Posts Tagged ‘Economy’

Peabody Energy joins coal bankruptcy club

Thursday, April 14th, 2016 - posted by brian
While the company no longer operates in Central Appalachia, the story of Peabody Energy’s fall is similar to those of major Appalachian producers. Photo via Flickr licensed under Creative Commons.

While the company no longer operates in Central Appalachia, the story of Peabody Energy’s downfall is similar to those of major Appalachian producers. Photo via Flickr licensed under Creative Commons.

This week, the world’s largest private-sector coal company filed for bankruptcy and pretty much no one was surprised.

Citing an “unprecedented industry downturn,” St. Louis-based Peabody Energy joined the ranks of Arch Coal, Alpha Natural Resources, Patriot Coal, Walter Energy and dozens of other U.S. coal companies forced to seek bankruptcy protections since 2012.

But Peabody’s production, the depth of its debt and the scale of its liabilities set the bankrupt coal behemoth apart.

The company operates the North Antelope Rochelle mine in Wyoming, the largest coal mine in the country. Last year, that mine alone accounted for 109 million tons of the nearly 900 million tons of coal produced in the U.S.

In order to eventually clean up its mines, Peabody is on the hook for more than $2 billion, but more than half of that amount is secured with “self-bonds,” basically a coal industry IOU conveniently co-signed by the taxpayer. It’s estimated that the company has amassed around $6 billion in debt.

While Peabody no longer operates in Central Appalachia, the story of its downfall is similar to those of major Appalachian producers Alpha Natural Resources and Arch Coal. Like those companies, Peabody bet big on overseas demand and took on billions in debt in 2011 when it acquired the Australian producer Macarthur Coal. (Stop me if you’ve heard this one.)

Rather than surging as predicted, demand for steelmaking metallurgical coal plunged. According to a February study by the economic analysis firm Rhodium Group, 93 percent of the decline in the industry’s revenue between 2011 and 2014 was due to a drop in the consumption and cost of metallurgical coal. That hit, combined with competition from natural gas and clean energy at home, eventually became too much to bear.

Central Appalachia also has a lot of first-hand experience with what happens next, especially after Alpha’s and Arch’s bankruptcy proceedings. In recent months, those companies have worked to dodge environmental cleanup liabilities and their obligations to workers past and present. Yet, somewhere, both Alpha and Arch found millions of dollars in bonuses to reward executives. For what? Not jumping ship, essentially.

Based on its past actions, I’m not sure we should expect any different from Peabody. After all, the coal company thought to be “too big to fail” may have gotten there partly by creating companies to fail. Look at what happened to Patriot Coal, a twice-bankrupt company created in 2007 from unionized, Peabody-owned mines in West Virginia and Kentucky and saddled with pension and health care obligations to more than 8,000 retired miners.

In fact, Appalachian citizens may be the least surprised that Peabody has joined the coal industry’s bankruptcy club.

“Here in Kentucky, we’ve known the coal industry has been leaving for 30 years,” said Carl Shoupe, a retired third generation coal miner and member of Kentuckians For The Commonwealth. So Shoupe and others across the region are staying focused on the future.

“Mr. Peabody’s coal train might have hauled away our coal — and the profits along with it — but we Kentuckians are still right here, fighting every day for a bright future and demanding our elected leaders do their job to help us transition to a new economy while keeping our promises to the coal miners who powered this country.”

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Sleeping giants: TVA and Georgia Power stuck in second gear on energy efficiency

Wednesday, March 30th, 2016 - posted by guestbloggers

Editors’ Note: This piece, by Taylor Allred, is the third entry in a blog series entitled Energy Savings in the Southeast and featured on the Southern Alliance for Clean Energy’s footprints blog. The series will cover the performance of Southeastern utilities’ energy efficiency programs, and highlight how the region can achieve more money-saving and carbon-reducing energy savings. Future posts in this series can be found here.

While even the region’s top achievers have room for improvement, some of the largest utilities in the Southeast are seriously falling behind on energy efficiency. In particular, the Tennessee Valley Authority (TVA) and Georgia Power are two enormously capable utilities that appear to be stuck in second gear.

Huge Potential, Anemic Growth

TVA

Energy-Savings-Chart-Feb-20162

The nation’s largest public power provider, TVA provides generation and transmission to 154 electric cooperatives and municipal utilities serving more than 9 million people across seven states. In addition, TVA provides power to 59 directly served industrial customers.

TVA started ramping up its energy savings in 2011, following a relatively favorable outcome for energy efficiency in its 2011 integrated resource plan (IRP). Apart from the IRP, the federal utility also signed a 2011 EPA Consent Decree settlement over coal-plant emissions violations that, among other things, called for TVA to spend at least $240 million on energy efficiency. Following up on the IRP, the TVA Board challenged its staff to achieve savings equivalent to the output of a new nuclear plant, and TVA did just that with its EnergyRight Solutions programs, reporting 1,126 MW in avoided capacity additions from fiscal year 2008 through fiscal year 2014.

Not surprisingly, the cost of TVA’s energy savings – about $0.02 per kWh – was far lower than the $0.10 to $0.14 per kWh cost of new nuclear energy reported by Lazard. However, the ultra-low cost energy savings also indicate that they could be doing a lot more. TVA’s net savings rate of 0.25% ranks in the bottom half of major Southeastern utilities.

Georgia Power

Georgia Power is the largest subsidiary of Southern Company, one of the largest power providers in the country. As the only investor-owned electric utility in Georgia, the company serves more than 2.4 million customers, including the Atlanta metro area.

While it has achieved higher savings than TVA, Georgia Power has been on a slow growth trajectory over the past few years, and just under half of its 0.43% 2014 savings came from prescriptive commercial incentives, such as fluorescent lighting retrofits. Commercial lighting is a fairly easy way for utilities to achieve a base level of energy savings at an extremely low cost, but it is critical to also invest fully in the many other opportunities for cost-effective savings.

