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EPA Cracks Down on Coal

Like a 10 pound hammer, the impact of the EPA’s Clean Power Plan will be on Alabama’s economy, cry utility companies and Alabama pols.

New EPA rules are forcing utilities to lean away from their coal-fired power plants to embrace less reliable generating options, according to Damon Morgan, chief operating officer for PowerSouth Energy Cooperative in Andalusia.

New EPA rules are forcing utilities to lean away from their coal-fired power plants to embrace less reliable generating options, according to Damon Morgan, chief operating officer for PowerSouth Energy Cooperative in Andalusia.

Representatives of coal-fired utilities and politicians in Alabama have been crying foul since the Environmental Protection Agency unveiled its first-ever proposal to reduce carbon emissions at existing power plants.

In June, the EPA announced the Clean Power Plan, a proposed strategy by which states would design their own plan for lowering carbon emissions from power utilities. The EPA says the goal is to cut carbon emissions from U.S. power plants by 30 percent, below 2005 levels, by 2030.

The EPA, headed by Administrator Gina McCarthy, says power plants are the single largest source of carbon pollution in the United States, accounting for one-third of all domestic greenhouse gas emissions. In fact, many scientists have linked high CO2 levels in the atmosphere to rising global temperatures and sea levels, changes in weather patterns and premature death and asthma in children. 

But coal-fired utilities in Alabama say that the EPA’s plan, should it stand, will be unfeasible, too costly and harmful to the state’s economy.

“We’re very concerned about what it will do to the reliability of the electric grid, because it’s going to basically eliminate the use of coal-fired power plants,” says Damon Morgan, chief operating officer for PowerSouth Energy Cooperative. The company, headquartered in Andalusia, serves more than 1 million customers in Alabama and northwest Florida.

 “We’re concerned about cost of electricity, because to take that amount of capacity that’s generated with coal out of the mix means you’re going to have to replace it with other resources that are typically higher in costs and not as reliable.”

The EPA, however, defends the plan, saying that it gives each state the flexibility to choose how it will meet its target benchmark. Alabama would have to reduce its carbon emissions by 26 percent from the level that existed in 2012, says Ron Gore, chief of the Alabama Department of Environmental Management’s air division. 

EPA has laid out four “building blocks” that it says are already in use by many states and utilities and that collectively offer the best means to lowering carbon emissions.

The first building block would involve making fossil fuel plants more efficient by improving their equipment and processes and finding ways to use less fossil fuels while generating the same amount of electric power, Gore says.

The second strategy is increasing the use of low emitting power sources like natural gas and relying less on coal. But Gore says that historically, utilities have prioritized the use of coal and natural gas based on energy costs at a particular time.

“In the fall and spring, when there’s not a lot of demand for heating and cooling, they will run the large, efficient and relatively new coal-fired boilers, because they make electricity the cheapest,” he says. “Only when you get into the dead of summer or winter, when there is the highest demand for power, do you start cranking up every unit all the way up and down the line until you might have to operate every unit you have in the system, irrespective of how much power costs.”

Alabama Power’s Vice President for Environmental Affairs Matt Bowden agrees, saying that the plan would limit the utility’s ability to operate its generating fleet in the most cost effective manner.

“We currently have the ability to tap into a diverse mix of fuels, natural gas, nuclear, coal, hydro and other renewables and, basically, utilize the lowest cost option at any particular point in time. This proposal is going to require us to rely less on coal, which is typically one of the most cost-effective and abundant fuels that we have, and rely more on natural gas, new renewables and energy efficiency measures.” 

A third benchmark is finding ways to generate electricity that don’t use fossil fuels, Gore says. This can include turning to renewable energy sources such as wind or solar power. 

But PowerSouth’s Morgan says such forms of energy are less reliable than fossil fuels.

“Renewable power is fine, but you can’t count on it if the sun doesn’t shine or the wind doesn’t blow,” Morgan says. “We really don’t have enough wind around here to do any good, so we really have to have something that’s going to be there when we need it.”

Lay Dam, on the Coosa River in Coosa County, was the first of Alabama Power Co.’s 14 hydroelectric dams, which generate 6 percent of the company’s power. 

