- "New federal limits on greenhouse-gas emissions would force sweeping changes in the U.S. electric system but wouldn't deliver the knockout blow to coal that mining companies and some power producers had feared."
- "The overall costs of the plan remain hotly debated. The administration estimates that utilities would spend as much as $8.8 billion a year to comply with the rule, based on complex assumptions including using more natural gas as a baseload fuel. "
- "The U.S. Chamber of Commerce says the rule would cost the economy $50 billion a year."
Utilities Size Up Emission Cap for Power Plants
By Amy Harder and Cassandra Sweet | The Wall Street Journal | June 2, 2014
New federal limits on greenhouse-gas emissions would force sweeping changes in the U.S. electric system but wouldn't deliver the knockout blow to coal that mining companies and some power producers had feared.
The proposed caps on carbon emissions, unveiled by the Environmental Protection Agency on Monday, give both states and utilities credit for reductions they already have made, including moving from coal to more natural gas and deploying renewable energy. Burning gas produces less carbon than coal, and natural gas has become cheap and plentiful during the past few years because of the U.S. energy boom.
The EPA's plan, part of President Barack Obama's broader effort to combat climate change, also allows states to count measures like energy-efficiency programs to meet a nationwide goal of reducing 2005 greenhouse-gas emission levels by an average of 25% by 2020 and 30% by 2030.
Scott Segal of Bracewell & Giuliani LLP in Washington, D.C., who lobbies on behalf of coal-fired power plants, said he opposes the carbon plan but said the rule "could have been a whole lot worse."
The 645-page proposal is so complex that companies said they were trying to sort out the potential impacts, which are likely to vary widely by region. Coal consumption is highest in the Midwest, the Ohio Valley and the Southeast, including Florida and Georgia, and coal-burning states tend to have lower electricity prices.
American Electric Power Co. AEP +0.24% American Electric Power Co. Inc. U.S.: NYSE $53.48 +0.13 +0.24% June 2, 2014 4:03 pm Volume (Delayed 15m) : 2.29M AFTER HOURS $53.48 0.00 0.00% June 2, 2014 5:15 pm Volume (Delayed 15m): 48,288 P/E Ratio 15.55 Market Cap $26.04 Billion Dividend Yield 3.74% Rev. per Employee $866,800 53.6053.4053.2053.0010a11a12p1p2p3p4p5p 06/02/14 Utilities Size Up Emission Cap... 06/02/14 How the EPA's Plan Will Impact... 04/29/14 Supreme Court Revives EPA Rule... More quote details and news » AEP in 
Your Value Your Change Short position of Columbus, Ohio, said it is concerned that in many states where the company operates, carbon cuts could be more than 30% by 2030. "Climate change is a global issue, and some states should not bear a disproportionate share of the cost of U.S. action to cut emissions," a spokeswoman said.
Obama administration officials stressed that they were giving states a great deal of flexibility both in how the states and utilities meet the goals and when they must come up with a plan, which for some states could be as long as three years from next summer, when the rule becomes final.
Perhaps the biggest concession to the industry was the EPA's use of the 2005 baseline for the cuts. Carbon emissions have dropped 14% since that year, so the overall reduction sought is smaller than it would have been if the EPA had used a more-recent baseline year, as both coal and utility executives had feared. "We aren't sure how that happened, but it's a big relief," said a coal-industry lobbyist Monday.
The EPA said 2005 is an international benchmark year for many statistics including comparing pollution.
Building up to Monday's announcement, senior White House officials reached out extensively to the utility industry and other stakeholders, including labor unions and environmental groups. White House senior adviser John Podesta spent two days last week calling utilities, whose share prices barely moved Monday, and met with coal-mining labor groups, according to a White House official.
But the proposal will face challenges in court from both industry and some states. A spokeswoman for Michigan Attorney General Bill Schuette, a Republican, said Monday that the state, which has challenged the EPA on other rules, may take legal action against the rule.
Industry groups that oppose the administration push to cut greenhouse gases warned the plan would raise the cost of electricity, harming consumers and the economy.
"This proposal may adversely impact the affordability and reliability of electricity supply to major industrial consumers, which will harm workers, jobs and further impede the postrecession growth of American manufacturing," said Thomas Gibson, president of the America Iron and Steel Institute trade group.
