NEWARK -- Uncertain environmental standards leave energy companies scrambling to adapt to federal regulations, Entergy Arkansas Chief Executive Officer Hugh McDonald said Wednesday.
McDonald took Arkansas Attorney General Leslie Rutledge and U.S. Sen. John Boozman, R-Ark., on a tour of the coal-fired Independence Power Plant in Newark.
"That's the challenge for the industry -- trying to do the analysis as best as you can, forecasting the future and what's right for customers long-term with the uncertainty in the industry," McDonald said. "For me anyway, it's probably been one of the most challenging problems that I've had in my career -- figuring out if you invest that billion."
A proposal by the federal Environmental Protection Agency would require the plant to install scrubbers, pollution-control devices that McDonald said would cost more than $1 billion to implement. Entergy Arkansas is one of the plant's owners.
In September, Rutledge filed a motion to dismiss a federal lawsuit filed in 2014 by the Sierra Club, which alleged the EPA failed to enforce the 1999 Regional Haze Rule.
The rule, which is part of the federal Clean Air Act, is intended to reduce sulfur dioxide and nitrogen oxide emissions that contribute to visibility impairment at 156 national parks and certain wilderness areas across the country. Proponents say reducing the emissions also reduces respiratory illnesses.
The EPA partially rejected a plan that the state had proposed to comply with the rule.
"We sued, which forced the EPA to write a draft plan," said Sierra Club Arkansas Director Glen Hooks. "We held a big hearing in Arkansas in April. We had hundreds of people submit their own comments on the plan. We have a date at the end of the year by which the EPA is supposed to finalize the rule. All that has been done and now at the eleventh hour the state comes in and says we want to write our own plan."
Rutledge said in an interview that she filed the motion because the Sierra Club is not based in Arkansas.
"We have the Sierra Club out in California -- they don't have standing and haven't demonstrated any harm," Rutledge said. "That's why we've asked the court to dismiss that claim, because we have essentially an out-of-state organization trying to put their own policies into regulations here in Arkansas."
McDonald, who is retiring next year, said he's already worried about the next EPA regulation.
A system came online early to help the Independence plant comply with the Mercury and Air Toxics Standards. There's a plan to comply with the haze rule, although it involves shutting down the White Bluff Power Plant in Redfield, he said.
EPA's forthcoming Clean Power Plan -- announced in August -- would address carbon pollution. Coal is primarily made of carbon.
Rutledge joined a lawsuit brought by other states against that plan.
"Some of those environmental compliance requirements cause those plants to be forever uneconomic, forever shutting those plants down as a result of the regulation," McDonald said. "That was the analysis we did on White Bluff."
However, he said the price of natural gas also was having a large effect on the coal industry. Before last year, coal plants ran continuously and natural gas plants came online to deal with peak demand.
That model flipped because natural gas is so cheap, he said.
"The price of natural gas doesn't require you to forever shut down your coal plant," McDonald said when asked whether natural gas or the EPA was having a greater effect on coal-power generation.
"Certain regulations that are so costly, they have the potential to do that. It's all about economics. We're going to operate the plant that is most economic and still meet all environmental compliance requirements."
Boozman said he worried that the cost paid by electricity consumers would outweigh any potential gain from the regulations.
"What does that do to moms? What does that do to people with fixed incomes?" he said. "What does that do to our manufacturers that are trying to compete with people overseas?"
However, Hooks said the attorney general is targeting environmental regulations regardless of their effects on business or the environment.
"Our attorney general took office in January and there hasn't been a single environmental rule on air or water that she has not opposed," he said. "She's taken every opportunity to join with challenges brought by other states."
Rutledge and Boozman also toured Bad Boy Mowers Inc. in Batesville and made themselves available to the public at the University of Arkansas Community College at Batesville on Wednesday.
Metro on 10/15/2015