EPA regulations lead to climate of concern for rural economy

By Tom Steward | Watchdog Minnesota Bureau

Stringent CO2 reductions emitted out of Washington, D.C., this week could lead to a surge in power prices that affect the pocketbooks, employment and well-being of tens of millions of rural ratepayers across the country.

“Americans count on affordable and reliable energy to power our communities, promote job and economic growth, and keep costs in line for the basic necessities in our family budgets,” said Jo Ann Emerson, CEO of the National Rural Electric Cooperative Association in a statement. “New EPA regulations that add to the price of electricity have serious consequences for our communities, jobs and families.”

Minnesota’s 44 electric distribution electric co-ops supply the power needs of about 1.6 million rural and urban residents throughout much of Minnesota. Together, electric cooperatives account for nearly 20 percent of the kilowatt hours billed to Minnesotans and operate the largest transmission network in the state.

“None of the scenarios are good. I’m just perplexed that the administration says that the impact is going to be negligible. It is not going to be negligible. It’s going to be an enormous impact on our ratepayers,” said Mark Glaess, recently retired executive director of the Minnesota Rural Electric Association.

While still assessing the potential impact of the 645-page EPA proposal, the Minnesota Rural Electric Association warned the administration’s action could undermine the competitiveness of Main Street and further erode many families’ standard of living. Rural Minnesotans already pay an estimated $70 million to $100 million per year above market rates for higher priced state-mandated wind power.

“The economic stress over the past decade from rising electric prices is having an impact already on family budgets and keeping businesses, particularly in outstate Minnesota, competitive with our neighbors and other areas of the country. That’s the undercurrent of our concern over this,” said Joel Johnson, director of government relations and public affairs for the Minnesota Rural Electric Association.

Increased power costs due to the regulations will drive up production costs for southern Minnesota ethanol plants and agricultural operations, turkey producers and sugar beet plants in western Minnesota and taconite plants and paper companies on the iron range.

“How much is it going to cost? Those industries compete worldwide,” said Tony Kwilas, director of environmental policy for the Minnesota Chamber of Commerce. “They’re not competing against Wisconsin or Iowa. Those guys are competing against Brazil and Italy. So if you make that cost of steel go up, that’s the concern.”

Overall, Minnesota appears to be better positioned than most states, given an aggressive state mandate requiring 25 percent of electric power to be from renewable sources by 2025. Many electric providers have stabilized or cut CO2 and other emissions by increasing efficiency, conservation and technology.

For example, Great River Energy, the state’s largest electric co-op, has reduced emissions of carbon dioxide 20 percent, nitrogen oxides 40 percent, sulfur dioxide 56 percent and mercury levels at its largest plant 40 percent.

“Our top priorities are to maintain affordability and reliability for our members while reducing emissions,” stated a GRE news release in response to the EPA action. “To that end, we have been actively collaborating with others to find creative and flexible options for reducing carbon dioxide (CO2) emissions in our region and have shared our ideas with the EPA, among others.”

Federal regulators say electric providers will get credit for environmental improvements since 2005 and that states will have flexibility in promulgating plans to reduce carbon emissions 30 percent by 2030.

“Our worry is that they would come and say you have to reduce emissions 30 percent at every single coal plant,” saidthe MREA’s Johnson. “That’s not going to be realistic and that would end up being a disaster for rural Minnesota.”

Contact Tom Steward at tsteward@watchdog.org.