EPA’s rules could lead to regional changes

MOUNDSVILLE – Less than a decade ago, American Electric Power invested more than $10 billion to retrofit the Mitchell and Cardinal power plants and others within the company with “scrubbers” to reduce the amount of carbon dioxide and particulates being emitted into the air.

Now, it appears as if that investment – ultimately paid by customers through higher electricity rates – may be wasted, as new rules proposed last week by the U.S. Environmental Protection Agency require a 19 percent reduction in carbon dioxide emissions from power plants in West Virginia and a 28 percent reduction in Ohio.

The power industry says those targets are unreachable with modern technology for any power plant in our region – save possibly for the new Longview Plant outside Morgantown – to be able to operate past 2030 while still burning coal.

Portions of the United States’ economy were built on having affordable, dependable power sources – power produced in regions such as the Upper Ohio Valley, where coal is plentiful. The proposed EPA rule, for the first time, places that security into jeopardy, as a new report from the U.S. Chamber of Commerce estimates the plan will cost America’s economy more than $50 billion a year between now and 2030. The report also finds the rules will cost America about 224,000 jobs per year.

The report, “Assessing the Impact of Potential New Carbon Regulations in the United States,” gives an “accurate picture of the costs and benefits associated with the administration’s plans to reduce carbon dioxide emissions through unprecedented and aggressive EPA regulations,” said Karen Harbert, president and CEO of the chamber’s Institute for 21st Century Energy.

“Our analysis shows that Americans will pay significantly more for electricity, see slower economic growth and fewer jobs, and have less disposable income, while a slight reduction in carbon emissions will be overwhelmed by global increases,” she said.

Those global increases are expected to rise by 31 percent between 2011 and 2030. However, the Energy Institute’s analysis found that EPA regulations for the United States would reduce the domestic emissions level by just 1.8 percentage points.

It’s not as if emissions levels have not been dropping considerably over the past few years, particularly in West Virginia. A report issued last week by Georgetown University shows that power producers in West Virginia reduced carbon pollution by 22 percent from 2005-2012.

The same report shows that Rhode Island saw its power producers increase carbon emissions by 30 percent during the same time frame.

All of the Above – Except Coal

For those in the energy extraction business, whether it be coal, natural gas or oil, the proposed regulations came as a slap in the face from what President Obama had been claiming over the past few years with his so-called “all of the above” energy policy.

“This proposal is not consistent with the administration’s own ‘all of the above’ energy strategy. The uncertainty created will have a chilling effect on energy investment that could cost jobs, raise electricity prices and make energy less reliable,” said Jack Gerard, president and CEO of the Washington, D.C.-based American Petroleum Institute, whose members include energy giants Chevron, Exxon Mobil and Chesapeake Energy.

A local company that stands to take a direct hit from the proposed rules is Murray Energy Corp., which just last year spent $3.5 billion to purchase five Consol Energy Co. mines in West Virginia. The company currently is suing the Obama Administration in federal court over its implementation of coal regulations.

“The Obama administration’s proposed cap-and-tax mandates are absolutely illegal – and will destroy millions of jobs, cripple the American economy, and cause massive blackouts in this country,” company spokesman Gary Broadbent said.

“This is clearly an illegal attempt by the Obama administration to impose irrational and destructive cap-and-tax mandates, which Congress and the American people have consistently rejected.”

Some in the natural gas industry see the proposal as a good thing. “Natural gas is already providing significant economic and environmental benefits, and the president has repeatedly recognized the role natural gas will continue to play in growing our economy, strengthening our energy security and reducing emissions,” said Marty Durbin, president and CEO of the Washington, D.C.-based America’s Natural Gas Alliance.

Gerard is not so optimistic, as he said the energy industry already faces heavy regulations. He is not sure why the administration is moving in such a direction.

“The uncertainty created will have a chilling effect on energy investment that could cost jobs, raise electricity prices and make energy less reliable.” Gerard said. “Our air is getting cleaner under existing regulations – and carbon emissions are down due to technological advancements developed by the private sector.”

West Virginia University economics professor and director of the Bureau of Business and Economic Research John Deskins offered this thought on the proposed rules: “This is not a law passed by Congress. It can be overturned by electing a president from the opposition party,” he said.

The Environmentalist View

Michael Brune, executive director of the Sierra Club, a longtime opponent of the coal industry, said President Obama “made good on his promise to American families that his administration would tackle the climate crisis, and clean up and modernize the way we power our country.”

The Sierra Club calls coal an “outdated, backward, and dirty 19th-century technology.” According to Open Secrets.org, the Sierra Club donated $452,010 to various Democratic candidates for Congress in 2012, but gave $0 to Republicans.

“Until now, power plants have been allowed to dump unlimited amounts of carbon pollution into our air, driving dangerous climate disruption, and fueling severe drought, wildfires, heat waves and superstorms,” Brune said.

The Sierra Club’s statement on the new rules also notes that carbon pollution “sickens our children and costs billions of dollars each year in emergency room visits, lost productivity and premature death.”

“The Sierra Club and our 2.4 million members and supporters stand with President Obama and EPA Administrator Gina McCarthy. In the month ahead, we will work to ensure a strong and just standard for cutting carbon pollution. In doing so, we will protect the health of our children, boost our clean energy economy, and help American communities thrive,” Brune added.

Impact on Power Plants

AEP now provides coal-fired electricity to residents in Ohio, Marshall, Belmont, Jefferson, Harrison and Monroe counties, with much of this power generated at the Kammer and Mitchell plants in Marshall County and the Cardinal Plant in Jefferson County. The company already plans to close the Kammer facility by June 2015.

“Climate change is a global issue, and some states should not bear a disproportionate share of the cost of U.S. action to cut emissions,” AEP spokeswoman Melissa McHenry said.

Along with Kammer, McHenry said AEP will retire more than one-fourth of its coal-fired power over the next few years. She said those remaining in operation, such as the Mitchell and Cardinal plants, have already received “more than $10 billion worth of emission controls that were installed to meet other EPA requirements.”

“The investments that our customers made in these plants should not be prematurely lost when ultimately, it will have no impact on growing global greenhouse gas concentrations,” McHenry added.

FirstEnergy operates the W.H. Sammis Plant in Jefferson County, while providing electricity to Brooke, Hancock, Wetzel and Tyler Counties via its Mon Power subsidiary. The company also still runs the R.E. Burger Plant in Shadyside on a reserve basis.

“It is too soon to say what, if any, modifications would be required at FirstEnergy’s coal-fired plants, as the regulation is only in the beginning stages. There are many details still to be determined as the regulatory process plays out over the next several years,” FirstEnergy spokeswoman Stephanie Walton said.

“Following our initial review, FirstEnergy believes it is in a good position to meet the requirements outlined in the proposed rule. As proposed, the rule provides states with reasonable flexibility and gives an adequate compliance timeline,” she added.

Through it all, Deskins emphasized the destinies of coal mines and the electricity plants that burn the mineral remain uncertain.

“Coal jobs are very important to our economy. However, if this leads to more natural gas production, there could be some offset,” he said.