Clean Air Rules Likely to Cause Power Generation Shortages in Much of US: NERC Chief

Via Platts:

New US environmental regulations are likely to create generation shortages in the Great Plains, Midwest, Northeast and Texas, the head of the North American Electric Reliability Corp. said Wednesday.

Speaking at the Gulf Coast Power Association’s Spring Conference in Houston, Gerry Cauley, NERC president and CEO, said new greenhouse gas rules could cause the retirement of 60 GW of generation capacity, mainly coal-fired, over the next few years.

NERC plans to release a report on April 20 that would show such retirements could create shortages in the Electric Reliability Council of Texas, the Midcontinent Independent System Operator, the Northeast Power Coordination Council and the Southwest Power Pool, Cauley said.

Noting that the Environmental Protection Agency’s Clean Power Plan aims to lower carbon dioxide emissions to 30% below 2005 levels by 2020, Cauley said the report would highlight that the necessary cuts for many states “appear to be infeasible.”

“The second main point we’re going to make is that we need to have a reliability assurance mechanism, or safety valve,” Cauley said. “If there’s a reliability issue that comes up, we can’t have an environmental rule that trumps reliability. We don’t want to put companies in a position where it has to choose between violating an environmental rule or violating a reliability standard.”

To most efficiently meet the new emissions limits, states should band together to diversify their generation and emissions profiles, Cauley said.

Immediately after Cauley’s speech there was a panel discussion of the Clean Power Plan, during which Robert Lawrence, policy adviser for energy issues at the EPA’s Region 6 office in Dallas, said the carbon dioxide emissions reduction plan presented last summer is to be presented in final version in the summer of 2015.

“I guarantee you it won’t be the plan as proposed,” Lawrence said, but he could not elaborate on what the final plan would entail.

Holding out hope for a way to cut emissions, Susan Williams Sloan, American Wind Energy Association vice president for state policy, pointed out that several states, such as Iowa and South Dakota, get relatively high percentages of their electricity from wind resources now. Also, wind resources have proven to help reliability, particularly during cold emergencies when fossil-fueled power plants are incapacitated for some reason, Sloan said.

MIXED VIEWS ON RELIABILITY IMPACT ON TEXAS; COSTS EXPECTED TO RISE

When the GCPA polled attendees during the presentation, asking whether the Clean Power Plan would impair Texas electricity reliability, 43% of respondents said yes, 39% said no, and 19% said maybe.

Another survey asked whether the CPP would increase Texas electricity bills, to which 73% said yes, 20% said no and 7% said maybe.

Susana Hildebrand, Energy Future Holdings director of environmental policy, said her organization, which has the largest share of generation in Texas, believes the EPA’s Clean Power Plan does not represent an appropriate, accurate interpretation of the Clean Air Act.

“If ever there was a rule where the devil was in the details, it was this rule,” Hildebrand said.

It calls for cutting the emissions rate by 39% from 2012 levels, down to 791 pounds of carbon dioxide per MWh, Hildebrand said, which is about 20% lower than the 50-state average of 991 pounds per MWh.

In terms of how much total carbon dioxide each state would need to cut annually to meet the goal, Texas tops the list, at about 58 million tons, compared with Florida, the next-largest total, at about 28 million tons. The estimated Texas cut would require the state to retire 12,117 MW of coal-fired capacity by 2020, Hildebrand said.

–Mark Watson

See the article here.