Electricity regulators from across the US insisted this week that the Environmental Protection Agency is underestimating the time they’ll need to meet EPA’s newest air rules, and they want EPA to lay out standards now that will guarantee five years’ compliance time and insulate them from civil liability.
EPA’s Mercury and Air Toxics Standard gives generators three years from its publication date to comply, but allows state regulators to grant a fourth year and EPA to issue an administrative order allowing a fifth year in limited circumstances. The rule was approved but hasn’t been legally published yet.
EPA Assistant Administrator Gina McCarthy told the National Association of Regulatory Utility Commissioners’ (NARUC) meeting in Washington DC this week that her agency believes the areas most affected, those heavily dependent on older coal plants without emission controls, are in areas with large reserve margins, so compliance outages should not cause reliability problems.
Read analysis of claims that the new rules could cause blackouts on Breaking Energy here.
But John Bear, CEO of the Midwest Independent Service Operator, said 61,000 of MISO’s 71,000 megawatts of coal capacity, in 13 states, must be retrofit or retired to comply with MATS, and it takes an average of 48 months to plan for and obtain permits for major retrofits. EPA’s three-year schedule would leave all the plants trying to retrofit the same year.
Bear said utilities, state regulators and grid operators are just beginning to compare their plans and find timing conflicts. Moreover, he said, because utilities couldn’t order equipment until EPA finalized MATS, generators may not all be able to get equipment and skilled workers in time.
Frustration Just The Beginning For States
The nearly three-hour session with McCarthy was billed by organizers as focusing on how to comply, not the merits of MATS, but some speakers made plain their frustration with the rule.
Georgia Public Service Commission Chairman Stan Wise said his ratepayers are already charged $7 a month for a decade of cleanup actions and now face paying for 600 to 3,100 MW of coal shutdowns, plus backfits.
West Virginia Public Service Commissioner Jon McKinney said even new coal plants can’t meet the rule, despite EPA statements to the contrary. Colorado Public Utilities Commission Chairman Joshua Epel said citizen initiatives had already forced major changes, including coal shutdowns, in his state, but facilities there still can’t conform by EPA’s deadline.
Bear said he is also concerned about getting enough natural gas pipelines built to support new or converted generation, and Maine Public Utilities Commission Chairman Thomas Welch wondered whether the steep increase in gas demand, foreseen by most analysts to meet MATS and other EPA rules, will be a “tipping point” pushing up gas prices.
McCarthy insisted that EPA wants to work with regulators and utilities to allow “flexibility in genuine need.” MATS allows state regulators to approve a fourth year if needed for compliance, and also a fifth year if EPA issues an administrative order finding it’s necessary.
Multiple speakers said the need for a fifth year will soon be clear, as grid operators decide how to integrate backfit outage schedules with keeping the lights on. They said EPA should issue the orders well ahead.
Further Liabilities Lurk
Generators also worried about civil liability, noting Mirant had run an old coal plant under a Department of Energy order that found the plant needed for reliability at a certain period. But Mirant lost a court case to a citizen demanding damages for air pollution violations. Regulators repeatedly and said utilities should never be asked to choose whether to violate a DOE order or an EPA rule, and asked EPA to shield utilities from liability.
Federal Energy Regulatory Commissioner Philip Moeller said legislation may be needed to limit liability.
The meeting also made clear that no one had a clear path for utilities nationwide to seek EPA exceptions.
Utilities that are part of an organized grid, like MISO, can work through the operator, but Western state regulators said they had no similar organization, nor do municipal and other public power entities that are not state-regulated. FERC has no formal role either. McCarthy said EPA wants to collaborate with the electric industry to work out these details.
Kentucky Public Service Commissioner James Gardner said EPA’s short compliance schedule doesn’t leave time for lengthy processes. By the next time NARUC’s committee meets on the subject, in July, he said Kentucky regulators must issue orders on how one-half of the state’s coal capacity will comply.
