ACCCE Statement on U.S. Senate Effort to Restrain EPA's Job-Destroying Regulation - The United States Senate today took the first step in setting aside a new EPA regulation on America's coal-fueled electricity industry that would unnecessarily drive up energy costs for millions of American families and businesses.

With the PTCs and cash grants in effect, other energy technologies were caught in a serious bind but coal was in a real crunch.  New, advanced cycle coal plants are expensive and the incremental cost decreases as size increases.  Large coal plants do not follow load with alacrity and are thus best suited to baseload applications both from operability and emissions standpoints.  In a strictly competitive power market, the cost increases of coal, due in large part to increasing worldwide demand, would tend to drive construction of new plants in an effort to increase efficiency by replacing older, less efficient plants with the high capacity factor helping to offset the high capital cost.  The incorporation of improved emissions mitigation would be part of the plant design by regulations already established.  Retrofitting an older coal plant not designed with emissions mitigation will simply mean adding to the cost of the power generated with no efficiency gains to make up for it.

But, the power markets are not strictly competitive due to federal subsidies of wind and solar power via cash grants and/or production tax credits.  By far the largest of these in terms of MWs being built is wind.  A wind farm is expensive--1.5 to 2 times the cost of advanced cycle coal plants and their output very unpredictable and highly variable.  And, the capacity factor of about 32% is about one-third the capacity factor of a coal-fired power plant.  The kicker is however, that wind is typically most available in the dog shift hours, midnight to 6AM--the primary realm of baseload power.  And the blow that really kills the drive to build newer, more efficient, cleaner advanced cycle coal plants is the production tax credit of $22/MWh that wind gets--or at least did get if the present moratorium holds.  This $22/MWh offsets the variable costs of producing power in a coal plant thereby making wind the less expensive option.  Therefore, no investor wants to build a new coal plant.  Problem is, the wind typically is not blowing with enough energy to make significant quantities of power the rest of the day so the older plants have to be kept in service to take up the slack and to provide grid stability when wind is operating.  The other option is to back up wind with combined cycle plants running at part load and/or simple cycle gas turbines.  But, the lack of a robust round-the-clock market discourages construction of combined cycle gas turbine plants as well as advanced cycle coal.  So, we get stuck with older plants that should have been replaced or simple cycle gas turbines that waste fuel unnecessarily.

Federal subsidies to wind are disrupting competitive power markets, wasting fuel, and, arguably, resulting in higher emissions than would have been the case if the DoE were not wasting taxpayer dollars to subsidize uncompetitive energy technologies.