McCullough supports fuel diversity in testimony before U.S. House of Representatives Energy & Commerce Committee

(Story by Tom Holliday)

WASHINGTON, D.C. — In testimony before the Energy and Power subcommittee of the U.S. House of Representatives Energy & Commerce Committee yesterday, AEP Executive Vice President – Generation [Mark McCullough] laid out AEP’s strategy with respect to fuel diversity for the Generation side of its business.

Specifically, McCullough made it clear that the United States may be making an imprudent “dash to gas,” while other fuels face extinction, and that could have serious negative impacts on the economy in the future.

Mark McCullough

“The importance of fuel diversity cannot be overstated given its implications for assuring economic and energy security,” he said. “Too great a reliance upon any one energy source creates a significant risk of exposure to electricity price spikes and supply disruptions. This can lead to severe impacts on the supply stability and price of electricity for residential, commercial, and industrial customers.”

He was especially critical of any legislative or regulatory action that would handicap the future use of coal as a fuel source. “Any policy, direct or indirect, to restrict coal use within the U.S. is unlikely to have a significant impact on reducing global coal consumption,” he explained. “The more significant impacts will be felt, however, by the U.S. economy, particularly in regions of the country which rely on coal production for economic stability and low-cost electric generation.”

The hearing was called by Subcommittee Chair Ed Whitfield, R-Kentucky, as a means to call attention to the need for a diverse electricity generation portfolio as a means of assuring American energy security and innovation.

In his opening remarks, Whitfield suggested that the current regulatory approach of the U.S. Environmental Protection Agency (EPA) is limiting the options of resources and technologies available to utilities. “EPA’s regulatory assault on coal is bad policy,” he said. “Coal is the leading source of electricity generation in the U.S., and it certainly remains the fastest-growing source of energy for China and many of our other global competitors. We gain nothing when we foreclose the option of new coal-fired generation by regulating it out of existence.”

McCullough focused criticism on the EPA’s proposed New Source Performance Standard for new electric generating utilities (EGUs), which, in AEP’s view, is overly restrictive in its limitations on new coal-fired facilities.

“Under the proposed regulations, all new baseload and intermediate demand fossil-fueled EGUs would have to achieve an emission rate equivalent to EPA’s estimate of the emission rate achievable at a new natural gas combined cycle unit,” he said. “However, due to different fuel characteristics, plant designs, and operational considerations between coal and natural gas power plants, a coal-fueled power plant cannot meet at CO2 emission rate equivalent to natural gas without some form of technology capable of reducing CO2 from the power plant emissions.

“The proposed regulation is instead fuel discriminatory in that it prevents the construction of any new coal-fueled units without a defined, plausible plan for CCS (carbon capture and storage) implementation. CCS is not currently commercially available or economically viable at this time.”

McCullough noted that the John W. Turk, Jr. Power Plant — AEP’s newest and most technologically advanced coal-fired power plant — could not have ben built if the proposed guideline had been applied to its construction.

He closed his comments by calling once again for the development of a comprehensive national energy policy that would “promote fuel diversity, including the continued use of coal to generate low-cost, reliable electricity, and encourage policies that seek to use coal and nuclear energy in revolutionary ways that minimize environmental impacts and increase efficiency.”

McCullough’s appearance in Washington also illustrates AEP’s ongoing efforts to promote the business strategies that were outlined during last week’s AEP Leadership Summit.

One of those strategies is the Transformation of the Generation Fleet. As part of this strategy, AEP is diversifying its own generation portfolio, while supporting efforts to ensure that national polices keep energy diversity as a primary feature. Generation’s mission is to “provide safe, reliable, cost effective, risk-balanced, envionmentally responsible generation for today, tomorrow and decades into the future.” Fuel diversity is a critical element of achieving that mission for the benefit of our customers, communities, employees and shareholders.