By Bill Dawson
Texas Climate News
Think Texas’ industry-friendly political leaders were echoing the state’s electric-power industry when they blasted the Obama administration’s emission-cutting rules for power plants this week? If so, think again.
Texas’ electricity producers were generally more positive about the new Clean Power Plan to fight climate change than were harshly critical officials in top government positions.
To nobody’s surprise, the state’s leading elected officials came out swinging at the administration’s regulations to reshape the nation’s electricity-producing system to cut atmosphere-warming carbon pollution.
Gov. Greg Abbott said the rules will batter consumers with “higher energy prices” and “cost thousands of jobs.” Attorney General Ken Paxton said the economic harm to Texas will be “immeasurable.” Sen. Ted Cruz alleged that the very science of manmade global warming – the reason for the new regulations – is marred by falsified data.
Anyone who is not attuned to the diverse and competitive character of the electric-power industry might well assume those anti-regulation declarations were in sync with an industry stance that’s also uniformly critical of the Clean Power Plan.
Taken as a whole, however, the reactions by a number of major companies that produce electricity in Texas did not resemble the government officials’ unsparing negativity and dire predictions. Dallas-based Luminant, which has a coal-heavy fuel mix, was the one company whose reaction was reviewed for this article that did closely echo the officials’ remarks.
In contrast, other companies’ responses – nuanced, varied and sometimes tentative as they were – included numerous positive comments about the Clean Power Plan in the final form unveiled by the administration.
Those reactions reflected companies’ differing business strategies – their diverse “fuel mixes” today and their varied plans for the relative amounts of coal, natural gas, renewable and nuclear generation they may use in the future.
The Clean Power Plan aims to boost power producers’ use of renewables and, to a smaller extent than federal officials originally proposed, natural gas. It aims to decrease use of coal, the dirtiest fuel used to make electricity, both in terms of its emissions of heat-trapping carbon dioxide and its emissions of smog-forming and other so-called “conventional” air pollutants.
Here’s a sampling of public comments by some of the major power companies operating in Texas about the final version of the Clean Power Plan, issued this week:
Houston-based Calpine, which calls itself “America’s largest generator of electricity from natural gas and geothermal resources,” issued a statement saying it “supports” the Clean Power Plan.
Based on statements by President Obama and the [Environmental Protection Agency], it appears the plan mandates significant but achievable CO2 emissions reductions while giving the states broad discretion in how to achieve those goals. Specifically, the plan provides a framework that will allow states to adopt a market-based approach to achieving reductions, easing the states’ burden while allowing market economics to decide the best mix of generation resources to achieve the goal.
In marked contrast to the warning of skyrocketing electricity costs by Abbott and Paxton, Calpine predicted the Clean Power Plan’s “emissions reductions will be realized in a manner that ensures continued affordable and reliable electricity.”
Houston- and New Jersey-based NRG, which operates a fleet of coal and natural gas plants, has already been boosting its investments in renewable sources and carbon-capture technology in recent years to cut its CO2 emissions 50 percent from 2014 levels by 2030 and 90 percent by 2050.
For instance, NRG acquired Austin-based Green Mountain Energy, an early provider of electricity from renewable sources, in 2010 and operates it as a subsidiary.
NRG had faulted the initial draft of the Clean Power Plan for a “dash to gas” in the plan’s then-stricter requirement for companies to switch from coal to natural gas. It warned that this emphasis on natural gas – understandably welcomed by the natural gas industry in Texas, but criticized by many environmentalists suspicious of claims about the fuel’s climate-protection potential – would “create unintended consequences that will prevent essential long-term carbon reductions.”
That post on NRG’s “Executive Blog” last October said that instead of natural gas, the company “sees renewables, carbon capture, and innovative distributed energy technologies as the foundation of a clean energy economy that can thrive without risking catastrophic climate change.”
Reacting to the final plan this week, NRG welcomed what it said was the EPA’s responsiveness to suggested changes, and the final rules’ “increased emphasis on replacing conventional generation with more renewables” (which chimes with the company’s own emphasis on renewables).
We are withholding additional comment until we have fully reviewed it, but one thing we support is its ultimate emissions reduction goal. The EPA’s emission reduction target for 2030 is less aggressive than our own corporate reduction goal of 50 percent by 2030. Indeed, our own fleet’s emissions have already gone down since 2005 by 40 percent, more than the EPA’s goal for 2030.
While Austin residents Abbott and Paxton were denouncing the Clean Power Plan, the capital city’s publicly-owned electric utility, Austin Energy, declared that it “applauds” the plan’s effort to “move the nation forward with national climate goals” and reiterated its prior commitment to renewables and carbon-free nuclear power:
We are scheduled to get 55 percent of our power by 2025 from renewable sources, and a large part of the remainder from a nuclear plant that produces energy without carbon dioxide emissions.
