An environmental compliance plan by Public Service Co. of Oklahoma to end its use of coal in the state will cost too much money for the utility's customers and limit fuel diversity, a researcher for a libertarian think tank said Thursday.
The paper by the Washington-based Competitive Enterprise Institute was released at a forum on the costs of federal environmental regulation hosted by the Oklahoma chapter of Americans for Prosperity.
At the forum, Oklahoma Attorney General Scott Pruitt and U.S. Rep. James Lankford, R-Oklahoma City, said the Environmental Protection Agency and the Obama administration were exceeding their authority on a number of environmental rules affecting electric generating plants and their ratepayers.
Pruitt, whose office is involved in several lawsuits against the EPA, said the Clean Air and Clean Water acts were drafted with the idea that states would be involved.
“There was a recognition that states had to be a viable partner,” Pruitt said. “States had to be the regulators under those acts because, after all, states are concerned about the safety and health of their citizenry and they know better how to balance the competing effects we see in the environmental arena than someone in Washington.”
Among the rules Pruitt is fighting is regional haze, which governs power plant emissions that affect visibility at national parks and wilderness areas.
Pruitt said regional haze is about aesthetics, not safety and health. Because of that, it is unique among environmental laws in that it allows states to do cost-benefit analyses for compliance. Pruitt said the state's plan for regional haze, which was rejected by EPA, reached compliance 15 years earlier than the 2064 deadline.
“They rejected it out of hand and they did so because I believe the EPA has an anti-fossil fuel mentality,” Pruitt said. “They started with coal, and now it's reached natural gas. ... You see that permeating the EPA's approach to these laws. That's the reason I think they are rejecting, and dismissing and not respecting, the role of the states.”
Lankford said with gridlock in Washington, he's concentrating on Congress' oversight of federal agencies. The idea that Washington regulators know what is best for Oklahomans is insulting.
“These battles are not solved easily or quickly, but they have to be solved because they affect ratepayers in Oklahoma,” Lankford said. “This can be done in a way that we're both guarding our environment and protecting it for the next generation, but also making economic sense.”
Oklahoma's two biggest investor-owned electric utilities, PSO and Oklahoma Gas and Electric Co., are taking different paths on regulations for regional haze.
OG&E, along with Pruitt, is fighting the regional haze rule in court. A three-judge panel of a federal appeals court in Denver last month ruled 2-1 against OG&E and the state on regional haze. Pruitt and OG&E are expected to file for a rehearing before the full 10th U.S. Court of Appeals before the Sept. 3 deadline.
PSO came to a settlement last year with the EPA, the Oklahoma environment secretary's office and the Sierra Club. PSO wants to retire one coal unit at its Northeastern Station plant near Oologah by 2016, and then install emissions-control technology on the other coal unit before retiring it by 2026.
PSO estimates its environmental compliance plan will cost more than $350 million and raise customer rates by about 11 percent starting in 2016.
William Yeatman, assistant director of the Center for Energy and Environment at the Competitive Enterprise Institute, said PSO's plan underreported the costs of switching to natural gas by using “budget gimmicks.” PSO ratepayers will have to pay for phasing out the Northeastern coal units before the end of their useful lives, he said.
Stan Whiteford, a spokesman with PSO, said the utility disagreed with most of the points in Yeatman's report. He said accusing PSO of accounting tricks in its cost estimates was offensive to the utility and state regulators at the Oklahoma Corporation Commission.
“Our process is widely accepted by public utility commissions across the country,” Whiteford said. “We take all of these things very seriously. This (report) is representative of outside interests with their own agendas who aren't responsible for keeping the lights on for customers in Oklahoma.”
Whitney Pearson, the Sierra Club's Beyond Coal campaign organizer for Oklahoma, attended the forum and said PSO's plan for environmental compliance was a better option for Oklahomans. It would use Oklahoma-sourced natural gas instead of coal imported from Wyoming mines.
“We have a solution here at home that won't do near as much damage as coal,” Pearson said. “It's unfortunate that Attorney General Pruitt and Rep. Lankford would align themselves with coal when there's a forward-looking, low-cost and environmentally compliant plan out there.”