[Senate Hearing 114-48]
[From the U.S. Government Publishing Office]
S. Hrg. 114-48
REGIONAL IMPACTS OF EPA CARBON REGULATIONS: THE CASE OF WEST VIRGINIA
=======================================================================
FIELD HEARING
before the
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
----------
MARCH 23, 2015--BECKLEY, WV
----------
Printed for the use of the Committee on Environment and Public Works
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.gpo.gov/fdsys
REGIONAL IMPACTS OF EPA CARBON REGULATIONS: THE CASE OF WEST VIRGINIA
S. Hrg. 114-48
REGIONAL IMPACTS OF EPA CARBON REGULATIONS: THE CASE OF WEST VIRGINIA
=======================================================================
FIELD HEARING
before the
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
MARCH 23, 2015--BECKLEY, WV
__________
Printed for the use of the Committee on Environment and Public Works
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.gpo.gov/fdsys
__________
U.S. GOVERNMENT PUBLISHING OFFICE
94-986 PDF WASHINGTON : 2015
______________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Publishing Office,
Internet:bookstore.gpo.gov. Phone:toll free (866)512-1800;DC area (202)512-1800
Fax:(202) 512-2104 Mail:Stop IDCC,Washington,DC 20402-001
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
JAMES M. INHOFE, Oklahoma, Chairman
DAVID VITTER, Louisiana BARBARA BOXER, California
JOHN BARRASSO, Wyoming THOMAS R. CARPER, Delaware
SHELLEY MOORE CAPITO, West Virginia BENJAMIN L. CARDIN, Maryland
MIKE CRAPO, Idaho BERNARD SANDERS, Vermont
JOHN BOOZMAN, Arkansas SHELDON WHITEHOUSE, Rhode Island
JEFF SESSIONS, Alabama JEFF MERKLEY, Oregon
ROGER WICKER, Mississippi KIRSTEN GILLIBRAND, New York
DEB FISCHER, Nebraska CORY A. BOOKER, New Jersey
MIKE ROUNDS, South Dakota EDWARD J. MARKEY, Massachusetts
DAN SULLIVAN, Alaska
Ryan Jackson, Majority Staff Director
Bettina Poirier, Democratic Staff Director
C O N T E N T S
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Page
MARCH 23, 2015
OPENING STATEMENT
Capito, Hon. Shelley Moore, U.S. Senator from the State of West
Virginia....................................................... 1
WITNESSES
Jenkins, Hon. Evan H., U.S. Representative from the State of West
Virginia....................................................... 4
Trisko, Eugene M., Attorney at Law, on behalf of the United Mine
Workers of America............................................. 5
Prepared statement........................................... 8
Patton, Charles, President and Chief Operating Officer,
Appalachian Power Company...................................... 13
Prepared statement........................................... 15
Richardson, L. Jeremy, Ph.D., Senior Energy Analyst for the Union
of Concerned Scientists........................................ 41
Prepared statement........................................... 43
Van Nostrand, James M., Associate Professor and Director of the
Center for Energy and Sustainable Development, West Virginia
University College of Law...................................... 87
Prepared statement........................................... 90
Farmer, Chuck, President, Rouster Wire, Rope and Rigging......... 98
Prepared statement........................................... 101
ADDITIONAL MATERIAL
Union of Concerned Scientists:
Policy brief: Strengthening the EPA's Clean Power Plan....... 122
Technical Comments on the Clean Power Plan................... 130
Report: National Landmarks at Risk........................... 255
REGIONAL IMPACTS OF EPA CARBON REGULATIONS: THE CASE OF WEST VIRGINIA
----------
MONDAY, MARCH 23, 2015
U.S. Senate,
Committee on Environment and Public Works,
Beckley, WV.
OPENING STATEMENT OF HON. SHELLEY MOORE CAPITO,
U.S. SENATOR FROM THE STATE OF WEST VIRGINIA
Senator Capito. I want to thank Congressman Evan Jenkins
for joining me here today. It's great to be in Raleigh County.
I want to thank the Raleigh County Commission, the Sheriff's
Office and Judge Kirkpatrick for letting us use your chambers.
I want to thank all of you for coming. I want to thank the
witnesses for being here today.
This is the first hearing that I've chaired as I've come
back home as a United States Senator. But it will not be the
last one, I can tell you that. This issue we have before us,
which is the Greenhouse Gas Rule and the Clean Air Rule, falls
right squarely in my subcommittee on the energy--or the
Environment of Public Works Committee in the Senate. I'm going
to be chairing that subcommittee. So all the data that we
collect in our hearings is extremely valuable to us on the
committee. And I want to thank everybody for their
participation. But it's no more important to all the folks that
live in and around West Virginia, particularly Southern West
Virginia.
Last month, EPA acting administrator--assistant
administrator, Janet McCabe, came before our committee, our EPW
committee, to discuss the agency's proposed carbon regulations
for new and existing power plants. I asked her to explain why
has EPA not had a public meeting on its proposed climate rules
in West Virginia. We asked for that. I wasn't alone. Evan asked
for that--the Congressman asked for that--many of us did--to
ask the EPA to come to West Virginia.
And I was kind of surprised by her response. Because she
told me that the public hearings were held where the agency
officials were--and this is a direct quote--comfortable going.
That was exceedingly unimpressive to me. While it may be
uncomfortable for EPA officials to face the coal miners whose
livelihoods and whose communities are threatened by these
regulations, I think West Virginians deserve to have their
voices be heard. So that's why I'm here today. The public
hearing on the Environment and Public Works is live streaming
on our website, so it will be seen across the Country.
We're going to hear the voices of West Virginians on the
devastating impact on the regulations of our fellow West
Virginians, because we know we receive 95 percent of our power
from coal-fired power plants. The West Virginia coal industry
supports families, strengthens our national security and
affordably powers not only our State, but provides affordable
electricity to our neighbors.
West Virginia exports more than half of the electricity
that we produce. And Charles can back me up on that. Just last
week, AEP warn notices to--issued warn notices to employees at
three West Virginia power plants; the Kanawha River plant in
Glasgow, the Sporn plant in New Haven and the Cameron plant
near Moundsville. All three plants will close within 2 months.
These closures are ahead of schedule and early closures
basically because of the EPA's MATS Rule, which is a previous
rule different than the one we're discussing today, but still
has a great impact.
The upcoming EPA regulations for carbon emissions for power
plants that we are here to examine today will have even more
devastating impact. I have grave concerns about these
regulations. I'm concerned about their cost; the cost to the
taxpayer, and the cost to the bill payer.
Numerous studies by well-respected economic analysis firms
made clear that the EPA has grossly understated the costs.
Findings from these reports show that costs could go up to $479
billion over a 15-year period while causing double-digit
electric price increases in 43 States.
Over half of our Country's power comes from coal. And EPA
has gone so far to predict that by effectively eliminating one
half of our energy generation, we will reduce electricity
prices by 8 percent. That just doesn't add up to me.
Here in West Virginia, our monthly electric bills are
roughly 23 percent cheaper now than the national average
because coal is cheap, reliable and plentiful. I'm very
concerned that in formulating these regulations, EPA has not
considered the impact on the reliability of the grid.
We actually had a hearing on this last week in our
committee. That's one of the reasons I'm very pleased to have
Charles Patton from Appalachian Power as one of our witnesses.
In his statement, he does speak directly to the impact of these
rules on our ability to keep the lights on.
We also have small business owner, Charles Farmer, who will
be here shortly. I'm very interested to see how he has borne
the brunt of increased electricity prices on his business
operations, and how it impacts him and his family and his
business.
And the United Mine Workers--we're pleased to have Mr. Gene
Trisko who is here to represent the brunt of the president's
war on coal in terms of the effect it has on the UMW and coal
miners across the Country.
So as we move forward, I'm also concerned--as we talk about
emissions, and the lowering of emissions, I'm concerned that
the United States is sort of out front here--not sort of out
front. We are out front. What are the other nations doing?
And is what we're doing going to really make the impact
that those who are putting these forward hope that it will?
So I think we're not rushing this. There are legality
issues. We'll get into that today. But what we're doing is
really beginning to talk about the economic impacts to our
families where the impact is most felt, and that's here in West
Virginia.
With that, I'm going to ask Congressman Jenkins to make an
opening statement, and then we'll turn to the witnesses.
[The prepared statement of Senator Capito follows:]
Statement of Hon. Shelley Moore Capito,
U.S. Senator from the State of West Virginia
Thank you all for being here today. A special thank you to
our witnesses for coming to Beckley and to Congressman Jenkins
for joining me. This is the first hearing I have chaired back
home in West Virginia as a U.S. Senator, but it will not be the
last.
Last month, EPA Acting Assistant Administrator Janet McCabe
came before the Environment and Public Works Committee to
discuss the agency's proposed carbon regulations for new and
existing power plants. I asked her to explain why the EPA did
not hold a public hearing on its proposed climate rules in West
Virginia, despite the large role coal has in our economy and
the multiple invitations by Federal and State legislators.
I was shocked, and frankly, appalled by her response.
She told me public hearings were held where agency
officials were ``comfortable'' going.
While it may be uncomfortable for EPA officials to face the
coal miners whose livelihoods are threatened by these misguided
regulations, West Virginians deserve the opportunity to make
their voices heard.
This is why I am here today, holding a field hearing of the
Environment and Public Works Committee, which is being live
streamed on the Committee website.
EPA will hear the voices of West Virginians on the
devastating impact of their regulations on the just under 2
million hard-working West Virginians who receive 95 percent of
their electricity from coal-fired power plants.
The West Virginia coal industry supports families,
strengthens national security and affordably powers not only my
State, but provides affordable electricity to our neighbors--
West Virginia exports more than half of the electricity we
produce to neighboring States.
Just last week, AEP issued WARN notices to employees at
three West Virginia power plants--the Kanawha River Plant in
Glasgow, the Philip Sporn Plant in New Haven and the Kammer
Plant near Moundsville. All three plants will close within 2
months. These closures are years ahead of schedule, and the
early closures are because of the impact of EPA's Mercury and
Air Toxins (MATS) rule.
The upcoming EPA regulations for carbon emissions from
power plants that we are here to examine today will have an
even more devastating impact.
I have grave concerns about these proposed regulations. I
am concerned about their cost--the cost to the taxpayer and
cost to the bill payer. Numerous studies by well-respected
economic analysis firms make clear that the EPA grossly under-
estimated the costs. Findings from these reports show costs
could get up to $479 billion over a 15-year period while
causing double digit electricity price increases in 43 States.
