Will the Trump administration be more favorable to the needs of rural electric cooperatives compared with the approach that existed under the Obama administration? During today's OnPoint, former Rep. Jim Matheson, now CEO of the National Rural Electric Cooperative Association, explains what an executive order that unravels the Clean Power Plan could mean for his member groups and how electric co-ops plan to lobby the Trump administration on climate policy.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is former Congressman Jim Matheson, CEO of the National Rural Electric Cooperative Association. Jim, it's nice to see you again.
Jim Matheson: Oh, it's great to be here again.
Monica Trauzzi: So, Jim, E&E News has reported that the White House is not currently intending to replace the Clean Power Plan once an executive order to unravel the plan is released. What is your reaction to the change in direction that we're seeing on the power plan between the Obama administration and the Trump administration, and what does it mean, ultimately, for your member organizations?
Jim Matheson: Yeah, the overriding reaction is we're glad we're going to have a change from what the Obama administration Clean Power Plan had been. It was structured in a way that we thought was an overreach. We as the electric co-ops were participating in the litigation that resulted in the Supreme Court actually issuing a stay, so we think we had a lot of merit in our complaints about the Clean Power Plan. It really would have hurt electric co-ops. Some of our folks would have been very economically disadvantaged by having it go through, so we're pleased the Trump administration wants to take a look at changing from where we were. We think that's really important for the future of electric co-ops.
Monica Trauzzi: But does an outright refusal to replace the CPP provide your member groups with enough certainty?
Jim Matheson: I think taking the existing rule that's still on the books — it's being held in stay by the Supreme Court, but it still exists. Moving that off the books is going to be really important to the electric co-ops. What it looks like if there's something on the books or a replacement instead, that's less of an importance to us than moving away from what is written now because, again, as I said, the way it's structured, it'd be really tough on a lot of our members.
Monica Trauzzi: Would you like to see the power plan replaced with something else?
Jim Matheson: You know, I think that — I think that's open to some conjecture about what's the best path to take, and I think the Trump administration, I assume, is going to be looking at whether it makes sense to replace it with a different version or take it out altogether. As I said, for me, those are two choices that are both far preferable to where we are today, which is what the rule that is on the books. So we want to sit down with the Trump administration as a representative of the electric co-ops, offer our thoughts about what works and what doesn't work and what it really means for our consumers. That's really the pitch we want to make.
Monica Trauzzi: And what will you lobby for when you sit down with them?
Jim Matheson: We're going to lobby for — primarily, it's for flexibility. You know, electric co-ops are in 47 different states. We're all over the map in terms of our circumstances, too, and what we want is the flexibility to make the right decisions for our members. We don't need these regulations that put onerous requirements on us, force us, quite frankly, to shut down power plants that aren't even paid for yet really hits our member consumers in the pocketbook in a significant way, and we just don't want that.
Monica Trauzzi: A lot of planning, though, has already gone into meeting the requirements of the CPP. Many utilities are making investments that will put them well beyond what the power plan is calling for. So is some kind of policy mechanism even necessary when we see the market sort of going in that direction of emissions reduction?
Jim Matheson: I think you're right that the broad markets are going in that direction, but if you look at individual utilities, some have multiple power plants, and shutting down one may not be such significant action. For electric co-ops where we don't own a lot of different power plants within a specific co-op, that one co-op — that one power plant may be a significant part of their asset base, so shutting down one is a big deal for certain co-ops. We actually think electric co-ops were more significantly affected by the Clean Power Plan than other parts of the electric industry because of the way we're structured. So for us, it's a big deal if you shut down a plant.
Monica Trauzzi: But the story for your folks has also been evolving and changing over the last couple of years. You're just reporting that by the end of 2017, the total solar energy capacity for co-ops will be five times what it was two years ago. What have been the key drivers behind that?
Jim Matheson: We've learned that the implementation, what's called community solar, as opposed to rooftop, really has a lot of economic advantages, and so we have been at the forefront of promoting community solar. In fact, 75 percent of all community solar in America is owned by electric co-ops. We pride ourselves on the fact that we're innovative and we're also completely consumer-driven. We've had a lot of success with that program, as you've just suggested. Particularly in the last year, we've doubled our solar capacity, and that trend is going to continue.
Monica Trauzzi: And this is ultimately driving you towards emissions reductions, yeah?
Jim Matheson: There's no question that that's one of the outcomes, but it's also got to be economically viable for our consumers, and that's one of the criteria we always look at, but we've been leaders on innovation when it comes to community solar. Also with community storage, you may be familiar with our program where we have grid-enabled hot water heaters where we can use them, in effect, as batteries, and we take advantage particularly in western Minnesota for the wind power that's so cheap at night. We fire up all those hot water heaters. They can't fire during the day during peak electric times. We can store up to a gigawatt of power in one of our co-ops, just among 65,000 hot water heaters that we use as storage.
Monica Trauzzi: Ultimately, do you believe that the Trump administration will be more favorable, or what you perceive as favorable, towards your member groups?
Jim Matheson: There's no question that the Trump administration, with its regulatory reform agenda, is going to offer greater flexibility for our members to do what's best for their consumers, and that's really all we ask for. We are a consumer-driven organization by definition, and we want that flexibility to meet those consumer needs.
Monica Trauzzi: I know you recently wrapped NRECA's annual meeting in San Diego. Overall tone and message coming from your member groups?
Jim Matheson: We had a fantastic annual meeting, and there was a lot of optimism about the future. The fact that co-ops recognize all the change that's happening at the consumer level with smartphones, with smart thermostats, with so many devices in the house that are smart now, and since we have that relationship directly with the consumer as a co-op, we feel like we're best positioned to work with them, to help realize value and be a partner, so we're excited about all these technological changes that are happening. From a co-op perspective, we think it's just going to continue what's been a great member relationship.
Monica Trauzzi:All right, a lot to keep watching. Thanks for coming on the show. Nice to see you.
Jim Matheson: OK, thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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