Harsh winter reveals necessity of coal

For the past three months, millions of Americans on the East Coast have endured constant freezing temperatures, regular deluges of snow, and expensive heating and electric bills. Pulling out all the stops to keep the East Coast’s lights on, utilities and grid operators employed every source of power they could to stave off dangerous brown outs.

Unfortunately, many of the coal-fired power plants that kept the East Coast running are being forced to shutter their doors due to Environmental Protection Agency (EPA) regulations. In early January, around 75 percent of Southern Company’s coal power plants scheduled to retire were called upon to generate electricity. The Tennessee Valley Authority set new records for electricity demand at the same time that nearly 20 of its coal-fired generating facilities are scheduled for retirement.

With 300 units and 44,295 megawatts of coal-fired electricity going offline due to EPA policies, case studies and anecdotes abound about the vacuum that will be left in their absence. Prohibitive EPA regulations banning new coal power plants from being constructed mean that this void will be filled with natural gas electricity. Although the shale revolution has brought previously unthinkable amounts of natural gas to market, the recent cold snap illustrates how depending on one energy source is precarious policy.

Because of temperature driven demand, natural gas prices have reached their 5-year high. Extrapolating on the implications of $6 per thousand cubic feet of gas, the Washington Post warns of a $400 gas bill:

“Utilities are warning homeowners that they are about to get hit with a double whammy — higher natural gas prices and consumption, both of which have been driven to five-year peaks by the Arctic cold that gripped much of the country in recent weeks.

Con Edison in New York estimated that the typical home-heating customer would see a gas bill this month of $388, which would be nearly 17 percent above last February. Older homes, like many in the Washington area, are much less energy efficient and could run up even steeper bills.”

When East Coast Americans receive their second or third consecutive $400 gas bill, they will take notice. During the next cold snap, when Americans foot an even larger gas bill once natural gas plants replace 300 coal power plants, they will be livid. The worst part is, this consumer pain and reliability anxiety is largely self-induced, or more accurately, EPA induced.

Looking to mitigate expensive gas bills and buttress grid stability, today the House will vote on the bipartisan Electricity Security and Affordability Act introduced by Rep. Whitfield (R-Ky.) in the House and Sen. Manchin (D-W.Va.) in the Senate. Current EPA regulations require that new coal-fired power plants meet greenhouse gas (GHG) standards that are largely unattainable.

The EPA found the only full-scale coal-fired power plant with Carbon Capture Storage (CCS) technology under construction in the United States and held all new coal power plants to this standard. Minimal scrutiny reveals the EPA’s folly. The Kemper County CCS plant that the EPA GHG regs are based on is the benefactor of unique circumstances. It received $270 million in Department of Energy funding and sells its carbon to nearby oil producers allowing the plant to reduce its income tax liability by another $133 million. It is safe to assume that very few coal plants will qualify for DoE grants, which is fine, and be able to sell their carbon for oil production or other qualifying activities. It is also worth noting that the Kemper County plant is now going to cost $5 billion – its initial estimate was $2.8 billion.

The Kemper County’s incomparable attributes help take the sting out of the Obama Administration’s estimated $400 million to $900 million price tag for CCS technology. When it is all said and done, CCS technology can increase the cost of coal plants by 80 percent, a price increase no utility or merchant generator can justify spending.

The Electricity Security and Affordability Act will realign the EPA’s GHG standards with realistic targets that are based on actual functioning coal plants, not economic anomalies. Rep. Whitfield’s legislation also requires Congress to sign-off on the imminent GHG regulation for current coal-fired power plants. That’s right, even more coal plants might turn the lights off after more punishing EPA regs are released.

In the Democrat controlled Senate, it is unlikely Majority Leader Harry Reid (D-Nev.) will allow Sen. Manchin’s legislation to come to the floor. Luckily, Sen. Mitch McConnell (R-Ky.) is planning on using the Congressional Review Act to attempt to nullify the GHG rule, a move that Sen. Reid cannot block and only requires 51 votes to pass. Speaking about the EPA rule and alluding to legislation like the Electricity Security and Affordability Act, Sen. McConnell charged:

“When the President is faced with bipartisan opposition to things like his desire for a national energy tax, he simply avoids the elected legislature to make sweeping regulatory changes. He’s added a mountain of new regulatory burdens that have hurt ordinary people and his administration wants to add more that could further weaken the economy and cost good jobs.

Let’s hope the recent cold snap jars Democrats out of their EPA deference. Once these coal plants go offline, they will not be reopened. The time to act is now. The House should be applauded for taking up legislation to roll back crippling EPA regulations that will increase American’s electricity bills.

 

http://www.forbes.com/sites/chrisprandoni/2014/03/06/harsh-winter-reveals-necessity-of-coal/?ss=business:energy