Electric Co-op Today

The electric utility industry loves certainty. Electric utilities make very large investments in power generation facilities that cost hundreds of millions of dollars to construct and then consume millions of dollars of fuel every year.

Chris Meyers

These generation assets have a very long life. Most have a useful life of well over 30 years and many last 50 years and beyond with proper maintenance and upgrades.

With such high costs and long lives, it is important that utilities make decisions that yield the lowest possible cost over the life of a plant.

If these decisions were based simply on projected load growth, fuel supply availability and plant efficiency, making them would be easy. It is the energy policy and regulatory changes after construction that changes the economics of these plants.

You may recall in 1978 when Congress passed the Powerplant and Industrial Fuel Use Act, blocking the use of natural gas to generate electricity. That policy stood until 1987. During that period of time it was thought that the United States was rapidly running out of natural gas. Nuclear power had also fallen out of favor after the accidents at Three Mile Island and Chernobyl.

For more than 20 years the only viable option for baseload generation was coal-based. As a result, more than half of all the electricity generated in the United States today is coal-based.

The generation choices that have to be made today are very difficult due to the uncertainty around current and future energy policy and regulation. We have never been able to predict 50 years out with much accuracy, but today we cannot even predict the next couple of years.

With or without Congress, the Environmental Protection Agency is implementing tighter emissions standards and regulating greenhouse gases under the Clean Air Act. The agency believes it has the authority and obligation to do so. Congress and the EPA are at odds. Several bills have been introduced in Congress to stop or delay the EPA long enough for Congress to address the issue.

In the meantime, utilities have to build, and face many questions in preparing to do so. Do they invest in units to meet the new EPA regulations or do they strand them and leave the years of their remaining useful life behind? Do they invest in natural gas, which is cleaner but still emits greenhouse gases, or do they invest in a very expensive nuclear plant, which has no greenhouse gas emissions?

It is a challenging time for planning in the industry. It is a time to get greater certainty around regulations for a long period of time, so that co-op consumer-members have a better chance of having the lowest possible cost of electricity.

Chris Meyers is general manager of the Oklahoma Association of Electric Cooperatives.

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