Posted by Marita Noon @ Brietbart.com
One year ago, Gina
McCarthy, Environmental Protection Agency (EPA) Administrator, announced the controversial centerpiece of the Obama Administration’s
climate change legacy: the Clean Power Plan (CPP). The rule is slated for
finalization this summer.
Unions have
protested against it. The North American Electric Reliability Corporation,
which is the international regulatory body devoted to ensuring outage-free
electric service for Canada, the U.S., and parts of Mexico, as highlighted in a
recent study, believes it risks the reliability of the grid.
States, encouraged by Majority Leader Senator Mitch McConnell, are boycotting it. Yet, the EPA is pushing ahead, touting the
plan’s built-in flexibility for individual states in devising a compliance plan—uniquely
suited to each specific state. If states, as McConnell advocates, refuse to
comply, the EPA will impose a Federal Implementation Plan (FIP).
While no one knows
what the final plan will be, we can be sure that, at the very least, it aims to
severely reduce coal-fueled power generation and dramatically increase the
implementation of renewables such as wind and solar. Industry experts expect
the CPP will possibly force the premature closure of hundreds of coal-fueled
power plants—and that, alone, without factoring in the higher-cost renewables,
will raise costs to all consumers.
The anti-fossil
fuel movement would like us to believe we are just replacing one power source
with another. The problem, however, is far bigger.
After attending a
recent workshop at the Federal Energy Regulatory Commission (FERC), Phillip A.
Wallach, a Fellow in Governance Studies at the Brookings Institute, wrote a report titled: The confounding complexities of the Clean Power
Plan—reliability concerns aired at FERC. In it, Wallach addresses the technical
problems that the CPP will have to overcome—which he calls “staggering.” He,
then points out that “the interplay of federal laws set off by the CPP is
enough to make one’s head spin.” He continues: “It can take a remarkable 12-14
years to site a new high-voltage transmission line. Unless federal regulators
(and possibly Congress) somehow facilitate streamlined development, it is hard
to see how states will be able to achieve big emissions reductions in time to
meet the first compliance goals in 2020. Amidst this cacophony of legal
requirements, states are not currently able to plan for compliance with any
confidence.”
Wallach’s
predictions about the “complex, EPA-mandated process of energy sector
transformation” are hypothetical, but totally believable—especially given the
real-world example of New Mexico’s ongoing experience.
*****
In New Mexico’s
Four Corners region, negotiations regarding bringing the San Juan Generating
Station (SJGS) into compliance with Regional Visibility Rules under the Clean
Air Act have been underway for more than a decade—with the bulk of the
shenanigans taking place during the past five years. Note: SJGS’s back and
forth with the EPA, the New Mexico Environmental Department (NMED), and
anti-fossil groups have been over just one small rule that would improve
visibility in wilderness areas and national parks to such a small degree that
it would not be detected by the human eye. One can easily imagine how this
process would be exacerbated by policy so extensive that it strives to
transform the entire energy sector.
You may want to
just skim over the following abbreviated timeline as it will “make your head
spin”—which is my goal. The reality is far more overwhelming than what I am
presenting here. (Thanks to James Crawford for the use of his background research on the SJGS.)
SJGS is a
coal-fueled power plant near Farmington, NM that produces 1,683 mega-watts (MW)
of electricity through four units. The Public Service Company of New Mexico
(PNM) is the majority owner and takes 783 MW for NM customers. The coal for
SJGS comes from an adjacent coal mine operated by BHP Billiton. The current
contract for coal expires in 2017.
To meet Regional
Visibility Rules, the EPA requires that states develop a State Implementation
Plan (SIP) that must be approved by the EPA. The NMED submitted its first SIP
back in 2003. However, due to evolving regulations, it was never approved.
In 2010, NMED
submitted another, revised SIP but had to withdraw it again due to those
changing regulations. Once again, in February 2011, NMED submitted a new SIP
for EPA approval—which the EPA ruled was invalid because it wasn’t approved by
the required 2009 date.
The EPA further
decreed that because of sue-and-settle cases brought by Wild Earth Guardians
and others, EPA was under court order to implement a FIP by January 2011—which
the EPA did finally issue in September 2011 (well after the SIP submittal that
wasn’t even considered). Now, SJGS was subject to the dictates in the FIP
without any due consideration of the SIP.
The February 2011
SIP called for compliance-achieving emissions controls costing about $80
million. The FIP required a different approach that costs almost $1 billion—or,
PNM could close down two perfectly good, reliable generating units with years
of life left.
PNM and the NMED
filed suit against EPA and, after a couple years of legal wrangling settled on
closing the two units and lesser-cost equipment for the two remaining units. In
September 2013, NMED submitted a revised SIP, which reflected the agreement,
and was approved by EPA a year later.
