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COMMENTARY ARCHVES
   

JANUARY COMMENTARY
by Stephen Freese


Looking Out for Rural Wisconsin

As a leader in the electric cooperative movement, my job is to serve and uphold the interests of every one of our 589,133 member–consumers and the 25 not-for-profit cooperatives they collectively own. It’s the focus on the member—the consumer at the end of the line—that sets electric cooperatives apart. Throughout our rich history electric cooperatives have risen to the challenges of the day. This proud tradition has carried us forward to rise to today’s challenges, including integration of renewables and distributed generation resources; hiring, training, and maintaining a skilled workforce; and promoting a culture of safety. A significant challenge is the ever-increasing onslaught of federal regulations, including expansive environmental requirements.

I was on the job just a little over a month when the EPA announced its Clean Power Plan, a sweeping federal regulation to reduce carbon dioxide emissions from power plants that will drastically change the way electricity is generated in our state and throughout the nation. Under this rule, the U.S. electric power sector must reduce overall carbon dioxide emissions 32 percent by 2030. Without question, this regulation will have significant implications for the delivery of safe, reliable, and affordable electricity. 

The National Rural Electric Cooperative Association (NRECA) estimated that the initial Clean Power Plan would have raised cooperative consumers’ electric rates on average more than 10 percent by 2020 and more than 17 percent by 2025. NRECA is in the midst of a new economic analysis of the final plan to see just how much worse it will be for individual states. Rural Wisconsin could be hit especially hard by rising rates and I fear they will exacerbate the growing economic gap between rural and urban areas, especially in areas served by electric cooperatives where household income is 12 percent below the national average.

The Clean Power Plan will significantly reduce or could effectively end the use of coal as a generation resource in the near future. Electric cooperatives have made great strides using renewable energy resources in recent years, with more than 12 percent of the energy generated by our member-owned generation and transmission (G&T) cooperative, Dairyland Power, coming from renewables. Moreover, Dairyland has surpassed Wisconsin state mandates for renewables by almost 25 percent and has more distributed generation in the Badger State than all other utilities, despite serving only 11 percent of the people. Even so, our generation system has historically relied on coal to meet the growing needs of our membership. The reason is straightforward: Coal is a plentiful and affordable domestic fuel resource.

However, reliance on coal wasn’t a purely economic choice; it was to comply with federal government policy. In the 1970s, industry was directed to use coal out of concern over limited natural gas supplies. Pursuant to the Power Plant and Industrial Fuel Act of 1978, federal policy drove electric cooperatives to coal as the only viable resource in a major power-plant building cycle. As a result, we continue to rely heavily on coal for low-cost, reliable power from facilities built during that era. More recently, our members have made substantial investments in the coal fleet to reduce air emissions in compliance with regulations addressing conventional pollutants. Those investments are now threatened as the Clean Power Plan, ironically, risks making cleaner-operating plants economically nonviable. 

The Clean Power Plan could force a vast and costly transition to replace generation resources while still paying the debt associated with their recently installed pollution controls. EPA acknowledges that the Clean Power Plan will cause some cooperative-owned power plants to shut down. Forced closure of coal-fired power plants still paying loans for construction or upgrades means cooperative member–owners will pay twice for their electricity: once for the shuttered plant and again for the power to replace it.

 

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