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For Immediate Release: June 19, 2012
Contact: Rob Thormeyer, 202-898-9382, rthormeyer@naruc.org

Utility Regulators Encourage Flexibility in EPA Rules

WASHINGTON—New environmental rules must take into account regional differences and consumer costs, the National Association of Regulatory Utility Commissioners told Congress.

In testimony today to the House Energy and Commerce Committee’s Subcommittee on Energy and Power, NARUC President David Wright of South Carolina said new rules from the Environmental Protection Agency seeking to reduce emissions from power plants should be more flexible and provide enough time so utilities and their consumers are not overburdened.

The proposed EPA rulemaking on greenhouse gas emissions, for example, “raises concerns regarding resource diversity, consumer costs, and uncertainty for existing resources,” President Wright said. “These concerns are heightened if one considers previous and future EPA rules that have, or will have, an impact upon electric generation reliability, consumer costs, and resource diversity…”.

While noting that NARUC does not have a position on the merits of the GHG rule or any of the agency’s other proposed regulations, President Wright said the greenhouse gas proposal could impact resource diversity. This is because the proposed emission standards are based on combined-cycle natural gas plants and apply not only to gas units but coal-fired plants as well.

This could result in an over-reliance on natural gas for new power plants, President Wright said. And although gas prices are low now, one should not count on that trend to continue.

“The proposed [greenhouse gas rule] identifies the current trend of low natural gas prices,” President Wright said. “The price of natural gas, however, like any commodity can be volatile—the more dependent a system is on a particular fuel, the more risk to the consumer from this volatility.”

Moreover, this will prevent States and utilities from promoting a diverse portfolio of generation resources, President Wright said. It will also likely raise costs because the rule essentially requires any new coal plants to be built with carbon capture and sequestration technologies.

Unfortunately, these technologies are costly, as “even the best-performing coal units cannot [meet the new standards] without CCS,” President Wright said. “A commitment to resource diversity would encourage a separate [standard] for coal-fired plants and natural gas combined-cycle units, keeping the categories separate as they have been historically.”
 

NARUC is a non-profit organization founded in 1889 whose members include the governmental agencies that are engaged in the regulation of utilities and carriers in the fifty States, the District of Columbia, Puerto Rico and the Virgin Islands. NARUC's member agencies regulate telecommunications, energy, and water utilities. NARUC represents the interests of State public utility commissions before the three branches of the Federal government.