Diversity Key to Ensuring Affordable and Reliable Electricity
WASHINGTON, DC – The Subcommittee on Energy and Power, chaired by Rep. Ed Whitfield (R-KY), today continued its American Energy Security and Innovation hearing series with a focus on the important role fuel diversity plays in ensuring affordable and reliable electricity for American consumers. The nation’s electricity generation includes such sources as coal, natural gas, nuclear power, hydropower, and renewables, and today’s hearing examined the need for a true “all-of-the-above” approach to meet the nation’s diverse energy needs.
“The best approach for affordability and reliability is a broad mix of generation sources, be it coal, natural gas, nuclear, or renewables. Each source can serve a purpose in the electricity mix, and each has strengths that can compensate for the other’s weaknesses. And the best way to strike the right balance is through market forces – not government mandates or other market distorting policies,” said Whitfield.
U.S. power generation consists of a broad mix of fuel resources, and maintaining this fuel diversity is critical to protecting against reliability risks and price increases. The nation’s generation fleet is currently experiencing a shift driven largely by low natural gas prices and new regulations on America’s power sector. Witnesses today cautioned against an overreliance on one specific fuel source and stressed the importance of a diverse fuel mix as we adapt to these changing dynamics.
John McClure, Vice President and General Counsel for Nebraska Public Power District, explained that power generation varies based on regional geographies. He said, “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.”
Referencing the chart below, McClure added, “A one-size-fits-all energy policy will not work in the electricity sector. The chart in the back of the room does a great job describing how different the regional mixes are around the country, and that’s worth 10,000 words that are not in my testimony in terms of educating us about the diversity around the country.”
Coal remains the country’s largest electricity source, but this reliable and affordable energy source is being threatened by EPA’s new suite of regulations on the power sector. Mark McCullough, Executive Vice President of American Electric Power (AEP), discussed the impact these regulations are having on coal’s ability to contribute to the baseload and the risk they pose to fuel diversity. “Policies that could prevent the construction of new baseload facilities or force their retirement could cause significant shifts to this mix; reduce capacity diversity; and increase risk of availability, reliability, and cost of electricity,” said McCullough. “The importance of fuel diversity cannot be overstated given its implications for assuring economic and energy security. Too great a reliance upon any one energy source (particularly those with a history of price volatility) creates a significant risk exposure to electricity price escalation and supply disruptions.”
William M. Mohl, President of Entergy Wholesale Commodities, described the important role nuclear power currently plays in the nation’s electricity mix, and further argued for the benefits of a diverse fuel portfolio. “The approximately twenty percent of the U.S. electricity supply safely generated by nuclear plants provides critical reliability, economic, and emissions benefits and contribute to a diverse generation mix for the United States,” said Mohl. “Every source of energy has advantages and disadvantages. We know this to be true in transportation, home heating and also with electricity. Each generation source varies in terms of cost, economic and environmental impact, and other factors that complement and may be weighed against each other. Generation diversity is simply necessary to ensure a reliable and secure generation portfolio for the nation.”
“Sound energy planning means that you don’t rely on one energy source, in essence putting all of your eggs into one basket,” concluded Chairman Whitfield. “Federal policies should encourage an all-of-the-above approach to electricity production that takes advantage of all affordable domestic energy resources. Rather than pursuing policies that could limit the diversity of energy resources, the U.S. instead should be pursuing opportunities to transition to the most advanced generation fleet in the world, inclusive of all affordable and reliable resources and technologies.”