Iowa ready to meet new EPA air standards for power plants

When the U.S. Environmental Protection Agency issued its proposed standards for reducing carbon emissions from electric power plants, a U.S. Chamber of Commerce study predicted skyrocketing electric bills and massive unemployment. However, the chamber "study" was conducted before the EPA plan had even been announced, based on the chamber's guess of what the standards might be.

Fortunately, their guess was spectacularly wrong. One false assumption, for example, inflated their cost estimate by over 240 percent.

The actual EPA proposal is much less onerous than the chamber's imaginary version. EPA bases each state's CO2 reduction goal on conditions in that state. Instead of imposing one-size-fits-all regulations or micromanaging each utility's generator fleet, each state has flexibility to design the least burdensome way to compliance. Options include customer energy efficiency, zero-carbon generation such as renewable energy or nuclear power, efficiency improvements at coal plants to emit less carbon per unit of energy generated, shifting some coal generation to natural gas, retiring the oldest and least efficient coal plants, and other alternatives. States may form regional efforts if advantageous.

There will undoubtedly be costs and challenges to meet, despite this flexibility. Some states and utilities will be in a better position than others to meet these challenges. Thanks to decisions made over the past 25 years by Iowa's utilities, elected officials, and utility regulators, Iowa now seems relatively well-positioned to comply with the new carbon standards despite being a coal-dependent state.

Iowa's wind power leadership, for example, will be an even bigger asset as we move to a lower-carbon future. And EPA's proposed emission standard lets Iowa count much of our renewable energy development to date.

Those wind turbines dotting the Iowa landscape didn't just sprout spontaneously. The Legislature began encouraging renewable energy in the 1980s, and governors of both parties have supported its growth. The Iowa Utilities Board has acted favorably on renewable generation ratemaking requests and reduced the regulatory burden for proposed facilities.

MidAmerican Energy invested heavily in wind energy and now owns more wind generation than any other rate-regulated utility in the U.S.. Independent power producers flocked to Iowa to build wind farms. The Central Iowa Power Cooperative, which supplies 12 rural cooperatives and 15 municipal utilities, receives a fourth of its energy from renewable sources.

Iowa is one of two states to have already exceeded EPA's highest regional renewable energy goal.

The best way to cut emissions is to use less electricity. States with well-established energy efficiency programs are in a better position than states needing to design new programs. In the late 1980s the Legislature and the Iowa Utilities Board made Iowa an early leader in energy efficiency policy.

The EPA recognizes Iowa as one of the "leading or high impact states" in energy efficiency. For example, over the past five years Alliant Energy/Interstate Power and Light saved 961 gigawatt hours of electricity, roughly equivalent to the electricity used by 91,700 Iowa homes annually.

Last year Alliant/IPL negotiated a favorable purchase agreement for power from the Duane Arnold nuclear plant, which was approved by the Iowa Utilities Board. This assures the continued operation of the plant until at least 2025. If Duane Arnold had closed, Iowa's CO2 compliance could have been complicated by the need to replace its reliable zero-carbon generation.

MidAmerican and Alliant/IPL already have generator efficiency upgrades in progress that will help meet the carbon standard. Alliant is switching its coal plant in Clinton to natural gas and reducing its CO2 emissions by 60 percent.

Another action improving Iowa's position is Alliant/IPL's 2009 decision to cancel a proposed coal plant in Marshalltown and focus on renewable energy and developing natural gas generation. Instead of being saddled with a major source of CO2 emissions for 40 years or longer, Iowa will benefit from the cleaner natural gas plant now being built.

Iowa will still face cost and regulatory hurdles.

One challenge will be dealing with the diversity in Iowa utility power supplies. Municipal power systems and RECs get a significant share of their energy from renewable and lower-carbon sources in Iowa, but that share varies widely because power is often procured in broader regional markets.

Some power supply arrangements may penalize certain energy-efficiency and demand-reduction efforts. Devising regulations that accommodate this diversity in supply sources will probably be complicated and contentious. Compliance would be much harder under less flexible plant-by-plant standards.

The standards are not final. Changes could either make compliance more difficult and costly, or weaken the nation's commitment to CO2 reduction. Iowans need to remain vigilant during the adoption process so the state can benefit from groundwork laid by policymakers, utilities, and regulators.

THE AUTHOR:

DARRELL HANSON of Altoona is a former member of the Iowa Utilities Board and former chairman of the Iowa Environmental Protection Commission. He also served as a Republican member of the Iowa House from 1979-94. Contact: darrellhanson2@gmail.com.