Monthly Archives: November 2014

Coal Related News from Around the Nation

Vitter Comments to EPA: Power Rule a Costly ‘Bully’

U.S. EPA’s Clean Power Plan tramples states’ authority over their own power sectors, would drive up costs and is based on unsound science, outgoing Senate Environment and Public Works Committee ranking member David Vitter (R-La.) argued in comments submitted to the agency today.

Vitter provided EPA with copies of letters, reports and witness testimony to argue that the draft “bullies states into implementing expensive programs with questionable benefits, whether they like it or not.”

“The rule would result in higher electricity bills for families, schools, hospitals, and businesses across the United States, and at the end of the day the people who will be hurt most are low-income families and the elderly,” Vitter contended in a statement accompanying the comments. EPA’s deadline for public comment on the draft is next Monday.

The senator’s submission included a “letter from 41 GOP senators released soon after the June 2 proposal asking EPA to rescind it.

“In your haste to drive coal and eventually natural gas from the generation portfolio, your administration has disregarded whether EPA even has the legal authority under the Clean Air Act to move forward with this proposal,” they wrote. They added that the environmental benefits of the rule are “dubious.”

The point is reinforced in the other documents Vitter submitted: two subsequent EPW Committee papers that take aim at the legal basis for EPA’s proposal and the written testimony of perennial GOP science hearing invitees Judith Curry, a man-made warming skeptic and professor at the School of Earth and Atmospheric Sciences at the Georgia Institute of Technology, and Bjørn Lomborg, director of the Copenhagen Consensus Center, who argues that warming will have relatively little adverse impact. Both have appeared before the Senate panel in the last year and are likely to be frequent visitors now that Republicans will hold the majority in the upper chamber.

Vitter is not the only Senate climate combatant who has submitted comment ahead of EPA’s deadline. Sen. Joe Manchin (D-W.Va.) posted to the rule’s docket arguing that while human activity is affecting the climate, the federal government should respond with investment in advanced energy technology rather than with harsh regulation.

“I have said again and again that the federal government needs to work as an ally, not as an adversary, when it comes to developing our nation’s energy policies,” he said. Manchin, a leading congressional ally of the coal industry, levels no specific criticisms against the rule but calls for a “reasonable compromise.”

Sen. John Hoeven (R-N.D.) called the draft rule “unworkable” in comments of his own. His state’s coal industry would be adversely affected if the rule became final, he said. The regulation would even stymie industry efforts to develop carbon capture and sequestration that will allow coal to limit its emissions — and to comply with a separate EPA standard for future power plants.

“The pathway from developing technically feasible innovations to deploying commercially viable technologies has occurred over the long-term,” he said. “The EPA’s artificial implementation timetable short-circuits this innovation pipeline and imposes unrealistic standards that will prevent the adoption of future, cleaner technologies.”

EPA’s draft asks North Dakota to reduce its emissions less than any other covered state. It assigns North Dakota a 2030 carbon intensity standard of 1,783 pounds per megawatt-hour — a cut of just over 10 percent compared with 2012 levels.

The draft does not dictate how states would meet their targets, but it is stringent enough to require them to do so through some combination of measures that stretch beyond the fence line of a power plant.

The senators’ arguments are a preview of the comments that continue to flow into the dockets from opponents of the EPA draft. Supporters of the draft say that any cost to fossil fuel developers — like the lignite producers Hoeven references — would be more than offset by its boost to renewable energy, energy efficiency and other employers. And while the rule might push electricity rates upward slightly, power bills will go down as efficiency measures reduce demand, they say.

Read the article here.

Supreme Court to Review EPA Rule on Power Plant Emissions

WASHINGTON—The U.S. Supreme Court on Tuesday said it would review the nation’s first-ever standards requiring power plants to reduce mercury emissions and other toxic air pollutants, taking up a case with implications for President Barack Obama ’s broader environmental agenda.

The high court accepted several challenges to the rules brought by the utility industry and a coalition of nearly two dozen states, including those where utilities rely on coal for most power generation.

