The Edmond Sun

Business

June 3, 2014

EPA greenhouse gas rule may lay new bet on future natural gas supplies

LOS ANGELES — The Obama administration’s ambitious plan to reduce greenhouse gas emissions from U.S. power plants 30 percent by 2030 is laying another big bet on future U.S. natural gas supplies.

The boom in U.S. production, the result of hydraulic fracturing and horizontal drilling into shale formations, has sharply boosted the availability of gas since 2009, but the abundance has prompted multiple new claims to the resource.

The Environmental Protection Agency is preparing two new rules that will weigh heavily on U.S. coal-fired generating plants. The rule on reducing greenhouse gases will be difficult for many, if not all, of the U.S. coal plants to satisfy. And already a massive wave of retirements of coal-fired plants is occurring as the EPA’s rule on mercury and acid gases is implemented over the next year.

The U.S. will grow increasingly dependent on natural gas to make up the difference, even with the most ambitious efforts to control the growth of demand and promote more costly renewable power.

Throughout history, natural gas has been among the most volatile fuels available, owing to changes in demand but also to the difficulty of storing large amounts of it. If natural gas prices spike, as many U.S. experts worry, the growing dependence of the U.S. on the fuel for power plants will take electricity along on the ride.

After the fracking boom began producing large volumes of new gas, an over-abundance of the fuel drove down prices from $11.78 per thousand cubic feet in July 2008 to $2.04 in April 2012, according to the U.S. Energy Information Agency. Those are average monthly prices, and the daily spot market price swings were even higher.

Where did it go from 2012? That’s the worrisome news. The price has since rebounded to $4.61 in trading Monday. Even at the current price, the effect on electricity prices is noteworthy.

Last month, PJM, the operator of the grid from the East Coast all the way to Chicago, warned that in auctions for power supply contracts prices in some areas were doubling. And the California Independent System Operator, which operates the grid for all of the investor-owned utilities in the state, reported that last year spot market prices in the state shot up 31 percent.

The surge has caught savvy investor’s attention. The prices of utility shares and funds are rising, as investors sense the potential for profit spikes as the price of electricity increases.

Electricity and natural gas have become joined at the hip. Stanford University energy expert James Sweeny notes that a 33 percent increase in natural gas yields a 16 percent increase in the retail price of electricity.

“When those natural gas prices start going up again, we will feel it in the way of higher electricity prices,” Sweeny said.

Just how high power prices will go is difficult to say. Malcolm Johnson, a former Shell Oil gas executive who now teaches at the Oxford Princeton Program, a private energy training company, said prices could move toward European price levels of $10. Such a move would still make the U.S. a bargain against Asian prices of more than $20.

Is there room for concern? A number of U.S. experts say the government and industry are making multiple claims on the resource, potentially outstripping future growth. The Energy Department projects that U.S. natural gas supplies will double in coming decades, but that has triggered a lot of ambitious plans for its use.

U.S. companies have submitted plans to build more than 20 liquefied natural gas facilities along the coasts, a massive amount of export capacity. Meanwhile, the trucking industry is slowly converting its fleet to burn cheaper natural gas and is counting on U.S. heavy engine manufacturers to continue improving the efficiency of natural gas engines over traditional diesel.

But the big wild card may be electricity.

Natural gas will be needed not only to replace coal-fired generating plants but also to make up for almost every other type of fuel. The U.S. has retired five nuclear reactors since 2013, and the industry is considering even more shutdowns. The prolonged drought is reducing hydropower in much of the West. And even renewable power needs natural gas-fired plants as a backup resource.

Although conservationists hope that regional networks will help improve the reliability of wind and solar resources, it is still too variable to count on. In Kansas, for example, regulators count on only 11 percent of the large installed wind turbine base without having fossil fuel backup.

As the California electricity crisis of 2000 showed, when electricity is in short supply prices are subject to wide swings and illegal manipulation. The prices shot up on the spot market by 800 percent in the crisis and left Californians paying for mistakes for more than a decade.

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  • Logan County pays off jail tax early, seeks new one

    Logan County is paying off a sales tax ahead of schedule and needs a new one to be able to afford funding jail operation and maintenance, officials said.
    Citizens vote on the county sales tax which is split for redistribution by state law. The tax is collected by the Oklahoma Tax Commission and redistributed back to the county as specified by voters.
    In 2005, citizens passed a 10-year sales tax, scheduled to end next month, to fund the building, operation and maintenance of the county jail, which operates on a $1.3 million budget. Jail capacity is 188 without anyone in a holding cell or a temporary bunk. Thursday it was holding 130 inmates, said Logan County Chief Deputy Richard Stephens.

    July 26, 2014

  • Edmond School District’s change orders anticipated

    When building new schools and classrooms there may be additional costs, but when renovating older buildings those costs can more than double, according to a Edmond School District official.
    “When remodeling, you have unknown and hidden costs and you need to include in your budgeted funds for the built-in items you can not see,” said Bret Towne, Edmond’s associate superintendent of general administration.

