Sen. Murkowski: EPA Power Plant Rule Threatens Reliability of Electricity Grid

June 5, 2014

WASHINGTON, D.C. – U.S. Sen. Lisa Murkowski, R-Alaska, today said the Environmental Protection Agency’s (EPA) unilateral effort to bypass Congress and impose climate regulations on the economy threatens the reliability and affordability of the U.S. power system.

Sen. Murkowski speaks on the Senate floor about the EPA's proposed climate rule.(Click for video of Murkowski floor speech)

Murkowski, the ranking Republican on the Senate Energy and Natural Resources Committee, made her comments Thursday afternoon on the floor of the U.S. Senate. The full text of her speech is below.

EPA Proposed Rule for Existing Power Plants

Sen. Lisa Murkowski

June 5, 2014

“I’ve come to speak about the latest regulation proposed by this administration’s Environmental Protection Agency. This time the agency’s target is a 30 percent reduction in greenhouse gas emissions from existing power plants by 2030. This is not to be confused with its rules for cooling water intake, or for proposed power plants, or for cross-state air pollution, or for boilers, or for ozone, or for incinerators, or for regional haze, or for fuel economy, or for the ‘waters of the United States,’ or for renewable fuels, or for cement kilns, or for coal ash, or for effluent limitations, or for any number of other regulatory actions the agency has taken or is expected to take.                    

“This rule – perhaps we should call it this week’s or this month’s EPA rule – is a unilateral effort to bypass Congress and force into place policies that we have not approved. The goal is to push our electric supply away from coal, and then ultimately natural gas, as soon as possible.

“As the ranking member of the energy committee, I can attest that energy is always the flip side of the environmental debate.  I believe we should advance policies that make our energy abundant, affordable, clean, diverse, and secure. To that end, our environmental goals must be in balance with our energy needs. And because of this, I have for years expressed concern that EPA’s relentless onslaught will harm the affordability and reliability of our electric supply – in fact, I even released a white paper on the subject earlier this year. 

“We still do not have an accurate accounting of the cumulative costs associated with all of EPA’s rules, but we do know not to trust their math – because EPA has dramatically underestimated power plant retirements in the very recent past. 

“For the Mercury and Air Toxics rule, EPA estimated only 4.7 gigawatts of coal-fired capacity retirements by 2015. In sharp contrast, labor unions forecast that MATS alone would result in 55 gigawatts of coal plant retirements and the loss of some 250,000 jobs. And government experts have determined that approximately 10 percent to 20 percent of existing coal capacity could be retired by the middle of the next decade – a calculation that dwarfs EPA’s numbers and one that does not even include the potential impacts of this latest proposal.

“I recognize that EPA has an important job to do and I appreciate that, but it does not and cannot regulate in a vacuum. Baseload coal and the ancillary services it provides account for almost 40 percent of our power. In many instances, EPA’s regulations will render generating units uneconomic, with compliance requiring retrofitting, the use of best available technology, and downtime for installation. I am greatly concerned EPA’s rules – particularly in combination with one another – will result in a grid that is less stable and less reliable. The cumulative effect of federal regulations on baseload capacity – resources such as coal and nuclear which provide electricity on demand – must be examined and appreciated, not discounted or ignored.  

“I would remind my colleagues that much of the Lower 48 recently had a taste of what life is like during an Alaskan winter. The Polar Vortex caused 50,000 megawatts of power plant outages.  For one key system, 89 percent of the coal capacity that is slated for retirement next year because of an EPA rule was called upon to meet rising demand. Think about that. We had a tough winter and coal facilities were able to step up. The question we should be asking is, what happens when that capacity is gone? Hoping for a mild winter isn’t a viable strategy. We can’t have a-hope-and-a-prayer policy.

“Our nation relies on installed, dis-patchable power generation during extreme weather, which is why we need to ensure grid reliability through a diversity of baseload capacity. Today it is unclear how many plants will retrofit to comply with various EPA regulations, including this most recent one, as opposed to simply shutting down. It is uncertain if there will be enough time – to say nothing of sufficient capital available for investment – to build new facilities or other forms of generation needed to ensure the continued reliability of the grid.