Over half of our country's power comes from coal; yet, EPA
has gone so far as to ``predict'' that by effectively
eliminating one-half of our energy generation, we will reduce
average electricity prices by 8 percent. That simply does not
add up.
Here in West Virginia, our monthly electrical bills are
roughly 23 percent cheaper than the national average because
our coal is cheap, reliable and plentiful.
I am also very concerned that, in formulating these
regulations, EPA has not considered the impact on the
reliability of our electricity grid. That is one of the reasons
I am pleased to have Charles Patton from Appalachian Power as
one of our witnesses. He can speak to the direct impact that
EPA regulations have on our ability to keep the lights on.
EPA doesn't have a great track record here. Look at the
Mercury and Air Toxins, or MATS, rule. EPA predicted this
regulation would result in the closure of about 5,000 megawatts
of generating capacity. Instead, the Department of Energy now
says that between 50,000 and 60,000 megawatts of generating
capacity will be taken offline. That's a huge mistake that
would have serious consequences.
It's not the EPA bureaucrats that have to deal with these
consequences of a miscalculation. It's the small business
owners, like Mr. Chuck Farmer, who will bear the brunt of
increased electricity prices on his business operations that
not only impact him and his family, but his employees, their
families and the surrounding community. It's the United Mine
Workers of America that Mr. Trisko is here to represent who
will bear the brunt of the President's ongoing war against
coal.
Only at a government agency, run by unelected bureaucrats
would it make sense to impose regulations that cost billions of
dollars, increase the costs of electricity, negatively impact
grid reliability, undermine global competitiveness and kill
jobs.
Concerning is that estimated emissions growth from China
and India render any of these perceived ``benefits'' pointless.
President Obama is rushing through extreme environmental
initiatives without regard for the real-life consequences.
Today we are beginning to talk about these economic impacts, to
families here, where the impact is felt and our communities are
impacted.
STATEMENT OF HON. EVAN H. JENKINS,
U.S. REPRESENTATIVE FROM THE STATE OF WEST VIRGINIA
Representative Jenkins. Thank you, Senator. Good morning.
And thank you for the wonderful turnout and the interest. Let
me first start by thanking Senator Capito for holding this
important hearing. She has been a steadfast voice for West
Virginia and continues to lead the fight against the
administration's regulatory overreach. She's a real champion
for our cause.
I also want to thank her and her staff for taking the
initiative to hold this important hearing so that the committee
can hear the voices from real West Virginians, people who
really care about our State's future and understand the issues
that we are facing as a State.
As you know--as Senator Capito mentioned just a moment ago,
her efforts to try to encourage the EPA to take a proactive
position to come to West Virginia. I too had that opportunity,
and questioned Administrator McCarthy just a couple of weeks
ago, and candidly begged her to come to West Virginia to see
the real consequences of her agency's policies and what they
will have with regard to the people of West Virginia. And as
Senator Capito has run into, she simply says no, unwilling to
come.
The EPA continues to overstep its legal authority waging a
war on coal. And, yes, it is a war on coal that has destroyed
the livelihoods that we have known for generations in West
Virginia.
For example, the EPA is retroactively vetoing already
issued permits. The permit for the mine in Logan County was
issued by the U.S. Army Corps of Engineers after an intensive
deliberative process. Families in that area were counting on
those new jobs that the mine would help provide and sustain.
But then 4 years later, the EPA swooped in and
retroactively vetoed this already issued permit by the Army
Corps of Engineers. That was the first time in history that the
EPA has ever taken such an action. But the effects of EPA's
decisions weren't limited to just the mine operation. They also
took away the promise of good-paying jobs and more affordable
energy for West Virginians.
Coal is an abundant resource in America. Why are we
forsaking one of our largest sources of affordable energy to
put ourselves at an economic disadvantage? Why is the EPA
forcing consumers to pay more for electricity and for all the
goods and products that require electricity to be produced?
The Clean Power Plan we're going to be talking about
today--the focus of today's hearing will bring even more
economic harm to West Virginia communities. States are being
asked by the EPA to decrease emissions by an unrealistic
amount. They are being asked to do it in an unreasonable
timeframe. If they are unable to comply, they will be fined.
All sorts of stakeholder corps, from utilities to State
regulators to grid operators have overwhelming concerns over
cost, reliability, transmission and grid problems.
Prior to President Obama, coal provided 48 percent of our
Nation's electricity. Today we're at 40 percent due to the
Mercury Rules and others. Under CPP, coal would be reduced to
30 percent. This has direct impact on coal jobs. We have
already suffered disproportionately under this Administration's
policies.
From 2009 through 2013, the State of West Virginia lost
nearly 9,000 coal jobs. Americans deserve to know the full
picture before the EPA moves forward on this aggressive and
unprecedented plan. The costs associated with CPP are
staggering. The U.S. Chamber of Commerce's Institute for 21st
Century Energy estimated that it would lead to 224,000 fewer
U.S. jobs on average every year through 2030. Worse, it would
force U.S. consumers to pay $289 billion more for electricity
in that same time period.
The coal industry has gone through highs and lows before
and has recovered. The difference now is that we have a
Government pushing policies that is picking winners and losers
in industry and forcing utilities to stop using coal.
I look forward to the hearing today and hearing from the
witnesses to hear the issues that they are facing and to
understand things from their perspective.
Once again, I would like to thank Senator Capito for
inviting me to this hearing. This is an important moment for
the Appalachian region, for Southern West Virginia, for all of
West Virginia and for our Country. This is an important moment.
It is critical that we work to preserve our way of life for our
children and our grandchildren here in West Virginia.
Thank you, Senator Capito.
Senator Capito. Thank you, Congressman. We will begin--I
would ask the witnesses--I think most of you have probably
testified. Your full statements are submitted into the record.
If you could, give us a 5-minute--around a 5-minute synopsis of
your full statement. We'll start with that, and then we'll go
to questions.
So I'm going to start with Gene Trisko, who is counsel for
the United Mine Workers of America. Welcome.
OPENING STATEMENT OF EUGENE M. TRISKO, ATTORNEY AT LAW, ON
BEHALF OF THE UNITED MINE WORKERS OF
AMERICA
Mr. Trisko. Thank you. Good morning, Chair Capito and
Representative Jenkins. I'm Gene Trisko. I'm an attorney in
private practice. I'm here on behalf of the United Mine Workers
of America whom I've represented in environmental and climate
matters for some 30 years.
The UMWA greatly appreciates this opportunity to testify on
the impacts of EPA's proposed Clean Power Plan. This proposed
regulation is a neutron bomb aimed directly at the heart of
West Virginia's economy and the coal miners, communities,
electric generators and allied industries that depend on coal
for their livelihoods.
EPA's carbon rule proposes an overall CO2
reduction equivalent to a 30 percent cut from 2005 emissions
with reductions measured against each State's 2012 emission
rate in pounds of CO2 per megawatt-hour of fossil
electric generation. West Virginia is assigned a 20 percent
reduction by 2030 based on the combined building block approach
that EPA developed.
EPA's data indicate that West Virginia's electric utilities
and independent power producers achieved a 20 percent reduction
of CO2 emissions measured in tons emitted between
2005 and 2012. In other words, if you were given a fair
baseline, you're there. You have already achieved EPA's
reduction.
EPA's proposed rule gives no credit for these reductions
because it uses a 2012 baseline for determining required
emission reductions.
EPA's regulatory impact analysis for this rule shows total
U.S. coal-generating capacity declining from 317 gigawatts in
2010 to 195 gigawatts in 2020. That is an overall reduction of
122,000 megawatts of capacity. Of this total, 49 gigawatts can
be attributed to the Clean Power Plan with the balance of 73
gigawatts due to compliance with the 2011 Mercury Rule, lower
natural gas prices and other factors.
EPA projects that the carbon rule would reduce coal
production in the overall Appalachian region--this region
stretches from Pennsylvania to Alabama--by 35 percent, from 140
million tons to 91 million tons in the year 2020. West Virginia
alone traditionally produces well over 100 million tons of coal
a year. Under this rule, the entire Appalachian region would
produce 90 million.
The fundamental problems that the EPA carbon rule poses for
West Virginia are twofold. First, the majority of West
Virginia's coal production is shipped to other States that have
even larger emission reduction requirements than West Virginia.
Second, as Senator Capito noted, the majority of the coal-
based electricity generated in West Virginia is exported to
other States affected by the rule.
In 2013, West Virginia produced 116 million tons of coal.
West Virginia's electric utilities and independent power
producers consumed 30 million tons of coal from all sources.
That's equivalent to just a quarter of the State's total coal
production. The rest of it goes somewhere else. You have no
control over that.
In 2014, West Virginia power plants generated 88,000
gigawatt-hours of electricity. Your total in-state retail
electricity sales were 29,000 gigawatts. That's about one-third
of total generation. Two-thirds of it goes to other States. You
have no control over it.
In short, there is no compliance option for West Virginia,
including potential interstate agreements that can effectively
mitigate the adverse impacts of the EPA rule attributable to
the compliance actions of other States.
The stakes for West Virginia's economy and jobs are very
high. Coal mining in West Virginia generates more than $15
billion of gross State output. Nearly $4 billion of household
income, and 75,000 direct and indirect jobs.
EPA's proposal for major expansions of State energy
efficiency and renewable energy programs interfere with
traditional State authority and energy planning and appear to
be well beyond the agency's authority under the Clean Air Act.
We are mindful in this regard of the cautions recently
raised by the Supreme Court in UARG versus EPA concerning an
overly expansive interpretation of EPA's authority to regulate
greenhouse gases under the Clean Air Act.
Finally, we do not know the extent to which other nations
will be willing to commit to a truly global program of
greenhouse gas reductions. All indications from the United
Nations' climate negotiation process point to an extremely
difficult outcome in Paris later this year. It is doubtful that
those negotiations will lead to meaningful or enforceable
emission reduction commitments by the developing countries that
are now the world's largest emitters of greenhouse gases.
Thank you for the opportunity to be here today.
[The prepared statement of Mr. Trisko follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Capito. Thank you.
Now, I'd like to ask Charles Patton to make his opening
statement. Charles is president of Appalachian Power Company.
Welcome. Thank you for being with us.
