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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--When discussing U.S. energy policy with Nick Akins, president and chief executive at American Electric Power Company (NYSE:AEP) (Columbus, Ohio), it helps to know something about rock and roll music. Specifically rock drummers. Akins, an electrical engineer by training, has played drums for nearly 40 years.
"I enjoy it and it helps me think creatively," Akins, right, said about drumming. "I wanted to be a rock and roll drummer from a young age and got my first drum set in the seventh grade, but I realized that I needed to have a real job to be able to support myself, so I became an engineer." The CEO plays in a band called the Power Chords that is made up of other AEP employees. His favorite drummer is Neil Peart from the Canadian rock group Rush.
Rock drummers like Peart typically work in a chaotic swirl of noise, heat, blinding lights, theatrical smoke, endless travel and a large entourage--a setting not all that different from utility CEOs seeking to change U.S. energy policy. In an interview with Industrial Info, Akins said nearly four decades of pounding the drums has given him some perspective that helps him steer AEP through today's rapidly changing electricity business. "I guess that means I like being surrounded by chaos," he said. "When you think about it, a drummer organizes the chaos of a rock band, providing the backbone for the music. Similarly, the electric utility industry provides the backbone that powers the U.S. economy. I share an equal passion for both."
Turning more directly to the energy business, the AEP leader said, "It is an exhilarating time to be in this business. Our industry is in the midst of a transformation that will shape how we produce and deliver electricity--and what customers pay for it--for decades."
He estimated that electric utilities will need to invest about $2 trillion by 2030 to upgrade, replace and expand its power production and delivery infrastructure. "If managed correctly," he said, "this transition can support a U.S. manufacturing renaissance, grow jobs and bolster the economy as well as ensure that we can continue to rely on reliable, reasonably priced electricity to power our nation. It's an exciting challenge."
Right now, though, Akins is not particularly happy with the way that transition is being managed by federal energy policy-makers. President Obama expresses support for an "all-of-the-above" energy policy, Akins said, but some federal agencies are picking winners and losers "by putting forth regulations that disfavor certain fuels." Recent rules from the U.S. Environmental Protection Agency (EPA) (Washington, D.C.) like the Cross-State Air Pollution Rule (CSAPR) and the Mercury and Air Toxics Standards (MATS) will prematurely retire about 25% of the nation's existing coal-fired generation, he said. This will "raise electricity prices more than necessary and prevent the construction of any new coal-fueled generating facilities. That's not the right approach when the economic recovery in much of this nation is still tenuous."
For more on CSAPR, which is being litigated in a federal appeals court in Washington, D.C., see October 13, 2011, article - EPA Proposes Technical Changes to Finalized Cross-State Air Pollution Rule. For more on the MATS rule, see December 27, 2011, article - Environmental Protection Agency Finalizes Mercury and Air Toxics Standards. A third EPA rule, setting fossil-fuel power plant emissions of carbon dioxide (CO2), effectively requires new fossil-fuel generators to burn natural gas. For more on that last rule, see March 30, 2012, article - EPA Strikes Again With 'New Source Performance Standard.'
In Akins' view, the combined effect of these EPA rules has turned the "dash to gas" into an industry-wide stampede that tramples on the long-established principle of fuel diversity. "Our concern is that EPA is making national energy policy through the development of environmental standards that force generators to select a single source of fuel: natural gas. Over-dependence on natural gas for electricity generation will put our future economy at risk for energy price volatility. We must also keep clean coal, natural gas and nuclear fuel in the mix for electricity generation, while supporting expanded renewable development and energy efficiency."
But Akins does applaud the Obama administration's financial support to advance carbon capture and sequestration (CCS), seen by many as key to maintaining coal's share of the nation's electricity mix. That support "is a smart investment in our nation's energy future," Akins said. "Unfortunately, the funding hasn't been enough to move the technology to commercial scale. Those efforts need to continue and be expanded if we are going to maintain fuel diversity for power generation in this country."
Until last summer, AEP was working to demonstrate CCS technology at its 1,300-megawatt (MW) Mountaineer Power Station in New Haven, West Virginia. Despite a federal grant of up to $334 million, AEP placed that project "on hold" last July after state utility regulators in West Virginia and Virginia refused to allow it to recover its outlays in rates. For more on that issue, see July 18, 2011, article - AEP Terminates Commercial-Scale CCS Project in West Virginia, and October 26, 2009, article - Power Plant Carbon Sequestration Era Begins at Mountaineer.
