3 utilities that aren't worried about the EPA emissions plan

3 utilities that aren't worried about the EPA emissions plan

The sun is setting on the era of coal-fired power plants in the U.S. First of all, natural gas – which is cheaper than ever and emits half the carbon dioxide of coal – is fast becoming the preferred source for utilities, pushing coal into the back seat. 

And, this morning, the Environmental Protection Agency proposed long-awaited new rules to cap greenhouse gas emissions from new power plants. If it's approved, the proposal -- called the New Source Performance Standard -- would nix future coal-fired plants unless they include costly carbon controls.

Coal advocates view the EPA proposal as the Obama administration's way of circumventing carbon-cap legislation that Congress stymied back in 2010.

The proposed rules would require that new power plants emit no more than 1,000 pounds of carbon dioxide per megawatt of electricity generated. Coal plants typically emit about 1,768 pounds per megawatt. Meanwhile, natural-gas plants – which usually emit roughly 800 pounds per megawatt generated -- would meet the cap.

The proposal wouldn't affect existing power plants or new plants that already have been permitted. But it would likely halt new coal plants, at least unless effective carbon controls become cheaper. And that's a big deal considering that coal accounts for 42 percent of U.S. electricity.

The power sector, which the EPA estimates accounts for roughly 40 percent of our GHG emissions, has the most at stake when it comes to the proposal. Utilities are busy reviewing the 257-page proposal released today.

But not everyone is worried about it. Three utilities I spoke with today believe they're already well-positioned to deal with the changes, if the rules take effect. After all, the high CO2 emissions of coal are hardly news, and these utilities already had been moving away from it. It's an example of how sustainability can confer a competitive advantage.

California's utilities, of course, were helped along by Assembly Bill 32, a state law which requires sources to reduce greenhouse gas emissions to 1990 levels by 2020.

For example, Pacific Gas & Electric Co. (NYSE: PGC), which doesn't own any coal plants, gets less than 1 percent of its electricity from purchased coal-fired power. So it doesn't expect the EPA's proposal to increase its rates for its customers.

"Coal is not part of our portfolio or part of the energy mix for our customers," explained Brian Herzog, director of corporate relations at PG&E.

Sempra Energy-owned San Diego Gas & Electric (NYSE: SRE) also owns no coal plants. A power-purchase agreement for coal-fired generation that will expire in 2013 accounts for 4 percent of its total generation. According to its representative Art Larson, the utility has no plans to renew the agreement.

Meanwhile, Duke Energy (NYSE: DUK) has two new coal plants -- not subject to the EPA emissions cap -- slated to come on line at the end of this year, along with two new natural-gas plants. The company plans to spend $7 billion on the four plants, which will result in rate increases for its customers in the coming months. 

Still, Duke, which has utilities that serve North Carolina, South Carolina, Indiana, Kentucky and Ohio, says it has no plans for new coal projects beyond the two plants already in the works. Tom Williams, director of external relations for Duke, added that the company will look at natural gas, nuclear energy and upgrades to existing coal plants instead.

"This proposal means nothing to us," he said. "Our carbon profile is going down. We're shutting down 3,800 megawatts of coal and [the new plants] we're bringing on will replace that with lower carbon emissions," Williams said.

Photo by leungchopan via Shutterstock.