Newsletter subscribe

Features, Politics

Arizona electricity costs soon to rise thanks to Obama’s EPA

Posted: February 15, 2013 at 12:00 pm   /   by

EPA regulations threaten Arizona economy, lawmakers told

(Phoenix, State Capitol)—Arizona’s economy could soon be feeling the effects of higher electricity rates under regulations recently announced by the Environmental Protection Agency (EPA), a group of state lawmakers was told Monday.

In a rare joint committee hearing chaired by Senator Gail Griffin (R-Hereford), members of the Senate Government and Environment Committee and the House Energy, Environment, and Natural Resources Committee, chaired by Representative Frank Pratt (R-Casa Grande) heard testimony from state air quality regulators, utility officials, a hospital executive, union representative, and the Director of the Navajo Nation Environmental Protection Agency, all of whom agreed that new regulations announced by the EPA could have a significant, negative impact on Arizona’s economy and its ability to attract and create new jobs.

“This is a non-partisan issue that has alarmed Republicans and Democrats alike,” Senator Griffin said. “Regardless of how one feels about the EPA, there is nothing logical about requiring Arizona residents to pay a billion dollars for regulations that make virtually no improvement in visibility and have nothing to do with public health.”

The regulations in question stem from the EPA’s interpretation of the Clean Air Act, which requires states to formulate ‘State Implementation Plans’ (SIP) to improve visibility at ‘Class-1’ federal areas such as national parks. The regulations do not address public health.

In July of last year, the EPA rejected Arizona’s plan to reduce nitrogen oxide (NOx) and, in an unusual and legally questionable move, required Arizona to discard its plan in favor of an EPA-drafted Federal Implementation Plan.

Under the EPA plan, Arizona utilities, including Arizona Public Service (APS), Salt River Project (SRP), and Arizona Electric Power Cooperative (AEPCO) would have to spend as much as $1 billion to retrofit three coal-burning power plants in some of the most economically challenged regions of the state. The scale of those costs present Arizona utilities with a stark choice—comply with the EPA rules and pass along the costs to Arizona residents and businesses through higher electricity rates, or close units at the generation facilities, costing rural Arizona hundreds of jobs.

In testimony to the joint committee of state lawmakers, representatives from the Arizona Department of Environmental Quality (ADEQ) testified that the regulations are not only excessively costly, they do virtually nothing to improve visibility compared to the state’s plan.

“We believe that the EPA’s decision is not only unreasonable in terms of its cost, but unnecessary,” declared Eric Massey, Air Quality Director for the Arizona Department of Environmental Quality. “No discernable visibility improvement would occur, but the costs would be significant.”

Massey explained that studies performed by state regulators clearly show that, compared to the state’s plan, the technology mandated by the EPA’s plan would result in an improvement in visibility of less than one deciview, or less than what the naked eye can perceive.

In response to questions, Massey pointed out that the EPA’s regulations are designed to address visibility only and are not related to public health.

Massey also pointed out that the EPA seems to be acting in violation of the Clean Air Act, which clearly gives deference to states, not the federal government. “Court decisions affirm that the EPA cannot substitute its judgment for a state’s when determining what constitutes best available retrofit technology,” Massey explained.

Representatives from Arizona utilities testified that the EPA plan would likely force them to increase the rates they charge their customers. Patrick Ledger, CEO of the Arizona Electric Power Cooperative, testified that the EPA plan would require his utility to increase costs by roughly 17% to 30%. “These regulations would double AEPCO’s total debt, and would have a significant impact on our ratepayers,” Ledger testified.

Such an increase in electricity rates would have devastating consequences for local businesses and health care providers.

Roland Knox, CEO of the Northern Cochise Community Hospital in Wilcox testified that a substantial increase in the cost of electricity would impact his hospital’s ability to provide affordable health care to local residents.

“An increase in our electricity rates would have a significant impact on the residents of Cochise County,” Knox said. “It would be very difficult for us to manage costs.”

That concern was echoed by Gretchen Konger of the Arizona Chamber of Commerce and Industry, who testified that higher electricity rates resulting from the EPA regulations threaten Arizona’s economic competitiveness.

“Higher electricity rates will deter companies from moving to Arizona,” Konger explained. “If the EPA moves forward, it will stall, if not stop, Arizona’s economic recovery.”

Also concerning is the prospect of job losses if the regulations force some utilities to shut down generation units. Mike Verbout of the International Brotherhood of Electrical Workers 570 testified that roughly 100 of his members work for utilities that would be impacted by the EPA’s plan. “There’s a lot to be lost. This affects the hospital, it affects the school, and it affects the employees. Verbout continued, “If the Apache Generating Station were to close, my workers would have a very difficult time finding jobs in the same region.”

The joint committee also heard testimony from the Director of the Navajo Nation Environmental Protection Agency, Stephen Etsitty, who told committee members that the Navajo Nation has concerns with what is happening. “We’re very concerned with how these decisions are being made,” Director Etsitty said. “Much of our concern has to do with the technical issues, but also highlighting the economic impact to the plants.”

Director Etsitty pointed out that there are hundreds of Tribal members who work for the mines that provide coal to the plants in question. “There is also a core of workers employed at the plants,” who would be affected if the EPA plan is implemented.

Monday’s hearing concluded with a video presentation from AEPCO, which featured a number of families whose fixed incomes and rising medical costs would make it difficult to afford higher electricity costs under the EPA plan. One of those featured, Apolonia Garcia, explained that her prescription drug costs are $400 per month, and that any increase in electricity rates would impact her ability to buy food.

At the conclusion of the hearing, State Senator Gail Griffin, Chairman of the Senate Government and Environment Committee, told those in attendance that she was appalled by the EPA’s plan and angered by the impact it would have on her residents.

“It is my hope that the information we heard today will educate and inform not only this committee, but the people of Arizona so that they can be aware of what is happening.”

In response to the EPA’s plan, Senator Griffin has sponsored a Senate Concurrent Resolution calling upon the EPA to reconsider its actions and work with the state on a workable and affordable plan.

“Arizona cannot afford new federal regulations that cost Arizona residents and businesses a billion dollars for an improvement in visibility that is imperceptible to the naked eye,” Senator Griffin declared.

Leave a comment

Arizona electricity costs soon to rise thanks to Obama's EPA