Patrick Ledger sees two ways his company can respond to a federal order to reduce pollution at its power plant east of Tucson — install multi-million dollar retrofits and hike electricity rates or ignore the order, shut down the plant and lay off workers.
Ledger, CEO of the Arizona Electric Power Cooperative, was one of many speakers at a state legislative hearing Feb. 11 who oppose the order to install pollution reduction measures at three coal-burning power plants in Arizona.
The edict by the U.S. Environmental Protection Agency would affect the Apache, Cholla and Coronado plants and could collectively cost Arizona utility companies as much as $1 billion.
The hearing before the House Energy, Environment and National Resources Committee and the Senate Government and Environment Committee made one thing clear — Arizona intends to defend its own regional haze reduction plan, which the EPA partially rejected, and avoid what speakers testified would be the disastrous economic impact of the EPA’s plan.
Some environmentalists were excluded from what Capitol staffers called an informational hearing. They later spoke out in favor of the EPA plan, reminding lawmakers of health concerns posed by regional haze and the brown cloud of dust, dirt and pollutants sullying views at Arizona’s national parks, including the hallmark Grand Canyon.
Utility companies should fix the plants, not shut them down and cost hundreds of workers valuable jobs in rural parts of the state, said Maggie Sacher, executive director of Friends of the Cliffs, a land conservation group working to preserve the Vermillion Cliffs National Monument.
That may require a compromise between the state and federal government to find a more cost-friendly alternative to the retrofits proposed by the EPA.
Meanwhile, lawmakers, utility executives and electrical workers lined up to blast the EPA’s plan. Other speakers included representatives from two more utilities with millions of dollars at stake: Arizona Public Service, which operates the Cholla plant, and Salt River Project, which operates the Coronado plant. Both are in northeast Arizona. The Arizona Electric Power Cooperative operates the Apache generating station.
Environmentalists who favor the EPA order spoke at a Senate Government and Environment Committee hearing immediately following the special joint hearing. Lawmakers considered a resolution that denounces the order and calls on the EPA to work with state officials to find a more cost-effective solution.
“The state has come up with a plan, an acceptable plan, and the EPA’s thumbed their nose at us,” said Sen. Gail Griffin,
R-Hereford, the resolution’s sponsor. “This is really the war on coal, and it’s an unacceptable order.”
Order pleases few
Eric Massey, director of the Arizona Department of Environmental Quality’s air quality division, assured the panel that given enough time, the state and federal government could work out their differences.
But the feds and Arizona officials find themselves in this situation because they failed to finish plans to reduce regional haze in a timely manner, said Sandy Bahr, director of the Grand Canyon chapter of the Sierra Club. A court-ordered consent decree in March 2012 set a schedule for the EPA to act on states’ haze reduction plans, speeding up a process that dragged on since 2003.
Now the sped-up order seems to have pleased few in the state. It has infuriated lawmakers and rural communities that power companies say, one way or another, will be hit the hardest if the EPA’s decision stands. Attorney General Tom Horne has already challenged the order in federal court.
Mike Verbout, secretary of the International Brotherhood of Electrical Workers union in Tucson, said roughly 100 of his members work for utilities impacted by the EPA order.
The prospect of workers losing their jobs at any of Arizona’s coal plants isn’t amenable to Sacher of the Friends of the Cliffs group, who said she lives under the brown haze of the Navajo power plant near Page. Horne’s appeal warns that the EPA order could set a precedent that threatens the Navajo coal-burning plant as well.
Stephen Etsitty, director of the Navajo Nation Environmental Protection Agency, said, “We understand that what EPA is going to decide for off the reservation is probably what is going to be what happens on the reservation, too.”
Closing the Navajo plant would be devastating to families in the area, many which survive off the support of one employee working at the plant, Sacher said.
“Let’s remember how many families we’re displacing, not just employees,” she said. “You’re displacing 200 to 300 families; it’s not just one-for-one as it is in most Anglo societies.”
Sacher wants more than anything to remove the brown cloud, a “rainbow of vary shades of brown” that sullies the plateaus and cliffs near her home, she said. But asking utility companies to do whatever is necessary, perhaps costing hundreds of millions of dollars to keep plants online and avoid losing jobs, is a complicated decision, though Sacher said for now it’s the only option.
“There’s nothing else for them to do, so until there’s an alternative, I think cleaning the air and keeping the generating station is the only choice,” Sacher said. “We can’t just decide as a society one day that we’re going to let those people starve because we want clean air.”
High cost of compliance
But Ledger worries about the detrimental impact to his company were it to spend millions of dollars retrofitting the plant with catalytic reduction technology targeting nitrogen oxide, one of the chemicals responsible for creating the brown haze in Arizona’s skies. Arizona Electric Power Cooperative (AEPCO) would have five years to meet the EPA’s order if it stands, during which the cooperative’s debt would double from $200 million to $400 million, Ledger said.
Contractors for the EPA who studied the economic impact of the federal government’s implementation plan “don’t understand our business,” he told lawmakers. “If we’re not marketable, we’re not going to operate.”
The cost of compliance, if that’s the route AEPCO chose, would be passed on to customers, Ledger said. A study done by the cooperative showed the average customer’s bill would increase annually by $215.33 — a number that reflects both residential and commercial rate payers. AEPCO also calculated compliance by Arizona Public Service would cost customers $25.80 annually and Salt River Project customers $25.83 annually.
“These are people that are disproportionately poor. It seems to us to be a very cruel irony,” Ledger said of the rural community surrounding the Apache plant.
Massey of ADEQ also questioned how much more good the EPA’s proposal would do than the state’s own plan. He told lawmakers that if the federal plan is followed, there won’t be any visible improvements in air quality. The Arizona Department of Environmental Quality believes that not only are the provisions called for by the EPA unreasonable, they’re also unnecessary, he said.
And if there would be no discernible improvements to air quality, why spend millions of dollars in an effort that could throw Arizona’s economy off course, said Gretchen Martinez, director of government relations for the Arizona Chamber of Commerce and Industry.
“The [EPA’s] injection of uncertainty into our regulatory environment will cause a spike in utility rates, hamper the economic recovery, and it will benefit no one,” Martinez said Feb. 11.
The threat of closure
Bahr of the Sierra Club dismissed many of the economic complaints made by utility companies and questioned Ledger’s assertion that AEPCO may close the Apache plant. Had Ledger made that threat to the EPA while the agency was reviewing the state’s implementation plan, AEPCO would have had to submit evidence backing up the gravity of the financial impact on the plant for consideration, Bahr said. The company didn’t, and is now using the threat of closure as a tactic to scare residents into supporting the state’s efforts to cast off the EPA order, she said.
That effort included an AEPCO-produced video interviewing residents near the plant who told of the woe and financial hardships would befall them if AEPCO had to follow the EPA’s order. The video was aired at the end of the joint House and Senate hearing.
“The bottom line is these facilities do pollute, they do affect public health… The plants cost Arizonans almost $314 million in health costs every year,” Bahr testified on Feb. 11. “We know there are some uncertainties out there, but we know that continuing to rely on coal power plants risks our health, risks our national parks, and it’s only going to get costlier.”
Bahr encouraged lawmakers to reject Griffin’s proposal and instead engage the EPA to find an amenable solution, rather than duke it out in the legislative battlefield. The Senate committee then approved Griffin’s resolution by a party-line vote.
“We, as a legislative body, have the responsibility to our citizens and the state of Arizona to send our message,” Sen. Chester Crandell, R-Heber, said.