Business Roundtable asks Sen. Reid to Intervene

Fortnightly obtained today the following letter from AEP CEO Michael Morris, which was sent to Senate Energy Committee Chairman Harry Reid under the auspices of the Business Roundtable. This is especially interesting given Morris’s work to help craft workable GHG legislation in Congress.-MTB

>>>>>>>>>

The Honorable Harry Reid

Majority Leader

United States Senate

Washington, D.C. 20510

The Honorable Mitch McConnell

Minority Leader

United States Senate

Washington, D.C. 20510

Dear Majority Leader Reid and Minority Leader McConnell:

The Environmental Protection Agency (EPA) has finalized or soon will be finalizing several regulations under the Clean Air Act addressing greenhouse gas emissions from power plants and major industrial sources. While these regulations will be challenged in the courts, the lack of a clear regulatory roadmap for these and future regulations affecting greenhouse gas emissions has created additional investment uncertainty for large portions of the utility and manufacturing sectors of our economy.

EPA and most industry participants agree that the Clean Air Act is not well-designed to regulate ubiquitous pollutants like carbon dioxide emissions, whose impact is global, not local or regional. Congress never envisioned that the Clean Air Act would be used to regulate carbon dioxide emissions and EPA has struggled mightily to tailor a regulatory program for greenhouse gas emissions under the Clean Air Act that makes sense. For this reason, Business Roundtable long has advocated Congressional action and international cooperation to address the climate issue. Without comprehensive legislation and global agreements encompassing other major emitting nations, EPA regulations only will increase energy costs for U.S. companies, thereby reducing their competitiveness in international markets, and drive up consumer costs, while doing little to reduce global concentrations of greenhouse gas emissions.

Unfortunately, it does not appear that Congress will act on comprehensive energy and climate legislation this year. It does have time to enact legislation that would delay the effectiveness of EPA regulations for up to two years, as proposed by Senator Rockefeller, until the next Congress has the opportunity to address the climate issue legislatively. We urge the Senate to do so. A two year delay will give Congress and the Administration time to work with a variety of stakeholders to develop new approaches, such as those advocated by Business Roundtable in its Balancing Act and Unfinished Business studies, focusing on new technologies and efficiency, as promising ways of addressing the climate challenge. A focus on developing needed technologies not only will help reduce greenhouse gas emissions but it will also help develop the industries of tomorrow and result in a more secure energy future.

A vote to delay pending EPA greenhouse gas emissions will provide Congress the opportunity to develop sound policy approaches to address greenhouse gas emissions, rather than default to a poorly designed EPA regulatory approach that is likely to further damage U.S. competitiveness, drive up consumer costs and make an immaterial contribution to reducing global greenhouse gas concentrations. Business Roundtable respectfully urges a favorable vote on legislation that would delay the effective date of EPA regulatory action with respect to greenhouse gas emissions.

Sincerely,

Morris-1

Michael G. Morris

Chairman, President and CEO

American Electric Power, Inc.

Chairman, Sustainable Growth Initiative

Business Roundtable

C: United States Senate

Posted: September 15th, 2010 under Current News, carbon regulation, climate change, coal, energy policy, green energy, regulation.
Comments: 1

Project removed from Appalachian Power’s rate base

Weekly Update courtesy of Utility Regulatory News #3981: While finding it reasonable for the American Electric Power (AEP) system to study various options for complying with possible future federal limitations on greenhouse gas emissions, the Virginia State Corporation Commission has deemed it unreasonable for the ratepayers of an AEP subsidiary, Appalachian Power Co. (APCo), to be responsible for the costs of any such exploratory project, at least at the present time.

In a general rate case, APCo had sought to reflect in rate base $74 million associated with AEP’s West Virginia-based Mountaineer Carbon Capture and Sequestration Demonstration Project. The utility asserted that the project is the first such endeavor to occur at an in-service coal plant and that it is likely to yield valuable information as to the commercial viability of such technology, to the benefit of not only APCo’s customers, but all electric consumers. Although the commission did not refute the possible attributes carbon sequestration might offer, the commission determined that it was inequitable to ask APCo’s customers to pay for AEP’s project.

Given that the project was still in its earliest stages, the commission held that AEP’s shareholders should be the ones shouldering the financial risks of AEP’s research and development programs. Subscribe to URN for the full story.

Posted: August 13th, 2010 under IGCC, R&D, carbon regulation, climate change, coal, energy policy, finance, green energy, regulation.
Comments: none

Gainesville plant ‘not technically needed’

Weekly Update courtesy of Utility Regulatory News #3980: Because a municipally planned biomass-fired power plant project would provide the city with additional fuel diversity as well as various environmental benefits, the Florida Public Service Commission (PSC) has issued the project a determination of need, even though the city was found to have sufficient generating capacity through at least 2023.

