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Major utility questions signature Biden climate plan

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One of the largest power companies in the Americas is worried that the president’s climate proposal would force utilities to develop clean energy “too quickly.”

American Electric Power asserted in a letter to other utilities and congressional offices that the Clean Electricity Performance Program would negatively impact the reliability and resiliency of the power grid.

The AEP letter comes as investor-owned utilities, which provide around 70% of the country’s electricity, offer qualified support for CEPP, a program designed to incentivize utilities to generate more electricity. renewable energy through grants and fees. But the details of the proposal released last week have prompted many companies to scramble to determine if they can meet the annual threshold of measures for clean electricity sales, industry representatives have said.

The AEP enters the political debate at a critical time for President Biden and Congressional Democrats, who are banking on the clean energy proposal to meet their goal of reducing emissions from the electricity sector by 80% of by 2030. The House Energy and Commerce Committee passed the CEPP yesterday in a gradual victory toward providing $ 150 billion in grants over seven years to help utilities purchase or build increasing amounts of carbon-free electricity (PM E&E News, September 14).

But the program faces a treacherous path in the Senate. Senator Joe Manchin, the conservative Democrat of West Virginia, raised doubts about the proposal this week by questioning whether utilities should receive federal funding to accelerate the transition to clean energy, which he says is already in progress (Climate wire, September 13).

AEP operates two large coal-fired power plants in West Virginia. The Columbus, Ohio-based utility is one of the largest power companies in the Americas, serving 5.5 million customers in 11 states. And it illustrates the uneven nature of the clean energy transition.

The company has been one of the largest coal burners in the country, but in recent years it has announced plans to move away from fuel. It plans to install 16 gigawatts of renewable energy by 2030, or about half of its fleet, and has announced plans to reduce carbon dioxide emissions by 80% from 2000 levels by the end of the decade.

Despite this, the company is expected to operate three of its largest coal-fired power plants through 2040. In 2019, it ranked fourth among US utilities for emissions when it released nearly 70 million tonnes of CO2, according to a analysis by MJ Bradley & Associates, a consulting firm. Most decarbonization studies show that coal will need to be virtually phased out in the United States by 2030 to keep the global temperature rise below 2 degrees Celsius.

Industry representatives said the AEP letter reflected a debate in utility circles about whether the CEPP’s requirements are achievable. Under the proposal, utilities would be eligible to receive a federal subsidy if they increase sales of clean electricity by 4% per year between 2023 and 2030. The subsidy would be worth $ 150 per megawatt hour on 2.5% of new electricity sales. own electricity from an electricity company. Nuclear is eligible under the proposal, as is wind and solar.

Utilities that do not meet the 4% threshold should pay a fine of $ 40 per MWh.

I think uniformly across the membership, we see the 4 percent as pretty aggressive, said Emily Fisher, senior vice president of the Edison Electric Institute, a trade association representing investor-owned utilities.

Edison offered qualified support for the CEPP, arguing that the plan should be technology neutral and provide flexibility for companies to meet their goals. Fisher said she did not view AEP’s letter as a signal that the company would oppose the plan, but as an attempt to improve the legislation.

We would like to have a program that we can do. That’s what we’re focusing on, she said.

AEP, for its part, expressed concern that CEPP could compromise reliability if it was not accompanied by similar investments in distributable resources like energy storage and supporting infrastructure like transmission. And it raised the prospect of increased costs for renewable energy projects due to government programs.

We expect the market will not have the capacity to correct this in a timely manner, given that the demand for projects is likely to exceed the supply of projects for years to come, wrote Anthony Kavanagh, vice-president. president of the ASP for government relations, in the letter.

The letter also raised concerns about the requirement that any fine must be paid by shareholders and it raised concerns that developers could be penalized if their plans to get clean electricity are rejected by the public. regulators of state utilities.

AEP spokesperson Tammy Ridout said CEPP is aligning with the company’s plans to advance clean energy.

The key will be to ensure that the timing and incentives allow us to maintain a reliable, resilient and affordable energy system for customers during the transition to cleaner resources.

All the public services did not hesitate to meet the demands. Exelon Corp., a large nuclear producer, has supported the plan, saying CEPP can help the country develop clean electricity. Including penalties can help ensure the success of the program, said David Brown, Exelon senior vice president for government.

But a compromise could be found on the annual need for new sales of clean electricity, he said. CEPP is part of a larger $ 3.5 trillion budget reconciliation plan. CEPP grants could be extended until 2032, the last year allowed under the reconciliation. This would allow Congress to lower the annual threshold for new clean energy sales, making the program more acceptable to some companies, Brown said.

I think the industry is interested in long term certainty, and I hope we don’t let the perfect be the enemy of the very good, he said.

The CEPP represents the main axis of Bidens’ climate agenda. Most climate scans show the United States will fall short of the president’s goal of cutting emissions to 50% of 2005 levels by 2030 without major legislative action, and looks to the energy sector electric to carry out a large part of the reductions (Climate wire, July 12).

The Rhodium Group, an economic consulting firm, account the United States must reduce its emissions from 1.7 billion to 2.3 billion tonnes to meet the Bidens target. The reconciliation package would allow a total reduction from 830 million to 936 million tonnes, the CEPP and fiscal incentives for renewable energies providing for a reduction of 715 million tonnes.

Proponents of the plan emphasize the modeling by the University of California, Berkeley, which shows that it is possible for utilities to increase sales of clean electricity by 4% per year. And they argue that it is important to include penalties to ensure that utilities meet their commitments.

You wouldn’t want consumers to pay for utilities’ malice or for their failure to meet an achievable goal, said Mike OBoyle, director of electrical policy at Energy Innovation, a think tank supporting the plan.

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