AEP $10M investment could go to waste

MOUNDSVILLE — Less than a decade ago, American Electric Power invested more than $10 billion to retrofit the Mitchell and Cardinal power plants and others within the company with “scrubbers” to reduce the amount of carbon dioxide and particulates being emitted into the air.

Now, it appears as if that investment — ultimately paid by customers through higher electricity rates — may be wasted, as new rules proposed last week by the U.S. Environmental Protection Agency require a 19 percent reduction in carbon dioxide emissions from power plants in West Virginia and a 28 percent reduction in Ohio.

The power industry says those targets are unreachable with modern technology for any power plant in our region — save possibly for the new Longview Plant outside Morgantown — to be able to operate past 2030 while still burning coal.

Portions of the United States’ economy were built on having affordable, dependable power sources — power produced in regions such as the Upper Ohio Valley, where coal is plentiful. The proposed EPA rule, for the first time, places that security into jeopardy, as a new report from the U.S. Chamber of Commerce estimates the plan will cost America’s economy more than $50 billion a year between now and 2030. The report also finds the rules will cost America about 224,000 jobs per year.

The report, “Assessing the Impact of Potential New Carbon Regulations in the United States,” gives an “accurate picture of the costs and benefits associated with the administration’s plans to reduce carbon dioxide emissions through unprecedented and aggressive EPA regulations,” said Karen Harbert, president and CEO of the chamber’s Institute for 21st Century Energy.

“Our analysis shows that Americans will pay significantly more for electricity, see slower economic growth and fewer jobs, and have less disposable income, while a slight reduction in carbon emissions will be overwhelmed by global increases,” she said.

Those global increases are expected to rise by 31 percent between 2011 and 2030. However, the Energy Institute’s analysis found that EPA regulations for the United States would reduce the domestic emissions level by just 1.8 percentage points.

It’s not as if emissions levels have not been dropping considerably over the past few years, particularly in West Virginia. A report issued last week by Georgetown University shows that power producers in West Virginia reduced carbon pollution by 22 percent from 2005-2012.

The same report shows that Rhode Island saw its power producers increase carbon emissions by 30 percent during the same time frame.

All of the Above — Except Coal

For those in the energy extraction business, whether it be coal, natural gas or oil, the proposed regulations came as a slap in the face from what President Obama had been claiming over the past few years with his so-called “all of the above” energy policy.

“This proposal is not consistent with the administration’s own ‘all of the above’ energy strategy. The uncertainty created will have a chilling effect on energy investment that could cost jobs, raise electricity prices and make energy less reliable,” said Jack Gerard, president and CEO of the Washington, D.C.-based American Petroleum Institute, whose members include energy giants Chevron, Exxon Mobil and Chesapeake Energy.

A local company that stands to take a direct hit from the proposed rules is Murray Energy Corp., which just last year spent $3.5 billion to purchase five Consol Energy Co. mines in West Virginia. The company currently is suing the Obama Administration in federal court over its implementation of coal regulations.

“The Obama administration’s proposed cap-and-tax mandates are absolutely illegal — and will destroy millions of jobs, cripple the American economy, and cause massive blackouts in this country,” company spokesman Gary Broadbent said.

“This is clearly an illegal attempt by the Obama administration to impose irrational and destructive cap-and-tax mandates, which Congress and the American people have consistently rejected.”

Some in the natural gas industry see the proposal as a good thing. “Natural gas is already providing significant economic and environmental benefits, and the president has repeatedly recognized the role natural gas will continue to play in growing our economy, strengthening our energy security and reducing emissions,” said Marty Durbin, president and CEO of the Washington, D.C.-based America’s Natural Gas Alliance.

Gerard is not so optimistic, as he said the energy industry already faces heavy regulations. He is not sure why the administration is moving in such a direction.

“The uncertainty created will have a chilling effect on energy investment that could cost jobs, raise electricity prices and make energy less reliable.” Gerard said. “Our air is getting cleaner under existing regulations — and carbon emissions are down due to technological advancements developed by the private sector.”

West Virginia University economics professor and director of the Bureau of Business and Economic Research John Deskins offered this thought on the proposed rules: “This is not a law passed by Congress. It can be overturned by electing a president from the opposition party,” he said. should not bear a disproportionate share of the cost of U.S. action to cut emissions,” AEP spokeswoman Melissa McHenry said.