STATEMENT OF CHARLES PATTON, PRESIDENT AND CHIEF OPERATING
OFFICER, APPALACHIAN POWER COMPANY
Mr. Patton. Thank you. Chairman Capito, I'd like to thank
you for inviting me here today. And it's always a pleasure to
see you, Congressman Jenkins. We appreciate the energy and
enthusiasm which you bring to represent the State of West
Virginia.
I appreciate this opportunity to offer the views of
Appalachian Power Company on the carbon dioxide rules for
existing power plants that have been proposed by the
Environmental Protection Agency.
Headquartered in Charleston, West Virginia, Appalachian
Power Company serves approximately 1 million customers in West
Virginia, Virginia and Tennessee. We are a subsidiary of
American Electric Power. AEP and its six other subsidiary
utilities deliver safe, reliable and affordable electric
service in eight additional States, making AEP one of the
Nation's largest generators of electricity.
Additionally, AEP's transmission network is the Nation's
largest and most robust with over 400,000 miles of high-voltage
transmission. As one of the Nation's largest utilities and one
of the Nation's historically most coal-dependent utilities due
to our proximity to this abundant and stably priced natural
resource, we have been active in the conversation surrounding
the appropriateness of the Clean Power Plan as a policy
direction for reducing the carbon footprint of the Nation's
electric power supply industry.
I have filed some 26 pages of testimony outlining our
concerns. As a major coal burner, I'm sure that you will not
find it surprising that Appalachian Power and our parent
company, AEP, has serious concerns around the proposed EPA
plan.
In that 26 pages of testimony, I have listed some concerns.
Are EPA's technical assumptions correct?
Has the EPA appropriately quantified the cost of its
proposal?
Are there significant reliability concerns that are not
receiving appropriate attention?
Has the EPA overreached its legal authority? These are
questions and issues that are raised in my testimony.
Having reviewed a significant number of the comments filed
by States this past fall, it is clear that the concerns
delineated a great deal in my testimony are also shared in some
form by the vast majority of the States in this Nation.
Therefore, in lieu of offering you a laundry list of
concerns, I would like to share with you my personal experience
which gives me great pause regarding the appropriateness of the
EPA's proposal.
Approximately 5 years ago, I became the president and chief
operating officer of Appalachian Power Company. When I arrived,
it was on the heels of a $2.2 billion capital spending program
placing scrubbers on our large baseload coal-fired generating
stations. At that time, given the prevailing cost of
alternatives, it was the best option for our customers. A
position that was endorsed by State regulators and key
stakeholders involved in the regulatory approval process.
Despite being the least cost solution--yes, that's right,
coal is the least cost solution. The results were electric
rates that did increase on average 40 percent. These
investments and resulting rate increases were common for
utilities with large coal fleets at that time.
States like Louisiana, Tennessee, Mississippi, Alabama and
West Virginia have the highest average residential electric
consumption rates in the Nation. There are logical reasons for
this outcome; the rural nature of these States, the lack of
retail natural gas in rural areas for gas heating, and a
strategic cost advantage of electricity. And, unfortunately,
also the socioeconomic factors related to the quality of the
housing stock in those States.
In West Virginia, over 400,000 low income and middle income
families spend 20 percent of their after-tax income on energy.
Approximately 25 percent of my residential customers are
delinquent on their electric bills.
Additionally, many of my customers in the metals industries
which have electric-intensive production processes are also
struggling to remain profitable. In fact, the West Virginia
legislature has enacted legislation specifically targeting its
large energy-intensive industries to help address this reality.
Congressman Jenkins, you were there when that--you were
part of passing that legislation.
But how much more can they afford? I'm not sure. However,
as we proceed in addressing carbon, I would ask that this
committee and all of Congress consider the following. Economics
and existing EPA regulations have resulted in a profile where
today 60 percent of AEP's generating capacity is coal compared
to well over 80 percent in 2000. By 2026, the percentage is
expected to drop to 45 percent.
Then if you go back to 2005, you will find that our
decrease to date in carbon output is somewhere north of 21
percent, not including future closures planned in 2015 as a
result of our efforts to comply with EPA's Mercury and Air
Toxics Standards.
APCO and AEP do not dispute the legitimacy of pursuing
policies that reduce our Nation's carbon footprint. However, we
would suggest to you that we have grave concerns regarding the
affordability, technical assumptions and need for the Clean
Power Plan as it is proposed.
Thank you very much.
[The prepared statement of Mr. Patton follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Capito. Thank you.
Our next witness is Dr. L. Jeremy Richardson, who is the
senior energy analyst, Union of Concerned Scientists,
Washington, DC. And I understand your father is in the
audience. I want to welcome him as well. Welcome, Dr.
Richardson.
STATEMENT OF L. JEREMY RICHARDSON, Ph.D., SENIOR ENERGY ANALYST
FOR THE UNION OF CONCERNED SCIENTISTS
Mr. Richarson. Thank you very much, Senator Capito and
Representative Jenkins.
As you said, I'm a senior energy analyst at the Union of
Concerned Scientists. UCS is the Nation's leading science-based
nonprofit working for a healthy environment and a safer world.
I have a very unique perspective on the issues before you
today. As a scientist, I understand the urgency to reduce
carbon emissions to protect the planet's climate. As the
brother, son and grandson of West Virginia coal miners, the
question of how we go about tackling climate change is deeply
personal to me.
First, on behalf of UCS's more than 450,000 supporters, I
want to say today that we strongly support the Environmental
Protection Agency's efforts to limit carbon emissions from
power plants under the Clean Air Act. Simultaneously, however,
we want to emphasize the need for special consideration for the
families and communities that are facing the negative
consequences for the transition away from coal.
Human-induced climate change is already having impacts that
are being felt by people here in West Virginia, our Nation and
around the world. If we collectively fail to make deep
reductions in our carbon emission, we will greatly increase the
risks of serious economic, health and environmental
consequences from accelerating sea level rise, storm surges,
heat waves, drought, wildfires, frequent heavy downpours and
increase hurricane intensity. These impacts are a direct
consequence of the increasing concentration of greenhouse gases
like carbon dioxide in our planet's atmosphere primarily caused
by the fossil fuels that we burn for energy.
These facts compel us to act and to act decisively. In
doing so, however, we must recognize that some regions of our
Country are facing a heavier burden than others in this
transition to a less fossil-intensive electricity system.
The proposed Clean Power Plan provides a sound and flexible
framework for reducing emissions from the power sector. But it
is not ambitious enough in its overall result of a 30 percent
reduction in emissions by 2030.
Our analysis shows that EPA significantly underestimated
the potential for renewables such as wind, solar and geothermal
energy resources that emit no carbon and are already delivering
safe, reliable and affordable power to consumers all around the
Country.
As we all know, the coal industry faces challenging times.
Many blame environmental regulations entirely for the downturn.
But the truth is that regardless of who occupies the White
House, the industry faces strong and persistent headwinds.
Multiple market factors are making coal fired power too
expensive relative to other cheaper, less polluting options
like natural gas, renewable energy and energy efficiency.
Thankfully, West Virginia has many assets that it can leverage
to diversify its economy. But we must let go of the idea that
coal is all we've got.
Communities all around coal country from Beckley to Welch
to Pikeville are eager to have this conversation. They realize
that times are changing and they are calling for leadership.
Over 200 people from a wide range of perspectives attended a
forum that UCS organized in September 2013 to talk about the
State's bright future. Participants pointed to the State's
topnotch work force, its natural resources, of course, a
multitude of opportunities for recreation and tourism, emerging
opportunities in advanced manufacturing and much more. The
conversations have continued from the ground up.
Williamson is remaking itself as a healthy community
focused on sustainability. Communities across West Virginia
have been participating in a series of dialogs called What's
Next West Virginia. And a few leaders are listening as
evidenced by initiatives in Eastern Kentucky and in Southern
West Virginia. Even the President's budget includes significant
investments in the Appalachian region.
Together with Federal policymakers, States, especially West
Virginia, should help ensure that economic diversification and
resources for workers in communities are an important part of
their compliance plans. Fortunately, there are a variety of
policies both within the context of State compliance plans and
through complementary policies enacted by State legislatures
that can help, including market-based mechanisms and tax
policies, like West Virginia's Future Fund that was established
last year. By working together, we cannot only establish a
strong standard to protect the planet's climate, but also
ensure that workers in communities have a fresh economic
opportunity as market forces continue to drive a shift away
from coal.
I do not accept this as an either/or proposition. Our
children and our grandchildren will face the risks of a vastly
different climate caused by our failure to act to reduce
emissions today.
My young niece, and maybe someday her children and
grandchildren, will face an uncertain future if we fail to
invest in the workers and communities that have built this
Nation's wealth. It is much harder, but it is imperative that
we do both.
Thank you.
[The prepared statement of Mr. Richardson follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Capito. Thank you, Dr. Richardson.
Our next witness is James M. Van Nostrand. Did I say that
correctly?
Mr. Van Nostrand. Van Nostrand, Senator.
Senator Capito. He is Associate Professor, Director of the
Center for Energy and Sustainable Development, West Virginia
University College of Law.
Welcome.
STATEMENT OF JAMES M. VAN NOSTRAND, ASSOCIATE PROFESSOR AND
DIRECTOR OF THE CENTER FOR ENERGY AND SUSTAINABLE DEVELOPMENT,
WEST VIRGINIA UNIVERSITY COLLEGE OF LAW
Mr. Van Nostrand. Thank you very much, Senator Capito and
Congressman Jenkins. I really appreciate the opportunity to
speak today.
Before I start off, I want to share your frustration with
the inability to get anybody from EPA to come to this State. We
had a conference back in February 2014 focusing on the then
anticipated EPA 111(d) Rules. Senator Manchin was our keynote
speaker. We tried for weeks to get an EPA speaker to come to
our conference. We started off with Janet McCabe and kind of
kept working our way down. And we were unsuccessful in having
them come to our State. So it is frustrating.
As everyone knows, we have a big basketball game coming up
on Thursday night in Cleveland, Ohio. I thought today would be
a good chance to not only talk about the Wildcats and the
Mountaineers on the court, but let's talk about West Virginia
versus Kentucky. I guess I would call my testimony a tale of
two States; why West Virginia is losing the battle for our
energy future.
