UPDATE 1-U.S. Southeast utiliites face renewable hurdle

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By Eileen O'Grady

CHARLESTON, South Carolina, June 22 (Reuters) - Progress Energy Inc's (PGN.N) Chief Executive William Johnson said on Monday that it's unlikely any southeastern U.S. state can meet a goal of using renewable energy to supply 20 percent of its power supply by 2020.

Utilities and state regulators from Arkansas to Georgia are feeling pressured as Congress considers legislation to curb emissions of carbon dioxide -- a greenhouse gas blamed for global warming -- and to set a national standard requiring utilities to produce more power from renewable resources like wind and solar power.

"I'm not sure how we we'll meet a 20-percent mandate in any state in the Southeast," Johnson told a gathering of state utility regulators from 10 Southeastern states.

Across the region, coal-fired power plants account for 36 percent of generating capacity, compared with 26 percent nationally while nuclear capacity, at 13 percent, is slightly above the U.S. figure of 11 percent, according to the the North American Electric Reliability Corp (NERC), which oversees reliability of the power supply.

"The Southeast has a problem," Johnson said. "We are carbon-intensive; we burn lots of coal and we are not blessed with a lot of indigenous renewables."

While lawmakers in Washington address CO2 emissions, residents of the Southeast are least able to afford costly carbon-reduction efforts or renewable options, said William Timmerman, chief executive of Columbia, SC-based SCANA Corp (SCG.N).

The state has the second-highest unemployment rate in the nation and 14 percent of its households are at or below the poverty level, Timmerman said. Like most states in the Southeast, monthly electric bills take a sizable chunk of a family's monthly income due to high use for air conditioning.

"The push-back from a mandate that threatens to raise prices 50 percent is something that has never been considered," Timmerman told attendees at a meeting of the Southeastern Association of Regulatory Utility Commissioners.

Utilities are building a variety of biomass power plants that burn wood or poultry waste because solar and wind resources in the Southeast are "negligible," NERC said.

Johnson said the results of his utility's effort to meet North Carolina's 12.5 renewable goal by 2021 is "mixed."

Availability of renewable resources has been less than a state study projected while costs are higher, he said. He predicted program costs will hit the allowed limit before reaching the 12.5 percent goal.

"We need to get the greatest CO2 reduction at the least cost," Johnson said.

At SCANA, Timmerman said a "green power" program where customers pay $6.25 per month extra for some renewable power has attracted only 250 subscribers out of SCANA's 650,000 customers. "People are voting with their pocketbooks," he said.

The executives also questioned whether the region will get credit for use of nuclear power which does not emit carbon and for forest areas that serve as carbon-sink zones. (Editing by Marguerita Choy)