As members of the American Public Power Association look to adopt an updated resolution on climate change policy, we spoke with several members about how they have been affected by climate-related policies and how they expect utilities to be involved in setting environmental policy into the future.
The interviews are with:
- Marc S. Gerken, PE, president and CEO, American Municipal Power
- Dave Geschwind, executive director and CEO, Southern Minnesota Municipal Power Agency
- David Leathers, general manager, Jamestown Board of Public Utilities, New York
- Jolene M. Thompson, executive vice president of member services and external affairs, American Municipal Power, and chair-elect of the American Public Power Association’s Board of Directors
- Steve Wright, general manager, Chelan County Public Utility District, Washington
In what ways have climate-related policies impacted your operations and planning, or how do you expect them to in the future?
Steve Wright: This is one of the most important issues for us — the markets in the West are driven by trying to make sure that there is resource adequacy, and, increasingly, policies with respect to carbon-emission reductions have a very significant impact on us. It’s not just whether there’s going to be a carbon policy, but what type of carbon policy. A couple of years ago, we initiated work with the Public Generating Pool to do a study on a least-cost approach to emissions reduction in the Pacific Northwest. We were able to stop a lot of bad policies that the Legislature thought might have achieved carbon-emission reductions that would have been at a much higher cost than the alternative that the state ended up with. Our study was critical to the decision-making process.
Marc Gerken: AMP has a diverse energy-supply portfolio, including both fossil and renewable assets, and AMP and our members have invested in carbon-free resources, including hydropower, solar and wind. From our viewpoint, it will be important for any carbon policy to recognize and award early actions to reduce greenhouse gas emissions, while also providing for an appropriate glide path for fossil-fuel-fired power plants with existing debt.
David Leathers: We in Jamestown are grateful to have approximately 90% of our energy supply needs met with a hydropower allocation from the New York Power Authority’s Niagara Hydropower Project. As good stewards of this important resource, the Jamestown BPU has aggressively implemented residential, commercial, and industrial energy efficiency and conservation programs as well as LED street lighting and electric vehicle infrastructure projects. We utilize thermal energy from our power plant for an award-winning district heating system that extends throughout our downtown corridor. These continuing efforts highlight our commitment to the responsible use of electricity, environmental stewardship, and reliable and affordable services.
New York state climate-related policies have increased costs for our customers through various state-driven programs and fee-based subsidies that are designed to move the state toward its carbon-free goals. However, these CO2 reduction programs, and nuclear plant and renewable project subsidies, represent new, significant costs for our financially challenged customers.
At the Federal level, we understand change is coming and we need to work hard to anticipate it and to integrate it into our long-term planning, both as it relates to challenges and opportunities.
Dave Geschwind: Policy is a big part of the backdrop of looking where we need to take our generation portfolio. Minnesota has had state legislation related to climate change or renewable energy going back to at least 2001. We have requirements today to meet 20% of our energy needs with renewable resources, and that requirement increases to 25% in 2025. SMMPA currently has one large coal-fired resource on our system and it is looking like 2030 will be the retirement date for that resource. With that retirement, we expect to be 80% carbon-free by 2030. That also means that we will have achieved a 90% decrease in carbon emissions compared to 2005 levels.
Do you expect any environmental policy to be enacted/revised in the next five to 10 years that will affect your operations?
Jolene Thompson: We expect some form of carbon policy will be enacted within the next five to 10 years. Whether it will be in the form of a clean-energy standard, carbon tax, or cap-and-trade format remains to be seen. Today, there is an increasing patchwork of goals, portfolio standards, and other similar efforts by states. We are engaged on behalf of our members to track these developments and ensure that policymakers understand our views.
Geschwind: There is too much momentum on this topic for nothing to happen. We think something is coming, if not at the federal, then probably at the state level. At the state level, there were proposals last session in Minnesota that would have required getting the state to 80% carbon-free energy by 2030 and 100% carbon-free by 2050. Those proposals didn’t pass, but we expect there will be continued discussions around those targets. Given that, part of our planning is to assume there will be some constraint or price on carbon emissions in the future. When we are talking to policymakers, a key part of our message is about having an appropriate glide path to allow utilities to meet these carbon goals, whatever they may be, without making electricity unreliable or unaffordable for customers.
Leathers: It’s hard to predict what will occur at the national level. New York state is driving climate policy with aggressive actions anticipated over the next five to 10 years. Anything at the federal level is not expected to be as consequential as what we’re experiencing in New York. An important part of the APPA resolution, the recent House draft legislation, and the Climate Leadership and Community Protection Act in New York is that all are looking at this in an economy-wide manner — not just with power generation. That’s certainly a broader impact. If the transportation and home heating industries are going to transition, it is going to directly impact us. We need to be a part of those changes and understand how can we help our community with education, incentives, and new programs. We’ve already started moving in that direction.
Wright: At the national level, the biggest question is what direction Congress is going to go. It is clear their intent is to begin to move during this Congress and the next. This is when the concrete is wet in the legislative process. It is very hard to change anything once it has dried. Critical elements are going to be decided in the next couple of years. But the problem is that these decisions don’t all get made two or three years from now — it’s a steady progression of decisions that leads to a final conclusion. We are pleased that the discussion is starting from a clean energy standard that includes all types of non-carbon-emitting resources rather than trying to focus on certain resources. We think that creates the best strategy for keeping costs low.
Are there any important roles utilities play in terms of addressing climate change that are often overlooked by policymakers or in the communities you serve?