Non-Residential Savings

Both TVA and Georgia Power derive about three-quarters of their energy savings from non-residential customers, but both utilities are still far from fully capturing their huge non-residential savings potential – for completely opposite reasons having to do with their industrial energy efficiency programs.

On the one hand, Georgia Power has no energy efficiency programs for large industrial customers – industrial interest groups maintain an active stance against developing programs tailored to their members’ needs. But just to the north, TVA’s industrial program is limited not by opposition from industrial interest groups, but by TVA’s budget. Industrial customer interest in the program is so high that TVA has suspended new applications for months at a time when funds have run out. Thankfully, TVA’s programs are currently all funded and operating.

The Role of Resource Planning

One of the biggest opportunities to increase energy savings is in the treatment of energy efficiency in integrated resource planning. Utilities typically just pick a modest number as an energy efficiency target, and then subtract that figure from their demand forecasts prior to modeling generation resources based on costs.

The problem with that approach is that energy efficiency is actually the least-cost resource available (and clean!), so it’s wasteful not to maximize cost-effective energy efficiency. A better approach is to model energy efficiency as an energy resource on equal footing with generation resources, but very few utilities have tried it.

TVA’s 2015 IRP

With its 2015 IRP, TVA broke new ground by becoming the first Southeastern utility to model energy efficiency as a resource, something SACE had recommended in our 2011 IRP comments. Unfortunately, TVA developed a methodology that inappropriately inflated the cost of energy efficiency and placed unreasonable limits on its ability to compete on a level playing field with other resources. However, TVA has been sharing its experience and could inspire other utilities to model energy efficiency, possibly with better methodologies.

In a year full of changes, it appears that TVA’s fiscal year 2015 net savings have declined to about 0.2% of sales, but new programs could drive growth in the near future. TVA launched a promising new residential audit and retrofit program called eScore in early 2015, and has recently been exploring options for serving lower-income customers, who are generally unable to access TVA’s energy efficiency rebates due to high upfront costs. SACE is engaging on those efforts, and we commend TVA for its interest in providing equitable offerings for lower-income customers.

Georgia Power’s 2016 IRP

Georgia Power filed its 2016 IRP in late January, and unfortunately, it represents more of the same. The company has not modeled energy efficiency as a resource, and its plan provides for only modest growth in energy savings. SACE will testify as an intervenor in the IRP proceeding and recommend ways the company could significantly increase its cost-effective energy savings. One solution we plan to recommend is a tariff-based on-bill financing program that would enable customers to make energy efficiency upgrades with no money down, and achieve immediate bill savings that are greater than the monthly payments.

SACE will continue pushing TVA and Georgia Power to increase their energy savings to catch up with regional leaders such as Entergy Arkansas. We are hopeful that a healthy spirit of competition, as well as Southeastern utilities’ growing experience with energy efficiency, will help to drive significant growth across the region over the next few years.

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Responding to “Appalachia’s Distress”

Tuesday, March 1st, 2016 - posted by brian

We have to address the economic and environmental burdens created by a dependence on coal

The influence of the extractive industries embedded in the region is a constant, and mountaintop removal moves closer to communities — even as coal production declines. Photo by Matt Wasson

The influence of the extractive industries embedded in the region is a constant, and mountaintop removal is moving closer to communities — even as coal production declines. Photo by Matt Wasson

Earlier this month, a letter to the editors of The New York Times by Appalachian Voices Executive Director Tom Cormons appeared on the newspaper’s website.

Tom penned the letter following a piece by the Times editorial board that described a “grossly disfigured landscape” where steep mountain ridgelines that formed over millions of years old stand “flat as mesas … inhospitable to forest restoration.”

After decades of mountaintop removal and large-scale surface mining, these grim descriptions of Central Appalachia are familiar in the media, literature and the daily experience of those that live near mines.

Not only does this devastating practice continue to reduce mountains to rubble, poisoning the air and water, Tom points out:

… mountaintop removal is moving closer to communities as the industry searches out ever-dwindling coal seams, and residents continue to suffer from a multitude of health effects related to mining pollution, not to mention dire economic conditions.

The influence of the extractive industries embedded in the region is a constant. Backers of mountaintop removal believe the debate ends with the reclamation of mines — a superficial “fix” that Ken Hechler, a former congressman and long-time opponent of mountaintop removal, has unsettlingly compared to putting “lipstick on a corpse.” But new research challenges the myth that reclamation can restore mountains, much less ecological health.

Donate now to help us continue to protect Appalachian streams

The Times’ welcome editorial drew attention to this study, by researchers at Duke University, that found mountaintop removal has left large swaths of Central Appalachia 40 percent flatter than they were before mining, leading to staggering changes in erosion patterns and water quality that are, essentially, permanent.

“We have data that the water quality impacts can last at least 30 years, but the geomorphology impacts might last thousands of years,” according to the study’s lead author, Matthew Ross.

The editorial also makes a brief mention of the Stream Protection Rule, which would go far to reducing the worst impacts of mountaintop removal. Tom wrote his letter in part to stress the importance of this science-based rule and to urge federal regulators to stand firm in the face of industry opposition, and finalize it before President Obama leaves office.

Not doing so could come at a high cost to Appalachia’s environmental and economic future. As Tom’s letter concludes:

… unless the [U.S. Department of the Interior] has the courage to issue a strong rule later this year that reflects the most current science, achieving a prosperous future here will be all but impossible.

Read the Times’ editorial here. Click here for Tom’s letter.

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Action needed: Va. General Assembly considers pipeline policy fixes

Thursday, February 4th, 2016 - posted by hannah
Virginians expressed their opposition to proposed natural gas pipelines in front of the Capitol Building in January.

