5.7. ERMUSR 03-13-2013 - Laserfiche WebLink

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/I IVIUJt Position Statement • Minnesota Municipal Utilities Association The Potential Impact of EPA Regulations on the Electric Industry Background and revise effluent discharge limits by lowering Concern about global climate change has led state discharge temperatures. and federal policy makers to consider the imposi- tion of limits on the emissions of carbon dioxide These EPA proposals collectively constitute the (CO2) and other greenhouse gases (GHG). There largest single imposition of EPA regulations have also been attempts to craft an international on electric utilities, and the largest regulatory approach to climate change through the Kyoto expense, in the history of the electric power conference in 1997 and the Copenhagen conference sector. No complete analysis has been performed in 2009. Despite these efforts and the best of inten- and released to the public to determine what the tions by state legislators and members of Congress, combined costs will be to the consumer. development of an effective and politically accept- able climate change policy has proven to be an ex- Impact on Our Region tremely difficult task. The issues are complex, the In the Midwest, impacts from the pending EPA impact of regulation on local, regional and national regulations will be extensive. One result will be economies would be significant, and new technology the costly replacement of an enormous amount of that will be needed to achieve emissions reductions baseload power from coal-fired generation. The is not yet commercially available. Midwest Independent System Operator estimates that amount to be an incredible12,600 megawatts. Executive Action This relatively sudden imposition of change will In the past few years, the Environmental be particularly onerous to consumers of Minnesota Protection Agency (EPA) has used the Clean Air municipal utilities, which depend on coal Act (Act) to undertake an aggressive campaign generation for more than 70% of their wholesale against coal-fired power generation. On December power needs. Retrofitting these plants with non- 7, 2009, the EPA issued a final finding that existent technologies to control greenhouse gases is greenhouse gases pose a danger to human health not an option, leaving conversion to natural gas as and the environment, clearing the way for a the sole remaining solution. This fuel switching will Clean Air Act regulation limiting carbon dioxide be expensive, to say the least. Some of the plants emissions from power plants, vehicles and other that will be forced to convert still have years left major sources. before their construction costs are recovered from revenues they produce. And the resulting reliance The EPA has outlined more than a dozen major on natural gas as a fuel leaves utilities and their environmental regulations to be imposed on ratepayers exposed to risks inherent in the complex the electric utility industry by the year 2020. natural gas commodity market. Insufficient These air, water, and waste regulations attempt pipeline capacity in the upper Midwest may lead to to accomplish a remarkable list of goals. They shortages and distorted prices. would: reduce hazardous air pollutants (including mercury); reduce GHGs by capturing and storing Our members have assembled a diverse portfolio them despite the lack of commercially deployable of energy resources that include solar, wind and technology to do so; potentially regulate coal ash bio-fuels and are on track to meet Minnesota's as hazardous waste; revise regulations on electric renewable energy standard of 25% energy sales utility water use by imposing new intake devices by 2025. The municipal utility sector has also met (including possibly requiring cooling towers); the energy conservation goal of conserving 1.5% of 14/ 2013 Federal Position Statements