CO - OP LIVI NG
Growing demand and environmental regulations stress electric rates Higher Power Costs Could Be on the Horizon
By Megan McKoy-Noe, CCC
hirty-five years ago disco was king, personal computers were born, and Americans needed more electricity. To meet this demand, not-for-profi t, consumer-owned elec- tric cooperatives—in partnership with their wholesale power suppliers—built or invested in power plants, mostly coal or nuclear. Unfortunately, many of these plants
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may be forced to make expensive changes to meet increasing environmental regu- lations—and as electric demand climbs again, new generation will be needed to keep the lights on. Some coal-fi red power plants may require modifi cations so se- vere that it will be more cost effective to simply shut them down.
Accelerating Factors
Consumers, adding more plugged-in devices daily, already pay more for elec- tricity. The average annual residential electric bill has risen $263.40 since 2005, with electricity use outpacing effi ciency efforts. Despite the recession, U.S. homes on average used an additional 50 kilo- watt-hours (kWh) every month between 2009 and 2010; retail electricity sales rose 4.4 percent.
Americans aren’t the only people us- ing more power; as worldwide energy use
grows, resource competition (and prices) shoot up. By 2035, global energy con- sumption, primarily in China and India, will jump 53 percent from 2008 levels. In spite of increasing energy needs, 37,600 megawatts (MW) of older coal-
fi red power plants are slated for retirement by 2018. The North American Electric Reliability Corporation (NERC), an Atlanta, Ga.-based organization charged with overseeing reliability of the electric grid covering the United States, most of Canada, and the Mexican state of Baja California Norte, pre- dicts a worst case scenario of environmental regulations may force coal plants generating up to 54,000 MW of additional power to shut their doors by 2018. New power plants could offset this loss, with natural gas taking center stage. The National Energy Technology Laboratory (NETL), a branch of the U.S. Department of Energy focused on advancing national, economic, and energy security, predicts 20,000 MW of natural gas facilities will start operating this year, with another 28,000 MW proposed for 2013. A strong breeze from wind project proposals may add 42,000 MW this year and 28,000 MW in 2013—but only if federal production tax credits continue.
Shifting Fuel Focus While about half of the nation’s electricity comes from burning coal, co-ops rely more heavily on the fossil fuel—approximately 80 percent. Why the differ- ence? The majority of co-op coal power plants were built between 1975 and 1986, when using natural gas was prohibited by the federal Powerplant and Industrial Fuel Use Act.
6 OKLAHOMA LIVING Regulation Risks
“Environmental regulations are shown to be the number one risk to [main- taining electric] reliability over the next one to fi ve years,” reports NERC’s 2011 Long-Term Reliability Assessment.
Why the concern? Because steps required by EPA rules have the potential to cost the industry billions of dollars and don’t provide enough time to comply. “Regulation on top of regulation, and court decision on top of court deci- sion, have compounded the situation to the point that we now have contra- dictory regulations and court decisions that don’t make any sense,” explains NRECA CEO Glenn English. “Our nation needs to adopt a balanced, common- sense approach to environmental protection that factors in electric reliability and affordability.” NRECA has been actively urging EPA through comments, testimony, and litigation to consider the negative impacts of increased electric power costs on consumers as it continues to move forward with its rulemakings. Electric cooperatives are leading the way to fi nd affordable solutions to America’s electricity demand. Find out how you can help at www.ourenergy. coop.
Megan McKoy-Noe writes on consumer and cooperative affairs for the National Rural Electric Cooperative As- sociation, the Arlington, Va.-based service arm of the nation’s 900-plus consumer-owned, not-for-profi t electric cooperatives. Steve Johnson and Jennifer Taylor contributed to this article.
Photo couresty Karen Kaley/Cotton Electric Co-op
WFEC is a generation and transmission cooperative that provides essen- tial electric service to 23 member cooperatives, Altus Air Force Base and other power users. WFEC’s coal-fi red facility is located in southeastern Oklahoma. The Hugo Plant can provide up to 450 MW of electric power.
Now, a series of U.S. Environmental Protec- tion Agency (EPA) regulations impacting cool- ing water intake structures, coal ash disposal, interstate transport of air pollutants, and haz- ardous air pollutants like mercury are affecting all electric utilities. In most cases, co-ops will need to retrofi t coal-fi red plants with costly pollution control equipment; in others, co-ops could opt for early plant retirements. “Time is tight—improvements take time and new technologies have to be tested before go- ing mainstream,” says Kirk Johnson, senior vice president of government relations for the National Rural Electric Cooperative Associa- tion (NRECA), the Arlington, Va.-based service organization for the nation’s 900-plus electric cooperatives. “We’re deeply concerned that EPA’s strategy to require significant change within very compressed timelines may be un- achievable and could damage the economy of rural America and affect service reliability.” Seeing the handwriting on the wall, co-ops have taken action. Over the last decade, power supply co-ops have invested $3.4 billion to boost plant performance and limit emissions. In fact, since 1990, power plant emissions of ni- trogen oxides and sulfur dioxides—compounds formed by burning fossil fuels—dropped at least 67 percent nationally, even as electricity use climbed 38 percent. And the large-scale expenditure isn’t over. Another $4 billion has been slated for upgrades through 2021, with the bulk of the money—$2.18 billion—marked for work this year and next.
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