Virginians expressed their opposition to proposed natural gas pipelines in front of the Capitol Building in January.

Late last month, we learned that the U.S. Forest Service rejected the Atlantic Coast Pipeline’s proposed route. This development significantly checks the lickety-split pace of the project.

If that renews your desire to take action, there are opportunities channel that feeling into these important legislative fights in the General Assembly.

Lobby days in Richmond displayed pipeline opposition — now, committees coming up

As the chorus of Virginians voicing opposition to fracked gas pipelines in our region grows and becomes more diverse, we took our movement to the General Assembly for a major day of action to educate legislators about our agenda to safeguard land and water. On Tuesday, Jan. 19, participants from across Virginia came to Richmond and held dozens of meetings with state delegates and senators. Addressing attendees the morning of the event, State Senator John Edwards made it clear that he stands with Virginians who are concerned about the risks of the dirty pipeline proposals.

Citizen lobbyists covered issues including the landowners’ right to deny pipeline companies permission to enter their land to conduct invasive surveys (SB 614 and HB 1118) and the importance of requiring rigorous site-specific sediment and erosion control plans to protect streams and ensuring unrestricted public access to such plans (SB 726). Now these bills have been scheduled for upcoming committee meetings, so here are directions on informing your legislators:

SB 726 in Agriculture, Conservation and Natural Resources Committee on Feb. 4

SB 726 would fix a serious problem with how Virginia limits erosion and sediment pollution from utility company construction projects, including pipelines. The status quo system would allow the Atlantic Coast Pipeline and the Mountain Valley Pipeline to avoid proper regulation through a loophole. Area legislators in the relevant committee include senators Emmett Hanger and Mark Obenshain.

Tell your senator the current system is wrong — and here are some reasons why: it allows utility companies to avoid proper government agency oversight; it exempts utility companies from requirements that apply to all other construction projects; it excludes the public and local governments from involvement; and it greatly increases the threat of damage to the environment and property due to the extensive and complicated nature of these projects.

Virginia State Senator John Edwards speaks with citizens about pipeline legislation.

Virginia State Senator John Edwards speaks with citizens about pipeline legislation.

Urge your legislator to restore proper government oversight of these developments and revoke the free pass that companies now have to pollute Virginia waterways. Use the blue tab at the top of the General Assembly’s website to look up who represents you and find contact information for his or her office.

If you can make it, we encourage you to attend the committee at the General Assembly in Senate Room B on Thursday afternoon starting at or around 2 p.m. to impress the importance of these decisions upon our legislators in person.

Help Win Repeal of the “Survey Without Permission” Statute — Bills Up Soon in Commerce Committee

On Feb. 8 and 9, respectively, committees will take up SB 614 and HB 1118 related to companies’ ability to survey without landowner permission. You can contact your legislation in support of these measures by going to the General Assembly’s website and clicking the blue bar up top to find out who represents you and how to email or call their offices.

As background, HB 1118 and SB 614 are House and Senate versions of a bill to repeal VA 56-49.01, which allows Dominion to force surveys on unwilling property owners. That means that under Virginia law there is really no legal way for property owners to unequivocally demonstrate opposition to a gas pipelines, no matter the size, going through their property.

Be sure to contact your legislators before committees deal with these bills so that your comments will be most effective: the Senate Commerce and Labor Committee will discuss SB 614 Monday, Feb. 8, starting at approximately 2 p.m. The House Subcommittee on Energy will discuss HB 1118 on Tuesday, Feb. 9, starting at approximately 4 p.m. Again, feel free to attend, and contact hannah [at] appvoices [dot] org if you have questions about how to participate in these committees’ decisions.

What else does recent news tell us about these risky pipelines?

The U.S. Forest Service (USFS) letter to the Atlantic Coast Pipeline (that is, Dominion Resources) states that alternative routes cannot cut through “highly sensitive resources … of such irreplaceable character that minimization and compensation measures may not be adequate or appropriate and should be avoided.” The pipeline company has not, in the USFS’s view, demonstrated “why the project cannot reasonably be accommodated off National Forest Service (NFS) lands.”

If Dominion tries to stick with the original route, it will have to say why it thinks the pipeline has to be built on USFS lands. The company could propose a new route, impacting a different set of landowners and their properties, or it may have to go back to the drawing board with a new application. -We hope Dominion will turn in an entirely different direction, as this project, like the other pipelines proposed in Virginia, is unneeded, hazardous and misguided.

Communities in our region have been on the receiving end of the fracking boom. A major build-out of this kind of infrastructure will only worsen the impacts of fracking in those communities while locking us into decades of dependence on dirty energy. At the same time it defers our collective chance to harness the cleanest, most-sustainable energy sources — which happen to be a great deal for customers too.

Our work seems to be provoking a reaction. Dominion recently went into high-gear in its public relations. Spokesman Jim Norvelle said last week that gas-fired power plants are widely viewed as essential to meeting the goals of the Clean Power plan. To anyone who understands the economic opportunity presented by the EPA’s carbon pollution standards, or for those who have been reading recent reports describing the benefits of prioritizing renewable solar power, wind power and energy efficiency in Virginia, that probably sounds ludicrous. Whatever the polluters say or do next, and whenever there’s a chance to take action, we’ll be keeping you in the loop.

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Do bankrupt coal company executives really deserve bonuses?

Tuesday, January 26th, 2016 - posted by brian

Debt-ridden companies are slashing worker benefits, struggling to clean up pollution — and handing out bonuses.

Why would a bankruptcy judge approve a bonus plan for a bankrupt coal company that was “written almost entirely by the executives who hope to exact almost $12 million of profit from it?” Photo of West Virginia Gov. Early Ray Tomblin and Alpha CEO Kevin Crutchfield via Flickr

Why would a bankruptcy judge approve a bonus plan for a bankrupt coal company that was “written almost entirely by the executives who hope to exact almost $12 million of profit from it?” Photo of West Virginia Gov. Earl Ray Tomblin and Alpha CEO Kevin Crutchfield via Flickr.

