Ameren Comments on Suggested Revisions to the EPA’s Clean Power Plan
Although there has been plenty of discussion in the U.S. power industry about the challenges posed by the Environmental Protection Agency’s (EPA’s) proposed Clean Power Plan (CPP), Missouri-based Ameren Corp. is the first generating company to go public with a specific set of proposed revisions.
On Feb. 11, Ameren released a white paper that proposed what the company calls “constructive and common-sense alterations” to the CPP that are needed to avoid imposing staggering costs on utility customers and significant risks to electric grid reliability.”
White Paper Highlights
The main elements of the proposal are:
- Eliminating the 2020 interim goals and giving states more flexibility to determine the “glide path” toward reaching the final goals.
- Enhancing interim reporting requirements by the states to ensure that progress is being made to achieve the 2030 target.
- Allowing full credit for the retirement of coal-fired power plants.
- Offering states a “reasonable extension of the 2030 deadline if utilities are making substantive progress” toward the CPP’s final goals.
Ameren is clearly hoping to take advantage of all these revisions. A press release announcing the white paper said that, “Under the Ameren GHG strategy, by 2035 Ameren would retire more than 1800 MW (about one-third) of its coal-fired fleet, add approximately 500 MW of renewable generation, extend the license of its 1200 MW Callaway Nuclear Energy Center, add a 600 MW natural gas combined-cycle unit, and continue to offer robust energy efficiency programs.”
The company has been focused on these options and timeframe since the CPP was first announced. Company representatives made the timeframe in particular a key talking point during last summer’s EPA hearings on the proposed plan.
Ameren CEO Comments at Environmental Conference
Warner L. Baxter (Figure 1), CEO of Ameren Corp., commented on the company’s proposal during his keynote presentation at the Energy, Utility & Environment Conference in San Diego, Calif., Feb. 16.
|1. Warner L. Baxter, CEO of Ameren Corp., offered several suggestions during his keynote presentation at the Energy, Utility & Environment Conference in San Diego, Calif., Feb. 16, intended to accomplish the goals of the Environmental Protection Agency’s (EPA’s) proposed Clean Power Plan. Source: POWER/Aaron Larson|
While some experts have suggested that just saying “no” is an option for states in response to the EPA’s proposed plan, Baxter sees a more productive way forward. “I think most importantly, I don’t come here just saying ‘No.’ I come here with some solutions—potential solutions—that we believe will help move the plan forward,” Baxter said.
Baxter suggested that all utilities “want to be good environmental stewards,” but he raised several concerns with the way in which the CPP addresses carbon emission reductions.
He noted that Ameren has a 20-year plan that results in significant changes to its generation portfolio. The plan includes optimization of the company’s existing coal power plants and results in the retirement of one-third of its coal-fired fleet. Baxter said that Ameren has a robust energy-efficiency program and continues to add renewable generation. The company is expanding its natural gas generation capacity and is in the process of extending the license for its Callaway nuclear plant, while keeping open the option of more nuclear in the future. With this type of strategy, Baxter believes his company is doing exactly what the EPA, the Obama administration, and its own customers want utilities to do.
“By us executing our plan, and taking all of these actions over the next 20 years, we will achieve the targets that were established by the EPA in their Clean Power Plan,” Baxter said.
But the reality is that there are some challenges to be overcome. Baxter said that the 2020 target is really where the difficulty begins. In Ameren’s case, the company’s carbon emissions must be reduced 62% by 2020. He noted that in some states, the target requires a 75% reduction by 2020, which creates a regulatory cliff.
“We’re here sitting in 2015. It’s not that far away. And so it becomes a big deal. It becomes a big deal in terms of what you need to do to really achieve those things,” he said.
Likely legal challenges to the rule are a major concern too. Baxter noted that many important operational decisions would need to be made based on the 2020 interim target date, but that the final plan could change based on the outcome of the legal challenges.
Baxter suggested that accelerating the construction of natural gas–fired plants to meet CPP targets would cost Ameren customers $4 billion. He also said that grid reliability would be at risk due to early retirement of coal-fired facilities.
“We want to be a world leader in terms of how we’re addressing greenhouse gas emissions, and we will be, even if we achieve these things in 2030. We will absolutely be a world leader in terms of reductions of greenhouse gas emissions,” Baxter concluded.
Not Just an Ameren Concern
POWER asked Ameren how many other generating companies and states might benefit if the EPA were to adopt the recommendations made in its white paper. Joe Power, vice president for federal legislative and regulatory affairs, responded via email that “Many regions and states would benefit from a responsible plan that helps to ensure reliability. Based on our discussions with other utilities we believe most utilities support our position. In fact,