Many diverse factors can affect the price and reliability of energy throughout the country. AEP has long advocated the need for a national energy policy to serve as a road map for how our country will generate and deliver electricity in a reliable, cost-effective and sustainable manner over the long term.
We believe a national energy policy must recognize regional differences and needs. The best approach would be a national framework that gives each region the flexibility to make choices and investments based on what makes the most sense for that state or region. For example, wind power in some western states, such as Oklahoma, is abundant and becoming more cost competitive with traditional fuel sources. In other states with a greater proximity to coal and a lack of wind resources, a different mix of energy investments may be more appropriate. Regional transmission organizations and state utility commissions are already approaching resource planning this way, and we support this approach. However, absent a cohesive national energy policy to stitch the pieces together, companies have little incentive to make strategic long-term investment decisions, such as building new generation capacity.
We believe the following elements are essential to a national policy that will actually move the country forward:
Preventing overdependence on one fuel source and maintaining fuel diversity:
Maintaining reliable service requires a diverse fuel portfolio. We need every resource at our disposal – coal, natural gas, renewables, nuclear, hydro, energy efficiency and demand response. Research and development for low emission, high reliability fossil and nuclear technologies should be a priority.
Investing in infrastructure and developing transmission:
In addition to environmental compliance costs, the electric utility industry will need to make significant investments to refurbish and replace existing infrastructure and to build new facilities to meet the nation’s future energy needs as well as accommodate the significant number of coal plant retirements that are forthcoming. With investments this large, it is easy to see why we need a national energy policy to allow our industry to plan with more certainty over the long term.
Establishing the right pricing models:
Developing pricing models that recognize the total value of electricity services provided, including use of the grid.
Creating rational energy and environmental regulations:
Because Congress has not been able to enact legislation, the U.S. Environmental Protection Agency (EPA) is using what it believes to be its authority under existing environmental laws to adopt new regulations that will impact this industry over the near and long-term. Our comments on EPA’s initiatives often include information essential to full consideration of the collateral impacts of new regulatory programs and revised environmental standards. We are also working with our state regulators to assure that they have adequate information to seize any new opportunities for flexibility in their implementation plans for the new regulations. Although we have already made significant investments to reduce emissions at our coal-fueled plants, more investment may be required to comply with pending EPA regulations.