 

The fourth building block encourages states to put programs in place that reduce demand for electricity. 

“The state, for example, could require residents to buy not just an energy efficient refrigerator but a very energy efficient refrigerator,” Gore says. “So it might cost another $50 to $100, but it would use less electricity than even today’s efficient refrigerator. So, if you can put in programs to require such things as that for your air conditioners,
refrigerators, washers, dryers or anything that uses heat, electric heat, anything that reduces an individual’s demand, you can get credit for that, too.”

The EPA will make final its standards next June. States will then have until June 30, 2016 to submit their plans, with the option of a two-step process for submitting plans if more time is needed. States can get an extension to June 30, 2017.

On Aug. 1, Alabama Power announced that it would close two small coal units at Plant Gorgas, in Walker County. Two more units at Plant Barry, in Mobile County, would cease using coal but remain available on a limited basis using natural gas, and a third coal unit would begin using gas. And at Plant Greene County, Alabama Power says it will stop using coal and begin using natural gas. As a result, the plant will reduce its workforce by half, through attrition and transfers, to avoid layoffs. 

“So, by 2016, we’ll go from 23 units at six plants to 10 units at four plants,” Bowden says. 

Alabama Power acted to meet deadlines on mercury emissions and in anticipation of proposed greenhouse gas restrictions designed to limit the release of carbon dioxide, Bowden says. 

The same day Alabama Power released its statement, Alabama’s two U.S. Senators, Republicans Jeff Sessions and Richard Shelby, sent a joint letter to President Barack Obama and McCarthy, saying that the proposed rule could have a negative impact on jobs in the state.

“The EPA’s proposal, if finalized, would impose enormous costs and burdens on Alabama workers and their families, and would hinder our global economic competitiveness,” they wrote. “The impact will be felt the deepest in states — like ours — where fossil fuels provide a significant share of our electricity generation.”

Several days earlier, in July, Gov. Robert Bentley, who also chairs the Southern States Energy Board, released his own statement, saying, “The new EPA plan will hurt the Alabama economy and force us to comply with Washington mandates that could result in higher electricity bills for Alabama families and business owners.”

The EPA, however, says that in 2030, once the plan is fully implemented, Americans’ electricity bills will be 8 percent lower than they would have been without the states’ plans.

Environmentalists like the Birmingham-based advocacy organization called Group Against Smog and Pollution (GASP) also support the plan. On its website, GASP says, “These new standards are a significant step forward in tackling climate change and protecting our health and our economy.” 

Alabama and 11 other states joined Murray Energy Corp., the country’s largest privately held coal mining company, in filing a lawsuit in June against the EPA’s Clean Power Plan. The group filed a brief with the U.S. District Court of Appeals for the District of Columbia, arguing that the EPA could not regulate an industry for hazardous pollutants under section 111(d) of the Clean Air Act, the basis of the proposed plan, if that same industry is already regulated under another section of the Clean Air Act.

Attorney General Luther Strange, in his statement at an EPA hearing in Atlanta in July, said, “Congress did not intend for the Clean Air Act section 111(d) to have such far-reaching consequences for the American people.

“Those consequences, moreover, would stem from a patently unlawful application of the Clean Air Act,” Strange said. “It would do so at the expense of state authority that is expressly identified and preserved in the Clean Air Act and in the unquestionable jurisdiction of states over intrastate electricity markets.”

University of Alabama environmental law professor William Andreen says that in cases where there is ambiguity in the interpretation of statutes, the courts would likely defer to the EPA. 

“If there was a lack of clarity in the language, the EPA is interpreting this language in the rulemaking,” Andreen says. “I think that if a court were to conclude that the language was not clear, then under Supreme Court precedent, the court is supposed to conclude basically that the question, if Congress didn’t write the statute very clearly, has been delegated to the expert judgment of the administrative agency charged with administering the statute, which is a co-equal branch of government. And the court would uphold the EPA’s interpretation in that case. The Supreme Court has said you must, as long as it’s a reasonable interpretation.”

Gail Allyn Short is a freelance writer for Business Alabama. She lives in Birmingham.

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