Nick Akins, chief executive officer of American Electric
Power, recently sat down with reporters to talk about issues affecting his
company and others involved in the electric utility industry in West
Virginia.
Part of the conversation dealt with how rates, environmental
regulations and alternative energy are connected.
Following is a partial transcript of that conversation.
Akins: "APCO – this territory – has borne the brunt of pretty sizable (rate)
increases, and it's mainly due to environmental retrofitting of coal units.
Still, the rates are lower than they are in other parts of the country, but
that doesn't matter to the people paying the bills. The fact is that we've
gotten ahead at APCO, so it should moderate future increases.
"But at the same time, what the EPA is doing has dramatic
impact. Instead of transitioning in a more fluid fashion, that you don't have
step increases for customers, we're now truncating generation and causing 10 to
35 percent step change in rates needlessly.
"For us to make all the environmental retrofitting, to
replace generation, those types of things, in a credible fashion, with work
force requirements and things like that, it would take us to 2020 to get it
done. They're saying we have to retire generation at the end of 2014.
"The difference between 2014 and 2020 only amounts to one
year of emissions. That's just crazy to spend six to eight billion dollars on
achieving the additional 15 to 20 percent – we've already reduced sox and nox
by 80 percent. We spent $7.2 billion doing it. Now we're going to spend six to
eight billion more to get that other 15 to 20 percent. At some point, you
really have to stop and think, where is the law of diminishing returns here?
Where do we stop?
"It's sort of like an engineer doing something relative to reliability.
I'm an engineer, so I can say this. Tell them to go make the system reliable, and
they're going to spend anything to make it the most reliable they can, but
there's always a realm of reasonableness there, and that's what needs to occur
around an energy policy in this country.
"That's why we support the Manchin-Coats bill. We worked
with Senator Manchin on that. It's critical to have some kind of oversight of
Congress to really look at the economy, look at the changing rates, look at the
impact on communities, taxes and so forth in making those kinds of decisions."
Taylor Kuykendall, The State Journal: In the state,
we have an Energy Portfolio Act. By 2025, we have to be, I think, 25 percent comes
from renewables. Is that a problem?
Akins: "But your renewables includes alternatives as
well. That's good. It includes clean coal. It includes IGCC and other things as
well. That's fine because we're obviously cleaning up the coal units and we
have also natural gas coming on line – those kinds of things.
"We'll continue with renewables. We're not just all about
coal. I think it provides an opportunity.
"What you have to watch, though, is when you have these
kinds types of mandates, what it does to the cost of electricity for the
customers going forward. I would certainly keep an eye on what that requires us
to do relative to cost and the impacts it has on customers in relation to other
existing forms of capacity.
"Too many times we wind up with solar requirements. We have
a solar requirement in Ohio, of
all places. … You're paying 23 to 25 cents a kilowatt hour when customers there
are paying 8 to 10 cents per kilowatt hour. You try to shove that into rates
and all of a sudden people are surprised. You really do have to think about
that end result."
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