CPS Energy Confident in Compliance with New Carbon Emission Rule

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The Environmental Protection Agency (EPA) long-awaited draft rule to cut carbon emissions across the U.S. by 30 percent by 2030 was released Monday. The rule is the federal government’s first-ever initiative to regulate carbon emissions, which some are calling a historic step . The EPA directive takes aim at more than 600 active coal-fired power plants nationwide.

Though the rule attaches to “fossil fuel” plants, it has an implied direction towards coal combustion, which releases the most carbon into the atmosphere, causing global climate change.

Some utilities, public representatives and lobbyists have begun to push back against the rule, while others seems more accepting of the terms. CPS Energy will not likely oppose the measure. Instead, said CPS Energy Executive Vice President Cris Eugster, the municipally-owned utility “has already embraced a low-carbon strategy that anticipates this rule.”

If the rule makes it through the anticipated political and legal battles to the EPA’s finalization process by mid-2015, the 30 percent carbon emission reduction will come from the aggregated, state-by-state reduction. State implementation plans, in turn, will be due by June 2016.

Each state will have an EPA-mandated goal and set of guidelines.  Texas is looking at a possible 20-25 percent reduction requirement, but the final requirement will be negotiated as federal and state officials finalize the rule. The implementation plan and CPS Energy’s cut of the statewide reduction will be determined by the Texas Commission on Environmental Quality. Because CPS Energy already has invested heavily in low-carbon options, CPS Energy expects little to no difference between the standards it has imposed on itself and what will be required of the utility by the new rule, according to Eugster.

“We’re hoping we get credit for the work we’ve already done in that regard,” he said.

CPS Energy anticipates a 25 percent reduction in overall carbon emissions by 2020, the equivalent of 4.6 million tons of CO2. Eugster credited CPS Energy President and CEO Doyle Beneby’s foresight in scheduling the early retirement of the Deely coal plant as a major step towards achieving the comfortable carbon position CPS Energy enjoys today compared to coal-dependent companies. Instead of retrofitting the plant with $550 million worth of pollution control mechanisms, CPS Energy decided to close the coal-fired Deely Power Plant by 2018 to invest in expanded solar generation and its cleaner coal technology at the Spruce Plant.

CPS Energy and San Antonio have stayed “ahead of the curve,” Eugster said, because of continued investment in renewables, the Save for Tomorrow Energy Plan (STEP), smart grid/metering technologies and building a diverse energy portfolio.

Graph courtesy of CPS Energy. Between 2010 and 2020, the Deely Plant, a traditional coal-fired plant will close and be replaced with a lower-carbon natural gas plant.

Graph courtesy of CPS Energy. Between 2010 and 2020, the Deely Plant, a traditional coal-fired plant will close and be replaced with a natural gas plant.

“Officials will spend the next several weeks studying the hundreds of pages that comprise the new greenhouse gas limits proposed today by the Environmental Protection Agency, but thanks to its proactive approach, it appears CPS Energy is on a path towards compliance,” CPS Energy said in a statement.

In 2010, about 45 percent of generated electricity for CPS Energy customers came from coal. With the closure of Deely and other investments in natural gas and solar, CPS Energy projects that figure to drop to 34 percent, under the current national average of 42 percent.

The costs associated with increased generation and future projects have already been incorporated into the existing rate structure, Eugster said. EPA’s announcement will not mean an increased electricity bill for CPS Energy customers.

“We’re looking at this as cost neutral for us,” Eugster said.

Officials at the Environmental Defense Fund hailed the new rule as “basic common sense” in a recent blog post, but recognized that the new rule may be, at first, a hard pill for many utilities to swallow.

“Right now we hear a lot of utilities and states resisting, yet this is an opportunity to modernize within the utility sector, find ways to profit from energy efficiency and renewable energy, and improve the air quality and health of local citizens,” said Kate Zerrenner, clean energy project manager for the EDF’s Austin office. “CPS Energy has already taken proactive steps to decarbonize its energy portfolio, proving that clean energy is profitable and sustainable for utilities. Others in Texas and across the nation would do well to take notice.”

The draft rule allows for a great measure of flexibility in terms of how states can comply – a shift away from plant-by-plant regulation. A variety of mechanisms will be allowed, including renewable energy, energy efficiency, demand and response improvements, or implementing a cap and trade arrangement.

The EPA’s new rule will also shift jobs away from the coal industry – a commonly-cited concern by traditional energy companies and economists.

“Those jobs will transition to the new energy economy,” Eugster said, citing CPS Energy’s “transitioning workforce plan.”

To those that would continue to be fearful of skyrocketing bills, reliability of service, or the loss of jobs, EPA Administrator Gina McCarthy said at a news conference on Monday: “They’re wrong … we have never nor will we ever have to choose between a healthy economy and a healthy environment.”

While the rule would symbolically (and historically) set the stage for a substantial federal commitment to combat climate change, McCarthy emphasized that the federal government is actually behind the game. “The clean energy revolution has been unfolding in front of us,” she said. Cities and states are the ones driving change.

“This is not just about disappearing polar bears and melting ice caps,” said McCarthy. ”This is about protecting our health and it’s about protecting our homes. This is about protecting local economies and it’s about protecting jobs.”

The EPA estimates that the average utility may have to spend as much as $8.8 billion per year to comply with the new rule, but the benefits of a cleaner, healthier environment – an estimated $93 billion in health care and other savings – far outweigh those costs. According to the EPA, the rule will allow the U.S. to “avoid up to 6,600 premature deaths, up to 150,000 asthma attacks in children and up to 490,000 missed work or school days.”

This rule would become the cornerstone of President Barack Obama’s commitment to environmental sustainability and combating climate change. After the U.S. Congress defeated a climate bill in 2010, Obama directed the EPA to write this rule – in effect circumventing the ideologically divisive debate in Congress.

“Although we limit pollutants like mercury, arsenic, sulfur – currently there are no limits on carbon pollution from power plants, our nation’s largest sources (of carbon emissions),” McCarthy said. “We have a moral obligation to act on climate.”

 

*Featured/top image: The San Antonio skyline beyond rows of solar panels. Photo courtesy of UTSA.

 Full disclosure: The Arsenal Group, which published the Rivard Report, conducted a four-month review of CPS Energy communications for the utility in 2012. Monika Maeckle, a former member of the The Arsenal Group and wife of Robert Rivard, now works at CPS as its Director of Integrated Communications. 

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  1. Liz Robbins via Facebook

    Please make the surface under those solar panels roof tops… I hate when the solar panels are placed over wildscapes…

  2. James D

    Well, imagine that. These new-fangled evil anti-merikun unaffordable bidness-harmin regulations are likely to be –cost-neutral– for an energy provider that already has some of the most competitive rates in the nation.


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