement of this technology forward?
Robert Weisenmiller: I think all of us are trying to do more there. Carbon capture is obviously very important on the coal plants, and it's also very important in natural gas plants. I know one of the things is we're looking through, we being the air board, Mary Nichols and I, are looking at a scoping plan to deal with our A.B. 32, which is our climate regulations. We're looking at the need for that sort of research in carbon sequestration so that we have that available for our gas plants in the future. We don't necessarily need it today, but we will need it, and probably in the next 10 to 15 years. Because again, we have cap-and-trade regulations, which mean that any new gas plant is either going to have to find offsets or buy those offsets, which will become increasingly difficult over time, or invest in carbon sequestration. And I've been approached by a number of companies who say that technology is getting to the point where they're very serious about making those investments so they can deal with our cap-and-trade regulations.
Monica Trauzzi: But are they also saying that they need a strong public-private partnership in order to make that happen?
Robert Weisenmiller: Yeah, the administration's proposals there are one of the things they're pointing to as driving that, and while I can't talk to the merits, one of the power plants that's now pending before the Energy Commission is something called HECO, which would be one of those carbon sequestration plants that would inject the CO2 into the ground to produce enhanced oil with Occidental. But it's a very controversial project, but it would be very groundbreaking if that were approved by us and could actually go into construction and operation.
Monica Trauzzi: So staying on climate action for a moment, what message do you believe the Pacific Coast Climate Action Plan on Climate and Energy, which California is a part of, sends to the rest of the country where efforts like that have not been successful or not even attempted in many cases?
Robert Weisenmiller: Well, again, I think part of our strong message, and certainly my governor is very, very clear on that, is that climate change is happening, climate change is real, and we're seeing that having an impact on us, and we're trying to take actions to deal with that. And it is really great when we can do that collaboratively with the other states, but we think we have a road map to address some of the issues. When you look at the full breadth of the types of things we're trying to do in collaboration through that document, again it's sort of a tool chest for states. And in some of our regulatory approaches obviously the more that it's not just California but it's the whole Pacific Coast, again is sending a very strong message to industry on the sort of changes we will need to deal with the new realities.
Monica Trauzzi: Earlier this year the controversial closure of the San Onofre nuclear facility got some big headlines. How do you successfully transform Southern California's electricity system without San Onofre in the mix?
Robert Weisenmiller: It is a huge challenge and opportunity for California. I mean, first the entire grid in Southern California was built around the assumption that San Onofre would operate and it would always operate, and it's gone. So we have to redo the entire system. So it is a huge challenge. And if that's not enough, and the transmission stuff means not just energy but we need it in specific locations. San Onofre was like the pressure, you know when you have your water and you need pressure in the pipes to move the water around, well, San Onofre was providing the pressure to move the electrons basically down into San Diego from the L.A. basin. So we need not just energy but we need power plants located in Orange County and San Diego. So it's a huge, as I said, and you combine not only San Onofre but then you have, we have to either retire or replace or somehow repower all of our coastal power plants which were built in the '50s and '60s or maybe even early '70s, using ocean cooling water. So we have to replace about 5,000 megawatts of that, plus San Onofre, and plus load growth.
Monica Trauzzi: And how do you keep prices down then?
Robert Weisenmiller: Exactly. And we have to keep the prices down. But we're looking at a portfolio of options, and sort of all the state agencies are working closely together in a partnership on this and with our utilities. It's a huge challenge, but what we're looking at is a portfolio that has basically three legs. One of them would be conventional gas generation, which we're trying to keep as small as we can. One of it would be new transmission or transmission infrastructure, things like synchronous condensers or static var compensators, and then preferred resources. So we want at least 50 percent of what we need to come from preferred resources, things like energy efficiency, renewables, distributed gen storage.
Monica Trauzzi: So is there a place for nuclear in the United States? The term "nuclear renaissance," is it still relevant?
Robert Weisenmiller: The industry has been announcing the renaissance for at least 10 years, and at this point the realities they're dealing with are, first, gas prices are very low. I mean, we're talking about existing gas, existing nuclear plants not being economically viable. At the same time, the financial cost of the new nuclear units is so high. And so when you get into that combination there are four plants under construction, or five if you include an old TVA plant that was in suspended animation for a long time, but we've had four plants shut down this year and people expect more plants to go into shutdown mode in the future. And again, I think the industry now is hoping that the modular, the whole new approach of going small, but we don't know what they're going to cost, we don't know what the issues really are. The theory historically had been if you did a larger nuclear plant you would have economies of scale. And now they're saying since the large ones are not, I mean, no one could put 15, or not many people can put 15 [billion] to 20 billion dollars into an investment, they're hoping if you could scale it back some. They're really betting their companies, if you're building a new plant, and you're betting your company that you don't have a reactor accident anywhere in the world.
Monica Trauzzi: I want to get one final question in about natural gas. Governor Brown recently signed a legislation that triggers a comprehensive environmental analysis of fracking. Natural has is playing an increasingly important role in the United States and our energy future. How do you see that conversation going in California over the next two years?
Robert Weisenmiller: I think we need to understand how to environmental responsibly develop natural gas in the fracking context. I mean, we've all seen some of the horror stories in Pennsylvania and other places where fracking has been done. And at the same time, we need to look at the gas system as a whole and deal with leaking system infrastructure. It's not good for safety and it's not good economically, but it's also not good from a greenhouse gas perspective. I mean, methane is a very potent greenhouse gas release. So we need to look at basically, and we will certainly need to look at ways of toughening our regulation of fracking to make sure it's being done in an environmentally responsible fashion.
Monica Trauzzi: All right, we'll end it right there. Thank you for coming on the show, nice to see you.
Robert Weisenmiller: Yeah, good to see you.
Monica Trauzzi: And thanks for watching, we'll see you back here tomorrow.
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