finding a reasoned path forward in an uncertain environment william h. downey, president & coo...
TRANSCRIPT
Finding a Reasoned Path Forward in an Uncertain Environment
William H. Downey, President & COO
June 2010
2 March 2010
The intersection of policy and technology…
3 March 2010
Goal line: maintaining reliable service and competitive rates
Business Week (July 2008)
4 March 2010
Missouri’s electricity generation portfolio
78% Coal fired power plants
11% Nuclear power plants (Callaway & Wolf Creek)
4% Natural gas fired power plants
7% Renewable power plants(primarily hydro-electric and wind)
5 March 2010
The evolution of climate change legislation…
Waxman-Markey 17 % reduction by 2020 83 % reduction by 2050 Cap-and-trade mechanism Allowances in early years that
decline over time for electric utilities
No cost collar on prices for carbon offsets
Renewable energy portfolio standard
Kerry-Lieberman 17 % reduction by 2020 83 % reduction by 2050 Cap-and-trade mechanism Same as Waxman-Markey but
utilities get 2.2 billion more allowances
Price collar with floor of $12/ton rising at CPI+3%/yr. and ceiling of $25/ton rising at CPI+5%/yr.
Unclear if a RPS will be included
6 March 2010
Train Wreck: It’s not all about climate change
Possible Timeline for Environmental Regulatory Requirements for the Utility Industry
7 March 2010
Midwest: Greater risk and uncertainty with existing environmental regulations
Most will need environmental
retrofits to continue
operation under existing EPA regulations
Source: MEDA Presentation to Joint Committee on Missouri’s Energy Future
8 March 2010
Existing environmental regulations will cause plant retirements…
Source: MEDA Presentation to Joint Committee on Missouri’s Energy Future
9 March 2010
Finding a reasoned path forward…
10 March 2010
The importance of Prop C and energy efficiency
Proposition C
2% by 2011 to 15% by 2021
2% must come from solar and provides for solar rebates
A maximum average retail rate increase of one percent
Energy Efficiency
Recover costs related to approved energy efficiency programs
Value the same as traditional supply investments
Opt-out provision for industrial customers
“To save power is the equivalent of making
power.”
– Governor Jay Nixon
(Signing the Missouri Energy Efficiency Act into law)
11 March 2010
Conclusion: small proactive steps and flexibility are key…
Missouri’s next major baseload generation will come in the next 10-20 years, what it will be remains uncertain
Uncertainty leads to increased cost—need ground rules
No one right answer, need a portfolio of solutions
Need to rationalize national energy and environmental policy with commercial availability of technology
Government policy and regulatory policy needs to be aligned
Must continue to work with customers to mitigate cost-impacts and understand their changing needs