CPS Energy CEO: path to comply with EPA carbon rule includes opportunities

By on September 23, 2014

All roads led to the Environmental Protection Agency’s proposed carbon rule last Saturday, whether the topic was coal versus natural gas, solar power or energy efficiency.

The setting was the Texas Tribune‘s fourth annual Tribune Festival, billed as “an innovative and engaging three-day event for people who are passionate about the issues that affect all Texans,” including energy, the environment, health care, higher education,public education and transportation.

CPS Energy CEO Doyle Beneby shared the stage for the first energy panel of the day with Texas Railroad Commissioner Barry Smitherman; Public Utilities Commission of Texas Commissioner Brandy Marty; Jim Marston, founding director of the Texas office of the Environmental Defense Fund and Congressman Gene Green, who sits on the U.S. House Energy and Commerce Committee.

Moderated by Texas Tribune energy reporter Jim Malewitz, the forum was titled “the State of the Grid.” But virtually every question he posed was analyzed by panelists in the context of the looming Clean Power Rule, proposed by the EPA this summer to decrease carbon emissions from existing power plants.

While the goal is a 30 percent reduction nationally from 2005 levels by 2030, Texas’ share of that reduction is expected to be greater, perhaps as high as 40 percent, due in part to its size and current emission levels.

While regulators warned that complying with the rule might mean higher energy prices for consumers and perhaps even compromised grid reliability, EDF’s Marston emphasized that ultimately, the rule is good for Texas, because it will lead to greater energy efficiency and more use of renewables, particularly solar.

Beneby encouraged regulators, including the Texas Commission on Environmental Quality, which will be tasked with crafting a Texas-specific set of regulations to comply with the proposed rule, to sit down with the state’s generators in order to speak with one voice when offering the EPA comments and suggestions on how it might tweak the rule to make it more palatable.

“We’re looking at this in a static way, but in fact it’s all very dynamic,” he said, “and I am sure there are tweaks around the edges the EPA can be influenced to change” that would help Texas comply.

Tacitly acknowledging that state regulators have already suggested that Texas may ignore the new rule or sue the EPA, Beneby said CPS Energy “would remain agnostic” and continue its already well-established path to lower the carbon intensity of its generation fleet.

He also noted that market forces are already converging on energy efficiency and demand response, which offers incentives to customers who voluntarily dial down their energy use during peak demand days.

With smart grid technology, he said, that energy savings can be “aggregated and bundled” and bid into the market, making it a powerful tool for grid reliability as well as carbon reduction.

It may not be easy to comply with the proposed rule, Beneby said.

“But is there a path forward? I think so.”

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