Proposed EPA Regulations Trouble Flint Energies CEO
Tuesday, October 7th, 2014
In June, the U.S. Environmental Protection Agency proposed regulations covering carbon emissions of existing power plants. The proposal is designed to cut carbon dioxide emissions from existing coal plants by more than 30 percent by 2030, compared with 2005 levels.
"If approved, the regulations will mean it will not be feasible to operate coal plants in the future in this country and that's just a shame," said Flint Energies CEO Bob Ray.
"Coal is an abundant resource in this country and Georgia has the largest, most productive, most technologically advanced coal generating plant in the U.S."
Flint Energies is a not-for-profit cooperative owned by thousands of members in parts of 17 central Georgia counties. The company directly employs 233 employees and serves more than 86,400 electric meters. Since 1937, Flint Energies' mission has been to improve quality of life in the communities it serves by providing affordable and reliable electricity.
Rather than owning and operating power plants, Flint Energies purchases electricity to meet customer demand under nine power supply contracts. Year to date in 2014, 47 percent of demand was met from coal-fired generation, 47 percent from natural gas-fired generation, 5 percent from renewable energy sources and 1 percent from oil-fired generation.
"Under the proposed EPA regulations, it will cost us more to purchase power. And because we are a not-for-profit, our members will pay all of that cost. We have no reserves," Ray said.
According to the EPA, electricity generation was the single largest source of carbon dioxide emissions in the U.S., accounting for 38 percent. Transportation was next at 32 percent. Accordingly, the EPA has focused its carbon rulemaking on power plants and fuel efficiency standards for the automotive industry.
Bureaucrats vs. Congress
Ray believes Congress needs to take responsibility to govern by passing a comprehensive energy policy that includes a framework for regulating carbon emissions. In the absence of Congressional action, executive agencies like the EPA are setting policy.
"The bureaucrats are taking over because Congress is not acting. The U.S. EPA is among the most aggressive; it's essentially setting the energy policy for the country," Ray said.
"Bureaucrats are not elected officials and they typically have a single agenda they are pursuing rather than answering to constituents with a wider range of concerns."
The proposed power plant regulations have generated intense lobbying in Washington from both industry and environmental groups. Following the comment period, the EPA is expected to finalize the rule in mid-2015.
Stifling investment with uncertainty
The lack of a comprehensive multi-year national energy policy makes it much more difficult for businesses to make long-term investments in plant and equipment. Inconsistencies in the EPA approach to carbon regulation can also reduce the expected return on past investments.
"We just invested $109 million to comply with two EPA regulations targeting coal generating plants. There’s another $150 million of projected cost impact from five more regulations, and that’s all before we even get to carbon. But with the proposed regulations issued this summer, it looks like we've invested in plants we may never get to fully use," Ray said.
Regulatory uncertainty also makes it difficult for businesses to know when to make investments. The timing of emission reductions can have a big impact on future compliance costs.
"We did a study that told us the most efficient thing we could do to reduce energy usage was to buy programmable thermostats, install them in our members' homes and businesses, and educate them on how to use them," Ray said.
"But we aren't doing that because we don't know if it will help us or hurt us in the long run because of proposed EPA rules. When will the EPA start counting emission reductions or energy efficiency measures? The uncertainty around that timing is causing businesses to hold off on making investments."
Taking voluntary action on its own
However, the power industry has not been standing still when it comes to reducing carbon emissions. With the availability of large amounts of relatively low-cost natural gas from hydraulic fracturing or fracking, utilities have converted many coal-burning units to natural gas. That market-driven move to natural gas, which has lower carbon intensity than coal, has resulted in a 13 percent reduction in carbon emissions. Georgia Power, the Electric Membership Cooperatives and Electric Cities are also pursuing more zero-emission nuclear power generation.
Flint Energies has pursued renewable energy projects in its service territory including landfill gas or methane plants at the Houston County and Taylor County landfills, as well as solar projects through Green Power EMC.
"We probably have a greater percentage of renewables than other utilities in Georgia," Ray said.
"Fuel diversity is important and we should be including renewables, natural gas, nuclear and coal in our long-term planning; all of the above."
More information on Flint Energies is available at www.flintenergies.com.
