Will New Power Plant Air Pollution Rules Shut Out Your Lights?

On December 16, the Environmental Protection Agency plans to finalize its proposed rule limiting mercury and other hazardous air emissions from power plants.

If EPA goes ahead, does that mean the lights will go out in coal country? If your only source of information is press releases coming out of what Ronald Reagan called the "puzzle palace" on Capitol Hill, you'd best lay in a  supply of candles. But The Daily Green's readers don't take everything they hear coming out of Dee Cee at face value, right?

Reliability of the electric power system--its ability to deliver juice 24/7/365--has been one of the neuralgic issues surrounding EPA's proposed rule, which comes straight out of the Clean Air Act's provision requiring limits on 189 toxic air pollutants using what the law calls "maximum achievable control technology," or MACT in the acronym-happy world of environmental politics. So, when you hear politicians rattling on about "Utility MACT," that's what they're talking about.

For all intents and purposes, the rule would apply to coal-fired power plants and would come into force in 2015. Critics say the rule would force utilities to shut down coal plants, impairing reliability, or force them to take too many of them down at once for pollution control retrofits, also impairing reliability.

A trio of reports published last week put the reliability issue under a scope. They were issued by the Department of Energy, a consulting firm working for gas and nuclear utilities that support the rule, and by an outfit called the North American Reliability Corp., or--if you can stand another acronym--NERC. Under a federal law enacted in 2005, NERC sets and enforces electric power reliability standards. NERC also publishes annual reliability assessments.

In varying degrees, all three reports steered well clear of apocalyptic predictions. To be sure, some coal plants that lack sulfur dioxide scrubbers are likely to close, but in many cases, those plants are decades old and due for retirement. Should utilities decide to retrofit the old beaters rather than close them and replace them with cleaner gas-fired generation, EPA can, on a case-by-case basis, give them an extra year or longer to comply. If more time is needed, EPA can stipulate that the plants in question can run only to maintain local reliability.

NERC's assessment, the most conservative of the three, looked at two scenarios, a "moderate case" and "strict case" to assess impacts of Utility MACT and three other EPA rules on reliability. NERC said "reserve margins"--the wiggle room that regional grids should have to ensure that power is delivered reliably during peak demand periods--could be too narrow for comfort in Texas by 2013 and in New England by 2015. Likewise, margins might slip below NERC targets in the lower Mississippi River Valley and in Kentucky and Tennessee by 2018. The question in NERC's mind is whether enough clean new power plants can be brought on line fast enough to replace the dirty old ones, and/or whether utilities can get enough time to bring their plants up to snuff.

Neither the Department of Energy (DOE) nor M.J. Bradley Assoc., consultant for the Clean Energy Group of utilities, believes there will be a reliability problem. DOE modeled a "stress test" on utilities--sort of like the stress tests the Treasury Department has done on banks--to determine whether utilities could keep the lights on and still comply with EPA rules.

DOE modeled two rules, Utility MACT and another one, already finalized, that  limits emissions that cause downwind smog and particulate pollution. DOE said the stress test was deliberately designed to be more stringent than what EPA is likely to require. The result? "Target reserve margins can be met in all regions, even under these stringent assumptions." Texas might need a bit more gas generation capacity, but otherwise the system looks capable of handling compliance.

Likewise, says the Bradley report, pointing out that development of gas-fired power plants is galloping ahead, with 38,000 megawatts under construction. Bradley's conclusion complements an August report by the Congressional Research Service, which found that impacts of EPA rules will fall hardest on coal plants that are more than 40 years old. Said the CRS report: "Many of these plants are inefficient and are being replaced by more efficient combined cycle natural gas plants, a development likely to be encouraged if the price of competing fuel--natural gas-- continues to be low, almost regardless of EPA rules."

If one thinks that concerns about reliability have been overblown, there is plenty of food for thought.