The overall costs of the plan remain hotly debated. The administration estimates that utilities would spend as much as $8.8 billion a year to comply with the rule, based on complex assumptions including using more natural gas as a baseload fuel. The U.S. Chamber of Commerce says the rule would cost the economy $50 billion a year.
The utility industry accounts for about one-third of total U.S. carbon emissions, according to the EPA, with coal making up most of that share. Coal use has declined from a decade ago, but the fuel still produced 39% of the nation's electricity last year, according to federal tallies. Plants fired by natural gas produced about 27%, nuclear plants generated 19%, and renewables including hydro, wind and solar produced 13%.
Electric companies that have made big cuts in their emissions in recent years but still have heavy concentrations of coal-fired power plants include American Electric Power, Duke Energy Corp. DUK -0.32% Duke Energy Corp. U.S.: NYSE $70.85 -0.23 -0.32% June 2, 2014 4:03 pm Volume (Delayed 15m) : 1.91M AFTER HOURS $70.85 0.00 0.00% June 2, 2014 4:25 pm Volume (Delayed 15m): 5,195 P/E Ratio 25.95 Market Cap $50.27 Billion Dividend Yield 4.40% Rev. per Employee $915,808 71.2071.0070.8070.6010a11a12p1p2p3p4p5p6p 06/02/14 Utilities Size Up Emission Cap... 06/02/14 Carbon Dating Tips for Utility... 05/30/14 Blackstone, Others Bid for Duk... More quote details and news » DUK in Your Value Your Change Short position , of Charlotte, N.C., and Atlanta-based Southern Co. SO -0.25% Southern Co. U.S.: NYSE $43.67 -0.11 -0.25% June 2, 2014 4:01 pm Volume (Delayed 15m) : 2.60M AFTER HOURS $43.66 -0.01 -0.03% June 2, 2014 4:38 pm Volume (Delayed 15m): 24,080 P/E Ratio 20.12 Market Cap $39.00 Billion Dividend Yield 4.81% Rev. per Employee $678,099 44.0043.8043.6043.4010a11a12p1p2p3p4p 06/02/14 Utilities Size Up Emission Cap... 06/02/14 Carbon Dating Tips for Utility... 04/29/14 Southern Co. to Take $380 Mill... More quote details and news » SO in Your Value Your Change Short position
"No one is doing more than Southern Co. to address CO2," said Tom Fanning, chief executive of that company, which says it has slashed emissions by 26% over the past few years. The company, which says it is still evaluating the impact of the new rules, is building a plant in Mississippi that is supposed to capture carbon emissions. It also operates the nation's biggest single emitter, the Scherer coal plant in Juliette, Ga.
The EPA has set different carbon reduction standards for each state based on what the agency believes is achievable, taking into account cuts that individual states and utilities already have made since 2005. For example, West Virginia must have a rate of 1,620 pounds of carbon dioxide emitted per megawatt hour of electricity by 2030, meaning it must cut its carbon by 19.7% during that time.
That is a relatively low percentage cut compared with some other states that have fossil-fuel-intense economies, such as Colorado, which must cut its emissions by 35.3% by 2030, and Louisiana, which must cut carbon emissions by 39.7% over that period.
—John W. Miller, Alicia Mundy and Ted Mann contributed to this article.
Your Value Your Change Short position of Columbus, Ohio, said it is concerned that in many states where the company operates, carbon cuts could be more than 30% by 2030. "Climate change is a global issue, and some states should not bear a disproportionate share of the cost of U.S. action to cut emissions," a spokeswoman said. Obama administration officials stressed that they were giving states a great deal of flexibility both in how the states and utilities meet the goals and when they must come up with a plan, which for some states could be as long as three years from next summer, when the rule becomes final.
Perhaps the biggest concession to the industry was the EPA's use of the 2005 baseline for the cuts. Carbon emissions have dropped 14% since that year, so the overall reduction sought is smaller than it would have been if the EPA had used a more-recent baseline year, as both coal and utility executives had feared. "We aren't sure how that happened, but it's a big relief," said a coal-industry lobbyist Monday.
