Duane Highley: EPA Rule Will Hit Arkansas Harder Than Its Neighbors

On June 2, the U.S. Environmental Protection Agency announced its most sweeping rulemaking yet – one that will affect every American but disproportionately affect every Arkansan. By restricting the use of coal, this rule will change the power-supply infrastructure that your money has built and paid for over the last few decades. Despite its tremendous negative economic impact, the proposed rule will have little or no impact on the environment. However, it will have a major impact on the pocketbooks of Arkansans.

The electric cooperatives of Arkansas are responsible for providing reliable, affordable electric power for 1 million Arkansans representing 500,000 homes, farms and businesses in communities covering almost two-thirds of the state. We are a non-profit business enterprise, owned by the members we serve. Since we aren’t in business to make a profit, we have no financial interest in any one power-supply option over another. We don’t prefer coal-based energy because it helps us make more money; we prefer coal-based energy because it saves our member-owners money on their electric bills, simple as that.

Coal power currently provides the majority of your electric energy. Without coal, utilities will shift heavily to natural gas. This is a problem because, even with the shale-gas revolution, natural gas energy costs about twice as much as coal.

Coal not only helps to keep your power affordable, it also helps keep it reliable. This past winter we faced restrictions in the delivery of natural gas to our power plants in Arkansas, and on the coldest days it was offered at a cost up to 1000% (that’s right, one-thousand percent) higher than normal! At times of extreme weather, a 45-day supply of coal on the ground at your local power plant provides great peace of mind and protection from price volatility.

In its newest proposed rule, the EPA has chosen to set independent carbon dioxide emission standards for each state, based on their estimate of that state’s ability to comply. Quizzically, this has resulted in Arkansas – which emits only 1% of the nation’s carbon dioxide – being asked to make a reduction equal to 5% of the nation’s total reduction target.

Said another way, to meet the nationwide “30% target” reduction, Arkansans will actually be required to reduce our carbon dioxide emissions by over 44%, while our neighboring states all reduce by less. Missouri will only be asked to reduce its emissions by 21%, and Kansas 23%. Why? Because they haven’t built a fleet of gas-based power plants. We did build them in Arkansas, so the federal government has decided that we should use them at a much higher level than is economic, in order to carry the burden of compliance for citizens in other states, all at our expense.

Arkansas will NOT be compensated. The rate impact from this rule in Arkansas will be more than double that in Missouri or Kansas, and higher than any other bordering state.

As we are forced to move away from coal for power generation, the energy will be replaced by natural gas. Reduced energy competition combined with increasing energy demand will inevitably increase the price for this volatile commodity, further increasing your electric bill. Exactly how much it will increase will depend on which EPA-approved method the Arkansas Department of Environmental Quality will choose to restrict the use of coal in the state.

Arkansas communities and schools will bear additional pain in the form of job losses, loss of local economic activity and loss of tax revenues when the existing coal plants cease operation. Many of these power plant jobs are the best jobs in their local community, and their loss will have a devastating impact on the rural Arkansas economy.

It is ironic that Arkansas utility customers are being punished for following federal policy. In the late 1970s, the federal government outlawed the use of natural gas for power generation. Arkansas utilities complied by building a fleet of coal-based units to replace those gas-based plants, paid for by their customers. Now the federal government is asking utility customers to pay again – but this time to shut down those coal-based units and replace them with new plants that burn natural gas.

Whatever your view may be on the science of climate change, the proposed regulations will do little to affect the planet. When fully implemented, the regulations will reduce global emissions of carbon dioxide by less than 1%. This is hardly noticeable on a planetary basis, but it will definitely be noticed by rural Arkansas communities who will deal with job losses, loss of tax base and increasing electric bills.

Citizens have only 120 days to comment on this rule and its impacts. You can help us send a message to the EPA by visiting our website at TellEPA.com. It takes only a minute and can help ensure that the EPA hears from Arkansas before it’s too late.

Editor’s note: Duane Highley is president and CEO of Arkansas Electric Cooperative Corp. and Arkansas Electric Cooperatives, Inc.