The court will hear arguments in the case in the spring and is likely to rule in June 2015, as the Obama administration is planning to put the final touches on a separate proposal to cut carbon-dioxide emissions from existing power plants.

The high court’s decision to review one of Mr. Obama’s signature environmental achievements comes at a pivotal time. On Wednesday, the Environmental Protection Agency intends to propose an updated national standard for ground-level ozone, commonly known as smog, which is based at least in part on enforcement of the mercury rule.

The high court will decide if the EPA should have considered how much the rules would cost utilities, addressing a recurring complaint by companies about government regulations. The power companies and states said the rules would add $9.6 billion in annual costs to the utility industry. The EPA should have taken those costs into account, they said.

The EPA has said the public-health benefit of reducing the pollutants amounts to between $37 billion and $90 billion a year, far outweighing any industry costs. The agency also has said it believes the rule could prevent up to 11,000 premature deaths each year.

“We are disappointed in the court’s decision, but we are confident that EPA acted properly in regulating harmful toxic air pollution from power plants,” EPA spokeswoman Liz Purchia said in a written statement.

The outcome of the case could affect other EPA initiatives, including the separate proposed rule cutting carbon emissions from the same set of nearly 600 fossil-fuel power plants, which is underpinned by a 2007 Supreme Court ruling in favor of the EPA. If the court strikes down the entire or significant parts of the mercury rule, it could limit EPA’s ability to push forward on other regulations, some energy analysts said.

“Does it make EPA go away? No, but it could make some of their plans a little less ambitious,” said Christine Tezak, a managing director of ClearView Energy Partners, a nonpartisan policy-analysis firm. “The agency’s ability to be aggressive could be constrained by a need to give greater weight to cost impacts.”

The EPA, in an earlier version of the ozone proposal, estimated it could cost up to $90 billion annually. The EPA also intends in January to issue final rules cutting carbon emissions from new power plants and parallel standards for existing plants next summer. Both also mean increased costs for businesses, though less than the mercury and ozone rules.

The EPA’s mercury rule, adopted in 2012 and scheduled to take effect in April for existing power plants, requires coal and oil-fired plantsto cut most of their emissions of mercury, a neurotoxin the EPA says is particularly harmful for children, unborn babies and women of childbearing age.

Power plants are the dominant emitters of mercury in the U.S., according to the EPA. The rules require coal-fired utilities to install so-called scrubber technology, which is widely available, to reduce air emissions. The government has granted many utilities a year extension to comply with the rule.

“The EPA has expressly refused to consider the cost of its regulation, which will result in rate increases for citizens across the country, and threatens the reliability of the electricity grid by forcing the closure of many power plants,” Michigan Attorney General Bill Schuette, a Republican, said in a written statement. Michigan is a lead state plaintiff in the case.

Environmental groups expressed confidence the court would rule in the EPA’s favor. “EPA’s life-saving limits on mercury, arsenic and acid gases from smokestacks are thoroughly anchored in law and science, and we look forward to presenting a compelling case for these vital clean-air safeguards,” said Vickie Patton, general counsel for the Environmental Defense Fund, a party in the case.

The mercury case is the latest in a series of consequential environmental lawsuits that have landed at the Supreme Court during the tenure of Chief Justice John Roberts. The EPA has won more than it has lost.

The high court, in its 2007 ruling, allowed the agency to regulate carbon dioxide and other gases associated with climate change. This June, the court said the EPA overreached in claiming the authority to impose greenhouse-gas controls on small emitters, but it said the agency could require controls at power plants and other large pollution sources.

In another case this year, the Obama administration scored a notable victory when the justices revived an EPA program that sought to limit power-plant emissions blowing across state lines, called the cross-state air pollution rule.

The administration also won an important court victory in April when a divided U.S. Court of Appeals for the District of Columbia Circuit upheld the mercury rules, saying the agency acted reasonably in crafting them.