In Kentucky--I think we all saw the Senate race last year
where Senator McConnell and Alison Grimes were fighting about
who hated the EPA the most. Most recently, Senator McConnell
encouraged States to not cooperate with the EPA in the
implementation of the 111(d) Rules. So we have that going on at
one level.
But within the State of Kentucky, there's a tremendous
bipartisan effort going on led by Governor Steve Beshear, a
Democrat, and Congressman Hal Rogers, a Republican.
Several years ago, Governor Beshear started on a policy of
an all-of-the-above energy strategy in the State of Kentucky.
And most recently, he and Congressman Hal Rogers have
encouraged the SOAR project which is shaping our Appalachian
region. 1700 people showed up for the SOAR convention in
Pikeville, Kentucky on the issue of the 111(d) Rules. They were
basically talking about the future of Kentucky, moving toward a
different future and having a broad bipartisan support taking
on these tough issues of a transition.
On the 111(d) Rule, Kentucky was one of the leading States
in the country. They shared a white paper with the EPA in
October 2013 saying we know these rules are coming down the
road and this is what's going to work for Kentucky. These are
the things that we need to make this rule work for Kentucky. We
are going to have a disproportionate impact, but these are the
rules. Kentucky became a national leader in terms of a State
getting out in front on the 111(d) Rules. We invited John
Lyons, the head of the Energy and Environment Cabinet for
Kentucky, to come to our conference back in February a year
ago.
Now let's look at West Virginia. We have no comprehensive
energy planning in this State. Our legislature just recently
repealed the renewal portfolio standards, which would have
encouraged renewal energy. They are rolling back net metering.
And while many utilities around the country were selling off
their coal plants for pennies on the dollar, in West Virginia
we're buying additional coal plants and putting them into our
rate base and actually paying more than their fair market value
for them.
I understand Charles Patton is talking about the interest
of AEP and diversity. Well, we're not seeing that diversity in
West Virginia. The AEP subsidiary, Wheeling Power, just
acquired the Mitchell plant. The AEP subsidiary, Appalachian
Power, just acquired the Amos plant. Mon Power acquired the
Harrison plant. These are all plants--for our foreseeable
future, most of our electricity is going to be generated by
coal. We're not seeing any event--any fuel diversity. We're not
seeing any of the effects of the shale gas revolution.
We're not really sharing in those lower energy prices. Both
utilities operating in West Virginia filed for double-digit
rate increases last year. And that's before we get to the
impact of these coal plants being added to our rate base and
the increase in compliance caused under MATS and of the 111(d)
Rules.
Our response on a legal front is, our attorney general has
filed a lawsuit joined by 11 other States to destroy the EPA
rule in court. We've joined the Murray Energy lawsuit. I don't
think the courts are going to be able to stop climate change,
and I don't think litigation is a climate change strategy, as a
compliance strategy.
What's frustrating is it doesn't need to be this way. As
Jeremy Richardson just mentioned, I think West Virginia has
tremendous potential. We are sitting on top of the Marcellus
shale. We are an energy State. We should be winning the energy
war. We have more resources at our disposal than does Kentucky
with the availability of natural gas, renewables. We have
virtually untapped energy efficiency. We are rated number 46 in
the Country by the American Council for Energy Efficient
Economy in terms of our energy efficiency commitment. And we
can do better.
As my testimony mentions, I think the whole issue of
reducing greenhouse gas emissions really cries out for a
legislative solution. I don't think the Clean Air Act is a
great fit. I have concerns about 111(d), and I certainly have
concerns about 111(b) that cries for a legislative solution.
But I don't know that we're going to be able to get that
solution. We're doing the best--I think the EPA is moving
forward with the statutory authority on the Clean Air Act. They
have the authority to do that.
But a legislative solution would be better because there's
no question West Virginia is getting hit disproportionately
hard. But there's limitations on what an agency can do to
address those desperate impacts. A legislative solution could
address that.
In closing--I don't know how the Mountaineers are going to
do Thursday night. I'm very hopeful we'll be competitive. I
think on the basketball court we'll be competitive. I worry
that on the energy front, West Virginia versus Kentucky, I
worry that we're losing that war. And we should be winning that
war.
Thank you very much.
[The prepared statement of Mr. Van Nostrand follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Capito. Thank you very much. And, boy, they did
look good last night, didn't they?
Our final witness is Charles Farmer who is president of
Rouster Rope, Wire and Rigging, a small business here in
Raleigh County. Welcome, Mr. Farmer.
The process is basically a 5-minute synopsis of your
testimony, and then we're going to move to the question
portion. Welcome.
STATEMENT OF CHUCK FARMER, PRESIDENT, ROUSTER WIRE, ROPE AND
RIGGING
Mr. Farmer. Thank you, Senator Capito, Representative
Jenkins and panel. Thank you for having me here.
I hope I represent our State very well, but especially the
southern part of West Virginia. Twenty years ago, I got into
the rigging business for the logging industry. We saw them
leave because of regulation insurance. We are not tied
completely to the mining industry. But a devastating amount of
loss of work has happened here.
The EPA MATS 111 regulations have an effect on small
businesses which you generally don't see. We had over 170, 80
mines a year ago. Now we're down to 70, 80. We've lost a lot of
revenue in our counties for road building particularly. I don't
know how many of you have been between here and Kentucky, in
Raleigh, Wyoming, McDowell, Mingo Counties and seen the
absolute devastation of the economies and loss of business.
The EPA is making good headway, which we support, for clean
air and the environment. In a regional timeframe, that would be
good. But as they press harder and harder to adapt to stricter
and stricter regulations, we see people leaving here, and a
work force they are going to be very hard pressed to replace.
Our good customers, such as AEP, the United Mine Workers,
and their workers and the mines here, have lost more than what
we will. We've seen their plants--Clinch River, Glen Lyn,
Kanawha River, Sporn. The regulations are pushing people out of
work and leaving this industry. Our revenues are killing us.
My business is going down instead of going up in this
wonderful economy that we have. I'm a petroleum engineer from
West Virginia University. I've lived all over the world. I came
back to West Virginia to make a difference in this community
and to employ people in this town to try to make a difference
and diversify our economy away from the extractive industries.
Again, I'll go back to the southern part of West Virginia.
I don't know how many of you travel down there. But that's some
of the steepest, roughest, uninhabitable terrain to build
businesses, plants. Without removing the mountaintops, there is
really no place to put people up out of the flood zone, not
even to put the businesses here.
The infrastructure to get there--piping, water, electricity
is extremely expensive to build that infrastructure here, which
we support. The line transmission work, the gas and pipelines.
But we continue to see interference. The delays and delays and
delays of the projects, and the target moves and moves and
moves, and the timeframe gets shorter. Our customers do not
benefit from such haste to prove to the world--America is
showing the way.
We had friends come back from China here in the past month
in the coal industry. And they can tell you in their coal
industry, they are running zero scrubbers on their plants. And
we think this is an unfair advantage to the people whose
economies are growing and ours are shrinking. It goes to all
industries.
Now, 20 years ago, we had great hope for this place. But we
see our customers moving down--Caterpillar left here this past
year with 120 jobs in the mining equipment business. Our miners
have had to become workers in the salt mines in Louisiana, and
elsewhere. There is no work for them.
I hope that you will remember that the terrain here is not
very conducive to building large plants and building new towns
that are not actually in an area of danger from the environment
that we continue to face.
When we got into the mining industry, there were so many
tons of mines built. And through market forces and speculation,
a lot of the mining grew. And like in the oil and gas industry
now, our gas industry down here is going to be faced with
regulations with the escape of methane. And I have drilled many
wells.
When you get into productive gas well drilling, it's
inevitable to get the gas away from the rig. It's a very
dangerous situation. At some point in time, we feel like
through these regulations, they're going to drive what is now a
very expensive proposition--it takes $5 million to $6 million
to drill one of these Utica/Marcellus wells. We can only
imagine what the regulations are going to do to the gas
drilling in Southern West Virginia. Our recounts are already in
half. We are already seeing people going bankrupt and leaving
the business because of market forces. But regulations are
going to put a lot more pressure on them.
Again, we've seen our customers, such as this panel, spend
billions of dollars to upgrade only to have the target moved
again. The compliance efforts of these people have been
Herculean. We applaud their efforts because we know the power
companies are dedicated to finding a way to produce energy
without coal. Without coal, I don't think our southern part of
the State can survive in any way shape, form or fashion.
My contemporaries I work with do not think the Federal
Government has any interest in the viability of this industry
in the Appalachian basin. We feel like we're being put upon in
an unfair competition against the world who does not adhere to
what we're trying to do. We feel like their efforts--the
Federal Government efforts should be to work with those people
overseas to get some kind of equal playing field.
We're not asking for subsidies. Our company will diversify
and continue to adapt. But to adapt is becoming an extremely
difficult situation for Rouster Wire, Rope and Rigging. If a
company here in town is spending $10,000 a month on energy and
we get a 26 percent increase in energy, you're looking at one
or two more employees that I could be putting to work. Take all
the tax--I mean, off the dole and actually be constructive
citizens of Southern West Virginia.
As we see our OEMs, our original equipment manufacturers,
slow down--we're not talking about 4, 5, 10 jobs at Rouster
Wire, Rope and Rigging. We're talking about hundreds of jobs
from the ground to the top, to the finished product, to when
that machinery goes into production. It's going to hurt our
southern part of West Virginia worse than anything.
We do want a clean environment. Being fathers and
grandfathers of children here, we definitely want a clean
environment. We need consistent, long-term goals that don't
crush our economy here in Southern West Virginia.
Thank you very much.
[The prepared statement of Mr. Farmer follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Capito. Thank you, Mr. Farmer.
Thank all of you.
We're now going to move to the question portion. I am going
to start--there's lots to talk about here.
I want to start with Mr. Patton. I want to talk about the
reliability issue because coal is our baseload fuel in this
country. And if we don't have the baseload, then we can't peak
when it's really cold or it's really hot or where there's an
outage or there's a flood or there's something that's happened
in another region of the country that--or the region that is
hampering our ability to get power.
And coal certainly is that baseload. It's secure. I read in
your testimony where you can store it right on the facility.
You don't have to look for it to come in maybe through a
disrupted pipeline or something like that, or whether the sun
is shining or the wind is blowing. It's there. Coal is there.
It's solid.
Let's go back to the polar vortex of last year. I
understand at AEP there were--that you were peaking at maximum
capacity. If that were to happen in, say, 2 or 3 years from now
when you've taken your coal plants down, it could have a real
effect on the reliability of our power generation. Could you
speak to that issue?
