APCo’s Charles Patton Frames Legislative Session with Fearmongering

Don’t you wish you had a few thousand dollars to spend on a special luncheon to tell WV legislators about the problems your family faces, from your point of view?  Well, that’s what Appalachian Power Company did on Wednesday.

The State Journal’s Sarah Tincher reported on a speech given at a WV Business and Industry Council luncheon in Charleston by Charles Patton, Appalachian Power Company’s president and the guy who takes orders from the AEP big boys in Columbus, OH.

Mr. Patton is always a pretty straight shooter, and some of the things he said were not what WVBIC Chairman, and long time lobbyist for the WV Coal Association, Chris Hamilton, wanted to hear.

Additionally, he said, when looking at the forward curve on coal for 2015, Central Appalachian coal is the most expensive coal in the country for APCo to buy, largely because of regulations imposed on coal companies that have driven up their costs.

“I have to do the cheapest thing possible,” Patton said. “I point this out not because I want to use it as an excuse not to burn Central Appalachian coal, but I want to make it apparent to you, that if you want Central Appalachian coal to be competitive, it’s important for you from a policy perspective to be thinking about how you do it.”

It’s clear from the last sentence, that Mr. Patton saw coal industry legislators as his target audience.  WV coal operators can’t change geology, which is the real problem causing high mining costs.  Mr. Patton, who really doesn’t care where his coal comes from, as long as it is cheap, left the heavy lifting up to the politicians.

Central Appalachian coal operators have often talked about importing miners from Mexico and Central America to cut labor costs, the only costs that operators can really control.  Importing low wage immigrants was a time honored tradition in the WV coal fields, until miners organized in the 1930s stopped it.  Coal operators have already cut safety requirements to the bone so that miners continue to die on a regular basis and black lung has now surged among miners.  Mr. Patton didn’t suggest these “solutions” to the Central Appalachian coal industry’s problems, he left that up to the politicians in his audience.

The main thrust of Mr. Patton’s remarks, though, was fear.  Fear is now the main driver of political policy in the US, and fear never produces good policy.  But Mr. Patton doesn’t want good policy.  He wants higher profits for AEP shareholders and bigger bonuses for AEP executives.

So he trotted out the WV coal industry favorite propaganda memes: EPA air regulations and the new bogey man, the polar vortex.  Mr. Patton actually claimed that EPA’s goals to reduce carbon emissions were “set arbitrarily.”  Really?  If you have read anything about EPA’s 111d process, you will see that it is the result of extensive study and research, and includes an open comment process with heavy industry involvement.  And the goals are open to interpretation by states within their broad framework.  To claim that this process may not be perfect, but to claim it is “arbitrary” is simply not true.

It is also not surprising that Mr. Patton never mentioned the WVU/Downstream Strategies report showing how WV can meet its 111d goals.

You know the BS is getting deep when industry people trot out the scary polar vortex.  They gave it a name, because they want to make it scarier.  Industry people love words that end or start with “x” which makes it even better.  Mr. Patton lists all the WV coal burners that have closed recently, claiming that if it hadn’t been for them, we would have been plunged into darkness last January.

Let’s look at the facts.  In May 2014, FERC issued its preliminary report on the problems caused by three cold snaps last January.  Here is a quote from that report on the some of the causes:

During the early January event, the RTOs estimate generation on forced outages and derates ranged from about 7 to 30% of the load on the peak day. Significant portions of those outages were related to fuel issues including gas curtailments, no fuel, oil delivery and frozen coal. For example, PJM estimates that about one quarter of the forced generation outages on January 7 were fuel related. In addition, 5,000 MW of combustion turbines failed to start when called.  During the latter January events, gas curtailments declined in PJM as did start failures for combustion turbines. However lack of fuel, oil delivery and frozen coal persisted in causing forced outages of 5,000 MW and 8,000 MW in late January.

So problems with coal burners were some of the main drivers of the overall problems on the grid.  Far from being “the solution,” as Mr. Patton seems to claim, coal burners were clearly a big part of the problem.  Mr. Patton touts new natural gas plants as the wave of the future, but fuel problems at natural gas power plants were big contributors to grid managers’ headaches last January.

WV legislators in the audience at the WVBIC luncheon wouldn’t have known how wildly Mr. Patton was misrepresenting the polar vortex situation, because few, if any, of them have read PJM or FERC assessments of the situation.  If they had, they would have realized that what Mr. Patton, like his coal burners, was just blowing smoke.


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