New EPA Rules Could Close Hundreds of Coal-, Oil-, and Gas-Fired Power Plants

New EPA Rules Will Erode Power Grid Reliability, Report Finds

Energy reserves available to the power grid for peak use could be cut in half, says an industry report, as power plants are retired for noncompliance with stiffer clean-air and clean-water rules.

October 26, 2010

Christian Science Monitor - Four federal environmental regulations to improve water and air quality could by 2018 chop by nearly half the amount of projected reserve energy available to the US power grid, says a new report.

Nationwide, hundreds of coal-, oil-, and gas-fired power plants, with a collective capacity of about 76,000 megawatts (one megawatt provides enough power for about 750 homes), could be retired if the forthcoming rules are implemented under the fastest proposed timeline, says the report by the North American Electric Reliability Corp. (NERC), an industry group charged with ensuring grid reliability. A "moderate" pace of implementation would lead to a 46,000-megawatt cut in reserve generating capacity, it says.

NERC determines the amount of generating capacity that needs to be on standby to meet peak electricity load in the summer months and to cover for any unexpected generating outages. That "planning reserve margin" would drop by almost half if the environmental rules are implemented under the fastest possible scenario. Under a "moderate" timetable for implementation, the reduction in reserve capacity would be less.

“The results of this assessment show a significant potential impact to reliability should the four EPA rules be implemented as proposed,” said Gerry Cauley, NERC president and CEO, in a statement.

Mr. Cauley did not argue that the environmental rules are impossible to accommodate, but he did say a longer implementation time will probably be needed.

“To ensure bulk power system reliability, the proposed rules should provide sufficient time to acquire replacement resources, offsetting the reductions in capacity from unit retirements and deratings from environmental control retrofits,” he said.

Utility companies have long argued that tougher environmental regulations would reduce grid reliability. Environmental groups and some green energy groups hailed the report, saying that its close examination proves that three of the four rules would have little or no impact on grid reliability.

"The NERC assessment affirms that the electric power industry can maintain electric system reliability while improving our air quality and protecting public health," said Michael Bradley, executive director of the Clean Energy Group, a coalition of electricity generating and electricity distribution companies committed to environmental stewardship, in a statement. "The clear message from the report is that EPA's proposed air rules aimed at curbing hazardous air emissions from power plants will have negligible impact."

He noted that NERC's projected number of plant retirements as a result of new air regulations is "significantly lower than others have projected."

The NERC study comes on the heels of a recent Wall Street analysis that forecast a similar impact on America's coal-fired power plants. Tougher federal air pollution rules coming next year could result in electricity companies shuttering nearly one-fifth of America's coal-burning power plants, mostly facilities more than 40 years old that lack any emissions controls, that study by Credit Suisse found.

The four regulations, enforced by the Environmental Protection Agency, mark a ratcheting-up of Clear Water Act and Clean Air Act rules.

One new requirement increases the amount of cooling water from power plants that is recycled rather than discharged, a move intended to limit heat damage to lakes and rivers. Of the four rules, it would have the biggest effect on the power grid, causing plant retirements or derating of up to 37,000 megawatts of capacity.

By comparison, a tough new standard for mercury emissions would lead to loss of 5,000 megawatts, in a worst-case scenario, the NERC report said. New limits on sulfur and nitrogen emissions could eliminate another 7,000 megawatts. Finally, new coal-ash impoundment requirements could see 2,000 megawatts retired under the fastest implementation schedule.

This was all good news to Conrad Schneider, advocacy director of Clean Air Task Force, a Boston environmental group. The NERC report, he says, should sweep away arguments that clean-air requirements might weaken the grid.

"This study removes any contention that the Clean Air Act rules would drive significant reliability concerns," he says. "The only potential problem NERC found that might drive reliability concerns was the clean water intake rule. But it was also the one for which the EPA has the widest discretion about timing and implementation."

EPA to Issue More Rules in Climate Fight

September 2, 2010

Reuters - The U.S. Environmental Protection Agency will roll out more regulations on greenhouse gases and other pollution to help fight climate change, but they will not be as strong as action by Congress, a senior administration official said.

The agency "has a huge role to play in continuing the work to move from where we are now to lower carbon emissions," said the official, who did not want to be identified as the EPA policies are still being formed.

President Barack Obama, looking to take the lead in global talks on greenhouse gas emissions, has long warned that the EPA would take steps to regulate emissions if Congress failed to pass a climate bill.

The Senate has all but ruled out moving on greenhouse gases this year, even though the House of Representatives passed a bill last year. In late July, Senate Majority Leader Harry Reid stripped climate provisions out of an energy bill, saying he could not get one Republican vote for them.

The senior official stopped short of saying the EPA alone would achieve Obama's goal of about 17 percent reductions in greenhouse gases by 2020 from 2005 levels.

"With legislation you almost certainly get more emissions reductions than you get with existing authorities" that the EPA can use under the Clean Air Act, the official said.

And analysts say the EPA will not be able to achieve the far deeper cuts needed to help prevent the worst effects of climate change such as floods, droughts and heatwaves.

Though Congress will not likely move in 2010, the EPA expects it will do so in coming years, the official said.

EPA plans on smokestack emissions face obstacles in Congress and in the courts. Senator Jay Rockefeller, a West Virginia Democrat, and other lawmakers hope to stop the EPA from regulating the emissions for two years.

Energy companies -- from wind and solar power makers to utilities -- are concerned about the regulatory uncertainties, with some analysts saying billions of dollars of investments are stymied by the lack of direction in Washington.

The official said the EPA rules would provide regulatory certainty that could help businesses get loans to build new plants. A two-year delay would only prolong the uncertainty, and hurt the chances of getting financing, the official said.

NEW RULES

The EPA has worked with the Department of Transportation to set new fuel-efficiency standards, as well as the first greenhouse gas emissions rules, on cars and light trucks. More standards for vehicles sold after 2017 are expected to be released later this month.

The EPA also has moved to regulate greenhouse gases from stationary sources such as power plants and factories.

Starting next year the EPA will require large power plants, manufacturers and oil refiners to get permits for releasing greenhouse gas emissions, though details are unclear.

The EPA will also require industrial sources to submit analyses on the so-called "best available technology" they could add to their plants to cut emissions under the existing Clean Air Act.

The official said the EPA will put out guidance this month that would help companies determine which technologies -- perhaps moving to cleaner-burning natural gas and away from coal -- would make the most sense.

In addition, the EPA is working on rules to cut emissions of mercury from coal-burning power plants and cement plants and on toughening rules on coal ash. In combination, the rules could help force inefficient coal plants into early retirement.

That could hit shares in big coal burners such as American Electric Power and Southern Co..

A recent Bernstein Research report said upcoming EPA rules could push 15 percent of current coal-fired power plant capacity into early retirement by 2015.

The EPA will soon roll out more regulations on greenhouse gases and traditional pollutants like mercury emissions that will help cut planet-warming pollution and emissions that more directly hurt human health, the official said.

EPA Administrator Lisa Jackson plans to attend a meeting in Mexico in October aimed at reducing emissions of methane, a greenhouse gas about 20 times more potent than carbon dioxide, the official said.

The meeting will come a month before representatives from rich and developing countries convene for annual U.N. climate talks in Cancun, Mexico.