The Environmental Protection Agency’s power plant rule jeopardizes the ability of rural electric cooperatives to fulfill their mission to provide affordable, reliable and safe electricity to their consumer-members. Because cooperatives must make business decisions now to comply with the EPA’s power plant rule, the rule will have immediate and irreparable economic consequences if it is not stayed until the courts have had a full opportunity for review.
The National Rural Electric Cooperative Association represents nearly 900 not-for-profit electric cooperatives, including 64 generation and transmission cooperatives and 832 distribution cooperatives. America’s electric cooperatives are not-for-profit, independently owned and democratically governed by the people they serve.
Electric cooperatives provide power to 1 in 8 Americans, or 42 million people across 56% of the nation’s landmass. They own and maintain 2.7 million miles, or 42%, of the nation’s electric distribution lines and serve large, sparsely populated areas. Many cooperative consumer-members are among those least able to afford higher electricity rates. Electric co-ops serve 92% of persistent poverty counties in the United States. In 2022, the average household income for electric co-op members was 12% below the national average.
The EPA’s power plant rule jeopardizes the ability of rural electric cooperatives to fulfill their mission to provide affordable, reliable and safe electricity to their consumer-members. Because cooperatives must make business decisions now to comply with the rule, the rule will have immediate and irreparable economic consequences if it is not stayed until the courts have had a full opportunity for review.
To meet stringent requirements and required retirement deadlines, EPA itself “assumes” the “work” toward achieving compliance will begin in “June 2024.” NRECA’s members must immediately begin taking costly steps to prepare.
The power plant rule requires the use of emissions control technology that is not commercially viable and is currently unachievable. Many existing coal-fired power plants will be forced to shut down. Among the more than 75 coal-fired units that are wholly or partially owned by NRECA members, NRECA knows of only three units that are in a position to even consider attempting 90% carbon capture and storage, two of which are at the same plant.
Building new generation resources and related infrastructure requires many years of advance planning and might require compliance with federal requirements. Timelines for these reviews are unpredictable and can be long, especially if they draw legal challenges. Large capital expenditures can damage a co-op’s credit rating, making it more difficult, more expensive, or both to finance needed projects. While new federal incentive programs, including loan guarantees, grants and tax credits, have been made available to cooperatives, timelines are uncertain. Additionally, costs associated with complying with the power plant rule far exceed any funding available through these programs.
One source of replacement power is to build new natural gas-fired power plants. However, it makes no sense to build an expensive, state-of-the-art power plant and then run that plant less than half the time, as the power plant rule requires for “intermediate” load units. Another option is to build many low-capacity combustion turbines all running at a capacity factor of 20% or less. This is highly inefficient and a tremendous waste of resources for no environmental benefit.
Unlike dispatchable resources that are always available, renewables are intermittent and unpredictable. Renewables cannot be reliably called upon as needed at times of peak demand, which can occur at night, on cloudy days and when the wind is not blowing. Even wind or solar generation that is co-located with batteries cannot be used in the same manner as dispatchable generation, because today’s batteries can only store a few hours’ worth of power.
The final option is to purchase market power. Electricity markets are volatile. The EPA’s power plant rule increases this volatility by forcing the disorderly retirement of always-available generating assets without adequate replacement capacity. This will result in more utilities depending on market power to meet load requirements, all while chasing a shrinking supply of power.
Ultimately, the consumer-members at the end of the line bear the cost of regulations through increased electric rates. Electric cooperatives may not, however, be free to raise rates. Cooperative board members must approve any rate increases, and they are mindful of the effect of rate increases on their members. In addition, cooperatives in 23 states are subject to regulation by state public utility commissions, and eight G&Ts are subject to the Federal Energy Regulatory Commission’s rate regulation.
EPA’s power plant rule would result in the premature retirement of generation capacity at a time when total generation capacity needs to be substantially increased. Already the electric grid is struggling to keep up. The North American Electric Reliability Corp. has pointed to “the disorderly retirement of traditional generation (with its inherent ability to provide essential reliability services and balance energy reserves) as one of the biggest challenges facing the grid.” According to NERC, all or parts of 19 states are at high risk of rolling blackouts during normal peak conditions. And most of the rest of the country is at similar risk when demand for electricity spikes during exceedingly hot or cold temperatures.
Providing reliable and affordable electricity to the consumer-members at the end of the line is an essential component of cooperatives’ mission. EPA’s power plant rule jeopardizes this mission.