Friday, September 9, 2011

Is it possible that we won’t have enough power plants to meet growing demand for electricity? Not without absurd compromises. Not without giving into the anti-coal environmental zealots so that whatever it is we try
To do jeopardizes electric-power reliability. Or are we just going to depend on wind and solar energy to satisfy our electricity needs?

Take the U.S. Environmental Protection Agency’s proposal to establish a maximum achievable control technology standard for mercury and other hazardous air emissions, which was issued in March. It would require utilities to install equipment that is prohibitively expensive or, in some cases, doesn’t yet exist. Utilities would have three years to comply with the standard. But that is not enough time to design and install the necessary emission controls. According to a study done for the utility industry, the combination of this rule and another aimed at reducing nitrogen and sulfur dioxide emissions by 70 per cent by 2025 could force the retirement of as many as 140 coal plants, greatly increasing the cost of electricity.

Do electricity ratepayers have any rights? Of course. But it is up to the EPA to balance those rights against the public-health benefits from curtailing emissions. And it is also EPA’s responsibility before issuing proposed regulations to work together with the Federal Energy Regulatory Commission (FERC), which is charged by law with ensuring generation reliability, to make certain the constraints do not jeopardize electric-power production. But that is not being done.

In letters to Senator Lisa Murkowski (R-Alaska) of the Committee on Energy and Natural Resources,
FERC Chairman Jon Wellinghoff and FERC commissioners clearly stated that no formal assessment has been made of the impact the air-quality regulations would have on the nation’s ability to meet the electricity needs of American households and businesses.

Senator Murkowski said that this is a serious breach of regulatory responsibility. Some energy officials believe the regulatory pendulum has swung too far toward EPA and that the Agency is riding ruthlessly over the public interest.

With the nation’s economy stagnating and 14 million Americans out of work, we can ill-afford regulatory actions that would make matters even worse. Yet EPA is pursuing a no-holds-barred regulatory strategy aimed mainly at coal plants that supply more than half of the nation’s electricity. Those tempted to think that natural gas can replace coal in electricity generation without an adverse effect on the economy should think again. Though natural gas is cheap now, you can be sure that its price will rise sharply as the use of gas increases and the U. S. uses liquefied natural gas (LNG) terminals to export gas to Asian markets. Several LNG terminals are being modified for precisely that purpose.

We can look back to the 1980’s when natural gas prices rose precipitously and those gas companies that had contracted to supply low cost fuel to both electric generation and the chemicals/plastics industry had to declare bankruptcy to discharge those contracts. Natural gas has proven that is too subject to volatility to rely upon it for long-term needs such electric generation and the operation of chemical/plastic facilities. Natural gas is, by its very nature, a fuel that is better suited for short term uses. Reliance upon natural gas for long-term needs has been shown to be problematic.

So it is fair to ask if EPA has calculated the cumulative cost of stricter air-quality standards. A half-dozen major regulations are in the hopper. For instance, the EPA is preparing to regulate carbon dioxide and other greenhouse gas emissions from power plants and large industries. It is planning to issue tougher limits on smog-causing ozone, an action that the agency itself estimates could cost the economy as much as $90 billion annually by 2020. It is considering regulating coal ash as a hazardous waste, would deprive the construction industry of a valuable resource used in road construction and cost tens of thousands of jobs. And it is preparing to mandate the use of expensive cooling towers at new and existing power plants, which would cost an estimated $300 million per coal fired power plant.

Clean air is a worthwhile goal. But electric utilities have made great strides since passage of the landmark Clean Air Act of 1970. Though the use of coal has tripled since I graduated from the WV School of Mines, power plant emissions are down by more than 70%. Acid rain is no longer the issue that it once was. And emissions of nitrogen oxides have been curbed.

The next time a factory in Virginia closes down due to high energy costs; ask yourself if you would have forced utilities to curtail the use of coal. Then maybe it will be time for the pendulum to start swinging back.

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