The municipal utility noted that it and Austin City Council have launched a plan to begin retiring its largest CO2 producer, a coal plant in Fayette County, in 2022, and that it has “invested millions of dollars in energy-efficiency measures.”
Such actions, taken before the Clean Power Plan’s release, should earn credit in a still-to-be-developed state blueprint for future reductions of CO2 under the plan’s rules, Austin Energy said. The Clean Power Plan grants states flexibility to devise their own such plans to meet different emission-reduction goals that it assigns.
San Antonio’s publicly owned CPS Energy, like Austin Energy, has been moving to reduce its carbon footprint with steps such as retiring coal plants years ahead of schedule and adding lower-CO2 natural gas and CO2-free wind and solar to its generation mix.
Thirteen months ago, the San Antonio utility was already saying this strategy would allow it to help meet the Clean Power Plan’s overall goal for CO2 reduction in Texas, but stressing – just as Austin Energy did – that it wants official credit for its early and ongoing action.
This week, Doyle Beneby, the CPS president and CEO, issued an optimistic statement about Texas’ ability to handle the Clean Power Plan’s requirements that contrasted with state officials’ warnings of damage to the state economy:
We at CPS Energy have been on a steady path to diversify and reduce the carbon output of our generation fleet. With the best market structure, low energy costs, and vast renewable and natural gas resources, Texas is uniquely positioned. After final resolution of the Clean Power Plan, we look forward to working with the state to continue taking a leadership role in carbon reduction.
Dallas-based Luminant, which describes itself as “the largest competitive power generation company in Texas,” maintains coal-fired generation – targeted for reduction nationwide by the Clean Power Plan – as the predominant part of its fuel mix.
The company’s generating capacity is a mix of 52 percent coal, 33 percent natural gas and 15 percent nuclear. Natural gas typically plays a smaller role, however. Luminant says its coal and nuclear units “generally operate continuously at capacity” and its natural plants “help meet variable consumption because they can more readily be ramped up or down as demand warrants.”
In 2012, for instance, that meant coal accounted for 70 percent of its power production, nuclear for 28 percent and natural gas for just 2 percent.
Of the companies’ statements reviewed for this article, Luminant’s reaction to the final Clean Power Plan rules was the most similar in tone and particulars to the critique lodged by Abbott and Paxton, and to earlier warnings by Texas officials regarding the plan’s alleged threat to electric-system reliability.
Luminant, for example, echoed government officials’ charges of federal “overreach” and their warnings of economic damage, saying it would study to plan’s final version to see if, like an earlier draft, it “exceeds the confines of the Clean Air Act” and “inflicts severe impact on the affordable, reliable power sector driven by market forces that serves Texas so well.”
The final rule, to be workable, must respect Texas’ unique intrastate electricity sector and dynamic competitive market. The proposed rule did not account for these factors, with its huge cost increase for consumers, unrealistic dispatch of coal to natural gas and mandate for a massive build out of renewables — without crediting Texas for its significant and nation-wide leading investments in renewables to date — that would threaten reliability.
American Electric Power
The Ohio-based American Electric Power, or AEP, has operations in Texas and 10 other states. Like Luminant, it has a coal-heavy mix of generation sources, though it has been moving to add natural gas units and proclaims its concern about climate change and its reductions in CO2 emissions.
The company issued a statement about the Clean Power Plan saying its ongoing commitment to make more such cuts will have resulted by the end of 2016 in retiring or changing the fuel source at 28 coal-fired plants. The statement was otherwise guarded:
The initial compliance target has been extended to 2022. That’s positive because it provides more time to evaluate how the individual state plans will collectively impact the reliability of the transmission grid. But simply moving the date forward a few years won’t be enough to address the negative reliability impacts if the initial reduction targets are still too stringent. We are still evaluating the state-specific reduction targets to determine how difficult they would be to achieve for the states where we operate.
In a CNBC interview, AEP’s CEO, Nicholas Akins, sounded a more positive note about the plan, saying it will help attack pollution-caused climate change:
I think it will be good for the climate. As we progress toward the emphasis on renewables and energy efficiency, we’ll be able to make and adapt to changes through the power system in terms of resources to enable a cleaner energy environment from a carbon perspective.
Houston Business Journal reported that Houston-based Dynegy, which it noted had “closed on the acquisition of multiple coal-fired power plants in April,” was refraining from comment on the Clean Power Plan while reviewing its details.
The EnergyWire news services reported that CEO Robert Flexon of Dynegy, which operates both coal and gas plants, had asserted earlier this year that the Clean Power Plan should recognize “there’s a role for coal in the generation mix.”
While the plan would reduce coal-fired generation of electricity in the U.S., it does not aim to eliminate it. The plan’s first of three “building blocks” for reaching its emission-cutting goals involves more efficient operation of coal plants.