Geschwind: Utilities have already accomplished a great deal. I don’t think there’s a utility out there that wouldn’t be 100% carbon-free if they could be. Whether for economics or end-of-life issues, many traditional fossil resources are being replaced, and much of this is happening with no mandates to do so. Allowing that to continue, without creating time frames that might artificially increase the cost of compliance or jeopardize reliability, is important.
Another one of our messages to lawmakers is that the cost of achieving carbon reductions starts to increase exponentially when you get higher than 80% or 90% carbon-free. There is a lot of focus on the utility sector when it comes to carbon emissions. The electric utility sector was responsible for 28% of greenhouse gas emissions in 2017, so we can’t be 100% of the solution. It might be much more economical for other sectors to bear part of the burden.
Thompson: Public power utilities have already taken actions to reduce GHG emissions from their energy supply, as well as their municipal operations, in response to the communities they serve. We have the ability to lead by example and help the transportation and building sectors decarbonize through electrification.
Leathers: An important role we play is to consistently highlight the critical importance of reliability and affordability in addition to the environmental impacts. We prioritize working with our partners at the state level to understand their goals and planning, to make sure we are included in that process. Sometimes policymakers only focus on the environmental aspects, without accounting for effects on lower income customers and economic preservation and development. We must stress affordability and reliability. The utilities are an important group to not just talk about the environmental reasons for change, but also the importance of reliability and affordability as we consider how the change will occur.
Wright: Utilities have an extremely important role to play, and we have to make sure our communities are engaged and our voice is heard. If we come from a perspective that either carbon-emission reductions are not important, or are the only thing that is important, we get hurt. The fundamental goal is always a three-legged stool: clean, reliable, and affordable. We need to recognize that climate change is an issue that the public at large cares about, and we need to put it in the context of what we’re good at — that we have the expertise to explain how to solve for all three legs of the stool simultaneously. Deep decarbonization strategies don’t work if you have an unaffordable or unreliable electric power system, because there is a need to electrify other sectors of the economy using clean electricity. There are times that if we don’t speak up, there is a risk that you’ll get something very focused on the clean element without capturing the affordable and reliable.
Why was it important for public power to update its resolution on climate change policy?
Gerken: Public power utilities are community owned and have a heightened responsibility to ensure that our customer-owners are strongly represented at the table when policy changes impacting our industry are being considered. As the national organization advocating for public power, APPA is our voice in Washington with lawmakers and regulators. In order for APPA staff to secure a seat at the table, it’s incumbent upon its members to ensure that they have a position to advocate.
Geschwind: The No. 1 reason is the age of the old one — it has been over a decade since the last resolution was adopted. Since then, there has been even more emphasis among our lawmakers and customers about climate change. We want to be more effective with policymakers, so it makes sense to work from an updated policy position from our national association.
Wright: A lot has changed in 12 years. There is a shift going on in Congress and nationally. It is not just Democrats who are addressing climate change. I was particularly taken by Republican Rep. Greg Walden, who was honored as the Legislator of the Year at the 2019 Legislative Rally, and how he and some of his colleagues said it was time to take action. That shift is important for public power to recognize. There’s enough evidence out there now that it’s time to update and think through where we want to be positioned. What I feel good about is that public power can work together, we can come together as we have with this resolution.
The strength of public power is local decision-making. There are many localities that believe something needs to be done to address climate change. Their constituents are demanding action. We also have members for whom climate policy is a significant threat to their local economies. So, in order to best represent public power, we needed this update. Otherwise, what we’ll be doing is telling APPA’s legislative staff, “We really don’t want you to participate in this discussion.”
Leathers: Primarily, it appears more likely that Congress will act in the near-term. There is common agreement that staff needs updated membership input on Association priorities to make sure we’re part of this ongoing and important legislative process.
Thompson: Carbon policies are under discussion at the local, state and federal levels and the outcomes will have major impacts on our industry. It was timely to revisit and refresh the Association’s existing federal carbon policies to provide APPA staff with clear direction as they represent members before Congress and federal agencies.
How does having this resolution help you in your work?
Leathers: Individually, it helps me and us to hear and better understand the broader priorities beyond what is occurring in New York state. As an organization, APPA is very spread across the country and is made up of small and large utilities; all members have different challenges and priorities. Related to our work in New York, [the resolution] helps to make sure that we have awareness and understanding of these broader priorities while we consider and progress on our own goals and objectives.
Wright: We’re in Washington state, which has chosen to be aggressive on climate change, but Chelan County is in the eastern, more conservative part of the state. As we engage with Congress, we’ll be articulating policies, and it will be important to say that this isn’t just the views of Chelan County, this is the view of the national trade organization. We’re not an urban center that has a tremendous number of voters — if we can express that these views also represent the view of members from across the country, it brings more weight to our argument. There are a lot of different perspectives within public power, because we’re all situated differently geographically or from a generating resource standpoint. The power of this resolution is the fact that it represents utilities who represent a very diverse group of interests.
Gerken: Having the resolution helps guide the Association’s strategy and positioning with federal legislators, regulators and other stakeholders. The tenets of the resolution also provide a list of priorities for APPA members to consider as they are faced with state and regional action.
Geschwind: It provides guideposts and more weight for us when we’re talking to policymakers, whether at the federal or state and local levels. By having our message consistent with that of our national association, we can let policymakers know that our positions are not just ours, but that they also represent a consensus of many, many public power utilities.
