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June 12, 2014

Proposed EPA ruling could affect power customers

Mayo — Suwannee Valley Electric Cooperative (SVEC) Community Relations Manager Baynard Ward recently gave an informative and interesting presentation on the state of the power industry and the effects of the Environmental Protection Agency’s (EPA) proposed restrictions on coal-firing power plants, which is part of President Obama’s Climate Action Plan. Early estimates state the new proposed rule by the EPA will cost about $50 billion a year and will take away more than 200,000 jobs, Ward said.

SVEC recently held their annual meeting and one of the major topics discussed was the proposed EPA ruling.

“They are really coming after our industry, unfortunately” said Ward. “Our co-op model is something where we try to provide low rates to our members. This proposed rule that they passed is going to negatively impact our ability to provide those low rates.”

Ward said the Obama Administration tried to go through Congress and when that didn’t work he used the EPA to propose this new emissions rule. Ward said it puts standards in place that make it difficult to keep coal-fire generation as a viable option.

The industry, he said, has until 2030 to implement the new standards, which will impose mandated emissions reductions.

“The bottom line is, the best place for the government to be is not in energy policy,” said Ward. “It just clouds everything up...muddies it up,” he added. “The problem is, the technology they are pushing on us doesn’t exist. We’re going to be unable to meet those standards.”

He said over the next several years a lot of coal plants will be shutting down.

“Our argument is, they’re not going to start mining coal, so what are they going to do with that coal?” he rhetorically asked. “They’re going to ship it to China and India who don’t go by the standards that we do to produce energy, so they’re the ones who are emitting a lot more pollution than the U.S., so that’s just going to increase. Overall, it’s not going to affect their mission of climate change positively, we don’t think.”

Seminole Electric

SVEC, as part of a nine-member cooperative, buys their power from Seminole Electric who produces the energy at their coal plant in Palatka, Ward explained.

“It is one of the cleanest coal plants in the world,” he said. “They spent over half a billion dollars in the last five to 10 years renovating that plant to make it a low emissions plant. We’re proud of the fact that even though we use coal as part of our portfolio that it’s a good coal plant.”

Over the last two years, the Tennessee Valley Authority (TVA) has shut down eight coal plants, Ward said.

“So, this is real,” he said. “It’s happening before our eyes.”

About 62 percent (almost two-thirds) of Seminole’s power comes from coal, roughly 30 percent comes from natural gas, and the remainder comes from renewable energy, Ward continued.

“They don’t have much solar right now, but one of the things they’re doing in South Florida is harvesting methane off landfills and using that for renewable energy,” he said. “Seventy percent of SVEC’s cost comes from fuel costs. The other 30 percent of our budget is operating costs. What Seminole pays for fuel, it matters to our members.”

In 1978, the Carter Administration passed a fuel use act on the heels of an oil embargo, which nearly eliminated the use of natural gas for power plants, Ward said, which spurred the use of coal. Thirty years later, there is a large number of coal plants in the country.

“Now, on the whims of whoever is in office, the decisions that they’re making in Washington are going to affect the cost of energy for the next several decades or longer,” said Ward. “The problem is, you can’t just build a power plant.”

Building a power plant is very capital intensive, he said, in the billions of dollars.

“The permitting process takes, sometimes, decades to do,” he added. “Even if we wanted it changed, it’s nothing that we could change overnight.”

Ward explained that energy can’t be stored. When it is produced at a power plant it goes through transmission lines, then to distribution lines and has to be used. They base the amount of energy needed by referring to prior years’ history of usage.

“To make a megawatt of solar energy, it takes about 10 acres of land,” said Ward. “To replace that 1,300 megawatt plant in Palatka, you’re talking about a serious parking lot to provide that.”

Solar is becoming more inexpensive and more of an option, he said, and SVEC is looking to do some community solar projects, but in terms of base load energy need, it just isn’t viable. Also, when looking at a thermal map of the U.S., Florida isn’t as good a site for solar as the southwest part of the country, he added.

“It’s cloudy here,” he said. “Plus, it’s going to work half the day. What are you going to do the other half of the day at night?”

Options

Another issue when you shut down a coal plant is that you have to have something to replace it, which, as Ward stated earlier, it is expensive to build a power plant. This past winter was extremely cold across the country, he said, and the nationwide grid was maxed out.

“If you start taking coal plants out of that equation, it leaves us vulnerable to not having enough electricity for users,” said Ward.

As huge an economic impact the move to eliminate coal plants is, Ward said, you would think there would be a health trade-off to it.

“So far, we’ve been shown no scientific evidence that CO2 is detrimental to your health,” he said. “It’s a natural occurring thing.”

Clean coal technology

There are four plants being built in the U.S. right now as part of a clean coal technology program, Ward said. It is called Carbon Capture and Sequestration (CCS) where CO2 is pumped into the ground.

“None of those four plants have been built,” he said. “They’re all unfinished.”

One of those, the Kemper Plant in Mississippi, was estimated to cost $1 billion to build. Costs are now nearing $6 billion and it still isn’t up and running.

Florida

Because Florida is a peninsula and not bordered on all sides by other states, options are limited as to where energy can be bought if needed.

“We’re kind of on our own and we need the ability to produce electricity,” Ward said. “Overall, what we want to do is maintain a diverse portfolio. We need more natural gas, we need coal, we need nuclear and we need solar. You can’t put all your eggs in one basket.”

He said as soon as coal power goes away and natural gas is used more, the cost of natural gas is going to go up.

“The Sabal Trail Gas Pipeline we view as a positive,” he said.

Some things still need to be worked out, he added, such as property rights and environmental issues as relates to local rivers, as well as public dissent against the project.

There are two gas transmission lines in Florida now and both are at capacity, Ward said.

“If we were to build a plant today, there would not be enough natural gas, more than likely, to feed that plant, so we need additional natural gas,” said Ward.

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