Before we explore that question, I’ll admit, the immoral logic of corporate compensation used to justify gigantic executive bonuses has always mystified me. I’m not highly educated on the matter, nor am I impartial.

Sure, I’d be willing to entertain an answer in the affirmative. But in the case of Alpha Natural Resources, which is swimming in debt and trying to navigate its way out of bankruptcy, it really seems resources could be better spent elsewhere. Paying taxes, for example. Communities in Appalachia could put millions of dollars owed by Alpha to good use.

But, no, they want their bonuses. So let’s hear them out.

Back in December, lawyers for Alpha asked the U.S. bankruptcy court to approve an “Incentive Plan for Certain Key Insider Employees,” a fancy way of saying $12 million for 15 top executives. Their argument is pretty simple — bankruptcy stinks and high-level employees may decide to cut their losses. The obvious solution: make it seem like they’re not losing — at all costs.

According to Alpha’s court filing, bonuses will go to executives “who are vital to the [the company’s] successful restructuring and the maximization of value for the benefit of all parties in interest.” OK, I can sort of see how this becomes logical for a company in bankruptcy.

Alpha has been struggling for years, though, and these bonuses actually exceed the payouts executives received in years past, even as the company barreled toward bankruptcy. The last time Alpha recorded a profit was in 2011. In the past five years, the company’s stock fell from $65 a share to around 35 cents.

Over the same period, it laid off 4,000 employees and shut down dozens of mines, mostly affecting communities in Central Appalachia where the company operates. Just yesterday, Alpha announced plans to close 10 mining complexes and lay off 886 coal miners and other personnel in southern West Virginia.

But in 2015, the year that Alpha declared bankruptcy with billions of dollars in debt, the maximum bonus pool for top staff was $8.4 million, according to the Casper Star-Tribune. If only Alpha’s balance sheet looked like its executives’ bank accounts.

It’s becoming difficult to give Alpha the benefit of the doubt. We don’t even know the names and positions of these supposedly high-performers keeping the company on course. And it looks like we never will.

Alpha’s lawyers argued that disclosing the executives’ identities, salaries and bonuses “may facilitate the hiring” of those executives away from Alpha “by competing businesses and, therefore, increase the likelihood that the Debtors will lose the valuable services of the [executives].”

Now it’s too hard to fake. Witnessing the irresponsibility and one-sidedness of the major coal bankruptcies in Appalachia and their aftershocks goes to show who has a voice and whose voices the system values.

Click to read the U.S. Trustee's scathing objection to Alpha's bonus plan.

Click to read the U.S. Trustee’s scathing objection to Alpha’s bonus plan.

Last year, Patriot Coal — while in its second bankruptcy — hatched a plan to pay a portion of its legal fees with millions of dollars earmarked for workers’ health care. There is growing concern nationwide that bankrupt coal companies, a group that now includes Arch Coal, won’t be able to afford to clean up their mines. And right now, Alpha is trying to revoke medical and life insurance benefits from retired miners and their spouses to save around $3 million a year.

The U.S. Trustee, a watchdog division of the U.S. Department of Justice, summarized the vast disconnect between what is right and what Alpha wants in its objection to the bonuses:

Alpha seeks this relief while at the same time incurring more than $1.3 Billion in losses for 2015. Alpha seeks this relief while at the same time seeking to cut off the health and life insurance benefits to some 1,200 rank-and-file retirees because it claims it desperately needs to save $3 Million a year. Alpha seeks this relief after demonstrating to this Court that it is so hopelessly insolvent that its shareholders have no chance of seeing any return on their investments into the companies.

Makes sense so far. Go on …

According to Alpha, these executives need these bonuses as an incentive to do the very jobs they were hired to do, that they are already highly compensated for with generous salaries, and which their fiduciary duties already compel them to do. Such bonuses cannot be justified under the facts and circumstances of this case.

Another common argument is based purely on the merits of the bonuses. How can it be possible that the same handsomely compensated executives who took home bonuses while steering Alpha into bankruptcy get sizable bonuses to help Alpha exit bankruptcy? Well, as lawyers for the United Mine Workers of America argue in their objection, the bonus plan was “written almost entirely by the executives who hope to exact almost $12 million of profit from it.”

Until recently, I never thought of “bankruptcy” and “bonanza” as being synonymous. Maybe rather than being mystified I’m just mad, and I can’t claim anything close to the level of outrage or broken trust thousands of Appalachian families can. But, like U.S. Bankruptcy Judge Kevin Huennekens said last week as he OKed Alpha’s bonus plan, “Cash is king.”

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Our hope for the year ahead

Friday, January 22nd, 2016 - posted by tom

Each month, Appalachian Voices Executive Director Tom Cormons reflects on issues of importance to our supporters and to the region.

With your support, Appalachian Voices is working hard to make 2016 a watershed year for the health of Appalachia’s communities, environment and economy.

With your support, Appalachian Voices is working hard to make 2016 a watershed year for the health of Appalachia’s communities, environment and economy.

Appalachian Voices is beginning 2016 stronger than ever and positioned to advance a positive future for the region we all love. Standing with citizens from across Appalachia and from all walks of life, we are hard at work and have high hopes for the year ahead.

Since we launched our economic diversification program and opened an office in Southwest Virginia early last year, the conversation about how to hasten a just economic transition in Appalachia has only grown. A forward-thinking plan to expand funding for economic development initiatives is on the table. But for those initiatives to succeed, both political parties must make supporting investments to strengthen Appalachia’s economy a priority.