However, the antis
were not happy with this agreement for replacing the lost electricity which,
for PNM, would be met by assuming a greater share of the electricity from the
two remaining units (remember: PNM didn’t use all that was generated, there are
other owners; some plan to leave), constructing a new natural gas peaking
plant, bringing in nuclear power from Arizona, and adding 40 MW of solar. They
wanted the deficit made up strictly with renewables. (In fact, the antis want
all four units closed—this, after PNM already spent $320 million in 2009 on
extensive emissions remodeling.)
Just before the
October 2014 Public Regulatory Commission’s (PRC) meeting to approve the SIP,
environmental groups filed a series of legal blockades that ultimately changed
the agreed upon plan.
Finally, in January
2015, the PRC held hearings on the plan almost everyone agreed
on—environmentalists protested outside the hearing and demanded the closure of all
four units. Addressing their views, Paul Gessing, President of New Mexico’s
free-market think tank, the Rio Grande Foundation, said: “the radical anti-modern-society types were out in force
… While the PNM plan is not perfect, the radical anti-energy crowd would love
nothing more than to completely kill New Mexico’s economy.”
In April, a hearing
examiner advised the PRC to reject the plan unless changes were made. His
concerns, according to the Associated Press report, were in part because PNM didn’t have a “contract to
provide coal for the plant beyond 2017.” The adjacent coal mine is the subject
of negotiations between current owner BHP Billiton and several proposed new
owners.
On May 5, a deal was struck. Westmoreland Coal Company would purchase the mine and take over operations—resulting in a $300
million savings over the next six years for PNM and its customers. However, the
PRC must approve this deal before the sale goes through.
Business leaders,
coal miners, power plant workers, and elected officials from the Four Corners
area have united in support of the plan that would allow SJGS to continue
operating. At a recent Albuquerque City Council meeting, Ray Hagerman, Four
Corners Economic Development CEO, “emphasized that 740 jobs—400 coal miners and
340 power plant workers—would be jeopardized if the plan is not approved.”
According to the Farmington Daily Times, Hagerman said: “the generating station and the coal mine that feeds it
also represent around 2,400 indirect jobs.” Unemployment in the region would
double.
Because getting all
parties—including minor-percentage owners in SJGS such as the City of Anaheim
and the Utah Associated Municipal Power Systems—on board is essential to
approval of the deal, the PRC voted, on May 27, to give PNM more time to finalize an
ownership restructuring agreement. Sources tell me that many of these co-owners
don’t meet regularly and the new July 1 deadline has the potential to scuttle
the entire decade-plus procedure.
Hagerman believes: “if the utility supplies regulators with the
documentation they need, then approval of the plan is likely.”
PNM spokesman Pahl
Shipley, according to the Farmington Daily Times: “reiterated that the revised
plan, with new tentative agreements in place, represents ‘the most
cost-effective path forward, balancing reliability, affordability and
environmental responsibility. The ownership restructuring and coal supply
agreements would further increase the cost benefit to customers.’”
While there will be
a “cost benefit to customers,” rates will still increase. The PRC hearing
officer “warned that the changes spurred by the partial closure of San Juan
would result in substantial rate increase for customers over the next 20
years.”
In a recent op-ed
in the Albuquerque Journal, Carla Sontag, executive director of the New Mexico
Utility Shareholders Alliance, addressed the cost factors: “It is estimated that the shutdown
will cost about $5.25 a month for the average residential customer. PNM plans
to replace lost power generation with cleaner energy sources and significantly
less coal. Those costs will be filed with the PRC later, and that increase
would take effect in 2018. … PNM recently filed its first rate increase in
almost five years. Beyond the need to maintain system integrity, the biggest
driving force behind the increases is environmental initiatives.” Environmental
groups acknowledge a 7 percent increase to monthly bills.
So, now we wait.
Will the PRC
approve the plan? Will good-paying jobs be saved? Will cost increases be
minimized? Will the anti-fossil fuel groups sue? Will New Mexico have enough
power for the future?
*****
This is a New
Mexico story. It is about just one power plant, in a sparsely populated state.
It is the story of that power plant, in that state, trying to meet just one EPA
regulation dealing with regional visibility—even though improvements will not
be detectible to the human eye. (The American Lung Association’s 2015 State of
the Air report just ranked Farmington number 1 for cleanest
metropolitan areas in the country for 24-hour particle pollution and number 2
for cleanest metropolitan areas in the country for annual particle pollution.)
Under the CPP,
similar scenarios will have to take place in every state, over every
coal-fueled power plant—not with just one regulation, but with a massive plan
designed to transform the entire energy sector. The CPP, which is not yet
final, is supposed to be implemented in less than five years. This New Mexico
story is a taste of what is to come: years of legal wrangling, cost increases
for consumers, loss of good-paying jobs—for reductions in CO2
emissions that will make no temperature difference on a global scale.
It makes my head
spin.
