With emissions standards changing on coal-fired power plants, an Indiana State alumnus weighs in on what he envisions as our energy future.
An Indiana State University alumnus hopes for a balanced approach to deal with increasing demand on the country’s electrical grid and managing energy costs.
Rob Hochstetler, who earned an MBA in 1993, recently left his home state and a job with Hoosier Energy to become president and chief executive officer of Central Electric Power Cooperative Inc., a generation and transmission utility in South Carolina.
“Everyone wants to do our part. We need to be greener and reduce pollution, but we want to make sure it’s fair and affordable,” Hochstetler said.
Much is made in the media about the “war on coal,” but our dependence on coal-fired power plants dates back to long before current Sycamores were born. During the 1970s, leaders predicted the growing electricity demand, but discouraged building gas or nuclear generation.
“If you go back to the Carter administration, our industry was told to build coal plants. There were rules and regulations against building anything else but that,” Hochstetler said.
In more recent times, the rules governing emissions have changed so unpredictably that it was easier to retrofit these old coal-fired plants than build a new one.
“It’s hard to make a multi-billion dollar investment when you didn’t know what the rules were going to be,” he said.
So metaphorically speaking, instead of buying a new car — one equipped with improved fuel efficiency and safety measures — the electric industry just keeps fixing up its old 1970s car.
In 2012, Indiana ranked seventh among the states in coal production, and coal-fired electric power plants provided about 84 percent of Indiana’s net electricity generation in 2013, according to the U.S. Energy Information Administration. So, abandoning coal altogether would leave a large hole to fill — both energy-wise and economically.
With new natural gas extraction methods — the often controversial hydraulic fracturing or “fracking” — prices for the resource have stabilized and are currently competitive with coal. Previously, natural gas prices were highly volatile.
Solar and wind technology have improved and are coming down in prices, but solar panels only work when the sun shines and wind turbines only work when the wind blows at a sustained velocity.
Nuclear, although a source of clean energy, is perhaps the most complicated form of generation, especially considering the long planning horizon. In 2012, Georgia was the first state in 30 years to get the OK to build additional nuclear capacity by the U.S. Nuclear Regulatory Commission, and South Carolina and Tennessee have since been approved.
Under the Environmental Protection Agency’s proposed Clean Power Plan, however, these states would essentially be penalized for their forward thinking, compared to states that haven’t done anything.
“What the government is saying is since you already decided to do these things, you shouldn’t get credit for something you did in the past,” Hochstetler said.
For instance, Indiana has taken a watch-and-wait approach to these CO2 standards, and they’re facing about a 17 percent reduction in the state’s emissions footprint by 2030, under the current proposal. South Carolina, on the other hand, is looking at a required 51 percent reduction.
“It’s a very complicated formula, but the government is struggling what to do with nuclear under construction,” he said.
So, what’s the future of electricity? Some experts say energy prices would quadruple if more of a balanced approach — one that taps all generation sources, along with conservation — isn’t applied.
On Indiana State’s campus, Sycamores are living this balanced approach, with conservation, a wind turbine and a steam plant for heating that was previously coal-fired is now powered by natural gas. The administration is also making the most of an oil reserve beneath the campus that is feasible to recover thanks to horizontal drilling.
“People love electricity — they want that light to turn on when they flip the switch — but how much more are they willing to pay?” Hochstetler said.
Already, many Americans are described as “energy poor” or living in “energy poverty,” meaning they have to choose between keeping their homes heated to a comfortable level or buying medicine.
In South Carolina, utilities are able to offer government-backed loans to customers to make energy-efficiency upgrades such as adding insulation, sealing air leaks and upgrading to a heat pump from electric-resistant heat. The money the resident saves on their electric bill goes to pay back the loan, which is granted to the meter (not the individual).
“S.C. is doing this and the program is doing so well that I’m looking for it to spread,” Hochstetler said.
In fact, it is. The program introduced by South Carolina Sen. James Clyburn is being expanded by the U.S. Department of Agriculture, which is allocating up to $250 million in existing Rural Utilities Service funds for loans.
Helping customers save on their electric bill can seem counterintuitive. But electric cooperatives, which are owned by their members — usually, their power customers — operate as not-for-profits.
“The thing about co-ops is we enjoy selling electricity, but we don’t have to answer to shareholders,” he said.
Hochstetler is married to the former Linda Eldridge, a ’92 psychology graduate of Indiana State.