Beyond advocating for federal investment in workforce training, infrastructure and land restoration, Appalachian Voices is enlisting experts to develop plans for clean energy and other economic development opportunities in the coal-bearing region, including utilization of abandoned mine sites. By adding technical and policy resources where they are they needed most, we’ll further efforts to build the pillars of a healthier, more resilient regional economy.

Of course, the foundation for that renewed economy must be a healthy environment. And without science-based environmental protections that are fully enforced, we fear the movement to diversify the region’s economy will fall short. This year, the last of Obama’s presidency, is our best chance to see a long-awaited rule finalized to protect Appalachian streams from mining waste.

As we push for an effective Stream Protection Rule, we will remain focused on holding polluters accountable. Pursuing the same strategies that led to our landmark victory over Frasure Creek Mining in Kentucky late last year, we’ll sue coal companies that violate clean water laws, and we’ll put grassroots pressure on regulators to step up enforcement of existing protections.

Our goals demand that we stay deeply involved in action at the state level, where we are combatting the continued threats of fossil fuels. In Virginia, the movement to move beyond dirty energy is opposing proposed multi-billion dollar investments in huge pipelines that would lock the Southeast into an increased dependence on natural gas and exacerbate the impacts of fracking. In North Carolina, residents are coming together to fight the threat of fracking and address the ongoing crisis of coal ash pollution.

Appalachian Voices is committed to these important battles. We’re also increasingly focused on securing investments in energy efficiency and renewable energy by promoting policies and technologies that can reduce harmful pollution and create thousands of jobs. As a result of our efforts, rural electric cooperatives in both North Carolina and Tennessee on are the verge of developing cost-saving energy efficiency programs for their members.

We’re sure to encounter obstacles. Successful renewable energy policies in North Carolina will again face attacks by policymakers. Our electric utilities will tout natural gas and attempt to undermine consumer access to cleaner energy options. The familiar partisan battles over coal and climate change will intensify as election season nears. And states, some more reluctantly than others, will take steps toward compliance with the Clean Power Plan. But we know the landmark climate rule will help states expand clean energy and cut pollution — if only they embrace its potential.

The year is just getting started. But the stage is set for 2016 to be a historic year for clean energy, climate action and efforts to diversify economies that have long depended on the coal industry. With your support, Appalachian Voices is working hard to make 2016 a watershed year for the health of Appalachia’s communities, environment and economy.

Please consider joining to donating to support Appalachian Voices today.

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The 2016 General Assembly session begins in Virginia

Thursday, January 21st, 2016 - posted by hannah
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Clean energy is a major area for potential policy changes during this year’s General Assembly session. Here is a roundup of energy bills to watch.

Clean energy is a major area for potential policy changes during this year’s General Assembly session.

Governor Terry McAuliffe touched on the subject in his State of the Commonwealth speech last week, pledging to “stimulate economic growth by expanding our use of renewable energy” and touting recent commitments that amount to a 100-fold increase in solar generated in the state.

Still, some of the most exciting measures that legislators are considering face significant challenges. Here is a roundup of energy bills to watch.

Solar Power Solutions

Legislators who are allied with our clean energy agenda admit there are barriers to making meaningful change during this session. In a radio interview last week, Senator Creigh Deeds invoked lyrics from a familiar Talking Heads song to describe the partisan divide: “Same as it ever was.” This sentiment pointedly captures utility companies’ opposition to basic provisions governing customer freedom to select clean energy options and others aimed at reducing wasted energy in Virginia.

Last month, we discussed the vital need to legally clarify that it is legal in Virginia for an electricity customer to enter into an agreement to purchase power from a company than can install a renewable energy generating system on their property. Power Purchase Agreements can encourage arrangements that involve no upfront cost for the customer, present attractive cost-saving opportunities for schools and churches, and avoid more costly forms of generation while relieving grid congestion, among other benefits to the whole customer base. SB 139, SB 140, SB 148, HB 618 and a bill currently being finalized by Delegate Randy Minchew entitled the Renewable Energy Provisions Bill will all be considered as ways to promote solar affordably in Virginia.

Energy Efficiency Policy Reform

Year after year, one roadblock that has kept Virginia from improving energy efficiency is the fact that state regulators evaluate proposed energy efficiency programs using a flawed process. This method practically guarantees that the most thorough demand management measures, such as home and business assessments, will be denied. This results in fewer cost-saving options for customers and perpetuates a system that makes rewards utilities for pursuing more expensive ways to meet demand.

A bill sponsored by Delegate Lee Ware, HB 352, could reform these tests to give robust energy efficiency programs a better chance of being approved by the State Corporation Commission. HB 1053 and SB 395 are companion bills that are intended to address another dimension of this problem: in theory, electric utilities that operate energy efficiency programs are allowed to request recovery of the revenue that they have lost from the energy saved, that is, the energy the utility would have sold to customers. But regulators tend to be apprehensive about approving programs that could result in such future costs to ratepayers, and they can turn down programs based on that consideration. Other states have dealt with this by rewarding utilities a lesser dollar figure for the energy they save by running such programs — this a reform that the McAuliffe administration supports and one that should get traction this year.

Who’s Grandstanding Against the Clean Power Plan this Year?

Three bills introduced this year would impede Virginia’s compliance with federal carbon pollution standards and interfere with our path toward a clean energy future. HB 2, SB 21 and SB 482 all would require the General Assembly’s approval of the compliance plan prepared by the state Department of Environmental Quality. This approach is being advocated by the likes of the industry-friendly American Legislative Exchange Council (ALEC), which recently lost American Electric Power as a member, apparently because of this very issue.

Governor McAuliffe expressed his intention to veto such legislation should both houses approve it, which is good news for the state’s economic and clean energy outlook. Even a consulting firm that Virginia’s utilities often look to has shown that the Clean Power Plan will reduce customer bills and grow clean energy, a sector that created $3.9 billion in revenue in Virginia in 2014.

