W. Scott RamseyPresident and General Manager of Southern Illinois Power Cooperative
Climate Change Legislation Costly for Consumers
To avoid rate shock, time needed to develop CO2 capture technology
As the U.S. House of Representatives voted on June 26, 2009 to approve the bill HR 2454 the “American Clean Energy and Security Act of 2009” (ACES), many of us were likely working hard, running errands, or perhaps even looking for a new job. But I was glued to my TV set watching C-Span watching the final debate on the proposed ACES bill. I suppose I could have been doing other things, but this bill has me very concerned for our community and our nation. In my 24 years in the power industry, I have never observed the structuring of such a potentially far-reaching bill that will affect every facet of our lives.
The bill’s main focus is to reduce carbon-dioxide (CO2) emissions. The Environmental Protection Agency (EPA) has stated that CO2 is a dangerous gas, which is linked to global warming. The unfortunate news is that CO2 touches all our lives in some way such as mowing your yard, taking that car or motorcycle trip, the fizz in your soda, exhaling when you breath, and of course in the production of goods and services.
As the President and General Manager of Southern Illinois Power Cooperative (SIPC,
www.sipower.org) I see it as our responsibility to generate and deliver reliable low-cost wholesale power to our member distribution-cooperatives and municipal systems in a good portion of Southern Illinois. SIPC serves a population of nearly 200,000 people in our region. As an electric cooperative, owned by its members, whatever it costs to produce and transmit the power to your home is all that a cooperative charges. This legislation, as it stands now, will increase our cost and your bill.
When SIPC recently ran the numbers for our CO2 emissions we estimated an impact to the homeowners in our region of $240-$1,300 per year per home. The cost estimates for this legislation will be changing as it makes its way through the U.S. Senate.
Others are saying the potential increase in the average household electric bill is just the cost of a postage stamp per day, or about $150 per year. However, Illinois ranked No. 3 in the carbon dioxide (CO2) emissions. Only Kentucky (#1) and Minnesota (#2) ranked higher. Needless to say when your state is near the top in the rankings your electric bill is not going to be just average.
The reason for the high rankings is primarily that we get most of our energy from coal. A good portion of the Midwest utilizes coal for electrical power production. While the national average for energy produced from coal-fired generation is in the 50 percent range, in the Midwest the percentage jumps to approximately 70 percent. SIPC produces most of its generation from coal-fired sources with natural gas and hydro rounding out the final numbers.
The current ACES bill would allow trading for a portion of the total CO2 allowances needed to generate electricity. This will introduce speculation by traders and creates more volatility in everyone’s electric bill. We all remember what happened to energy prices in 2008 when we experienced the volatility of record-high gasoline prices.
The second concern is that there are no commercially available, proven and cost-effective technologies we can purchase to install on our generating plants to reduce CO2. We are hopeful that continued research and development will create the solutions necessary to safely capture and store CO2. We’ve been successful before in developing technology to dramatically reduce emissions. However, this legislation does not provide enough time or resources for developing the CO2 capture and sequestration technology.
The electric power industry has been successful in developing the technology to cost-effectively capture sulfur dioxide (SO2) and nitrogen oxides (NOx). Mercury reduction technology has been, or is being, installed nationwide today to help reduce mercury emissions from coal-burning power plants by approximately 80 to 90 percent.
We can work on CO2 emissions too, but the ACES bill does not give utilities enough time. The bill proposes that the rules start in 2012. Obviously, our industry and government have been successful using American ingenuity to reduce SO2, NOx, and mercury. If given the chance we can do it again to control CO2. The bill focuses more on penalizing utilities (thereby penalizing cooperative members), than on assistance to help solve the problem. SIPC would like to see more assistance in solving the problem through technology development and fewer penalties. If we have to spend additional dollars I would hope we would want to spend them on fixing the problem rather than paying a penalty each month.
Renewable energy will be part of the solution and SIPC is a founding member of the National Renewables Cooperative Organization, which will help co-ops nationwide participate in renewable energy projects. But renewable energy will also take time. The simple fact is that just locating an acceptable site and requesting a permit for new renewable generation can take several years. It is highly unlikely that most utilities starting today could have a new hydro dam, wind farm, or biomass plant permitted and in operation by 2012. New renewable energy generation will also require new transmission lines.
In addition to a realistic time schedule, SIPC would like to see a cap, also called safety valve, put on the allowance price so that market speculation and volatility do not create unbearable price increases for consumers. The best solution to avoid market volatility is for the government to issue all allowances needed for SIPC’s emissions and assist in helping find a technology solution to reduce CO2.
I would encourage you to make your voice heard by contacting your U.S. Senators as the ACES bill (HR-2454) moves to the U.S. Senate for debate. Tell them your concerns. Also, visit the Web site www.ourenergy.coop. You can learn more about the issue and easily contact your elected officials. Or you can go to www.senate.gov to contact your senators.
W. Scott Ramsey- President and General Manager of Southern Illinois Power Cooperative. SIPC provides power to Southern Illinois Electric Cooperative, Southeastern Illinois Electric Cooperative, Egyptian Electric Cooperative Association, Tri-County Electric Cooperative, Clinton County Electric Cooperative, Monroe County Electric Cooperative, City of Redbud, IL, and City of McLeansboro, IL. Clay Electric Cooperative will join SIPC in 2010.
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