Mr. Patton. Yes. Thank you, Senator.
So first of all, just one point of clarification to
comments that were made previously about Appalachian Power
Company. And it is related to your question.
Appalachian Power Company transferring coal plants to serve
its customers in West Virginia. Yes, we did. I'm very proud of
transferring those plants. Because those plants were the
cheapest options for our customers.
It's important to understand in this conversation around
natural gas--and natural gas is a rich, abundant resource. And
it is the fuel--it is affordable fuel. It is. The price and
availability of that fuel is indisputable.
The reality though is that if you have a coal plant and it
is a coal plant that meets current EPA standards, that coal
plant is very competitive with natural gas. Because coal on an
MMBTU basis is still a cheaper fuel than natural gas.
The difference is the capital cost associated with building
a new coal plant with all the environmental requirements versus
the cost of building a new gas plant.
So the coal plants that Appalachian Power Company has
transferred to serve its customers in West Virginia--or have
been transferred because we believe that--to your question--
that those plants are both reliable and they are affordable and
the best option for our customers.
To that end, last year the polar vortex, which received a
lot of attention--at Appalachian Power Company, we set an all-
time peak. But what is not known for most people is this winter
it did not get the attention of the polar vortex, but we broke
last year's record. This February was actually colder than last
year. Both last year and this year, every plant that
Appalachian Power Company has--every coal plant was running--
was up and operating.
The Glen Lyn plant, which will not be here next year. The
Kanawha River plant, which will not be here next year. The
Sporn plant, which will not be here next year. Cameron, which
will not be here next year. All of these plants were running.
I'm sorry. Not Cameron. But all of the APCO plants were running
this year, and they will not be available next year or in the
near future until we can build additional capacity.
The PJM, which is the governing body, tells us that they're
at sufficient capacity. If there is sufficient capacity, why
would we have to run every one of our units whenever we get
into these peak conditions?
Senator Capito. I think that's a real concern certainly
where the replacement for this power generation could possibly
come from.
Just as a side comment, in your statement you talk about
the cost of--well, you talked about it a little bit here--
building a new coal-fired power plant, building a new natural
gas plant. Well, it's not like these things can occur overnight
either. What's the length of time--let's say you were going
to--decided to build a natural gas plant in the Wheeling area.
How long would that take--just real quick--expensive-wise and--
a 10-year project?
Mr. Patton. No. Once you get permits, I would say you could
build one in probably--it's probably about a 3-year process.
Senator Capito. Once you get permits?
Mr. Patton. Once you get permits.
Senator Capito. What's the time for the permit?
Mr. Patton. Well, when I say 3 years--3 to 4 years, you can
get permitted and build a natural gas plant.
Senator Capito. What is the approximate cost of something
like that?
Mr. Patton. A natural gas plant--to give you a common
benchmark, a thousand megawatt gas plant would be about $1.3
billion.
Senator Capito. Mr. Trisko, let's talk about the EPA's
legal authority that sort of came through everybody's
testimony. You know that there's four building blocks. And for
those of you in the audience, that's what the Clean Power Plan
is based on, EPA's four building blocks. But building block one
seems to fit within the EPA's traditional authority to regulate
emissions at the source.
But is there any legal basis for EPA to regulate natural
gas dispatch requirements?
What that means is, in this Clean Power Plan, they're
saying--the way I understand it, the natural gas plant has to
dispatch at 70 percent. Is that your understanding?
Mr. Trisko. That's what the rule proposes.
Senator Capito. And presently they're dispatching at, what,
51 percent or something like that?
Mr. Trisko. Yes.
Senator Capito. So do you think there is legal basis for
the dispatch for the Renewable Portfolio Standard, or to order
reductions in energy demand on customers?
Mr. Trisko. Senator, those are all very good questions. Let
me start at the top. Building block No. 1, the 6 percent
efficiency improvement for coal plants. Even the author of the
study that EPA relied upon for that 6 percent efficiency
improvement has disclaimed the study for purposes of EPA's
application of the study findings to this rule. Six percent has
been roundly denounced in the comments EPA has received as
being unachievable. The figures I hear most commonly are in the
order of 1 to 2 percent. It's realistic estimates.
Now, that would be an inside-the-fence reduction. That is
what the UMWA urged EPA in a number of meetings that we held
with the agency prior to the proposal of the rule. We said
figure out what you can get from existing plants inside the
fence. Send the engineers in, boots on the ground. Consistent
with what EPA is required in its new source, Backed Guidance,
by the way. And that went through an EPA stakeholder process
for over a year. The agency chose to go far beyond the inside-
the-fence approach.
Now, it starts with the natural gas dispatch requirement.
To the extent that a coal-based facility has an existing gas
combined cycle facility located within its fence line, then I
would say arguably EPA has authority under Section 111(d).
But to the extent that another utility in another part of
the State happens to have an existing natural gas combined
cycle unit, then I don't see 111(d) as providing the authority
for EPA to require that redispatch requirement.
Now, Senator, a key phrase in Section 111(d) is a standard
of performance. Now, this is classic throughout the Clean Air
Act, a standard of performance. I am at a loss to find within
the penumbras of previous EPA regulation regarding existing
source performance standards or new source performance
standards requirements related to increased residential energy
efficiency.
I am at a loss to find authority linking 111(d) to
renewable energy standard requirements. There's good reason for
that. Because under our Federal system, Congress has seen fit
to allow the States to determine based upon their own
individual social, economic, political characteristics the
extent to which they would pursue energy efficiency programs or
renewable energy standards.
As noted, West Virginia had its own renewable energy
standard on the books for a period of time and just recently
chose to repeal that standard. Other States similarly have
moved in the direction of revising their renewable energy
standards. Quite a number of States have chosen not to adopt
them. This is an effort by U.S. EPA, in effect, to require
those States that have chosen for their own reason not to
pursue renewable energy standards to impose them under the
rubric of Section 111(d).
I don't find the statutory authority for it. And I'm
hopeful that the D.C. Circuit will likewise be doubtful of it,
and ultimately the Supreme Court will affirm.
Senator Capito. Thank you.
Mr. Farmer, thank you for coming. Thank you for investing
in West Virginia as a West Virginian. I think one of the most
frustrating things for me is just the seeming inability for the
EPA to actually look at what the economic impacts, you know, in
regions has been. I just think that they have by the fact--as
we shared, they haven't come and listened to us. They don't
know about the thousands of miners that have already lost their
jobs. Certainly, in Eastern Kentucky where Hal Rogers
represents, they've had thousands of jobs lost there. And in
Southern West Virginia, again, thousands of jobs.
Could you just--and you alluded to this in your statement.
But I really would like to get on the record what your
employees--how do they feel about knowing that they're on pins
and needles as to whether they're going to have a job when they
know that policies emanating from the President and the
executive branch are really not listening to them, not seeming
to even care, about what a particular region of this Country
and how devastating policies that--as you said, tight
timelines, unachievable deadlines. I mean, this has got to be a
daily conversation in your building--buildings.
Mr. Farmer. Senator, I appreciate the opportunity to be
here again. I again apologize for being late. 30 minutes before
I was here, I looked like a coal miner. When Hampton called me,
I had to rush and get a shower.
Our guys--we have a great, and have had a great work force
here in Southern West Virginia that's provided energy and
timber for our war efforts. I think that one common thread that
runs through the conversation from the aggregate companies to
the pipelining companies to transmission distribution and power
generation, people are worried about the world situation here
in this little part of Southern West Virginia. How would we
prepare ourselves for a war to generate power and make steel,
very energy consumptive, extractive base industries? We're the
people that pick this stuff up. We're the people that get this
off--materials on the cranes to pick these things up, to tie
them down, to move them across our roads.
Our workers, Senator, are extremely worried of my ability
to continue to provide jobs here in West Virginia which
continue to shrink and contract. I don't think the world knows
that much about our area down here and how rough it is. It's
not--80 percent of the land south of Charleston is owned by
large land-holding companies and coal companies and trusts.
Eighty percent of the land north of Charleston is more held by
private people.
There's no opportunity for my workers to turn and go across
town and get a job for $13, $14 an hour. Our average salaries
are $20, $25 an hour. Our bosses with no education make
$65,000, $70,000 a year. These jobs are not here. The
regulations that we see--we're intimately associated with the
power generation, transmission, distribution business.
If I recall right, Mr. Patton, when you-all built the 765
KV line from Oceana to Jackson's Farm, Virginia--from the time
of conception to the time of first caisson was drilled, it was
like 10 years. I don't know if that's a fact or not.
Mr. Patton. More like 14.
Mr. Farmer. Fourteen years from time of conception through
the public comment period to constructing the first yard of
gravel. By the way, that was our first large rigging job for my
company. It gave me two more employees. And we thank you. But
now, not only them, but we're worried about our gas line, which
is what we're focused on this year.
We don't think that the regulations and--the permitting and
the regulations that are going to be forced upon them through
the EPA are going to allow us to continue--possibly not even be
working here in 5 years. Thank you, Senator.
Senator Capito. Thank you. Congressman Jenkins.
Representative Jenkins. Thank you, Senator.
A couple of questions. First, Dr. Richardson, good morning
and welcome. From your comments, I think I heard you say--and I
just want to make sure. You think what the EPA has proposed is
quote, not bold enough?
You think the EPA should actually be going further on their
carbon and their greenhouse gas emission standards?
Mr. Richardson. That's right. Thanks for the question.
If you look at the science of climate change and you look
at the magnitude of the problem, it really is urgent to bring
down our carbon emissions more so than what the proposed
regulation would accomplish.
The analysis that we did at UCS shows that in terms of the
renewables building block, that the agency actually
underestimated the potential nationally for renewables to play
a part in what they proposed.
Representative Jenkins. The progressive budget has for the
last several years contained a provision for a carbon tax. And
in the language in the progressive budget, it specifically says
through the imposition of a carbon tax, it will have the
ability to impact the weather and address significant storm
potential.
Do you agree, one, with the belief that a carbon tax is a
good mechanism by which to influence change, vis-a-vis electric
power generation through the use of coal?
Do you support a carbon tax?
Mr. Richardson. I would say that in general UCS's agnostic
about the particular policy mechanism. But I think that we
would absolutely agree that a price on carbon is essential.
