Feb 6 U.S. investor-owned utilities will invest
about $85 billion annually this year and next to keep the power
grid reliable and integrate new natural gas plants while
cleaning up older coal units, the president of the industry's
trade group told Reuters on Wednesday.
"Our industry is the most capital-intensive industry in the
United States and projects to spend an average of about $85
billion a year on capital expenditures through 2014," said Tom
Kuhn, president of the Edison Electric Institute.
He told Reuters those investment levels are about double
what they were 10 years ago.
Of the $85 billion, Kuhn said power companies would spend
about $50 billion on new generation and upgrades, $25 billion on
distribution to consumers and $10 billion on transmission
between power plants and distribution networks.
On the generation front, Kuhn said EEI has organized
meetings between its diverse members - some who want more
regulation on coal and some less - to propose recommendations to
federal environmental regulators that would make it easier for
utilities to comply with stricter air emissions and other rules.
"A great deal of our recommendations were accepted by the
administration and have mitigated the effect of (environmental)
rules and made it more economic for us to comply," Kuhn said.
EEI members include utilities with several coal-fired plants
like American Electric Power Co Inc, Duke Energy Corp
and Southern Co, and companies with more nuclear,
natural gas and renewable plants like NextEra Energy Inc
, Exelon Corp and Entergy Corp.
With natural gas prices averaging a 13-year low last year
and still relatively cheap due to record shale production, even
power companies with large coal-fueled operations have been
shifting their fuel mix toward cleaner-burning gas.
Kuhn said the U.S. Environmental Protection Agency still had
a lot of proposed regulations in the pipeline, including rules
on coal ash, cooling water, greenhouse gases and other air
"The most important rule is on greenhouse gases," Kuhn said.
By midyear, he said, the EPA was expected to put out a
greenhouse gas rule for new power plants that would preclude new
coal plants from being built unless they had carbon capture and
The average coal plant emits about 2,400 pounds per megawatt
hour of carbon dioxide emissions. The standard in the EPA
proposed rule is 1,000 pounds, which Kuhn said "may even
preclude some gas plants from being built."
"We're advocating the EPA have some flexibility to bring the
standard up to 1,200 or 1,300 (pounds)," he said, which would
still exclude new coal plants without carbon capture and
There are only a few coal plants under construction in the
United States with carbon capture technologies, including
Southern's Kemper County plant in Mississippi and Duke's
Edwardsport in Indiana.
Kuhn said some in Washington think President Barack Obama
may direct the EPA to issue rules limiting carbon emissions for
existing plants in his State of the Union address on Feb. 12.
"That would be a challenge because it's hard to write a rule
for existing coal plants and certainly you could not write one
based on the rule proposed for new coal plants because that
would put them all out of business," he said.
COAL PLANTS RETIRED
Kuhn said the industry has already retired a lot of older
coal plants to meet the stricter environmental rules and is
investing billions to upgrade emission control equipment at the
coal plants that will remain.
"After investing billions ... you don't want to force their
closure. We're already moving toward a cleaner fleet," he said.
Since Obama took office in 2009, power companies have
announced plans to shut more than 40,000 megawatts of coal
capacity as weak gas prices have depressed power prices, making
it uneconomic for generators to invest in emission control
equipment needed to keep older coal plants compliant with
stricter environmental rules.
Kuhn said it is difficult for the EPA to regulate carbon
emissions and said it would be better for Congress to write
legislation on emission levels.
But energy analysts note that gridlock in Congress would
make it virtually impossible to pass a sweeping carbon emissions
(Additional reporting by Tim Gardner in Washington and Eileen
O'Grady in Houston; Editing by Dan Grebler)