I Do, But I Don't

I Do, But I Don't

Tuesday, March 29, 2011

Charlie Meadows Takes On CHK (Sort Of)

Excerpted from the OCPAC Blog:

++ CHESAPEAKE WANT’S UTILITIES TO INCREASE OVER 30%?

The presentation and our conversations with Brian Alford at the OCPAC meeting last Wednesday were quite lively. It is very clear that many people are not too enthused about the new smart meters being installed system wide by OG&E. The EPA (Environmental Protection Agency) will funneled $100 million dollars in subsidies to OG&E to get these meters installed. I believe most of the concern is over the possibility that the EPA might someday order a company like OG&E to ration electricity. While OG&E has no interest in doing that, the technology does make that possible and so far OG&E has not proven a willingness to tell the feds to go to hell.

Prior to our luncheon, there was a meeting held at the Corporation Commission offices with newly elected Attorney General Scott Pruitt taking the lead by explaining his intentions to take legal action against the EPA. The problem is their un-reasonable edict about forcing all of PSO and OG&E’s Oklahoma coal fired generating facilities to either install expensive scrubbers on their equipment or switch to natural gas for fuel which turns the generators to make electricity.

The problem seems to stem from the EPA’s mandate to improve air quality over our national parks and wildlife refuges. One of the things we learned last Wednesday is that the EPA has no scientific evidence that the intermittent haze over the Wichita Wildlife Refuge, West of Lawton, is caused by the 3 coal fired generating plants that are close to 200 miles to the East Northeast of the refuge. Rather, the EPA has determined the problem to be caused by using a model and a model that does not represent the facts of the situation. In reality, OG&E’s coal fired plants already produce electricity at a pollution level below the standards the EPA would want to obtain with the scrubbers.

Therefore, all the expense to Oklahoma consumers and businesses to obtain a certain level of pollution emissions with the installation of scrubbers would be feel good efforts for the radical environmentalists and just another case where the bureaucrats under the Obama administration can prove that they can yank the chains of the people and the states.

When asked if common sense fails to prevail and OG&E might be forced to install the scrubbers or convert the coal fired plants to natural gas, which might be the choice for OG&E? While the answer was speculation, Mr. Alford suggested their preference would probably be scrubbers. The reason is the cost to the rate payers to install scrubbers would probably require a rate increase of 15% or a little more, whereas the cost to convert to natural gas would require a rate increase of more than 30%.

Now, back to the meeting last Wednesday morning at the Corporation Commission. In Thursday’s Oklahoman, it was reported that “A Chesapeake Energy Corp. executive (Tom Price, Chesapeake’s senior vice president of corporate development) said it doesn’t make sense to fight the federal plan because Oklahoma stands to benefit from increased use of natural gas.”

Let me interpret that for everyone: what he should have said is that Oklahoma’s natural gas producers (especially Chesapeake) and state GOVERNMENT stand to benefit on the backs of consumers who will have to shoulder an enormous increase in electric rates. In addition, all Oklahoma businesses other than those in the natural gas industry will also see their overhead increase which will be harmful to their businesses and our attempt to see our economy grow.

In addition, if PSO and OG&E were to convert to natural gas, there would be an additional rate increase in addition to the cost of conversion. This would be a permanent rate increase as the cost of producing electricity from gas is higher than with the use of coal. And of course, when the inevitable occurs again sometime in the future, when supply (we currently have an excess supply of natural gas which is why prices are depressed) will again struggle to keep up with demand, we will see the price of natural gas spike up and our electric rates will skyrocket for some period of time. Of course companies like Chesapeake love that scenario, because their GREED is then temporarily satisfied.

Now, let me make it crystal clear, I am not an opponent of Chesapeake energy or any other Oklahoma gas or oil producer. I want them to be successful. I want them to sell vast amounts of the valuable oil and gas they produce and given enough time they will sell it all. What I do object to is their efforts to use government (in this case the EPA) to obtain an advantage over their competitors (in this case coal) so they can sell their products sooner than what the free market determines is best for the consumers.

AG Scott Pruitt handled it perfectly when he said: “the debate over whether to fuel the state’s power plants with coal or natural gas is worthwhile, but such decisions should be made in Oklahoma, not in Washington D.C. Right on General Pruitt, proceed in the courts with all vigor against the nameless faceless bureaucrats in Washington.