Arkansas Stakeholders Debate Economic Impact Of Proposed EPA Rules

Six stakeholder groups went back-and-forth Thursday for several hours on the economic impact of the Environmental Protection Agency’s pending regulations to reduce carbon emissions from existing power plants in Arkansas.

The presentations, held at the North Little Rock headquarters of the Arkansas Department of Environmental Quality, are part of the state’s ongoing process to meet the EPA mandate in Arkansas to reduce carbon emissions by 44% – if adopted by the federal regulators on June 1, 2015.

Under President Obama’s so-called Clean Power Plan, the EPA has proposed a 30% reduction in carbon dioxide emissions from existing power plants by 2030 from 2005 levels, mainly targeting the nation’s fleet of more than 600 coal-fired plants that currently supply the lion’s share of the nation’s electricity needs.

The first stakeholder group to make the case that the new EPA would benefit Arkansas consumers was the Arkansas Advanced Energy Foundation (AAEF), which issued a report showing that the state can achieve more than 40% of its carbon reduction target through energy efficiency measures.

Local economist James Metzger, CEO of Histecon Associates, appeared before stakeholders and presented preliminary findings from an AAEF-sponsored report that recent energy efficiency programs implemented by state utilities have resulted in more than $1.5 billion in sales activity and more than 12,500 high-paying jobs.

“We already knew that energy efficiency programs had the potential of having a positive effect on the overall economy in Arkansas,” Metzger said. “With this report, we are able to document for the first time that the potential is already being realized and even more positive impacts have taken hold in Arkansas.”

Metzger said the full report will be released next week. He said it is the first-ever attempt in Arkansas to identify and contact the hundreds of individual companies that work as energy efficiency contractors throughout the state. Based on survey data, the study estimates that 9,000 jobs and $1 billion in sales have been generated by companies doing business in the EE sector. In addition, the indirect impact of this work is another 3,500 jobs in related sectors and output of more than $550 million.

Randy Zook, President and CEO of the Arkansas State Chamber of Commerce/Associated Industries of Arkansas, said he could think of no other public policy issue that is more critical to the economic future of Arkansas than the outcome of the EPA proposed guidelines in Arkansas.

He said the EPA’s mandate, if implemented, will drive up costs, reduce jobs and lower the standard of living for most Arkansans. “This is, in our view, is bad public policy, driven by ideology – not science and certainly not economics,” Zook said.

To support his case, Zook introduced Dan Byers, senior director for the Washington, D.C.-based Institute for 21st Century Energy, which is housed in the U.S. Chamber of Commerce. Byers is the author of the much-referenced nationwide study that warns electric bills will skyrocket and the nation’s economy will suffer if President Obama’s Clean Power Plan is not delayed, drastically changed or halted altogether.

Byers told Arkansas regulators and the stakeholders if the current EPA guidelines are fully implemented, it would end up costing the state $5.4 billion to $7.4 billion a year to comply by 2020, the first step of the “glide path” that would gradually phase in the new rules. Those costs would rise to nearly $9 billion by 2030, Byers said, when the rules would be fully implemented.

“Huge change is coming quickly,” Byers warned.

Duane Highley, president and CEO of Arkansas Electric Cooperative Corp., also advocated delaying the proposed greenhouse gas rules so Arkansas regulators and stakeholders could further study “affordability, reliability and responsibility” of the new rules.

“This calls for not much of a glide path, but a crash landing,” said the AECC chief. “We don’t have much time to make some of these big changes.”

Highley also reiterated to the stakeholder panel that the White Bluff Electric Power Plant in Jefferson County and possibly the Independence (County) Electric Station could close if the proposed rules don’t allow for some flexibility in handling coal-fired power.

He said the cost alone to convert the AECC’s electric generation from coal to gas would be nearly $74 million a year by 2020 and $184 million annually by 2030. Highley closed his presentation by pointing out that the EPA has made no attempts to consult with the Federal Energy Regulatory Commission on the rule’s impact on the nation’s grid system.

“We are asking for more time,” he said.

But Arkansas Sierra Club Director Glen Hooks told participants at Thursday’s meeting that Arkansas must avoid inaction on the EPA rules. “We can best achieve the goals of the Clean Power Plan by transitioning away from the older, dirtier pieces of our coal-fired power fleet and ramping up our investment in clean energy and energy efficiency,” he said. “It makes a ton of economic sense as well as being better for our public and environmental health.”

In his slideshow presentation, Hooks said that Arkansas spends nearly $650 million annual to import Wyoming coal to power the 85% of state’s existing power plant fleet. He said the state could save billions by reducing its dependency on coal and adopting energy efficiency and renewable energy resources.

Other presenters at the stakeholders meeting included Todd Hillman, South Region Vice President for Midcontinent Independent System Operator (MISO), and Dr. James Phillips with the Arkansas Department of Health.

Hillman said MISO does not hold a position on the EPA’s effort to regulate greenhouse gases. However, he said the grid system operator was “uniquely positioned” to study the rule’s impact to the state’s power generation fleet and consumers in MISO’s 15-state footprint. Phillips provided the stakeholder panel with a “health impact assessment” of the EPA’s proposed guidelines, saying financial costs from “dirty air” emissions in Arkansas was nearly $450 million annually.

Thursday’s meeting was the second stakeholder meeting in Arkansas since the EPA announced its proposed rules in early June. The ADEQ and state Public Service Commission have been tasked by Gov. Mike Beebe to oversee the process of developing new rules to meet the EPA mandate in Arkansas.

The public comment period on the EPA docket began June 18 and must be received by federal regulators on or before Oct. 16, 2014. In Arkansas, the proposed rules, if adopted by the EPA on June 1, 2015, would cut Arkansas’ carbon emissions by 44%.

ADEQ Director Teresa Marks said the goal of the stakeholder group was not to reach a consensus, but to look practically at what would work best in Arkansas.

“This rule, we assume, is going to come out as a final (mandate), and we have parameters on what we think it is going to look like,” Marks said. “So, we need to get a jump on planning what is going to work best in Arkansas. It will have a major effect on all Arkansans.”