I think that one of the most frustrating things for me is
to hear people talk about how cheap coal is. Because if you
look at the externalities from the extraction of coal, the
transportation of coal, the burning of coal, the pollution that
it releases when it's burned, the ash that's left over after
it's burned--it has a huge impact on not only on the
environment, but public health. And if you were to add up all
of those extra costs that are not included in the price that
you pay for your electricity, it would double or triple the
price of coal-fired electricity.
So I think that the point of having a price on carbon would
absolutely send a signal that, look, it shouldn't be free to
dump this substance into the atmosphere.
Representative Jenkins. You raised during your comments,
Williamson, West Virginia and held it out as a community leader
in addressing health issues. Just in the last couple of weeks
Williamson Hospital announced that they are going to stop
delivering babies. No OB services in Williamson, West Virginia.
How do you look at a resident in Mingo County and an
expectant mother who historically has gone to the local
hospital, readily accessible, and faces now the impact of not
being able to have a baby delivered in their own home
community?
Mr. Richardson. I think that if you--again, I'm from the
northern part of West Virginia. I think that if you look at
Southern West Virginia as a whole, there's a whole series of
issues that come into play when we talk about the economy.
The subject of this hearing is just one of those things.
Absolutely, there is an issue with the availability of health
services. And healthcare in Southern West Virginia is a huge
problem.
Representative Jenkins. As you tried to hold out Williamson
as a leader in healthcare, transition or transformation, I'm
just trying to provide a little reality check that this is a
community and a people that are really struggling.
Mr. Van Nostrand, again, welcome to you.
Mr. Van Nostrand. Thank you.
Representative Jenkins. You mentioned in your comments
twice bipartisan in comparing Kentucky to West Virginia. I
think you did it in a context of promoting--look what they're
doing in Kentucky, bipartisan, bipartisan, twice.
We've got a Democratic Governor in West Virginia. And
overwhelmingly within the West Virginia legislature, led by
Republicans. Both Republicans and Democrats led the charge,
again, signed by a Democratic Governor for the repeal of the
renewable energy portfolio. Wouldn't you acknowledge that the
issues relating to our advocacy has been a bipartisan effort in
West Virginia?
Mr. Van Nostrand. Well, certainly we have a split in
parties and control in West Virginia. I think the point I was
making about Kentucky was the bipartisan effort to start the
conversations, to have the issue. You look at the shaping our
Appalachian region process--it's going to be another conference
in a couple months from now--and you've got this--a Democratic
Governor and Republican Congressman who are starting those
conversations in Kentucky and talking about the future.
I think it's been effective. I think they're much further
down the road of a future. And they don't have the benefit of
Marcellus shale. They don't have the benefit of a great energy
resource. We should be a better energy State than Kentucky.
So, yes, I understand--I acknowledge that we have a
Democratic Governor and legislative control by the House. But
we have--I was talking about the Federal and State level. Just
the fact that you can have two U.S. Senators battling for that
position, Mitch McConnell and Alison Grimes. But the--while
that's going on--in a Senate race, you've got this action going
on between a Democratic Governor and Republican Congressman to
start those conversations.
That's my point. We really need to start those
conversations in West Virginia.
Representative Jenkins. Are you thinking those
conversations are not already being had about the future of
West Virginia?
As a former member of the legislature, we talked about
Marcellus shale. West Virginia was a leader in establishing
legislative policies relating to how we're going to, in an
appropriate way, seize that energy opportunity. We are talking
about the south and issues relating to the future of Southern
West Virginia. So when you say I think West Virginia should
start--I think you're not giving credit for the kinds of
efforts and discussions that are already being had.
Let me ask you--you also pointed a finger at West Virginia
relating to the suit against the EPA. You and I are both
attorneys by education. Never ask a question you don't know the
answer to. Is Kentucky one of the States that is suing the EPA?
Mr. Van Nostrand. Yes, they are.
Representative Jenkins. I thought they were.
Mr. Van Nostrand. I don't deny that's going on at one
level. The question is, while you have these positions being
taken at one level, is there hard work going on behind the
scenes to figure out how we're going to make this work for our
State?
That's happening.
Representative Jenkins. Chairman Rogers, the chair of the
committee I serve on, appropriations, is passionate,
passionate, and you give him credit for SOAR. I too give him
credit. But he is as articulate and as passionate and as
bulldogish as they come in fighting the EPA in standing up for
coal.
You can walk and chew gum at the same time. You can talk
about the future, but you can also be a passionate advocate for
coal.
So I'm having a difficult time when you compare Kentucky
and West Virginia. Kentucky is suing the EPA. Kentucky is
representative and Congress is fighting the EPA. Kentucky and
West Virginia in a bipartisan effort are standing up for coal.
So while you can point to a program or project, I think you
can--a fair analysis, you can find that West Virginia too is
looking to the future.
Mr. Van Nostrand. I guess I would still go back to Governor
Beshear a few years ago talking about an all-of-the-above
energy strategy which really looked at, not just coal, but also
taking advantage of that State's renewable resources--that
State's energy efficiency resources, that kind of leadership
going on. And we have not had--I mean, the steps our
legislature is taking in the last couple of years--the last
year, we're moving in an entirely different direction.
Representative Jenkins. In a bipartisan effort?
Mr. Van Nostrand. Not this year. We have a Democratic----
Representative Jenkins. Do you know what the vote in the
House and Senate----
Mr. Van Nostrand. I testified on the----
Representative Jenkins. Was that not bipartisan?
Mr. Van Nostrand. Yes, it was.
Representative Jenkins. Did the Governor sign the repeal of
the Renewable Portfolio Standard?
Mr. Van Nostrand. Yes, he did.
Representative Jenkins. Is he a Democrat?
Mr. Van Nostrand. Yes, he did. He also signed the bill to
wind down that metering.
Representative Jenkins. Thank you.
Senator Capito. Mr. Trisko, quickly, on the MATS Rule that
is the rule that was put into effect in 2008--is that----
Mr. Trisko. 2011, Senator.
Senator Capito. 2011. Excuse me.
How has the implementation of the MATS Rule impacted the
UMW?
And do you expect similar impacts from this Clean Power
Plan to affect the United Miner Workers and their work force?
Mr. Trisko. Thank you, Senator.
When the MATS Rule was initially proposed, the UMWA
estimated potential plant closures amounting to 56,000
megawatts of capacity. Largely, the smaller and older
generating plants, such as Kanawha River, Sporn, they would not
be able to afford the capital expenditures for the investment
and compliance with MATS. At the time, EPA indicated that their
estimate of retirements due to the MATS Rule was 4.7 gigawatts.
So we were pretty much in order a magnitude apart in our
estimates.
A number of years went by. Other studies were done by Wall
Street, by other consulting firms. And the consensus estimate
of closures as a result of the MATS Rule--and this will
continue through about the year 2017. There are 1- and 2-year
extensions available under that rule--are on the order of 50
gigawatts of capacity.
You will have another 20 or so gigawatts that will retire
for any reason--a number of reasons; lower natural gas prices,
reduced industrial demands, so on and so forth. Those two
numbers, 50 gigawatts for MATS and another 20 make up the 70-
plus gigawatts that EPA indicates will retire apart from the
Clean Power Plan.
Now, Senator, if I might, there's been a missing element
within this discussion as it relates to reliability and the
impact on coal. We are not appropriately considering at this
point the potential impacts of EPA's revision of the 8-hour
ozone standard. The comment period on that rule closed last
week. EPA has proposed a range of 65 to 70 ppb. The current
stand is 75 ppb. They're also put forward an alternative
standard of 60 ppb.
EPA's regulatory impact analysis indicates that at the 65
ppb proposed standard, 51 gigawatts of coal capacity--which are
identified in the docket in this rulemaking--are subject in
EPA's view to potential retrofit of selective catalytic
reduction technology, SCR. It's like the catalytic converter on
your car, except it's the size of a house and it costs a couple
hundred million dollars.
EPA likewise has identified that many of these units
subject to SCR requirements are older and smaller units. We
believe it more likely that those plants would retire rather
than invest in SCR capacity. So, in effect, we are looking at
yet another 50 gigawatts or 50,000 megawatts of potential
capacity shutdowns between now and roughly the year of 2023. So
that would bring the total--taking it from 122 gigawatt
reduction from EPA's regulatory impact analysis, it would take
it above 150, in the direction of 170 gigawatts. Our total coal
fleet is just over 300 gigawatts.
Frankly, Senator, I do not know how this Country keeps the
light on with the loss of 150 or more gigawatts of coal
capacity. That represents more than 20 percent of our total
electric generation when you consider the generating capacity
of those facilities.
Senator Capito. Thank you. I wanted to talk a little bit
about the letter that Senator McConnell wrote. I think,
Professor, you might have talked about it. My reading of the
letter basically says every State has to have a State
implementation plan. I asked Administrator McCabe if the States
do not have a State implementation plan, what happens. And she
said the EPA will make the implementation plan. Which sent sort
of the wrong kind of chills down my spine.
But in any event, I think McConnell's point is, if you're
going to impose certain standards on every State and the State
has to come up with the State implementation plan, the State
makes the difficult decision--the State says we're going to
close this many power plants, your work force is going to be
cut, you know, and the difficult, hard--at the community level,
employment level, price and cost of electricity level are made
at the State.
I think what McConnell is saying is if the EPA wants to go
in this direction and they're federally allowed to do it, then
they're the ones that are going to have to be the ones that
make the tough decisions. The EPA is going to be the ones
that's going to tell West Virginia how we're going to meet a
standard that we basically don't think we're going to meet.
Which leads me to a whole other issue, which is the
regional issue. You mentioned it, I think, in your statement.
The plan allows for you to be able to go to different regions
so that you could maybe capture certain statistically
reductions from your regions. We've been discussing our region.
We're 95 percent reliable on coal. We export our coal. We
export our electricity. Who is going to want us in their
region?
I mean, our numbers are not going to improve anybody's
numbers. So we're going to be in an island here. I'll quote Mr.
Richardson when he says, It must be recognized that job impacts
will be unevenly disbursed. Some regions and States will be
winners--I appreciate your frankness here--and others will
experience economic consequences with a shift away from coal.
I understand basically there's winners and there's losers.
And we are in a really difficult position here in our State.
So I think that's why McConnell--and if you would like to
respond to the McConnell letter, Professor, I want to give you
that opportunity since I brought it up and that was part of
your statement.
