Reliable Electricity Needs Flexible Fuel Mix

Mar 6, 2013

In at the last few years, natural gas has flooded the market making it a valuable fuel for electricity generation, but we live in a global economy where commodities trade across borders and new technology constantly spring up. Fuel prices and availability fluctuates. To prevent price spikes and maintain reliable generating capacity, electricity producers need energy diversity--natural gas, coal, nuclear, hydro, solar, and wind. On Tuesday, the House of Representatives Energy and Power Subcommittee held a hearing on this subject.

American Electric Power (AEP) Executive Vice President for Generation Mark McCullough warned Members,

[P]olicies that could prevent the construction of new baseload generating units or force the retirement of existing coal-fired capacity could cause significant shifts to this balanced energy mix; reduce capacity diversity; and hinder our ability to provide reliable and affordable electricity to our communities and customers.

McCullough added that proposed greenhouse gas regulations targeting coal-fired plants would "effectively prohibits the construction of any new coal-fired power plant." He concluded:

Due to these regulations, as well as numerous other challenges facing nuclear energy, our nation’s electric grid will become increasingly reliant on natural gas for new generation capacity, likely eliminating both diversity and flexibility in new power plant builds. Federal policy should support fuel diversity, not preclude it.

John McClure, Vice-President and General Counsel of the Nebraska Public Power District (NPPD) also testified on the need for fuel diversity. While the NPPD generates nearly 60% of its electricity from coal it also employs nuclear, hydro, wind, and natural gas. He explained to the Members of Congress:

While the supply and price of natural gas has been a game-changer and is a critical part of a diverse fuel mix, it is not the silver bullet. What many do not realize is coal remains a more competitively priced fuel for certain regions of the country due to the proximity of supply, especially in the central and western U.S. Natural gas may be a great option if your power plant is located near a robust network of gas pipelines, but unfortunately many of the existing coal plants do not have access to pipeline capacity to convert from coal to natural gas.

McClure added, "[F]uel choices go in and out of vogue, and that a diverse mix of fuel is important to deal with the economic and policy swings that can happen over a longer period of time."

Reliability needs fuel balance and diversity. Good policy should support that and not attempt to drive a vital fuel source like coal from the market.

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