Ensuring a Strong, Beneficial Clean Power Plan with the Virginia Coastal Protection Act

HB 351SB 571 is the bipartisan Virginia Alternative Energy and Coastal Protection Act, which would authorize our state to join a carbon trading program with other states, providing more than $250 million in the first year through the auction of emission allowances. These funds would be divided to combat the effects of worsening sea-level rise, support energy efficiency and renewable energy projects, and assist with economic development in Southwest Virginia.

Take a moment to fill your legislators in on the energy issues that matter to you most. Visit the General Assembly’s website and pull down the blue tab from the top of the page to look up who represents you, find email addresses for your state delegate and senator, search bills introduced this session and familiarize yourself with the civic process that determines Virginia’s energy policy. Then buckle up for a fast two-month-long General Assembly session!

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What to expect for Virginia’s energy policy in 2016

Friday, December 18th, 2015 - posted by hannah
Ahead of the 2016 General Assembly session, Virginians gathered in Richmond to call for greater commitments by their leaders to address climate change and advance renewable energy.

Ahead of the 2016 General Assembly session, Virginians gathered in Richmond to call for greater commitments by their leaders to address climate change and advance renewable energy.

Around this time of year, we usually offer a Virginia legislative preview, looking ahead at the issues that will arise in the upcoming session of the General Assembly. Recent events relate to some of those possible policy changes, thickening the plot and making this session one worth watching and engaging in — especially for customers of Appalachian Power Company.

Legislation Attacks the Clean Power Plan, Again

With the McAuliffe administration in the lead, Virginia is now drafting a plan to comply with its carbon pollution reduction target as set by the federal Clean Power Plan. Many central elements of the state plan remain in question, including whether reductions will be based on the rate of carbon dioxide emissions per unit of energy generated, or on the total mass of emissions, as well as whether Virginia will trade emissions with other states.

On Tuesday in Richmond, an open meeting of an official group of Clean Power Plan stakeholders was held in the Department of Environmental Quality office. While public comment is not taken in these meetings, they are a key opportunity to follow the process and let decision-makers know how important their work is to you, so stay tuned for future meetings.

Even as these policy experts, advocates, and business and utility representatives invest time and energy into constructively discussing Virginia’s carbon-reduction plan, there are those who are focused on stymieing this effort. Recently proposed legislation would require General Assembly approval of our state Clean Power Plan. The bill (HB2) would hold up our progress and could result in the federal government telling Virginia how to meet its carbon-reduction targets, removing the flexibility that many parties believe makes these emissions reductions economically doable.

As the players at the table shape state plans, it is resulting in some interesting shifts in political activity.

AEP Drops ALEC

American Electric Power, the parent company of Virginia’s second-largest utility, Appalachian Power Company, announced last week that it is ending its relationship with the American Legislative Exchange Council, or ALEC. A widely known climate denial front organization, ALEC currently has half a dozen pieces of model legislation opposing the Clean Power Plan that it’s pushing in state legislatures. By way of explaining its termination of membership, an AEP spokesperson said the company is reallocating resources as it focuses on working with states around the Clean Power Plan.

AEP says it supports the federal plan and renewable energy, and has “long been involved in the reduction of greenhouse gases.” Still, reporters pointed out the company’s significant reliance on coal in its generation mix, although projections show its coal use declining in the near future.

So what is subsidiary Appalachian Power (APCo) planning to do to meet demand with clean energy in its Virginia service area?

APCo’s 2015 Long Range Resource Plan

APCo customers that read this blog will be aware that we have followed the company’s release of its latest long-term plan for meeting demand in its service area, and that media have reported on some important ways this plan is distinguished from what we have seen the utility propose in the past.

APCo proposes 510 megawatts of solar and land-based wind development in the coming years. Oddly, the predicted growth in its customers’ self-generated energy from solar arrays is low. APCo offers no assessment of the overall costs and benefits of rooftop solar, nor steps to encourage residents and businesses to go solar.

Prompted to comment, an APCo representative made the interesting point that managing demand by offering customers ways to save energy and reduce their bills is an approach that may cost less than developing energy generation. That sentiment may ring a bell for regular readers of this blog: it’s an argument that Appalachian Voices has been stressing for years. Now we’ll be holding onto that nugget of brilliance and keeping the utility on track to live up to those words.

More energy bills this session: solar purchasing, resilience and the pipeline fight

In September, the State Corporation Commission considered a case about APCo’s proposed program for customers looking to go solar. Schools, churches, nonprofits and other non-residential entities were the most affected by the program, which would provide one way for a customer contract for solar power with a system installed and owned by a third party. Such customers in Dominion Virginia Power’s territory can go solar with no upfront costs, thanks to innovative financing for this type of arrangement.

But under APCo’s program, the utility would act as middleman, paying back lower-than-usual credits to the customer and charging higher-than-normal fees. It all adds up to an uneconomic deal that’s likely to deter use of this option and diminish the ability of customers to realize their energy goals and environmental preferences, while slowing job growth in Virginia’s solar industry.

Businesses and concerned customers are now coming together behind legislation that would remove many of the hurdles that are currently hampering solar development in Virginia. Watch for updates on this bill.

A bill to join Virginia into the Regional Greenhouse Gas Initiative (RGGI) is again being introduced, with important differences from last year’s version. Notably, through the auction of emissions allowances, the wVirginia Coastal Protection Actwould raise approximately $250 million in the first year of Virginia’s membership, more than $20 million of which would be allocated for economic development in southwest Virginia.

Show your support for this measure and stay tuned for more ways to educate yourself and your legislators about legislative solutions and threats as the General Assembly 2016 approaches.