Mr. Van Nostrand. I understand the position the Senator is
taking. My point is, I think--those are tough decisions. But I
think the States know better. I think our goal--we had our
conference back in February a year ago. Our goal is--what
flexibility is EPA going to provide us?
Because our goal is to try to figure out how to comply with
this rule in the manner that has the least disruption on the
economy. What is our lowest cost compliance path?
And I think the States know that better than EPA. So I
think the States ought to try to work with the EPA, first, to
shape this rule.
In response to what Mr. Trisko said, this is a proposed
rule. The final rule is going to come out in December. It could
look entirely different in terms of--and there's nothing that's
required by these building blocks. The building blocks were
used to come to the best emission reduction number, the 20
percent number for West Virginia. There's no requirement. The
building blocks were a tool used by EPA.
The final rule is going to come out this summer. I think
the States--because we're in a better position to know what's
going to work, we ought to be taking advantage and try to work
with EPA and--because a Federal plan is going--they don't know
the State as well. Chances are the compliance costs are going
to be higher, so our utility rates are going to be higher than
they need to be.
Mr. Richardson. If I could just add. One of the things I
was trying to emphasize with my testimony was that it is
absolutely critical that we work to diversify our economy here.
It just doesn't make sense to have all of our eggs in one
basket.
I can tell you as well as anybody in this room how proud I
am of my heritage, my family's heritage mining coal. OK. But it
just doesn't make sense to have our entire economy based on one
thing that is subject to these boom-and-bust cycles.
Think of it in terms of a risk framework, right?
So you don't want to risk things moving forward and
changing that you don't have control over, whether it's who is
sitting in the White House or whether it's how much coal China
decides to burn. They're working on burning less coal over the
next decade.
So there's a lot of issues here that we don't have control
over in Southern West Virginia. So what I'm trying to say is,
why can't we build the solar panels? Why can't we build the
components of the wind turbines going up?
We can do that here in West Virginia. But we have to decide
we're going to invest in that and in those different sectors of
the economy.
Senator Capito. I appreciate that.
Let's go to CCS really quickly, carbon capture and
sequestration. The EPA uses that as sort of a--what do I want
to say--blunting of the effect of the regulations. Well, if we
move forward on CCS--and I certainly have been a broad--and
will continue to be a big supporter of the research and
development of the CCS. Because I think for all the reasons
we've talked about, coal still is going to have a role. Maybe
we're disputing the largeness of the role. We think it still
needs to have that good baseline, solid role that represents
the fuel that it is.
The EPA uses the Kemper plant in Mississippi--and you
mentioned that in your statements--as the gold standard for
CCS. Well, I just saw the president of--I think it's Southern
Company owns that plant, over $2 billion cost overrun. They
still don't have their sequestration protocol in effect. There
are some--I think some great research is going on in terms of
enhanced oil recovery and other things to use once you capture
the carbon.
But I know that since I had the Mountaineer plant in Mason
County for many years, when I represented Mason County, they
were doing a project on that plant on CCS with--I think it was
Olstrum and the Department of Energy. They had to pull the plug
on it. Give us the top two reasons why, please, Mr. Patton.
Mr. Patton. Well, it was simply a pilot project. And when
we looked at scaling it up, the cost of it was just prohibitive
at that time. As you pointed out, the Kemper station in
Mississippi is somewhere north of $7,000 a kw. So if you were
building a thousand megawatt plant, it would be $7 billion--
over $7 billion plant. And a new combined cycle gas unit, as I
said earlier, is $1.3 billion. So the technology----
Senator Capito. It's just not economically feasible?
Mr. Patton. It's not economically feasible.
Senator Capito. Not to say it never will be?
Mr. Patton. Right. And we should continue to invest in
technology to ensure a long and bright future for coal.
But one thing important to note here is that--we keep
talking about--you go from coal to renewables to solar to
energy efficiency. And all of those things are great. I believe
that they should be a significant part of a utility portfolio.
And Appalachian Power Company and AEP is moving--as I pointed
out in my testimony, if you look at our overall coal
consumption, it has dropped. But there's a cost--not only to
those technologies, which are more expensive. There's also a
cost of abandoning operational facilities that serve customers.
So to willy-nilly just say we're going to stop using these
coal plants and we're going to go and invest in a bunch of
windmills and solar panels and have our customers pay for the
coal plants that we abandon, and to pay for the solar and the
windmills is just not--it's crazy. It's not what you're going
to do.
The other thing is that renewables--again, they're an
important part of the portfolio. But the wind doesn't blow all
the time, and the sun doesn't shine all the time. And the
bottom line is, you need some type of fossil based or nuclear
power to support solar and wind. You have to have those as
backups.
As we saw during the polar vortex, the wind didn't quite
blow the way it was forecasted to. When I was president of the
Texas company, there were a couple of times we came very close
to outages in similar situations. So it's just important to
keep that in mind. It's not a binary decision.
Senator Capito. Thank you.
Congressman.
Representative Jenkins. Mr. Patton, let's stick with you.
Let's try just for a second to--where the rubber meets the
road. You've alluded to it in the last moment of your comments;
price and availability.
No. 1, once you convert a power plant away from coal, do
you ever convert it back?
Mr. Patton. You could under the right economic conditions.
But you would not today convert it back. Because all you do
with a plant that you convert is you convert the burners to
gas-based burners as opposed to burning coal.
Representative Jenkins. In your decisionmaking process,
you've listed out several coal-fired power plants that are
being taken offline, being mothballed. There are plants that
are being converted. Is a significant--not total. Is a
significant contributing factor to those business decisions
that you were making the policies, the proposals, the actions
from a regulatory standpoint from this administration and this
EPA?
Mr. Patton. Absolutely. The Kanawha River plant runs fine.
It's just--it doesn't meet the EPA requirements.
Representative Jenkins. Does it meet the EPA requirements
as of today?
Or meet the EPA requirements under a set of proposed rules,
I know in multiple areas, looking forward?
Mr. Patton. No. The Kanawha River plant falls in the group
of plants that Mr. Trisko pointed out. It's one of those older
smaller plants, which putting a scrubber on that unit does not
make economic sense. It does not meet existing MATS
requirements.
Representative Jenkins. So this is death by a thousand
cuts. We already have rules and regulations that have been put
in place in recent years that are causing power plants that are
already operational, working fine, just don't meet--and you are
forced as a result to take those offline?
Mr. Patton. That is correct.
Representative Jenkins. With regard to the issue--and you
referenced it in your comments earlier. I am very concerned,
just as the Senator is, about the cost of energy on fixed
income--predominantly seniors as a percentage of their
household budget. You referenced over the last few years as a
result of the new expenditures you've been required to make or
the changes. Share with me, again, those numbers in terms of
what it--what the price impact for a person's electric bill.
Mr. Patton. With the $2.2 billion investment that we made
at John Amos and Mountaineer plant--we spent approximately $2.2
billion to comply with the MATS and also with the Cross-State
Air Pollution Rules.
Representative Jenkins. Let me make sure that I understand.
So you have regulations that require you to make investments,
2.2 billion. You are a regulated utility. You can't charge one
penny more than what the Public Service Commission in West
Virginia says you can pay. So when you make that $2.2 billion
investment, do you then go to the PSC and say would you all--
here is a rate increase to cover these costs, and the PSC then
says, yes, you're going to be granted authority to raise your
rates?
Mr. Patton. Yes.
Representative Jenkins. Are the people paying for that $2.2
billion of investment that you've already made in their utility
bills?
Mr. Patton. Yes, they do.
Representative Jenkins. And those are for the regulations
already. Have you estimated to any extent possible if the
proposed rules would be implemented--and we've got testimony
here that says they don't think the proposed rules go far
enough.
If these proposed rules as is get implemented, do you have
a cost estimate that one of my constituents from Southern West
Virginia would have to pay on an average utility bill?
Mr. Patton. The numbers are broad throughout the Nation.
Here in West Virginia, we would be looking at--just solely
based on the--on the proposed rules, we would be looking at an
additional 25 percent. That's not--that does not include things
like the investment in transmission that's going on right now.
Representative Jenkins. When you say--are you saying that
25 percent may be the floor that it could be in--that the
actual number when other factors are considered, the percentage
increase might be more than that?
I wasn't sure if I understood your last comment there.
Mr. Patton. No. I can't--in fact, I believe I misspoke. I
had to think about the number. In fact, it's not 25 percent.
It's actually--I think the forecast for West Virginia is
actually 15 percent, is what it is for West Virginia.
Whether or not that is precise or it could be more, I don't
know. I can just base it on the calculations based on the
current proposal.
Representative Jenkins. Finally--I heard it from Gina
McCarthy. I hear it every time the issues of these rules get
discussed. These are proposed rules. These are proposed rules.
It's almost kind of a remain calm, don't worry about it. We're
going to have to wait to see what the final--I can't imagine an
administrative approach that is so calculating that would say,
let's do something really strong, get everybody worked up in a
proposed, and then we'll come in and back off and everybody
will say, look, we dodged a more aggressive bullet. I can't
imagine--shame on this administration if that was their
approach. The fact from a--in your world, do proposed rules
matter?
Mr. Patton. Absolutely. Because they drive costs.
Representative Jenkins. You're making decisions, are you
not, literally every day, week and month about the future?
You don't plan a week out. Don't you plan years out?
Mr. Patton. Absolutely. Power plants typically have a life
of 30 years. Therefore, you're making 30-year decisions. When
you've made major capital investments, like scrubbers, you're
typically looking at an additional 20 years associated with
those types of investments.
Representative Jenkins. So are you making decisions as a
company with an eye toward what is being proposed in this rule?
Mr. Patton. Oh, absolutely.
Representative Jenkins. Looking ahead?
Mr. Patton. Absolutely.
Representative Jenkins. Proposed rules have consequences?
Mr. Patton. They have consequences. In that I would suggest
to you that much of the industry is hamstrung on really what
it's going to do with some of its generation right now because
there's so much uncertainty around what these rules will
ultimately be.
Representative Jenkins. Senator, if I could ask maybe one
more to Mr. Trisko. Thank you for your leadership and your
effort.
The comment was made earlier by Mr. Richardson, special
considerations for families is needed. Let me--I didn't delve
into kind of what he meant by that. I think we kind of--
probably can believe what he's suggesting.
