Monday, October 26, 2015

Rural electric co-ops that lack funds to meet Clean Power Plan rules are at the mercy of state plans

Rural electric cooperatives are struggling to finance changes needed to meet the Environmental Protection Agency's Clean Power Plan rules, putting many of the companies in danger of shuttering, Joby Warrick reports for The Washington Post. At the request of the government, the businesses—mostly small nonprofit groups owned by the customers themselves—spent large sums of money in the 1970s to switch to coal-fired plants. Now that the government says to stop using coal, many of the co-ops say they are unable to afford to make upgrades or replacements to meet the new standards.

"The biggest utility companies are expected to meet the new standards with relative ease, in part by speeding up planned retirements of coal-fired plants and investing in natural gas and renewables, such as wind and solar energy But rural electric cooperatives have fewer options," Warrick writes. Smaller companies, such as Seminole Electric Cooperative in rural Putnam County, Florida, "rely on a single coal-burning plant for most of the electricity they provide. Seminole’s customers will be paying down the debt for the company’s existing generating plant until 2042, and officials with the nonprofit utility say they can’t afford to replace it."

"EPA officials acknowledge that the smallest electricity providers face a very different set of challenges compared with larger utilities," Warrick writes. "But they say the Clean Power Plan was designed to give states the flexibility to accommodate the concerns of smaller operators. Among the options available to states is the creation of cap-and-trade networks, which allow older power plants to stay in business by essentially buying pollution-cutting 'credits' from other utility companies that use wind and solar power."

"Separately, the Obama administration has offered loans to rural utilities to help pay for equipment upgrades that save energy," Warrick writes. "Outside experts who have studied the EPA’s regulations say small utilities could survive and even thrive under the new regulations but only if states take full advantage of the flexibility provisions. Some states—particularly those with Republican administrations—have shown little interest in developing the plans at all . . . Florida is among the 26 states that filed lawsuits Friday to block the regulations. States that refuse to come up with compliance plans could be subject to a default plan crafted by regulators in Washington, which could make the problems for rural cooperatives even worse, utilities officials say." (Read more)

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