July 5, 2015
The Scranton Times-Tribune
As most Pennsylvanians know, we are producing more natural gas than all but one other state, thanks to the prolific supplies of gas in the Marcellus and other formations.
What many Pennsylvanians may not know is that we are also second in the nation in total electric generation.
Coal and nuclear have provided reliable, baseload power, with natural gas and alternative energy filling in during times of high demand. But our grid — that is, the elaborate system of power plants, substations and transmission lines that provides our electricity — is changing.
Government regulations require Pennsylvanians to purchase more and more alternative energy — energy that is more costly and less reliable than traditional sources. One ironic effect of this is that some nuclear units, despite being zero-carbon, emissions-free and able to run regardless of the weather, are in jeopardy of retirement in large part due to these mandates that have cost ratepayers tens of millions of dollars.
Further, even though our nation and economy continue to grow, costly federal regulations have made building new, more efficient coal-fired power plants all but impossible — and many existing ones are being retired.
The good news is that there are new natural gas plants being proposed — but the bad news is that the Wolf administration continues to press for a potentially market-crushing severance tax that could impinge on our state’s future growth.
It is imperative that, in order to have affordable and available fuel supplies for power plants during this time of unprecedented change to the grid, state policymakers not impose additional costs on production, on top of the hundreds of millions of dollars in impact fees producers already pay.
Imposing a severance tax on production could jeopardize Pennsylvania’s ability to supply fuel for power generation — not just for the state, but also for PJM, the regional grid operator that provides power to 61 million Americans in Pennsylvania, 12 nearby states and Washington, D.C.
PJM’s independent market analyst, Monitoring Analytics, provides a good overview of the electric generation landscape in its latest “State of the Market Report.” The report expects that nearly 27 gigawatts of electric generation capacity, or more than enough to power about 20 million homes, will retire by 2019. Much of that is in Pennsylvania, much of it is due to onerous federal air quality regulations, and most of those retirements will happen by the end of next year.
Poorly thought out government policy has left challenges for nuclear and coal to provide power to the grid. Natural gas can help meet demand for affordable power, but only if state and federal government does not impede its ability to do so.
Clean the air
Important to many is the fact that natural gas will help us continue to clean the air. Since 2008, state Department of Environmental Protection data shows that emissions reductions of 68 percent for sulfur dioxide, 42 percent for particulate matter, 28 percent for nitrogen oxides and 12 percent for carbon monoxide have been achieved. This has led to fewer ozone air quality alerts, which are forecasted on days of poor air quality. There were just four ozone action days in all of 2014, down from 28 days in 2012.
While it is well known that natural gas development supports hundreds of thousands of direct and indirect jobs, gas-fired electric generation is providing an additional economic driver.
New highly efficient natural gas power plants are being built or are proposed throughout the commonwealth. Constructing these facilities will create hundreds of jobs over several years. Panda Power’s “Liberty” power project in Bradford County is one example. This 829-megawatt facility is creating approximately 500 construction jobs, and it is estimated that it will infuse more than $5 billion into the northern tier’s economy. Another project is Invenergy’s proposed Lackawanna Energy Center. According to one estimate, this state-of-the-art 1,480-megawatt facility will employ 600 people for construction and provide $4 million in wages once it is operational. These represent just a couple of the planned natural gas power plants in Pennsylvania.
Also imperative to taking full advantage of gas are pipelines, which, in addition to safely delivering fuel for heating and power across the state, provide both short- and long-term economic growth. In an economic analysis of the proposed.
PennEast Pipeline, Concentric Energy Advisors found that if the pipeline’s 1 billion cubic feet per day capacity had been installed in the polar vortex of the 2013-14 winter, electric customers would have saved more than $530 million.
We’re at a crossroads when it comes to our grid and our energy future. The state should be doing all it can to continue its role as an energy leader. In order to have a grid that can provide power reliably and affordably, we should allow gas, coal and nuclear to have a strong role in our portfolio by moving away from government mandates and regulations that distort the market and provide little benefit to human health. We must also promote continued, robust production of natural gas, not thwart production with a severance tax, or infrastructure development with onerous regulatory hurdles.
GENE BARR is president and CEO of the Pennsylvania Chamber of Business and Industry, the largest, broad-based business advocacy association in the state.