In Florida, no entity may proceed with construction of a generating facility rated at more than 75 megawatts (MW) unless it first receives a determination of need from the commission. Although other state and local consents also are required, those authorizations may not be pursued until the requisite determination of need has been obtained from the PSC. In the instant case, the City of Gainesville, through its municipal electric service provider, Gainesville Regional Utilities (GRU), had sought a determination of need from the PSC for a proposed 100-MW biomass-fired station, which it said should be ready for service by the end of 2013.

As support for its proposal, the city noted that a primary power purchase agreement is set to expire in 2013 and that a large coal-fired plant is expected to be taken out of service for scheduled maintenance in the same time frame. According to GRU, the two events taken together would leave the city in a capacity-deficient situation, at least temporarily, although it acknowledged that because of a 15% capacity reserve policy and various other power purchase arrangements, it is unlikely that it will experience any true shortage of capacity before 2023 at the earliest.

The commission agreed that the biomass project was not “technically needed” in order for GRU to maintain reliable service in the short term. However, the commission said that the concept of “need” can be viewed in different ways. From the PSC’s perspective, the biomass unit would contribute to greater fuel and supply diversity, would offer a good hedge against possible future carbon emission reduction requirements, and would provide environmental attributes not available from conventional fossil-fueled plants. Consequently, the commission held that the biomass facility’s ability to replace older, less efficient sources of power with a cleaner, more productive form of generation, while not necessary in a technical sense, nevertheless would satisfy other types of need, such that it was appropriate to issue the formal determination of need. Subscribe to URN for the full story.

Posted: August 13th, 2010 under biomass, carbon regulation, climate change, coal, energy policy, green energy, regulation, renewables.
Comments: none

Business-as-Usual Will Stifle Nuclear, Coal Development

In a letter dated July 21, Duke Energy CEO James Rogers urged Senate Majority Leader Harry Reid (D-Nev.) to “include a carbon title in your base energy bill that allows this country to move forward.” Rogers argued that a business-as-usual approach to carbon regulation would stifle development of new nuclear and coal-fired power plants and make America dangerously dependent on volatile natural gas markets.

Rogers also referred Sen. Reid to a McKinsey analysis that showed U.S. GDP would grow more under a “utility first” carbon regulation scenario than it would without any carbon regulation, and that carbon allowances and efficiency improvements would actually reduce electricity bills on average by 7 percent.

Rogers’ letter arrives just as Senate Democrats were convening to debate whether to include a carbon title in an energy bill sponsored by the majority leader. The San Francisco Chronicle’s website quoted Senate sources predicting that a scaled-down bill would proceed in late July and would not include carbon regulation, but some legislators—including Sen. Joe Lieberman (I-Ct.)—are hoping to retain the carbon title in Reid’s bill.-Michael T. Burr

Posted: July 22nd, 2010 under Current News, carbon regulation, climate change, coal, efficiency, energy policy, green energy, natural gas, nuclear renaissance, renewables.
Comments: 2

Weekly Update Courtesy of URN #3973: The Minnesota Court of Appeals has affirmed a Minnesota Public Utilities Commission (PUC) decision in which the commission had declined to compel an electric utility, Northern States Power Co. d/b/a Xcel Energy, to enter into a power purchase agreement (PPA) with the sponsor of an integrated gasification combined cycle (IGCC) power plant.

The project developer, Excelsior Energy Inc., had touted its Mesaba Energy Project as a state-of-the-art IGCC facility that would be both environmentally friendly and economically productive. Although it had received certain preliminary permits and local approvals for the project, Excelsior was unable to reach agreement with Xcel Energy for purchasing the unit’s output. Excelsior thereupon petitioned the PUC for an order mandating that Xcel Energy sign the developer’s proffered PPA.

In considering the terms of the proposed PPA, the commission undertook a two-part analysis, the first part of which looked at whether the plant qualified as an innovative energy project (IEP) under state law. The commission said that if that first part were answered in the affirmative, then it needed to determine if the associated PPA would be in the public interest. Despite various parties’ claims to the contrary, the PUC declared that the Mesaba project did indeed fit within the definition of an IEP under state law. The commission explained that the IGCC technology was clearly innovative, would use coal as a primary fuel, and would significantly reduce four noxious emissions enumerated in the controlling statute. The commission thus concluded that the project met the basic criteria for IEP status established in the legislation. However, the commission ultimately disapproved the PPA, deeming it to involve an excessive and unrealistic cost structure that could jeopardize Xcel Energy’s financial health if it were forced to enter the agreement. Although the project developer argued that the PUC’s public interest analysis had exceeded its PPA review authority, the court held that the commission was clearly within its rights to conduct such a review, given its obligation to protect the overall public interest and the broad discretion conferred upon it to interpret those laws and regulations which it has been charged with enforcing, such as the IEP statute.

Accordingly, the court refused to substitute its judgment for that of the commission.-Subscribe to Utility Regulatory News for the full story.

Posted: June 18th, 2010 under IGCC, Uncategorized, carbon regulation, climate change, coal, green energy.
Comments: none