AEP to Withdraw From ALEC, Cut Funding for Clean Coal Coalition

American Electric Power (AEP), one of the biggest coal generators in the U.S., is withdrawing funds and staff resources from heavy lobbying efforts against the Clean Power Plan, sinking them instead into preparations for compliance with the controversial climate rule.

The company has informed the American Legislative Exchange Council (ALEC) that it will not be renewing its membership in the conservative group that has lobbied hard against climate change legislation and pushed resolutions to block crucial federal and state efforts to address it, AEP spokeswoman Melissa McHenry told POWER on Dec. 8.

McHenry also said AEP has reduced funding in other groups, including the American Coalition for Clean Coal Electricity, an organization that was recently forced to cut its staff in half and tone down lobbying efforts.

"We reviewed our memberships and decided to reallocate limited financial and staff resources to work directly with lawmakers the 11 states where we operate on issues, including the Clean Power Plan," she said. "AEP is actively encouraging the states where we operate to develop [Clean Power Plan] compliance strategies, and we will be working with state agencies during that process."

AEP's Reinvention

About 60% of AEP's 32-GW power generation fleet is fueled by coal. Natural gas represents about 23%, with nuclear 5%, and the remainder wind, hydro, pumped storage, and solar. However, the company is in the midst of a major transition. By 2026 it expects that its coal capacity will drop to 45%, while natural gas capacity will increase to 33%.

In an Oct. 22 earnings call, AEP CEO Nick Akins said the company was urging states to file initial plans with the Environmental Protection Agency by September 2016 to ensure that states maintained ownership and the development of resource plans that make sense for their particular jurisdictions.

"AEP and the industry need clarity regarding investment decisions in new resources and will continue to work with the space to develop integrated resource plans that comport with the requirements of these ultimate state plans," he said.

ALEC's Climate Lobbying Proving Sharp Pain for Members

ALEC, which has over the last two years hemorrhaged members-including Google, BP, and Shell-was recently implicated in an investigation led by New York Attorney General Eric Schneiderman over whether energy giant ExxonMobil misled investors and the public about climate change risks and how it could affect the company.

New York is also examining the ExxonMobil's climate change impact disclosures to the U.S. Securities and Exchange Commission (SEC). Under a 2010-guidance, the federal agency requires companies to disclose anticipated impacts of climate change on assets and financial risks associated with compliance costs of existing and pending rules.

The Center for Media and Democracy (CMD) says it has furnished the New York attorney general's office with evidence showing Exxon has "plied legislators with disinformation and denial about climate change," earmarking $428,500 to "work on 'climate change' between 2003 and 2005." The national media group describes ALEC as an organization whose members include about 2,000 state legislators and the private sector-noting that "Corporate and special interests pay between 50 and 500 times as much as a lawmaker to be part of the organization." It says: "ALEC is quintessentially a pay-to-play operation that helps lobbyists obtain access to lawmakers and promote the agenda of the corporations for which they work."

At POWER's Dec. 7 conference on Navigating Legal Implications of Power Industry Regulations in Las Vegas, Nev., DLA Piper partner Teri Donaldson told attendees that litigation stemming from the SEC climate disclosure guidance such as the ExxonMobil case is "out of control."

"There are potential consequences that are not only expensive in terms of defending an investigation, but there is also the potential for criminal penalties for your inability to have an accurate crystal ball, and I think that's really alarming," Donaldson said.

-Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)

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