ST. GEORGE – On June 2, the United States Environmental Protection Agency, or EPA, proposed a plan to address carbon pollution from certain power plants in the United States. Enforcement of these policies are causing several Southern Utah power companies to re-evaluate their business plans regarding coal powered plants and how it impacts their customers, and could cause power rates to double.
According to EPA.gov, The Clean Air Act lays out distinct approaches for new and existing sources under Section 111: a federal program for new sources and state programs for existing sources. EPA is using its authority under section 111 of the Clean Air Act to issue standards, regulations or guidelines, as appropriate, that address carbon pollution from new and existing power plants, including modifications of those plants. This section of the Act establishes a mechanism for controlling air pollution from stationary sources.
The regulations will impact coal mines and power plants, which is where Dixie Power gets 80 percent of it’s power, Dixie Power CEO Ladel Laub said.
“We can’t afford to eliminate coal just yet. We need to live out the life expectancy of those facilities before we transition into something different,” Laub said. “What we’re saying no to is the EPA trying to limit or eliminate the use of coal-fired generation and we’re saying we need to use all of the resources we have available.”
Although Dixie Power gets the majority of its power from a coal fired plant, the company has other resources available, Laub said. There is a large allocation of power out of the Glen Canyon Dam; there is power out of the local hydros; the Quail Lake generation plant that’s associated with the Sand Hollow Reservoir; there’s a solar farm by the waste water treatment plant in St. George; and also some output from a geothermal project in the Escalante Valley.
As to the impact on rates that shifting away from coal will have, Laub said:
If we limit coal today, and we still have to pay for it, then our rates are going to go up. There’s no question about it. Even if we limit to half of what we’re doing, then we’re going to have to replace that power with something else. So we have that cost, but we still have to pay the debt service because nobody is going to pay that for us and that would cause our rates to more than double. We don’t think that’s in the best interest of our economy and our members. All we’re saying to the EPA is ‘hey back off a minute, let us use these resources as they were planned and are expected to be used, and let us transition over time into other resources.’ That will allow us to have things more streamlined, and with less of a rate impact. Rates will probably go up over time, but not drastically up.
The EPA is looking to have power companies start to make the transition by 2020 and meet the goal by 2030, but Laub said he believes that time frame is way too short and will have a maximum impact on Dixie Power customers. He said:
In the late 1970s, there was an energy crisis where the government thought we were going to run out of natural gas. So they told all of us utilities to invest in coal, because we had plenty of coal and that’s what we needed to do to solve the energy crisis. So in good faith, we invested in a coal mine and a rail road and a power plant that burns coal and a transmission line, and we built the latest and greatest technology there was. It’s a very clean, clean plant in terms of coal. The issue with that, is that it’s a very long term investment. When you make that kind of investment, it’s billions of dollars that takes time to pay back. It’s a 40 to 50 year investment. We put all our stock in that, following the lead of the federal government. Currently, we’re about halfway through the life expectancy of that plan.
Dixie Power operates as a co-op, which essentially means that the business is owned by the customers, and that the profits from the business they bring in go back into building the stability and infrastructure of the company itself rather than into shareholders’ pockets.
“Give us time to react, give us time to adjust. Don’t cut us off midstream and force us to do something that’s very expensive,” Laub said. “When I say expensive, it’s not expensive to the company, because the company are the members. When I say expensive, that just goes right to the users of electricity. That benefit or that consequence goes directly to them, there’s no pocket it goes in, there’s no corporate pocket it goes in, it goes directly through to the users.”
Bryce Bird, Director of the State Division of Air Quality, has been tracking how these regulations will impact power not only in Southern Utah, but across the state.
“Under the President’s climate action plan, one of the focuses was reducing emissions of carbon from the power generating sector,” Bird said. “So the EPA in response to that plan proposed two rule makings to address that, one for new electrical generation and establishing new carbon emissions limits for new power plants, and the second was looking at improving the efficiency and reducing the emissions from the current fleet of power plants as well. For both rules, it covers all power generation, but it does at different limitations and for the existing power plants rule, it’s a term that they call the ‘best system of emission reduction.’
“Each state was given a different target, and to meet that target in Utah, we’ll have to reduce our coal-fired generation and replace that with additional renewable or natural gas combined cycle or energy efficiency improvements,” Bird said.
“Because Utah is a growing state, the end result may not be that we’re actually shutting down any additional coal fired power plants, but it will probably mean that we won’t build any new coal fired power plants in the future,” Bird said. “The overall plan is to reduce the carbon emissions from the power sector. They (the EPA) have stated that there will still be coal fired generation, but as we make our future plans with a target of 2030 for Utah, our carbon emissions are to be 27 percent lower than they were in 2012.”
Right now, the plan has been proposed and is out for public comment. They’re taking these comments until Dec. 1, and then they would like to publish the final requirements in June of next year.
“We just want to make sure that the state is well informed, and that we’ll be capable of meeting those goals without impacting greatly the cost of electricity in the state,” Bird said.
The City of St. George also heavily relies on coal to generate power for the city, but not to the extent that Dixie power does.
“I’m confident that we’ll be able to find a solution for our customers, but coal up to this point has been a steady, affordable power,” James Van Fleet, of the St. George Energy Services Department said. “These power plants have to work with the EPA to meet those goals. We also have a natural gas plant here in town that we control, we also have hydro from the Colorado River, we have solar from our SunSmart field. We have well diversified portfolio of resources so that if one does increase, the others should help flatten it out.”
Because of the low rates Dixie Power and other power companies have to offer, they’ve attracted business from out of state to build facilities in St. George. Viracon, which already has a very storied history in Dixie, chose to build one of their plants at least in part because of those power rates.
“We love Utah, we love St. George. The community is great, the workforce is great, we had no issues getting people to relocate as we had about 15 people relocate from our Minnesota facility to St. George,” Monte Mitchell, Viracon’s senior vice president of administration said. “We did look at the electric rates in St. George, that was a factor – that, with the freight rates, was a part of our decision to locate in St. George.”
For more information on the EPA and the Clean Air Act, you can visit their website.
To send a comment regarding these regulations, you can follow the instructions on this page to fax, mail, or email the EPA.
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