Utilities say too soon to determine Obama plan's impact on rates

Representatives of two major Wisconsin utilities say they will not know until next year how new regulations limiting carbon emissions from existing coal-fired plants might affect electric rates. The policy was unveiled Tuesday by President Obama in a major climate change speech.

"It's just too early to tell until we see the details of the rule," said Brian Manthey, a spokesman for We Energies, which serves much of southeast Wisconsin. "But there could be an impact on customer rates. It will depend on what kind of changes and retrofitting will be required, their costs and what technology is available."

Alliant Energy spokesman Steve Schultz concurred and said it would be "only speculation" to make any estimates because the president didn't specify the level of carbon reduction that will be expected from existing power plants. Alliant serves southern and central Wisconsin.

Kurt Bauer, head of Wisconsin Manufacturers and Commerce, charged that the changes are unneeded and will hit Badger State industries disproportionately because 65 percent of the state's electricity is produced from coal-fired plants.

He predicted Obama's plan will "significantly increase electricity costs" for every Wisconsin household and business. Moreover, he said it will make Badger State manufacturers less competitive with other states and countries, ultimately costing jobs.

“This is global warming, and unilateral energy disarmament on the part of the U.S. is not the answer,” he said. “We need to have a global solution. He did indicate that he is going to try to work with other developed and emerging nations. But I don’t think they have any interest in reducing carbon emissions anywhere near what he’s talking about.”

A spokesman for the environmental group Clean Wisconsin lauded the president's action, calling it long overdue."We are pleased with how comprehensive his climate plan is," Keith Reopelle said. "It's a smart move and the highlight is the carbon pollution rules for existing power plants. That is critical because they are the largest source for emissions in this country. We're also delighted he wants to leverage this to get other countries to take similar steps."

Todd Stuart, executive director of the Wisconsin Industrial Energy Group, said the potential for tough new regulations on existing plants is a "wild card" that could potentially be very expensive, add to the cost of manufacturing in the state and cost jobs.

"We don't know for sure what the impact on Wisconsin will be," he said. "The president directed the EPA to issue proposed carbon standards for existing power plants by June 1, 2014, and a final rule by June 1, 2015."In the meantime, he said manufacturers can lobby the EPA, file lawsuits challenging the rule and possibly seek some kind of Congressional action.

Stuart said Wisconsin has been ahead of the curve in building new power plants and retrofitting the older ones."We've spent billions on new coal and natural-gas fired plants, billions on renewable generation, and billions more to retrofit older coal plants with new scrubbers. It has pushed our rates higher than the Midwest average in recent years, but others will be catching up when they start to fuel switch or retrofit their plants as well."

Alliant's Schultz said his company is on track to retire its oldest, smallest and least-efficient units."We are already been implementing a plan that supports the transition to a cleaner energy future by investing in emission controls at our newest and largest facilities. We are transitioning our generating fleet to meet customers' needs and provide flexibility to ensure that we can manage emerging environmental regulations while continuing to control costs."

Manthey warned that regulators will need to consider whether there are commercially available, cost-effective technologies to control carbon emission."Right now, there isn't one for the capture and storage of carbon," he said, noting that We Energies had worked on a small carbon capture pilot project with a company called Allstom that had positive results but has yet to be scaled up.

"We'd need to know what effect it would have on energy production and how much you might lose because you'd be running another system."He said the president's order could stimulate development of this type of technology, but "that would be something for those companies that deal with that to take further."

In the meantime, he said he hopes We Energies will get credit for the steps it has taken in the past decade."We replaced a coal-fired plant at Port Washington with natural gas and we plan to convert the Valley plant with natural gas that is currently coal," he said.

"We've also made large investments in renewables, including two largest wind farms in state and we're completing a 50-megawatt biomass plant in Wausau. So we'll hope that will be taken into account into meeting future rules."WMC's Bauer said he believes Obama wants to replace fossil fuels with renewable energy such as wind and solar power.

"This is aimed at coal, which is where we get most of our energy," he said. "But president is really going after all fossil fuels, including natural gas. They dislike coal the most, but they don't like any kind of fossil fuels."They are trying to promote wind and solar, which don't work in Wisconsin. We are not in the wind corridor and we don't have a lot of sunny days, particularly in the winter.

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