From your perspective, from a representative of the UMWA,
what sort of, quote, special considerations, do you think are
necessary to help the hard-working coal miners of West Virginia
get through this storm that they're faced with?
Mr. Trisko. Congressman, that's a wonderful question. The
answer is that we need policies that encourage the continued
utilization of our Nation's greatest fossil resource. You know
that the coal reserves in the United States have greater energy
content than all of the oil in Saudi Arabia. We do not have
policies that enable us to continue to utilize that. Rather
than an all-of-the-above energy strategy, we appear to be
headed toward a natural-gas-only strategy. That is an all eggs
in one basket gamble.
When we see the play out of the reduction of capital
expenditures in drilling that is ongoing within the oil and gas
sector, when we see the development of LNG export terminals,
watch out for the price of natural gas and what your consumers
will pay.
As for workers, unfortunately, because our members tend to
be among the highest wage and highest benefit of workers in the
rural areas of Appalachia, the loss of one of our jobs is
equivalent to the loss of more than three jobs elsewhere in the
economy. Those jobs are not made up in alternative sectors
because the alternative sectors do not exist.
When you look at the impact in, for example, a school
district of the closure of a power plant which is a major
contributor to the tax base of the region, and the closure of
the associated coal mines, you find a cliff. And the cliff is
where the school district once had funds available to support
its students. Those funds through its tax base are reduced by
half or more.
I was out in Colorado a few months ago talking to 500 folks
in a high school gymnasium where they were addressing the
prospect of a loss of a nearby power plant and coal mine. The
president of the community college, a gentleman in his 70s,
came up. He was one of the last to speak. He said ladies and
gentlemen, let me tell you what it means to this community if
we lose the Craig Power Plant and the Twenty Mile Coal Mine. I
run these numbers every day. I live with these numbers. If we
don't have that power plant--in fact, if we lose just one unit
at that power plant, I cannot guarantee you that our community
college will be able to remain in business and provide one half
of the course offerings and faculty that we now have.
This gentleman recognized clearly that the loss of those
contributions to the local tax base, to the community college
would not be replaced in rural Colorado. And nor will they be
replaced in Southern West Virginia.
Frankly, it's simply happy talk to suggest that there are
solutions at the State or the Federal level. We've been at this
since the great society and the Johnson administration and the
Appalachian Regional Commission. The funds are not there in
sufficient quantity to make up for the kinds of losses that we
in the UMWA, the IBEW, the boilermakers and others are
beginning to experience. I apologize for the length of the
question, but my blood pressure increased.
Representative Jenkins. I like it when I touch a nerve.
Let me see if I can touch one more nerve. The
Administration and their budget is throwing out a big figure, a
billion dollars, to invest in impacted communities, West
Virginia and other parts of the Country because of this agenda.
I'm still confused a little bit because my curiosity is--
this is--where are they taking this money from to make that?
On the one hand, I hear maybe that money is contemplated as
a result of a tax on coal. Isn't that incredible? We're going
to tax coal more and turn right around and say, isn't this
great, we're going to give money back to communities, but we're
going to try to kill coal through higher taxes in the first
place. Or they want to take it from the abandoned mine fund.
Do you know under the President's proposed investment where
he is suggesting that money come from?
And do you have an opinion as to whether this is a good
investment considering the source of the funding from which it
is being taken?
Mr. Trisko. Congressman, I'm not an expert on the
Administration's budget. There have been proposals to increase
severance taxes on western coal and transfer those increased
severance taxes east as a compensation mechanism. I suggest
that you confer with your colleagues west of the Mississippi
River as to their views on that proposal.
But a billion dollars, put that in the context of the
numbers cited in my testimony, the contribution of West
Virginia coal, just the West Virginia economy, to your gross
State output, it's about $15 billion a year. And we're talking
about a billion dollars applied to coal generally. It's a drop
in the bucket.
Representative Jenkins. It's a billion dollars nationally.
Mr. Trisko. It's really a drop in the bucket. Congressman,
our investment in research and development technology that
would allow us to successfully deploy carbon capture and
storage technologies is a far better place for those
investments. It's got to be a lot more than a billion dollars.
A few years ago, we were looking at $150 billion in
potential funds available for commercial CCS applications. Now,
that did not come to pass for one reason or another. There are
a number of bills in the Senate and in the House seeking to
increase funds available for CCS.
If you want to develop technology that will enable coal to
be burned cleanly in a carbon-constrained world, CCS or CCUS is
the way to go. But we must get to the lower cost second and
third generation technologies. The first generation
technologies that AEP applied at the Mountaineer plant proved
themselves to be unduly expensive. And that's why they couldn't
proceed to commercial deployment.
We have to have sufficient resources available initially at
the U.S. Department of Energy. And I'm talking far more than
what was provided in AARA in order to enable those second and
third generation technologies to be deployed.
When we have those technologies, then coal will be able to
compete effectively against natural gas on a CO2
basis. That's the direction that we need to be headed.
Mr. Richardson. If I could just add a clarification. The
proposal that you were just mentioning was not an
administration proposal. That was a Center for American
Progress proposal in a report that they just released a few
minutes ago that talked about fairness among Federal coal mine
leasing royalties. So that was not an administration thing.
The thing that you're thinking of, the billion dollars was,
in fact, from a proposal to shift some of the money from--its
existing money from the abandoned mine lands fund that has not
been appropriated and actually spend it on communities here. It
was a billion dollars over 5 years. It would require Congress
to actually change how--the formula for how those funds are
related.
I'd like to add one other thing, which is that--it's going
to be difficult to say this. But the truth of the matter is
that a lot of the coal that--the resources that we have here in
West Virginia, here in Wyoming, around the world, have to
remain in the ground. OK?
If you--there are recent studies out there that suggest
that 92 percent of our current coal reserves must remain in the
ground to give us any hope of avoiding the worst consequences
of climate change.
And what I'm here to tell you today is that is a clear and
present danger. Not only to this Country, but to countries
around the world. We're going to figure out a way to solve it
one way or another. My deepest fear is that we're not going to
solve this problem here in Southern West Virginia at the same
time.
I'm not making any--I'm not trying to be Pollyanna about
it, that this is going to be easy or whatever. It's going to be
very difficult. But we've got to figure it out.
Senator Capito. I think, Dr. Richardson, in your statement
you were very honest about that. I mean, I appreciate that. As
you said, you have family from West Virginia, good roots in
West Virginia.
But I'm glad that Mr. Trisko talked about some of the other
impacts. We've talked about job impacts and impacts on the cost
of your electric bills monthly. But there is another impact. I
know we have at least one county commissioner--we did earlier--
in the room.
There is an impact to every single county budget. It's
schools, yes. It's roads. It's a whole lot of other things. I
can imagine, Mr. Farmer, when you pay your local taxes and as
your productivity goes down, it's not just the coal mine, it's
all the other businesses in and around. So it has a much
greater effect to the whole community rather than those
directly working in that business.
Do you have any further questions?
Representative Jenkins. I don't. Thank you.
Senator Capito. I'm going to give the professor here one
shot at telling me why you think that the direction that the
EPA has gone--we heard Mr. Trisko's opinion on the legality,
the legal authority. And you did mention in your statement that
the preferable way is to legislate as opposed to regulate,
which is what we're seeing, or executive opinions.
Briefly, do you believe that EPA has the legal authority to
go as far as they've gone with the four building blocks to
bring forth the Clean Power Plan?
Mr. Van Nostrand. Yes, I do. I share some of the concerns
of Mr. Trisko in terms of whether or not this particular
proposal is necessarily lawful because of the language in
111(d) which refers to sources. I think you would need to go to
actual limits on sources from power plants, and you would use
the building blocks to determine how much can we reduce the
level of emissions on a mass basis. And you would use the
building blocks to figure out what that level is.
That's why I do think there is going to be some changes
when the final rule comes out. Because I think EPA made a lot
of comment on the precise issues that Mr. Trisko mentioned
going beyond--outside the fence. I think you can still get
there by looking at the language in 111(d), and the sources,
use the building blocks to figure out what kind of limits
you're going to put on the power plants under 111(d).
As you mentioned, the 111(b)--my comments also raised some
concerns, and the Kemper plant is one of them. And I followed
Senator Manchin's proposed legislation over the last couple of
years as to whether or not the EPA can really preclude one of
our energy sources through a rule that way and requiring CCS
technology when it's really cost prohibitive and not really
commercially available. I think that's--it's clearly causing
disproportionate impacts.
So it brings me back to the legislative solution which
would have addressed the impacts around the country, the
winners and the losers. I think the legislative solution is
much better at doing that. I think the EPA to some extent has
done that with the best system emissions reduction.
Because we have a 20 percent reduction in West Virginia
versus 30 percent under the rule. But there's limitations on
how much relief they can provide to a region that's clearly
going to be hit much harder than others.
Senator Capito. I'm on the legislation with Senator
Manchin. And by the way, he was extended an invitation to
attend today. I know some folks from his office were here. He
was unable to be here. So I want to make sure you all know that
he's as concerned about being here today as we would like to
have had him.
I would say--in conclusion, I want to thank you all--we
will keep the record open in case we have additional questions
that we may submit to you in writing. I think we've had a
really good discussion in a place where we should be having it,
in Raleigh County, Southern West Virginia.
All the impacts that Mr. Farmer, I think, talked about
very--from his heart, very locally. The bigger impacts as you
look at it more regionally, and then some of the global
questions too.
I would like to take the opportunity to say that we are the
representatives. You know, this is going to say hokey corny,
but we are the representatives of West Virginians. We are West
Virginia's voice. And by hearing what you've said to us today--
if you disagree with the direction that we might be going, we
have that prerogative as your voice to say the direction that
we think you want us to go.
So that is--in Washington, we've had a lot of gridlock.
We've had a lot of pushes and pulls. We've got to get the train
back on the track. I think we're trying. We're doing better.
I'm more of a veteran than Evan is in terms of legislative
service in Washington. I do think we are trying to work in more
bipartisan ways on certain areas where we have common ground.
My pledge to you is to continue to do that. At the same
time, I'm going to be the strong and powerful voice that I wish
to be in the U.S. Senate to reflect Mr. Farmer and his
business, and all of our West Virginia constituents that we see
every day. And that we care about your relatives, Dr.
Richardson. You know it's a great place.
So we'll end on this note. Beat the heck out of Kentucky on
Thursday. We can all agree on that. Thank you very much.
[Additional material submitted for the record follows:]
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