EPA regulations on coal-fired generation and the state of CCS technology are vitally important to AEP, one of the largest utility companies in the nation. Today, a little more than 60% of its 38,000 MW of generating capacity burns coal. By 2020, about half of AEP's electricity will come from coal. AEP, like other coal-burning utilities, is reducing its use of coal and making difficult investment decisions about the future of its coal-burning power plants. In an April speech at the U.S. Chamber of Commerce (Washington, D.C.), Akins said AEP's coal burn will decline to about 55 million tons this year, down more than 30% from its 2008 usage of 80 million tons. AEP has announced plans to prematurely retire more than 4,600 MW of coal-fired generation and install or upgrade pollution-control equipment on more than 13,000 MW of generation.
Akins' message--coal-burning utilities need more time to transition their fleet--has been a staple of his speeches and interviews. The electric utility industry has cut emissions from coal plants by nearly 80%, he said. AEP spent $7.2 billion over the last decade reducing its power-plant emissions by 80%, he noted in his Chamber speech.
In his interview with Industrial Info, Akins said AEP is "willing to move forward with additional emission reductions from our coal-fueled power plants. But we need a reasonable timeline and flexibility to do that in a way that will mitigate the impact on electricity prices and on jobs. The EPA's aggressive schedule to achieve additional reductions in 2015 will unnecessarily increase electricity prices and put the reliability of the electricity grid at risk in many parts of the country. It also will eliminate an estimated 1.5 million jobs--something our still-anemic economy can't afford."
The AEP CEO declined to say which presidential candidate he was supporting. But the next U.S. president needs to "advocate for, and hold federal agencies accountable for, federal policy that is supportive of business and job growth. That means developing national energy policy that maintains fuel diversity, supports domestic energy exploration and production, coordinates electricity and natural gas markets, supports clean energy research and development, and supports infrastructure investment, including transmission investment."
As he works to reshape the U.S. energy industry, Akins faces enormous pressures from a wide range of stakeholder groups--including investors, state and federal regulators, and elected officials. Many of his decisions carry billion-dollar consequences. With all those stresses, does Akins ever wish he was in a different limelight--beating the drums? Akins replied: "At this stage in my life, I'm not sure I could keep up with the lifestyle of a rock and roll drummer."
"I love being part of a business that has a long, noble history, provides a service essential to modern life and that attracts employees with a strong commitment to customers and our mission," the AEP CEO continued. "Having the opportunity to help shape the future of our industry during a time of great change and being in a position to advocate for the right energy future for our nation is an exciting challenge.
"I'm also very fortunate to be able to go home at night and work out any stress on my drums."
View Plant Report - 1013868
View Project Report - 24001398
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
"I enjoy it and it helps me think creatively," Akins, right, said about drumming. "I wanted to be a rock and roll drummer from a young age and got my first drum set in the seventh grade, but I realized that I needed to have a real job to be able to support myself, so I became an engineer." The CEO plays in a band called the Power Chords that is made up of other AEP employees. His favorite drummer is Neil Peart from the Canadian rock group Rush.Rock drummers like Peart typically work in a chaotic swirl of noise, heat, blinding lights, theatrical smoke, endless travel and a large entourage--a setting not all that different from utility CEOs seeking to change U.S. energy policy. In an interview with Industrial Info, Akins said nearly four decades of pounding the drums has given him some perspective that helps him steer AEP through today's rapidly changing electricity business. "I guess that means I like being surrounded by chaos," he said. "When you think about it, a drummer organizes the chaos of a rock band, providing the backbone for the music. Similarly, the electric utility industry provides the backbone that powers the U.S. economy. I share an equal passion for both."
Turning more directly to the energy business, the AEP leader said, "It is an exhilarating time to be in this business. Our industry is in the midst of a transformation that will shape how we produce and deliver electricity--and what customers pay for it--for decades."
He estimated that electric utilities will need to invest about $2 trillion by 2030 to upgrade, replace and expand its power production and delivery infrastructure. "If managed correctly," he said, "this transition can support a U.S. manufacturing renaissance, grow jobs and bolster the economy as well as ensure that we can continue to rely on reliable, reasonably priced electricity to power our nation. It's an exciting challenge."
Right now, though, Akins is not particularly happy with the way that transition is being managed by federal energy policy-makers. President Obama expresses support for an "all-of-the-above" energy policy, Akins said, but some federal agencies are picking winners and losers "by putting forth regulations that disfavor certain fuels." Recent rules from the U.S. Environmental Protection Agency (EPA) (Washington, D.C.) like the Cross-State Air Pollution Rule (CSAPR) and the Mercury and Air Toxics Standards (MATS) will prematurely retire about 25% of the nation's existing coal-fired generation, he said. This will "raise electricity prices more than necessary and prevent the construction of any new coal-fueled generating facilities. That's not the right approach when the economic recovery in much of this nation is still tenuous."
