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April 23, 2013 NATIONAL COAL CONFERENCE airman Robert F. Powelson nnsylvania Public Utility Commission

April 23, 2013 NATIONAL COAL CONFERENCE Chairman Robert F. Powelson Pennsylvania Public Utility Commission

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Page 1: April 23, 2013 NATIONAL COAL CONFERENCE Chairman Robert F. Powelson Pennsylvania Public Utility Commission

April 23, 2013

NATIONAL COAL CONFERENCE

Chairman Robert F. PowelsonPennsylvania Public Utility Commission

Page 2: April 23, 2013 NATIONAL COAL CONFERENCE Chairman Robert F. Powelson Pennsylvania Public Utility Commission

PA PUBLIC UTILITY COMMISSION

Created in 1937

5 commissioners

500 employees

$65 million budget

Regulates around 8,000 utilities in the following sectors:

• Electricity• Natural Gas• Water

• Telecommunications • Transportation

Page 3: April 23, 2013 NATIONAL COAL CONFERENCE Chairman Robert F. Powelson Pennsylvania Public Utility Commission

THE NEW ENERGY REALITY

World energy consumption predicted to grow by 53% from 2008 to 2035

Fossil fuels will continue to supply much of the energy used worldwide

Renewable share of total energy use is predicted to increase from 10% in 2008 to 14% in 2035

There are 1.6 billion people without electricity worldwide Source: EIA’ s International Energy Outlook 2011

Page 4: April 23, 2013 NATIONAL COAL CONFERENCE Chairman Robert F. Powelson Pennsylvania Public Utility Commission

U.S. ELECTRICITY CONSUMPTIONEXPECTED TO GROW 30% BY 2035

1950 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 20350

1,000

2,000

3,000

4,000

5,000

6,000

Annual U.S. Electricity Consumption 1950-2035

Projected

KWH(Billions)

Source: Energy Information Administration 4

Page 5: April 23, 2013 NATIONAL COAL CONFERENCE Chairman Robert F. Powelson Pennsylvania Public Utility Commission

U.S. COAL PRODUCTIONThe U.S. holds the worlds largest estimated recoverable

reserves of coal

In 2011, approximately

72% of coal production

originated in 5 states:• PA• WY • WV• KY• TX

Page 6: April 23, 2013 NATIONAL COAL CONFERENCE Chairman Robert F. Powelson Pennsylvania Public Utility Commission

PA is the 4th largest coal producing state in the U.S.

Coal production is vital to PA’s economy

In 2011, PA’s coal industry:• Contributed $3.2 billion in economic

output • Supplied well-paying jobs for 41,500

Pennsylvania residents• Provided more than $750 million in

federal, state, and local personal income and payroll tax revenue

PENNSYLVANIA + COAL

Page 7: April 23, 2013 NATIONAL COAL CONFERENCE Chairman Robert F. Powelson Pennsylvania Public Utility Commission

Over 90% of U.S. coal consumption is in the electric power sector• Coal-fired generation still holds the largest

share among all sources of electricity• In March 2012, coal's share of total U.S.

generation was 34%

However, coal’s use has declined since 2007 due to: • Slow growth in electricity demand• Strong price competition with natural gas• Increased used of renewables

COAL + ELECTRICITY

Page 8: April 23, 2013 NATIONAL COAL CONFERENCE Chairman Robert F. Powelson Pennsylvania Public Utility Commission

2013 PJM GENERATION BY FUEL TYPE

Source: PJM Environmental Information Services

Nuclear 35.8%

Solid Waste 0.5%

Hydro 1.1%

Natural Gas 15.0%

Oil 0.1%

Coal 44.7%

Wind 2.4%Other 0.4%

Page 9: April 23, 2013 NATIONAL COAL CONFERENCE Chairman Robert F. Powelson Pennsylvania Public Utility Commission

2013 PENNSYLVANIA GENERATION BY FUEL TYPE

Natural gas

20.5% Hydro 1.3%

Coal 39.7%

OtherRe-

new-ables 2.7%

Nuclear 35.5%

Petroleum 0.3%

Sources: U.S. Energy Information Administration

Page 10: April 23, 2013 NATIONAL COAL CONFERENCE Chairman Robert F. Powelson Pennsylvania Public Utility Commission

THE FUTURE OF ELECTRIC GENERATION

Page 11: April 23, 2013 NATIONAL COAL CONFERENCE Chairman Robert F. Powelson Pennsylvania Public Utility Commission

Coal is the most important commodity carried by America’s railroads• Coal accounts for 43 percent of all tonnage

shipped• Coal generates over 24 percent of all gross rail

revenues

The business of coal, rail, and power generation are inextricably linked • 70 percent of all call delivered to U.S.

power plants is delivered by rail• Coal industry accounts for 1 in 5

railroad jobs

COAL AND RAIL

Page 12: April 23, 2013 NATIONAL COAL CONFERENCE Chairman Robert F. Powelson Pennsylvania Public Utility Commission

FUTURE OF COALUnknown impact of environmental regulations creates

tremendous uncertainty for the coal industry.

Page 13: April 23, 2013 NATIONAL COAL CONFERENCE Chairman Robert F. Powelson Pennsylvania Public Utility Commission

Dominion Resources Inc.:

Completed construction of new coal plant in 2012.

One of the last new coal plants?

Brandon Shores, Crane & Wagner

Generating Stations:

Scrubbed for billions, but sold

for only $400 million

REAL WORLD EXAMPLES

PJM Plant Retirements:Almost 9,000 MW

did not clear in PJM’s Capacity Auction

for 2014-2015

FUTURE OF COAL

Homer City Generating Station:Edison & GE Capital planning to invest

$700 million in scrubbing this plant

Page 14: April 23, 2013 NATIONAL COAL CONFERENCE Chairman Robert F. Powelson Pennsylvania Public Utility Commission

With the rising demand for electricity, we need to rely on all sources of generation, from wind to coal

A diverse mix, or portfolio, approach is the answer

For coal plants to compete in the future, clean coal technology is a must

Coal will be a major player in the future of electric generation

CONCLUSION

Page 15: April 23, 2013 NATIONAL COAL CONFERENCE Chairman Robert F. Powelson Pennsylvania Public Utility Commission

THANK YOU