Environmental Regulations Drive Future Power Costs
Electric power associations work every day to balance the increasing costs of doing business with ensuring affordable service to members. While costs are escalating in a number of areas, one of the greatest threats to affordable power is new and constantly changing environmental regulations.
Electric cooperatives in the southeastern U.S. are largely dependent upon coal as a relatively inexpensive source of electric generation. South Mississippi Electric, the cooperative that generates the electricity distributed to you by Pearl River Valley Electric Power Association, used coal as the fuel for 54.7 percent of the power it produced in 2011. For this reason, regulations issued by the Environmental Protection Agency (EPA) that target coal are of particular concern for electric power associations in Mississippi and across the nation.
Over the past decade, the EPA has issued three significant regulations which impact coal-fired generation. The costs of complying with these regulations have essentially become prohibitive to power producers, especially not-for-profit electric cooperatives. The equipment necessary to make an existing coal plant compliant is so expensive that in some situations it is more cost-effective to close the plant down. In addition, the timeframes for complying with the regulations are inadequate. The short deadlines do not allow power producers sufficient time for planning major changes, nor do they take into consideration the limited number of contract specialists who are qualified to construct and install compliance controls. Essentially, the effect of these regulations is the elimination of coal as an option for producing electricity.
As our country and our industry move forward, new plants will be necessary to replace retired coal plants and to meet the growing need for electricity. In the absence of coal, more expensive alternative resources will be required. There is no getting around the fact that replacing a significant portion of our generating resources will increase our costs.
Pearl River Valley Electric and South Mississippi Electric are working to ensure that our members have the most affordable and reliable electric system today and into the future. Recent projects are taking steps to make our generation fleet more efficient, cost-effective and environmentally compliant.
A repowering project at the natural gas-fired J.T. Dudley, Sr. Generation Complex (Plant Moselle) will result in the capability of the plant to generate 37 percent more electricity using the same amount of fuel as before. This represents a savings of $25,000 to $40,000 per day for the first unit, which was completed in May. The second unit is scheduled to be completed in October. The total project cost, which is expected to be $220 million, is an example of the investment needed for future projects.
Pearl River Valley Electric and South Mississippi Electric are also investigating other options for future power generation that will enable us to maintain environmental compliance and keep our members’ power bills affordable. Amidst the changes faced by the electric industry each day, we remain committed to providing the best value possible for safe and reliable electric energy for our members.