The EPA said 2005 is an international benchmark year for many statistics including comparing pollution.
Building up to Monday's announcement, senior White House officials reached out extensively to the utility industry and other stakeholders, including labor unions and environmental groups. White House senior adviser John Podesta spent two days last week calling utilities, whose share prices barely moved Monday, and met with coal-mining labor groups, according to a White House official.
But the proposal will face challenges in court from both industry and some states. A spokeswoman for Michigan Attorney General Bill Schuette, a Republican, said Monday that the state, which has challenged the EPA on other rules, may take legal action against the rule.
Industry groups that oppose the administration push to cut greenhouse gases warned the plan would raise the cost of electricity, harming consumers and the economy.
"This proposal may adversely impact the affordability and reliability of electricity supply to major industrial consumers, which will harm workers, jobs and further impede the postrecession growth of American manufacturing," said Thomas Gibson, president of the America Iron and Steel Institute trade group.
The overall costs of the plan remain hotly debated. The administration estimates that utilities would spend as much as $8.8 billion a year to comply with the rule, based on complex assumptions including using more natural gas as a baseload fuel. The U.S. Chamber of Commerce says the rule would cost the economy $50 billion a year.
The utility industry accounts for about one-third of total U.S. carbon emissions, according to the EPA, with coal making up most of that share. Coal use has declined from a decade ago, but the fuel still produced 39% of the nation's electricity last year, according to federal tallies. Plants fired by natural gas produced about 27%, nuclear plants generated 19%, and renewables including hydro, wind and solar produced 13%.
Electric companies that have made big cuts in their emissions in recent years but still have heavy concentrations of coal-fired power plants include American Electric Power, Duke Energy Corp. DUK -0.32% Duke Energy Corp. U.S.: NYSE $70.85 -0.23 -0.32% June 2, 2014 4:03 pm Volume (Delayed 15m) : 1.91M AFTER HOURS $70.85 0.00 0.00% June 2, 2014 4:25 pm Volume (Delayed 15m): 5,195 P/E Ratio 25.95 Market Cap $50.27 Billion Dividend Yield 4.40% Rev. per Employee $915,808 71.2071.0070.8070.6010a11a12p1p2p3p4p5p6p 06/02/14 Utilities Size Up Emission Cap... 06/02/14 Carbon Dating Tips for Utility... 05/30/14 Blackstone, Others Bid for Duk... More quote details and news » DUK in
Your Value Your Change Short position , of Charlotte, N.C., and Atlanta-based Southern Co. SO -0.25% Southern Co. U.S.: NYSE $43.67 -0.11 -0.25% June 2, 2014 4:01 pm Volume (Delayed 15m) : 2.60M AFTER HOURS $43.66 -0.01 -0.03% June 2, 2014 4:38 pm Volume (Delayed 15m): 24,080 P/E Ratio 20.12 Market Cap $39.00 Billion Dividend Yield 4.81% Rev. per Employee $678,099 44.0043.8043.6043.4010a11a12p1p2p3p4p 06/02/14 Utilities Size Up Emission Cap... 06/02/14 Carbon Dating Tips for Utility... 04/29/14 Southern Co. to Take $380 Mill... More quote details and news » SO in Your Value Your Change Short position "No one is doing more than Southern Co. to address CO2," said Tom Fanning, chief executive of that company, which says it has slashed emissions by 26% over the past few years. The company, which says it is still evaluating the impact of the new rules, is building a plant in Mississippi that is supposed to capture carbon emissions. It also operates the nation's biggest single emitter, the Scherer coal plant in Juliette, Ga.
The EPA has set different carbon reduction standards for each state based on what the agency believes is achievable, taking into account cuts that individual states and utilities already have made since 2005. For example, West Virginia must have a rate of 1,620 pounds of carbon dioxide emitted per megawatt hour of electricity by 2030, meaning it must cut its carbon by 19.7% during that time.
That is a relatively low percentage cut compared with some other states that have fossil-fuel-intense economies, such as Colorado, which must cut its emissions by 35.3% by 2030, and Louisiana, which must cut carbon emissions by 39.7% over that period.
—John W. Miller, Alicia Mundy and Ted Mann contributed to this article.
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