The EPA Rule: What We Know Today
Utilities have to be prepared to respond to the current situation on the ground. This includes weather events (remember the polar vortex?), fuel supply availability (constraints on natural gas pipeline service and propane shortages), power plant equipment failure, regional market reliability requirements, regulatory compliance, and most importantly our obligation to provide reliable electricity to all consumers.
Early estimates by Wisconsin’s Public Service Commission and Department of Natural Resources of the cost to comply with the Environmental Protection Agency’s (EPA) greenhouse gas (GHG) regulation for existing power plants are in the tens of billions of dollars for the region’s ratepayers. Early estimates from Midcontinent Independent System Operator (MISO), the organization responsible for efficient, reliable and low-cost energy for 42 million electric ratepayers, range from $5-8 billion annually. These early estimates are based on assumptions that will change as the GHG rule evolves.
The EPA recently announced a 45-day extension to its public comment period, giving us until December 1 to communicate concerns and ideas for improvement. Unfortunately, the goal to issue the final GHG rule remains June 1, 2015. Once the final rule is issued, states will have one year to develop their State Implementation Plan or two years if they collaborate on a multi-state or regional plan. That means electric generators won’t know how to proceed until 2016 or 2017.
The proposed EPA rule sets a target to cut carbon dioxide (CO2) emissions from the power sector nationwide 30 percent below 2005 levels by 2030. The rule then sets state-by-state specific reductions; Wisconsin’s goal is a 34 percent reduction by 2030. The most significant challenge is the “interim goal” requiring Wisconsin’s utilities to achieve 87 percent of that reduction by 2020. Given that utilities won’t know what to do until 2016–2017, we’re being asked to make a huge reduction in just three to four years. This will directly affect the rates you pay as utilities are forced to scramble for generation resources that will suddenly be in high demand nationwide.
I sincerely hope what I have described is a worst-case scenario that we can improve by providing constructive, thoughtful comments to the EPA. Electric cooperatives are working with the state’s utilities and regulatory agencies to model impacts and share information with the EPA. We already know the interim goal is simply not doable; we must have a longer timeline. By 2030 more of our existing coal plants will be ready to retire and will have paid off the debts for environmental improvements already made.
Wisconsin utilities have made large investments over the past two decades in energy efficiency and conservation, power plant efficiency, and new and more efficient generation and transmission to address reliability concerns. These actions prior to 2012 count for nothing toward compliance with the pending EPA rule, but we are still paying for them. Moreover, renewable energy Wisconsin utilities own or have under contract in other states won’t be credited toward Wisconsin’s CO2 reduction goals.
These issues will be brought to the attention of the EPA in an effort to improve the rule and lessen ratepayer impacts. You can help by sending an email to the EPA. Visit www.action.coop and tell the EPA your cooperative needs more time to achieve the CO2 reductions required by the rule. Ask them to reconsider the steep interim goal and to credit early actions on power plant efficiency and energy efficiency investments. Tell them the cost will mean immediate hardship to residential and industrial ratepayers, putting people and jobs at risk in Wisconsin.