New EPA regulations could have an impact on local business and industry, according to East Kentucky Power Cooperative spokesman Nick Comer. East Kentucky Power is headquartered in Winchester and provides electricity to 16 member cooperatives, largely from coalfi red generators, including units in the Ford community of Clark County, Burnside and Maysville.
But when regulations for the Clean Power Plan are finalized this month, it could change operating practices for the cooperative, and result in higher rates for customers.
“There’s still a lot of uncertainty. There’s still a lot of moving parts,” Comer said.
The Clean Power Plan stipulates that each state must lower carbon dioxide emissions, based on 2005 levels. Targets are different from state to state, depending on fossil fuel dependency. A draft of the plan, part of the Obama administration’s Climate Action Plan, was released in June 2014 and the EPA solicited public comment until June 2014. In Kentucky, emissions must be decreased by 18 percent, based on 2005 levels, by 2030. Within each state, there will be flexibility in how goals are met, Comer said.
“It will increase rates, almost certainly. It depends on the final rule, and how the state implements that final rule,” Comer said.
EKPC has invested billions in coal-fi red assets in recent years. Two new units were built at Spurlock Station in Maysville in 2005 and 2009. Another $2.7 million has been invested in controls at Spurlock.
“We’ve installed scrubbers on three of our units. Those were sizable investments,” Comer said. “What could happen is we are not able to operate those plants as much as we had anticipated.”
For high intensity industry, even small rate increases can mean big costs. According to Comer, Kentucky’s utility rates make it attractive to businesses, like Nucor Steel Gallatin in Ghent, Kentucky, the cooperative’s largest consumer of electricity.
Nucor Steel representatives did not return calls for comment on how rate increases would impact their business.
“In Kentucky, wealth creation is based on energy use. We’re concerned that the Clean Power Plan will drive costs up,” Comer said.
According to a news release from the EPA, power plants are responsible for about one-third of the greenhouse gas emissions in the United States, and the Clean Power Plan provides the first national limits on carbon dioxide emissions.
EPA Administrator Gina McCarthy said in a news release the plan will “sharpen America’s competitive edge, spur innovation and create jobs.”
EKPC’s member cooperatives supply energy to 520,000 homes and businesses, about 1.1 million customers, Comer said.
“We have abundant coal resources, and those have been very affordable to use,” Comer said.
In April, Kentucky had the fourth lowest utility rates in the country, combining residential, commercial, industrial and transportation sectors, according to data compiled by the U.S. Energy Information Administration. Industrial customers paid an average of 5 cents per kilowatt hour.
“There’s a real concern that industries could move not only out of the state, but out of the country,” Comer said.
Coal-fired generators at Clark County’s Dale Station are scheduled to go offline permanently in April 2016. The generators are more than 50 years old and are no longer cost efficient to run because of environmental regulations. About $15 million has been spent bringing coal-fi red generators at Cooper Station in Burnside into compliance.
“If we’re unable to run our coal-fired plants at about 90 percent capacity, we’re not getting that investment. Ultimately, it’s the customers at the end of the line who bear that cost,” Comer said.