For more on CSAPR, which is being litigated in a federal appeals court in Washington, D.C., see October 13, 2011, article - EPA Proposes Technical Changes to Finalized Cross-State Air Pollution Rule. For more on the MATS rule, see December 27, 2011, article - Environmental Protection Agency Finalizes Mercury and Air Toxics Standards. A third EPA rule, setting fossil-fuel power plant emissions of carbon dioxide (CO2), effectively requires new fossil-fuel generators to burn natural gas. For more on that last rule, see March 30, 2012, article - EPA Strikes Again With 'New Source Performance Standard.'
In Akins' view, the combined effect of these EPA rules has turned the "dash to gas" into an industry-wide stampede that tramples on the long-established principle of fuel diversity. "Our concern is that EPA is making national energy policy through the development of environmental standards that force generators to select a single source of fuel: natural gas. Over-dependence on natural gas for electricity generation will put our future economy at risk for energy price volatility. We must also keep clean coal, natural gas and nuclear fuel in the mix for electricity generation, while supporting expanded renewable development and energy efficiency."
But Akins does applaud the Obama administration's financial support to advance carbon capture and sequestration (CCS), seen by many as key to maintaining coal's share of the nation's electricity mix. That support "is a smart investment in our nation's energy future," Akins said. "Unfortunately, the funding hasn't been enough to move the technology to commercial scale. Those efforts need to continue and be expanded if we are going to maintain fuel diversity for power generation in this country."
Until last summer, AEP was working to demonstrate CCS technology at its 1,300-megawatt (MW) Mountaineer Power Station in New Haven, West Virginia. Despite a federal grant of up to $334 million, AEP placed that project "on hold" last July after state utility regulators in West Virginia and Virginia refused to allow it to recover its outlays in rates. For more on that issue, see July 18, 2011, article - AEP Terminates Commercial-Scale CCS Project in West Virginia, and October 26, 2009, article - Power Plant Carbon Sequestration Era Begins at Mountaineer.
EPA regulations on coal-fired generation and the state of CCS technology are vitally important to AEP, one of the largest utility companies in the nation. Today, a little more than 60% of its 38,000 MW of generating capacity burns coal. By 2020, about half of AEP's electricity will come from coal. AEP, like other coal-burning utilities, is reducing its use of coal and making difficult investment decisions about the future of its coal-burning power plants. In an April speech at the U.S. Chamber of Commerce (Washington, D.C.), Akins said AEP's coal burn will decline to about 55 million tons this year, down more than 30% from its 2008 usage of 80 million tons. AEP has announced plans to prematurely retire more than 4,600 MW of coal-fired generation and install or upgrade pollution-control equipment on more than 13,000 MW of generation.
Akins' message--coal-burning utilities need more time to transition their fleet--has been a staple of his speeches and interviews. The electric utility industry has cut emissions from coal plants by nearly 80%, he said. AEP spent $7.2 billion over the last decade reducing its power-plant emissions by 80%, he noted in his Chamber speech.
In his interview with Industrial Info, Akins said AEP is "willing to move forward with additional emission reductions from our coal-fueled power plants. But we need a reasonable timeline and flexibility to do that in a way that will mitigate the impact on electricity prices and on jobs. The EPA's aggressive schedule to achieve additional reductions in 2015 will unnecessarily increase electricity prices and put the reliability of the electricity grid at risk in many parts of the country. It also will eliminate an estimated 1.5 million jobs--something our still-anemic economy can't afford."
The AEP CEO declined to say which presidential candidate he was supporting. But the next U.S. president needs to "advocate for, and hold federal agencies accountable for, federal policy that is supportive of business and job growth. That means developing national energy policy that maintains fuel diversity, supports domestic energy exploration and production, coordinates electricity and natural gas markets, supports clean energy research and development, and supports infrastructure investment, including transmission investment."
As he works to reshape the U.S. energy industry, Akins faces enormous pressures from a wide range of stakeholder groups--including investors, state and federal regulators, and elected officials. Many of his decisions carry billion-dollar consequences. With all those stresses, does Akins ever wish he was in a different limelight--beating the drums? Akins replied: "At this stage in my life, I'm not sure I could keep up with the lifestyle of a rock and roll drummer."
"I love being part of a business that has a long, noble history, provides a service essential to modern life and that attracts employees with a strong commitment to customers and our mission," the AEP CEO continued. "Having the opportunity to help shape the future of our industry during a time of great change and being in a position to advocate for the right energy future for our nation is an exciting challenge.
"I'm also very fortunate to be able to go home at night and work out any stress on my drums."
View Plant Report - 1013868
View Project Report - 24001398
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
