CERAWeek: Texas moving away from coal without federal mandates

HOUSTON — More Texas homes will be powered by cleaner-burning natural gas with or without stringent new federal regulations to cut carbon pollution from power plants, a panel of Texas regulators and electricity company chiefs said Thursday.

“We haven’t seen permits come across our desk for new coal plants,” said Toby Baker, commissioner of the Texas Commission on Environmental Quality, the state’s environmental regulator. “My guess is we’re not going to see permits for new coal plants. We are now in a gas/renewable world. And that’s where we’re going to be.”

He made his comments on the fourth day of IHS Energy’s weeklong CERAWeek conference amid a statewide outcry against recently proposed Environmental Protection Agency’s rules to set a state-by-state goals for reducing carbon pollution from power plants. Among the many outcomes expected from agency’s proposed Clean Power Plan, the mandate is expected to shutter coal-fired power plants.

But Texas electricity officials say the state is moving away from coal, anyway, thanks to a growing renewable energy industry and vast supplies of cheap natural gas unleashed by the U.S. shale boom.

At its peak in 2012, natural gas was responsible for 46 percent of the state’s electricity generation, Kenneth Anderson, commissioner of the Public Utility Commission of Texas, which regulates the state’s power markets.

Also driving the switch is wind power, which generated about 10 percent of Texas power last year overall. Gas-fired plants are better than coal plants at switching on and off to accommodate wind power, making them more attractive to generators hoping to capitalize on the renewable resource.

In a panel discussion Thursday, two state regulators slammed the proposed rule as impossible to implement in the timeframe the EPA has proposed. The Clean Power Plan sets interim targets by 2020 for some states to achieve emissions targets.

Even in Texas, which prides itself on a swift permitting system, new power plants take years to build, making it difficult to revamp the state’s electricity mix by the deadlines proposed by the EPA, Anderson said.

“Whether investors build more gas plants, retire coal plants and/or build the infrastructure to support it, you can’t do it by 2020, not with the implementation they want Texas to achieve,” he said.

Although cheap natural gas has allowed the state to rapidly moved away from coal-fired plants, coal still powers about 40 percent of electricity generation, said Robert Shapard, chairman and CEO of Oncor, the state’s largest regulated transmission and distribution provider.

“You really can’t wean yourself off of that very fast,” he said.

As the EPA collects public comment on the rule before making a final decision, Texas electricity officials said the plan needs serious revisions to address a range of concerns from the generators, transmission line companies and state regulators.

“I’d say generally we’re supportive of the direction but we really want to make sure we get the details right,” said Steven Schleimer, senior vice president of government and regulatory affairs at Calpine Corp., a Houston-based power generator.

For example, the Clean Power Plan regulates emissions from existing gas-fired plants but not new plants, which Schleimer said creates a loophole that subsidizes new investments and undermines the competitive market.

The federal mandates would also necessitate a massive reconfiguration of the state’s reconfiguration grid and require more than $2 billion per year in investments to meet the plan’s energy-efficiency goals, which could dramatically drive up the state’s power prices, Shapard said.

A more efficient way to achieve federal goals to curb pollution would be to charge companies who emit carbon dioxide, essentially creating incentives for generators to shift to renewable and other fuels that generate fewer emissions, Schleimer said.