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Powering Up: Diversifying central Appalachia’s economy

Wednesday, December 9th, 2015 - posted by interns

By Cat McCue

Forum participants broke into small groups to discuss what kinds of economic growth they envision for their community. Photo by Alistair Burke

Forum participants broke into small groups to discuss what kinds of economic growth they envision for their community. Photo by Alistair Burke

Last July, in far southwest Virginia, Wise County made national news when it hosted the first federally approved commercial drone delivery in the United States. The scene was a rural medical clinic tucked deep among the Appalachian mountains, and the package delivered by the small buzzing aircraft contained much-needed supplies.

“They were calling it our Kitty Hawk moment,” says Andrianah Kilgore, a Wise County native who was involved in the project and whose excitement for the possibilities it signified for the future of her community hasn’t waned since.

“Despite some misconceptions from the rest of the world, this area could really be a leader in technology,” she says.

Kilgore, 25, was among more than 130 people who attended one of eight community forums in September called “Southwest Virginia’s New Economy Forums.” The forums, hosted by Appalachian Voices, which publishes this newspaper, and Virginia Organizing, provided a place for ordinary citizens from across southwest Virginia to share their ideas and vision for stabilizing and growing the region’s economy. The area has been pummeled in recent years by layoffs and business closings as the coal industry continues to decline.

“The coal industry, like it or dislike it, has to, or will be, slowing down. It’s an exhaustive resource at the end of the day,” says Zafar Kahn, who also attended the community forum in Wise.

More than 60 percent of central Appalachian coal-producing counties are currently classified as “economically distressed” by the Appalachian Regional Commission. Those counties saw population declines of 9 percent between 1980 and 2010, compared to a 36 percent increase nationwide, and these days, the average per-capita income is just 59 percent of the national average.

Kahn, an associate professor of economics at the University of Virginia at Wise, has an academic interest in the region’s challenges, but also a personal stake in the community where he has lived for the past nine years.

“I’m very concerned about the economic development of the local area,” he says. “You can’t be just dependent on that one industry. So you must diversify.”

A tipping point

The coalfields of Virginia, and across central Appalachia, have hit hard times before, each resulting in efforts to bring in more industry and business. The pervasive belief, however, was that the coal industry would always be there, so those efforts never truly pulled the local communities out from under dominance of coal, says Adam Wells, a fifth generation Wise County resident and the economic diversification campaign coordinator for Appalachian Voices.

This time, though, it’s different.

“We’re in a watershed moment, a tipping point,” Wells says. “There have never been as many people working in a coordinated way on economic diversification, or even using that term, ‘diversification.’ There’s a collective understanding that coal is on its way out, for real this time.”

Over the last several months, a groundswell of support has been spreading across central Appalachia for the “POWER+ Plan,” announced in February as part of President Obama’s 2016 proposed budget. The Partnerships for Opportunity and Workforce and Economic Revitalization plan calls for billions in federal funding to help coal­-impacted areas nationwide, including Central Appalachia.

Local residents and members of Kentuckians For The Commonwealth stand with the Benham City Council in eastern Kentucky after a unanimous vote to pass a resolution supporting the Power-Plus Plan in August.  Photo courtesy Appalachian Citizens’ Law Center

Local residents and members of Kentuckians For The Commonwealth stand with the Benham City Council in eastern Kentucky after a unanimous vote to pass a resolution supporting the Power-Plus Plan in August. Photo courtesy Appalachian Citizens’ Law Center

As of press time in late November, 24 local government entities in the coalfields of Virginia, West Virginia, Kentucky and Tennessee have passed resolutions supporting the plan, or generally supporting federal action to aid the region. All but one have passed unanimously.

The POWER+ Plan would advance a new way of thinking about abandoned coal mines, which continue to pose a safety and health threat and pollute local waterways. In Virginia, West Virginia, Kentucky and Tennessee, it would deliver $340 million over five years to clean up sites that have potential for long-lasting economic activity, such as developing a solar installation or mountain bike park.

“In the past, federal funds were used just to clean up the worst messes, but this funding would be specifically for economic development,” Wells says.

The region would also get some portion of $153 million to support worker retraining, tourism, agriculture, energy efficiency and other economic development initiatives. The plan would also refurbish the United Mine Workers’ health and pension funds, which distribute $570 million annually to the four states.

“Appalachia is the next great investment opportunity in America,” says Earl Gohl, the commission’s federal co-chair. For decades, “people have spent their lives underground, in the dark, making a living. There’s no doubt in my mind those skills they had to use to support their families and develop communities are the same skills that are critical and important now.”

To nurture this survival instinct, the region needs help establishing what he calls an “entrepreneurial ecosystem” that includes capital funding, broadband internet and technical support for marketing and export.

The POWER+ Plan would be a strong step in that direction, and Gohl commends the local governments that support it. “From the commission’s point of view, we are very excited to work with them, and hopeful to how far we can move the needle,” he says.

The resolutions show the growing consensus among citizens and local leaders around the dire need for economic diversification in the coalfields. But for POWER+ to work, Congress must approve the funding, and so far, there hasn’t been strong public leadership from congressional representatives to usher the bill through the legislative process.

Simultaneous with proposing POWER+, President Obama announced a “down payment” on the plan of $14.5 million in existing funding for coal communities this year — no congressional approval needed. As of October, that money is on the ground in 12 coal states and tribal territories.

Awarded through four federal agencies, the funds are fueling a wide variety of projects, including retraining former coal-plant workers from Washington state and the Navajo Nation, developing a strategic business plan in southern Pennsylvania, diversifying the coal region of the San Juan Basin in the desert southwest and many others.

Central Appalachia by far received most of the funding, including:
• More than $3 million to expand broadband internet in Kentucky;
• $826,400 to extend water to an industry near Union, W.Va.;
• Almost $550,000 for a local food supply project in Elizabethtown, Ky.;
• $1.2 million for a substance abuse treatment program in Ashcamp, Ky., a coalfield community struggling with rampant drug use; and
• $350,000 to support efforts in southwest Virginia to develop outdoor recreation and tourism, and provide training for entrepreneurs.

