Power companies threatened US power regulators with the potential of rolling blackouts and unreliable electricity supply if they are forced to comply with what they claim are tight deadlines for meeting new emissions rules.
The companies told a Federal Energy Regulatory Commission hearing they need more time to comply with new environmental regulations that would require the retirement or retrofit of hundreds of coal-fired plants. Emissions of mercury and other pollutants from those units would exceed the new standards.
Executives from companies including Dominion Resources, Exelon, and Southern Company told FERC that they were not seeking to evade the Mercury and Air Toxics (MACT) rule, due to be finalized on December 16, but needed at least four years – a year more than planned by the EPA — to meet its requirements.
If the Environmental Protection Agency (EPA) does not extend the deadline – a move that could be achieved by a Presidential executive order — significant generation capacity will be lost and electricity customers will face the increased risk of power outages, officials warned.
“That means that lights will go out and there will be rolling blackouts in some areas,” said Anthony Topazi, chief operating officer of Southern Company, at the FERC hearing on the effects of EPA regulations on the reliability of electric supply.
A number of environmental regulations have been delayed this year, read Breaking Energy’s review of 2011 energy and environmental politics here.
Topazi said 45% of Southern’s capacity is coal-fired and that the company is already spending $8.5 billion to install scrubbers and other technology to meet tighter air-quality regulations. He said the company needs at least six years to comply with the new mercury rule.
David Wright, vice chairman of the South Carolina Public Service Commission, and the new president of the National Association of Regulatory Utility Commissioners (NARUC), said he was “greatly concerned” about the impact of EPA rules on reliability.
“I’m one of the people that consumers will call when their lights go out,” he told the FERC panel.
But Regina McCarthy, assistant administrator in the EPA’s Office of Air and Radiation, dismissed fears that the mercury rule would interrupt power supplies.
“We don’t take reliability issues lightly,” she said. “In the 40-year history of the Clean Air Act, EPA rules have not caused the lights to go out, and we won’t let it happen going forward.”
Weighing The Costs
The agency argues that lower emissions of mercury, arsenic, chromium and nickel from power plants will prevent between 6,800 and 17,000 premature deaths; 11,000 heart attacks, and 120,000 cases of childhood asthma symptoms. It calculates the rule would have $59 billion to $140 billion in annual benefits, outweighing costs of $10.9 billion to install new technology.
A November 28 report by the North American Electric Reliability Corporation projected that 36 GW of capacity would be retired or reduced by 2018 as a result of the mercury standard and three other regulations. A copy of the executive summary of that report can be found here.
“The cumulative effect from environmental regulations may reduce reserve margins in ways that could affect bulk power system reliability, depending on the scope and timing of final regulation implementation,” NERC said in a statement.
Politicians Take Note
Congressional Republicans have expressed concern that the EPA rules will hurt reliability and drive up costs for retail customers. “Ratepayers cannot afford to play a guessing game when the stakes are so high,” said Ed Whitfield, chairman of the House Energy and Power Subcommittee. “The potential consequences of an unreliable electricity supply could be disastrous to our economy and national security.”
Paul Koonce, vice president of Dominion, told the FERC hearing that generators are seeking clarity and time in order to implement the new regulations.
“The industry isn’t asking for another study. The industry isn’t asking for a delay,” he said. “The industry is asking for an implementation path that allows us to be compliant.”