With Congressional inaction on a national energy policy, the balance of power has tipped to federal regulatory agencies, the head of one of the country's largest electricity generators said Tuesday.
Nick Akins, president and CEO of American Electric Power, said that's complicating the future for consumers, states and electricity generating companies.
Increased production of natural gas and issues with emissions from coal plants means the company, which operates in 11 states, including Oklahoma, is moving to a broader mix of fuel for generation.
AEP is the parent company for Public Service Co. of Oklahoma, which has more than 527,000 customers in the state.
“Congress can't get anything done, so it's left to the administrative agencies to promulgate rules, and in some cases those rules are not realistic,” said Akins, who spoke at a panel on energy transitions at Oklahoma City University's Meinders School of Business. “It's going to take some time to move toward a different portfolio mix in the future. AEP is moving from predominantly a coal-fired generator to one that's more balanced.”
But Akins said timelines by the Environmental Protection Agency to deal with coal-plant emissions are much too aggressive. Installing scrubbers or decommissioning coal plants too fast will mean higher rates for utility customers and could jeopardize electricity reliability, he said.
“In my opinion, AEP will probably not be building a coal-fired plant in our portfolio,” Akins said. “About 65 percent of our electricity generation is coal. We need to move away from that. These older, smaller coal plants will be retired and predominantly replaced with natural-gas fired plants.”
Meanwhile, the United States isn't alone when it comes to transitioning to new fuel types for electricity, said Gregory Staple, CEO of American Clean Skies Foundation. He pointed to German Chancellor Angela Merkel's abrupt decision to decommission the country's 17 nuclear reactors in the wake of last year's Japanese disaster involving the Fukushima reactor.
“On the one hand, this provides a remarkable opportunity, on paper, for alternative sources of fuel like natural gas, renewables and coal, which Germany has relied on for a long time,” Staple said. “They face the same dilemmas we do to ensure it's clean coal.”
Staple said the discussion over how to replace nuclear energy in Germany has made German businesses nervous, since industrial users already pay high rates for electricity compared to the United States. But German manufacturing is less energy intensive than manufacturing in North America, he said.
“Abundance alone is not a winning strategy,” Staple said. “Electricity prices alone are not the bugaboo. Politicians are concerned about price shocks. They may not be here after the next election. Guess who will be? All of us. So energy policy needs to look beyond the next election.”
Staple said energy policy is an intergenerational process and takes time. Broad standards are needed so consumers, regulators and companies can respond to changes in technologies, energy efficiency and national priorities.
“Set mid- to long-term goals and stick to them,” Staple said. “Investors and consumers don't like uncertainty. These are long-lived assets we're talking about in the electricity sector for generation.”