Not waiting around

While Congress squabbles and coal companies seek to shelter their profits in bankruptcy courts, the people of Central Appalachia are not standing idly by. Over the last decade in particular, dozens of public and private initiatives and enterprises have taken root to grow the regional economy.

There are the big-vision projects. In southwest Virginia, the idea for a tourist-oriented, auto-centric “museum” showcasing the area’s musical heritage emerged in 2003. Today, the Crooked Road is a 330-mile route that includes 19 counties and more than 55 towns and cities and has been written up in the New York Times and Lonely Planet. The total economic impact as a result of the Crooked Road was estimated to be almost $23 million for 2008 (the most recent data available), with 445 full-time equivalent jobs.

Common themes that emerged from all eight forums were supporting advanced manufacturing and ecotourism, enhancing relationships between local colleges and the community, expanding broadband infrastructure, and ensuring that younger people have a voice in helping shape the region’s future. Photo by Alistair Burke

Common themes that emerged from all eight forums were supporting advanced manufacturing and ecotourism, enhancing relationships between local colleges and the community, expanding broadband infrastructure, and ensuring that younger people have a voice in helping shape the region’s future. Photo by Alistair Burke

There are the small business start-ups. In Pikeville, Ky., Bit Source trains laid-off coal miners and other industry workers in software coding and pairs them with markets well beyond the city limits. Its website proclaims: “The business concept and plan is to transition a workforce from one that exported coal from the region to one that exports CODE (#exportCode).” Started in October 2014, Bit Source received 900 applications in its first month and now employs 13 local people, most of whom were coal industry workers themselves. Its success drew U.S. Labor Secretary Thomas Perez for a visit in early 2015.

And then there are the local public projects. In Norton, Va., Shayne Fields has been working for the city for several years to design and build a top-notch mountain biking trail system on nearby High Knob Mountain. The way he sees it, there’s a double advantage in developing outdoor recreation facilities — attracting more affluent visitors to frequent restaurants, hotels and shops, and enticing local folks outdoors.

“Like many other depressed areas, you don’t see a lot of people here who are very active. You need to try to get people off the couch, outside and engaged in anything,” Fields says. “The tech industry won’t come unless they have a happy, educated work force and they get happy by doing the outside things.”

So, what will pull the region through in the years ahead? Gohl, with the Appalachian Regional Commission, says it comes down to the endemic sense of independence and a strong attachment to community. “In Appalachia, it’s hard to find someone who’s not running a business out of the back of a truck,” he says. “They don’t see themselves as entrepreneurs, but they are.”

Andrianah Kilgore, the young woman at the Wise community forum, embodies that attachment. She was born and raised here, her parents, too, and she doesn’t see herself living anywhere else. Not if she can help it.

“I feel a very huge sense of, I guess, debt to my community,” she says. “They gave a lot to me growing up. I absolutely feel like I should be a driving force, and hopefully bring the group of peers that I have along with me, to help the community continue to be successful.”

Student leaders support the POWER+ Plan

Thursday, December 3rd, 2015 - posted by brian
Members of the eastern Kentucky Appalachian Renaissance Initiative at Whitesburg City Hall. Photo courtesy of ARI.

Members of the eastern Kentucky Appalachian Renaissance Initiative at Whitesburg City Hall. Photo courtesy of ARI.

Yesterday, a group of student leaders in eastern Kentucky took a commendable step in support of Central Appalachia’s youth and economic future.

By a unanimous vote, the Appalachian Renaissance Initiative Student Senate passed a resolution of support for the POWER+ Plan, a White House initiative to build more diverse economies in communities hardest hit by the coal industry’s decline. More than 13,000 coal jobs have been lost in Central Appalachia since 2011 alone.

The group, which is comprised of high school juniors and seniors from seventeen school districts, has a particular interest in seeing economic prospects in the region improve. Rural communities in Central Appalachia are struggling with population loss due to a lack of opportunities.

“This POWER+ Plan can remove the need for people to leave,” said Kiley Short, a Junior Senator from Letcher County Central High School. “It stimulates economic growth and business opportunities, which are imperative to the fate of my home, my culture, my people, and my future.”

In Kentucky, Tennessee, Virginia and West Virginia, cities and counties with long histories of coal mining are advocating for the POWER+ Plan — and calling on their elected leaders to do the same. More than two dozen localities in Central Appalachia’s coal-bearing region have passed resolutions similar to the one approved by the Appalachian Renaissance Initiative.

Specifically, the POWER+ Plan directs millions of dollars in additional funding to the Appalachian Regional Commission, the Department of Labor and other federal agencies focused on economic development. It also calls for an additional $200 million per year over the next five years for the federal Abandoned Mine Lands program to restore dangerous unreclaimed mines.

According to the U.S. Office of Surface Mining Reclamation and Enforcement, which administers the program, additional funds would assist communities most severely impacted by coal “in a manner that facilitates economic revitalization on reclaimed lands and restored waterways.”

But the fate of that key component of POWER+, which must be approved by Congress, remains unclear.

Regional groups including Appalachian Voices are committed to seeing the POWER+ Plan succeed. And we’ve been inspired by the level of local support in spite of the uncertainty this bipartisan plan faces in a highly partisan Congress.

The need for new investment in Central Appalachian communities is urgent. In supporting POWER+, these young leaders aren’t just voting for their future, they’re voting for their families’ and neighbors’ present.

As Stacie Fugate, a Junior Senator from Hazard Independent, said after the vote: “My brother has recently been laid off from work. This plan hits home for not only me, but the majority of people in our region.”

We congratulate the Appalachian Renaissance Initiative for its vision and thank its members for speaking up for the region’s future.

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