EPA Regulations and Electrical System Reliability

Recently, the U.S. Environmental Protection Agency (EPA) announced that today there will be two public hearings, on the proposed carbon pollution standard for new power plants. The hearings will be all day and held in Washington DC and Chicago. Under the new rule, new power plants will have to emit no more than 1,000 tons of carbon dioxide per megawatt-hour of energy produced. All existing plants and currently permitted and built in the next 12 months will be grandfathered and exempt from this new rule for now. According to the EPA, a coal plant currently produces about 1,800 pounds of carbon dioxide per megawatt-hour of electricity. EPA says the rule creates “a path forward for new technologies to be deployed at future facilities that will allow companies to burn coal, while emitting less carbon pollution.” There is no commercially available technology for carbon sequestering that can meet this carbon standard for coal fired plants. EPA intends that carbon sequestering technology will be developed and can then be deployed on all future and existing coal burning plants or that the current crop of coal fired power plants will be the last.

The North American Electric Reliability Corporation’s, NERC, whose mission is to ensure the reliability of the North American bulk power system, recently released their 2011 Reliability Assessment. NERC develops and enforces reliability standards; assesses the projected adequacy of the power generation capacity in the United States and Canada, and educates trains and certifies industry personnel. In 2007 the U.S. Federal Energy Regulatory Commission (FERC) granted NERC the legal authority to enforce Reliability Standards with all U.S. users, owners, and operators of the bulk power system, and made compliance with those standards mandatory and enforceable.

The annual assessment of power generation capacity is intended to provide an independent view of the long term reliability of the North American power generation capacity while identifying trends, emerging issues, and concerns. NERC’s primary goal in their assessments is to make recommendations to ensure the reliability and adequacy of the electrical power supply. The most recent assessment found that the reliability of the power system remains adequate, though existing and proposed environmental regulations in the U.S. may significantly affect power system reliability. How significant an impact would depend on the scope, interpretation and timing of the rule implementation.

NERC identified potential impacts of recent environmental regulations as impacting the reliability of the U.S. power system. During the past year, EPA finalized four regulations that were specifically targeting coal fired power plants. The last was the carbon pollution standard that EPA is holding hearing for today, the others were in the news at various times throughout the past year. The Mercury and Air Toxics Standards (MATS) regulates mercury, arsenic, acid gas, nickel, selenium, and cyanide. MATS was finalized on December 21. 2011. The Cross-State Air Pollution Rule, CSAPR, which requires reductions of sulfur-dioxide and nitrogen-oxide emissions in coal fired plants, was made final in July 2011 but at the end of last year, the U.S. Court of Appeals District of Columbia Circuit granted a stay to the implementation of the CSAPR pending resolution of the legal challenges. In addition, EPA finalized the expanded Cooling Water Intake Structures Rule under Section 316(b) of the Clean Water Act that requires that National Pollutant Discharge Elimination System (NPDES) permits for facilities with cooling water intake structures ensure that the location, design, construction, and capacity of the structures reflect the best technology available to minimize harmful impacts on the environment, effectively expanding the current regulation to cover existing electrical generation facilities.

NERC 2010 Special Reliability Scenario Assessment

According to the NERC, the Cooling Water Intake Structures Rule and MATS could potentially have the most significant and negative impact on electric system reliability. The degree of impact depends on how strictly the EPA implements these and the other rules. A tight compliance schedule with limited or no flexibility could take electrical capacity out of the system and that could impact reliability. Because industry plans for complying with these rules are not yet finalized, NERC was forced under its charter to identify the potential impact based on a modeling approach that was used in the October 2010 Special Reliability Scenario Assessment to identify potential failures in the power supply. Their analysis showed that while 2013 capacity impact would be negligible it was anticipated that between 40 and 69 gigawatts of existing coal fired electrical capacity would be removed by 2018, and between 6.5 and 7.4 gigawatts of capacity would be eliminated due to the operation of the additional environmental equipment needed for compliance. This is an anticipated impact of about 3%- 7% of the total electrical system capacity which NERC warns could threaten system reliability if the regulations are implemented too quickly and too strictly. The Federal Energy Regulatory Commission now questions NERC's focus and statutory responsibilities, concluding that it "may have exceeded the functions" Congress intended for a reliability organization by evaluating electrical reliability impacts of these regulations and  other threats to the electrical capacity.