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Co-ops Must Remain Alert to Possible Changes in Federal Clean Power Policy

Randy Sukow Feb 16, 2016

Rural electric cooperatives received what some are calling a “godsend” when the U.S. Supreme Court stayed enforcement of the Environmental Protection Agency’s (EPA’s) Clean Power Plan last week. The court delayed the rules from going forward until lower courts have ruled on several legal challenges to them. The decision delays the closing of several coal-based power generation plants. Some states were bracing for potentially sharp increases in the price of electricity due to the EPA rules.

But panelists at an NRECA annual meeting session today said rural cooperatives certainly should not scrap all plans they made to comply with the rules, including plans to build solar generation and other renewable energy technologies. While the Supreme Court decision bought cooperatives time, it also created significant uncertainty.

  • While the court delayed the federal Clean Power rules, some states are moving forward with their own rules that could burden power providers;
  • Once the lower courts act on their cases – it could take months or years – nobody knows what the EPA will produce if it attempts to rewrite the rules;
  • The sudden death of Justice Antonin Scalia just a few days after the EPA decision removes one of the votes against the rules. The other eight justices split 4-4 on the case. Scalia’s eventual successor could change the direction of the court.

“We were one of the two or three worst-hit states in the country because most of our generation comes from coal. We sit right on top of it,” said Tony Campbell, president and CEO of East Kentucky Power Cooperative. The devastating effects of the rules on the coal industry have spread to touch the state’s economy in general, he said.

But Campbell advocated looking for a “middle ground” with environmentalist advocates of the rules. Cooperatives “really need to be engaged. We can’t go tell the EPA to pack sand. The last time that we did that , there was a Civil War and that didn’t work out so well,” he said. Campbell urged cooperatives to remain at the table and do more to shape any future rules to more manageable terms. The great benefit of the stay, he said, is that it will buy time for coal plants currently in operation to phase out more smoothly without sudden shocks to the economy.

“Time is on our side. When we have time to give the assets to go through their normal life cycle, that helps all of us,” Rob Hochstetler, president and CEO of Central Power Cooperative, Columbia, SC, said, concurring with Campbell. “Perhaps we make some commitment on what the end of life is, but let them run normally. Let’s not talk about reduced capacity factors.”

Hochstetler noted that the availability of other fuels for power generation, especially low-cost natural gas, has done more than anything to reduce the use of coal. At the same time, he advised against over reliance on any single fuel. A spike in gas and coal prices could come in time.

Paul Sukut, CEO and general manager of Basin Electric Power Cooperative, Bismarck, ND, added that natural gas prices are historically volatile. “I think there’s going to be a spike … We’ve got natural gas, we’ve got wind, and we’ve got some other small renewables. To the extent that you can diversify and stay diversified with gas or wind or solar, if it fits for you, and with coal in the portfolio, it’s still the right role for us,” Sukut said.

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