“I am even more troubled that EPA, which has conceded that a single rule may have “localized” effects, has not sought from our grid regulators, FERC and NERC, an analysis of the cumulative impact its rules may have. Instead, EPA appears to be morphing into an industrial planning agency for the energy sector. That’s not what they were designed to do. This latest rulemaking makes it even more important for FERC and the Department of Energy to step up and go toe-to-toe with EPA to protect the reliability and affordability of our power supply.

“The current chairwoman of FERC, while not calling for a formal official role for the commission as many of us would like, is certainly up to that task, in my view. Unfortunately, the White House does not want her in charge. Its nominee to serve as chairman is both short on energy experience and largely unaware of the electric reliability implications of EPA’s rules. In response to a hearing question about grid reliability from Sen. Manchin, the nominee conceded that he ‘has not been following the decisional process at EPA closely enough to know.’

“That response is not only disturbing, it raises the question of whether anyone in the administration is actually following EPA’s process ‘closely enough to know’ what will happen to our electric grid. 

“EPA certainly doesn’t know the impacts for my home state of Alaska. The agency readily admits that its proposal fails to account for the expected costs and benefits for areas outside of the contiguous United States. We’re one-fifth the size of the country. That does not mean my state is exempt from this new rule as some reports have led Alaskans to believe. Instead, without the benefit of any analysis, EPA has directed Alaska to reduce emissions by 26 percent. And this while EPA ignores – totally – the likely inflationary cost increases inherent in requiring the revamping of so much power production, likely within a single decade.

“EPA recommends that states work together to make cuts, but that is more difficult when you are not connected to an interstate electric grid. Alaska is, in many ways, on its own. Because of our constant need for federal approvals or, at best, federal cooperation that is too often slow to come, we are not even able to develop our clean hydropower. Based on more than 50 years of delayed or broken federal promises, there is no guarantee we will be able to fully develop our abundant natural gas or even our vast renewable resource potential. 

“EPA suggests a series of strategies for reducing greenhouse gas emissions. But of the five power plants in Alaska directly impacted by this proposed rule, four are natural gas-fired plants located near each other and Anchorage. The fifth already has clean coal technology. The proposed strategies of switching to natural gas, dispatch changes, or retiring plants are simply unworkable. Given that we live the Polar Vortex each winter, our houses are already well insulated to protect from the cold, so efficiency programs will likely provide comparatively small gains. 

“Although I am still canvassing my state, it seems it will be very difficult for Alaska to reach our 26 percent emissions reduction requirement without serious economic impacts. Electricity is already more expensive in Alaska than in most of the rest of the nation. The average family in the Lower 48 spends 4 percent of their monthly income on electricity. Many Alaskans pay 40 percent to 50 percent of their monthly income to stay warm and keep the lights on. We need to reduce those prices, not push them higher.

“Others have labelled this proposal Obamacare 2.0 – and in many ways, it is. The administration insists there will be no cost increases associated with this rule; all that is missing is an awful website and a pledge that ‘if you like your current electricity bill, you can keep it.’ The president promises that electricity bills ‘will shrink,’ but I’m not buying that. The Wall Street Journal has rightly labeled this a ‘huge tax on the poor and middle class.’ And no one understands what will happen if states refuse to move forward with their own plans. Does anyone really think EPA has the ability to impose its federal will while simultaneously keeping the lights on and power affordable in all 50 states?

“Despite negative economic growth last quarter, and despite far better approaches pending in Congress to promote energy efficiency and energy innovation, the president has decided to push ahead and propose a sweeping new regulation on our still-weak economy. We must keep cost and reliability in mind as regulatory mandates push more and more baseload coal plants offline. FERC must be the unambiguous champion of reliability, with a formal and documented role in EPA’s rulemaking process. Powerful regulatory laws must be judiciously administered. And only Congress, and not EPA, should decide such consequential changes for our energy supply, our economy, and our people.  Anything less is unacceptable, and could very well yield significant negative consequences for a wide variety of American families and businesses.”