AEP CEO: New coal plan could be huge cost to consumer

AEP CEO Nick Akins (right) appeared on Fox Business June 25 to discuss President Obama’s climate plan.

On June 25, President Barack Obama unveiled a sweeping new plan to tackle climate change. As part of his speech, Obama said he would direct the Environmental Protection Agency to create carbon standards for both new and existing power plants.

Nick Akins, AEP president and chief executive officer, discussed the key points of Obama’s speech with Fox Business.

View the video “AEP CEO: New Coal Plan Could Be Huge Cost to Consumer.” 

Fox Business noted that AEP has already invested $7 billion on environmental retrofits since 1990 and is planning on spending an additional $4 billion-to-$5 billion to comply with already existing regulations. However, the plan that Obama outlined June 25 may cost utilities and consumers much, much more.

“When you talk about ingenuity and you talk about getting to that process where our children and grandchildren will be proud of us (for protecting the environment), you have to think about the timing associated with that,” Akins asserted. “We have to take a very credible, rational, reasonable approach to this for all emissions — coal plants, gas plants, etc., — so we can achieve an objective that mitigates the costs to our customers. Otherwise, they are going to be paying a very large price for this type of activity.”

But if the president’s plan is not rational, how can utilties like AEP justify spending that amount of capital on its coal plants if there is a chance they will still not be in compliance?

“Keep in mind the $4 billion-to-$5 billion is being spent on all the other environmental regulations,” Akins said,  “so if you add carbon on top of that, that could be the nail in the coffin for coal.

“You have to make sure the technology (for compliance) is commercially available at a reasonable price and today, it is just not,” he said.

If that’s the case, then what happens to customers’ utility rates under this new plan?

“If it’s done in too expedient a fashion, where you have a requirement from a policy objective that doesn’t match up with the technology being developed, it will be a huge cost to consumers.”

Akins also noted that driving up the “input costs” for electricity could have an overall detrimental impact on the country’s already shaky economy.

“If you drive up the input costs, it will have an impact on the economy,” Akins emphasized. “Right now, the industrial and manufacturing sector in this country is very tenuous at best, so to increase those costs inordinately over a short period of time, is going to have a dramatic impact on our overall recovery.”

Akins did note that there were some positives in the president’s plan, but the keys are timing and rationality.

“I think there are some laudable objectives here in terms of our ability to go to a truly ‘all-the-above’ measure,” he said. “He (Obama) talks about clean coal, he talks about nuclear, natural gas and certainly renewables and energy efficiency. All of those have their place, and if you really focus on the technological development and the timing associated with that in a rational fashion, then we can make this transformation that’s already occurring in our industry. We’re already making progress, so let’s continue making this progress.”