By Michael N. Couick, president and CEO, The Electric Cooperatives of South Carolina
On June 2, the Environmental Protection Agency announced a proposed rule related to carbon dioxide emissions from existing power plants. More than 2,000 pages long, the Clean Power Plan is one of the most elaborate rules created by the federal agency.
Unfortunately, the proposed rule, as currently drafted, is not workable for South Carolina. If left unchanged, the EPA proposal will have significant adverse impacts for our state’s economy and consumers, especially low-income residents. After extensive study, our detailed modeling predicts the proposed plan will raise electricity costs for South Carolina consumers by 15 to 25 percent. However, our analysis also shows that reasonable, common-sense modifications to EPA’s methodology in the final rule can make the Clean Power Plan more feasible for power providers, consumers and our state’s economy.
What the EPA is asking of South Carolina
South Carolina must make the largest carbon intensity reduction in the nation – a 51 percent decrease by 2030. The EPA proposes an increase in utilization of four “building blocks” to meet the new standard:
- Nuclear energy
- Natural gas
- Renewable resources
- Energy efficiency
Each building block has a future role providing power to consumers across the country. However, the EPA’s proposed rule does not adequately capture the reality of South Carolina’s resources and constraints.
New nuclear under construction
South Carolina is serving as a national model for the transition to a less carbon-intensive economy. SCANA, Santee Cooper and the state’s electric cooperatives are already investing billions of dollars in the clean energy movement by building two new nuclear-generating facilities in Fairfield County. These are the first of a new breed of technologically advanced, efficient and carbon-free generating units under construction in the United States in more than 30 years.
However, the EPA’s proposed rule gives South Carolina no credit for these proactive and sizable investments in clean energy. The proposed rule assumes these two yet-to-be-completed 1,100-megawatt nuclear units are already operational and producing electricity. In practical terms, this means South Carolina power providers and consumers will be penalized for these multibillion-dollar investments. Curiously, if the nuclear project in Fairfield County were instead yet-to-be-completed solar or wind projects, South Carolina would be able to use the carbon-free energy to meet the EPA’s proposed 51 percent reduction target. We believe this inconsistent treatment of zero-emitting resources is unwarranted and unfair for South Carolina.
Natural gas infrastructure
The Clean Power Plan assumes natural gas will assume a larger share of South Carolina’s energy portfolio. We recognize new discoveries of this homegrown resource are providing enormous benefits to the country’s energy needs.
Unfortunately, switching to natural-gas-generated electricity is a limited option for South Carolina. There are only three natural gas pipelines in the entire state, and the pipeline companies that serve South Carolina report their pipelines are “substantially full” and fully subscribed. This means additional pipeline facilities are required for our state to obtain the natural gas necessary to modify existing plants and/or build new plants.
The cost of these expensive pipeline expansions and upgrades will be passed directly to South Carolina consumers in the form of capacity charges. Furthermore, the amount of time required to build new pipeline infrastructure will not allow South Carolina to meet the EPA’s reduction targets in the timeline proposed by the rule.
Energy efficiency and renewable resources
South Carolina’s electric cooperatives are national leaders in the study of whole-house efficiency programs. We understand energy efficiency programs provide economic benefits for our consumers while also reducing demand for energy. The EPA’s rule suggests South Carolina can reduce carbon dioxide emissions by 10 percent through efficiency measures. However, our most optimistic estimates suggest South Carolina may achieve about half what the EPA proposes on a cost-effective basis.
Lastly, when the EPA studied the future use of renewable resources like solar and wind in South Carolina, the agency used data from North Carolina to make assumptions about their availability and use in our state. A lack of state-specific data regarding renewable resources is another troubling inconsistency in the proposed rule.
Getting it right
The proposed rule allows each state to develop specific implementation plans – something we are already working on in South Carolina. This process allows electric cooperatives to work collaboratively with state agencies, other power providers and special interest groups to find creative, commonsense solutions that benefit both consumers and the environment.
