Why this Ohio utility lauds carbon controls

The year 2016 will be a crucial one for electric utilities as they prepare to meet new Environmental Protection Agency regulations requiring them to cut their carbon emissions more than ever.

Among the milestones in EPA’s Clean Power Plan, which the agency issued last year, is a requirement for states to submit plans by September to comply with the policy’s requirement to reduce emissions by 32% by 2030, compared with 2005 levels. Utilities will play a big part in the development of those plans.

While EPA has offered to postpone the September deadline for states that need more time, utilities, which are the leading source of the emissions responsible for global warming, know they need to produce strategies that will satisfy regulators, customers and investors.

Without a doubt, the Clean Power Plan has stirred controversy in the U.S., where 27 states have sued to stop the policy’s implementation, claiming EPA exceeded its authority under the Clean Air Act.

But regardless of the legal challenges, utility executives are moving ahead to meet the new requirements, and some are even acknowledging that the plan isn’t as bad as they feared it might be when EPA began to put it together a couple of years ago.

Among them is Nick Akins, chairman, president and CEO of American Electric Power, whose Columbus, Ohio-based company is among the biggest investor-owned electric utilities and biggest burners of coal in the U.S.

“We certainly started out very negative about the EPA’s original proposal as it related to the Clean Power Plan,” Akins said in an interview on the “Columbia Energy Exchange,” a podcast that I host for the Columbia University Center on Global Energy Policy. “I think EPA listened in many regards.”

Among the changes that EPA made in the final version of the plan, released in August, were options giving states two more years to complete their compliance plans and providing a temporary relaxation of emissions standards for individual power plants if reliable supplies of electricity appear to be at risk.

In fact, Akins, who is also the chairman of the Edison Electric Institute, the trade association for investor-owned utilities, acknowledged that the Clean Power Plan “can be a catalyst for moving to a clean energy future, if done wisely and responsibly,” a point on which EPA Administrator Gina McCarthy and other Obama administration officials would agree.

AEP has already reduced its reliance on coal, which accounts for 51% of its generation capacity now, compared with 74% in 2005, and the utility predicts a 25% decline in carbon emissions by 2017 compared with 2005.

So what about lawsuits from states, including some of the 11 states in which AEP operates?

“We don’t know how quickly it’s going to move through the court system, and we don’t know the outcome in the court system,” he said. “(But) we do know that our customers are focusing on a cleaner energy future, and our investors certainly want us to move in that direction, as well.”

In effect, Akins and other utility chiefs are going forward in the expectation that the Clean Power Plan is likely here to stay.

And along the way, AEP is even finding some unusual allies, like Sierra Club, which recently endorsed the utility’s plan to keep some coal power plants in Ohio open while closing others or converting them to natural gas by 2030, and to install 900 megawatts of solar and wind power in the state.

“Many people were surprised by that settlement,” Akins said of the agreement with Sierra Club, whose “Beyond Coal” campaign aims to get rid of coal power plants.

“We have the same objectives,” he added. “We just come about it from very different perspectives, and probably would do it very differently if left to our own devices. But obviously, compromise is key to any solution.”

Bill Loveless — @bill_loveless on Twitter — is a veteran energy journalist and television commentator in Washington. He is a former host of the TV program Platts Energy Week.