    July 25, 2014

  • Planning Commission approves rezoning

    The Edmond Planning Commission this week voted 4-0 in favor of rezoning from a single family district.  Peter and Kimberly Roberts made the request to allow a planned unit development on the southeast corner of Jackson and Lincoln Avenue, said Bob Schiermeyer, city planner.
    “They would like to have D-2 family (neighborhood commercial) zoning for duplexes, 14,000 square feet,” Schiermeyer said. “They can put four units on the property.”

    July 25, 2014

  • A Q&A on ‘Obamacare’ Court Rulings

    On Tuesday, two federal appeals courts issued conflicting rulings on the legality of tax subsidies being provided to people who bought “Obamacare” health insurance policies in Oklahoma and 35 other states.
    Here’s a look at the rulings’ potential impact in Oklahoma.

    Q: I’m confused. What did the courts rule today?
    A: A three-judge panel of the U.S. Court of Appeals circuit in Washington, D.C., decided that the government can’t provide tax subsidies for Affordable Care Act plans purchased in 36 states where the federal government is operating the health insurance exchange. Oklahoma is one of the 36 states. A few hours later, the U.S. Court of Appeals circuit in Richmond, Va., issued a conflicting ruling that upheld the legality of the health-care law’s tax subsidies.

    July 22, 2014

  • June healthy month for Oklahoma jobs

    Nearly 10,000 new jobs in Oklahoma were created in June, according to the U.S. Labor Department.
    Gov. Mary Fallin said Tuesday the state experienced one of the largest increases in employment in the nation in June. More than 9,600 additional people joined the state’s workforce in June.
    The unemployment rate in June dropped to 4.5 percent, its lowest ratio in six years. June’s rate was down a percentage point from 4.6 percent in May and April, according to the Oklahoma Employment Security Commission.

    July 22, 2014

  • UCO campus 3.jpg University of Central Oklahoma recognized as having friendly work environment

    The Chronicle of Higher Education named the University of Central Oklahoma as one of the “2014 Great Colleges to Work For.” Central is the only higher education institution in the state recognized on the list and one of only a handful of institutions in the nation given the distinction of being named to the Honor Roll for being cited most often among all the recognition categories.          
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    July 21, 2014 1 Photo

  • Council approves funds toward ADA update

    City Council members have approved a $398,800 professional services contract with Accessology, a McKinney, Texas, firm, to establish an Americans With Disabilities Act transition plan for the city.
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    Accessology was selected out of a pool of five finalists by a five-member committee to create Edmond’s plan. The firm will partner with Kimley-Horn and Associates, a design consulting firm located in North Carolina.
    Edmond’s last ADA transition plan was created in 1992.

    July 21, 2014

  • Panel approves jail services agreement

    City Council members have approved renewal of the city’s jail services agreement with Oklahoma County for prisoners incarcerated at the county jail on city charges.
    The current annual agreement expired June 30. It provides the feeding, care, housing and upkeep of said prisoners. Edmond uses the county jail when the city jail is at capacity.
    The sheriff’s office proposed a slight increase from $46.25 to a $46.50 daily rate per prisoner. City staff said the current agreement is working satisfactorily and believe the proposed rate is reasonable. The new agreement took effect July 1. The city can hold prisoners in its current jail  up to 10 days; a new jail with 10 male and five female cells will be available inside the new Public Safety Center next year when the facility opens.

    July 21, 2014

  • Panel establishes 911 phone rate

    City Council members have established the rate for the 911 emergency phone service fee for calendar year 2015
    Council members set the rate at 3 percent of the recurring charges as designated by the tariff for exchange telephone service or its equivalent within Edmond beginning Jan. 1, 2015.
    Fees collected by wireless and voice over Internet protocol companies are established under a separate statute. To continue collection of the locally authorized service fee on landline phone bills, local governments must approve a resolution on an annual basis to set the actual fee.
    Governments must also through the Association of Central Oklahoma Governments notify the appropriate incumbent local exchange carrier and competitive local exchange carrier phone companies by Sept. 1, 2015.
    ACOG recommended for calendar year 2015 to maintain service fees at their current level of 3 percent.

    July 21, 2014

  • Council approves $2.5M extra for utility

    City Council members have approved the transfer of a $2.5 million appropriation for Edmond Electric.
    The action was needed due to higher natural gas prices. Those increased prices caused wholesale electric purchase costs to exceed the department’s budget estimates for Fiscal Year 2013-14. To cover the increased costs, a transfer of funds from the “Transfers” category to the “Other Services and Charges” category was necessary.
    It will maintain state law requirements and not increase Edmond Electric’s budget.
    The action occurred during Monday’s meeting and was approved unanimously.

    July 21, 2014

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