Regulatory & Customer Rate Management
There are many factors that can affect the price and reliability of energy throughout the country. AEP has advocated for years that we need a national energy policy to serve as a road map for how our country will generate and deliver electricity in a reliable, cost-effective manner over the long term. The key is whether our elected leaders can overcome the political gridlock in Washington, D.C., and develop a federal energy policy that supports business and job growth.
There are some important aspects of an energy strategy that need to be addressed:
- Preventing overdependence on one fuel/maintaining fuel diversity
- Aligning the natural gas and electricity markets to address issues such as pipeline capacity and location, pricing and scheduling protocols, which need to be coordinated to address reliability concerns
- Infrastructure investment and transmission development
- Rational energy and environmental regulations
Because Congress has not been able to achieve a broad solution to environmental and energy policy, the U.S. Environmental Protection Agency (EPA) may be more aggressive over the next four years in initiating new rules that will impact this industry over the long term, enacting energy policy through regulations. Our industry will make a huge investment through the end of the decade just to comply with new EPA regulations affecting power plants. For AEP alone, we estimate the cost to be $4 billion to $5 billion between now and 2020 to make the remaining coal units comply with current and anticipated EPA regulations.
The regulations coming from the EPA need to be as reasonable as possible in the implementation timelines to minimize detrimental economic impacts to the states in which we operate and to minimize negative reliability impacts on the grid across the nation.
In addition to environmental compliance costs, the electric utility industry will need to invest approximately $2 trillion over the next two decades to refurbish and replace existing infrastructure and to build new facilities to meet the nation’s future energy needs. 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.