The cumulative effect of these regulations, coupled with low natural-gas prices, is compelling some utilities to close coal-fired power plants. Between 2012 and 2020, about 60 gigawatts of coal-fired capacity are projected to shut down, according to U.S. Energy Information Administration data published earlier this year. U.S. utilities have more than 1,000 gigawatts in capacity.

“A lot of utilities weren’t that concerned about the cross-state rule because MATS [the mercury rule] was already requiring them to install scrubbers,” said Brian Potts of Foley & Lardner LLP in Madison, Wis., who represents utilities but doesn’t have any clients involved in the mercury case. “But without MATS (or with a delay in MATS), the cross-state rule could become more significant.”

Akron, Ohio, utility FirstEnergy, which is a plaintiff in the case as part of its membership in the Utility Air Regulatory Group, is currently installing technology to comply with the mercury rule, though the high court’s ruling may change its plans, spokeswoman Jennifer Young said.

The court’s action Tuesday extends a saga that dates back more than two decades. Congress first required the EPA to issue regulations in 1990, but the agency’s efforts had been stalled for years due to several factors, including lengthy court battles and priorities that shifted with presidential administrations.

Read the article here.

Viewpoint: EPA Regulations Hit Florida’s Poor, Seniors Hardest

Energy policy used to be focused on providing affordable, reliable energy. But President Obama and the Environmental Protection Agency have swapped that focus for one on reducing carbon emissions. As many Americans still struggle to recover from the Great Recession, that focus couldn’t be more off the mark.

The EPA’s new, proposed plan aimed at cutting carbon dioxide emissions from power plants 30 percent by 2030 isn’t going to be cheap. Retooling the energy grid and turning our back on our most affordable source of electricity, coal, is an expensive proposition. It’s consumers who are going to be forced to pay the price. Unfortunately, consumers with low and fixed incomes are going to have to carry the heaviest burden. Even a small bump in energy prices disproportionately cuts into their income.

Seniors suffered greatly from our economic downturn. The average retiree’s net worth fell by over 10 percent and, according to the Kaiser Family Foundation, one in seven seniors now lives in poverty. For many seniors, higher electricity bills might be the straw that breaks the camel’s back.

Floridians already pay 40 percent more than average U.S. consumer for electricity – about $1,900 a year for each household. Even without EPA’s new carbon rules, prices have already been rising. The cost of electricity in the Sunshine state rose 5 percent in the last year alone.

Most of Florida’s utilities say that achieving the plan’s targets will be extremely difficult. They may have to shut down some power plants, including, incredibly, some that were recently expanded and upgraded under the federal government’s “clean coal” program. In their place, they will have to build new plants paid for by with bumps in each utility bill.

Florida’s power producers will also have fewer options when it comes to generating electricity, leaving consumers more vulnerable to volatile energy markets. Florida already relies on natural gas for almost two-thirds of its electricity generation. The EPA’s plan would push that reliance even higher by making it difficult or even impossible for utilities to produce power using alternatives like coal. If natural gas prices jump, there won’t be anywhere for generators to turn to limit the impact on the price of electricity. Once again, consumers will be left to foot the bill.

Despite these difficulties, and despite the fact that electricity bills are already so large, the EPA wants to impose especially stringent targets on Florida for emissions reductions. Just 10 states are being asked to do more.

Even if the U.S. cuts its emissions, at great cost to consumers, global emissions will continue to rise. Other nations, like China, the world’s largest carbon emitter, have no interest in sacrificing economic growth to tackle rising carbon emissions. Global problems require global solutions. The EPA’s plan will be a costly mistake.

Too many Americans, including a growing number of seniors, are already struggling to make ends meet. It’s indefensible to put seniors in a position where they have to cut back on their groceries or skip medication to pay their electric bill.

Jim Martin is chairman of the 60 Plus Association, a seniors advocacy group. Entertainer Pat Boone is their national spokesman.

Read the article here.

Report: EPA Regulations To Raise Power Costs 37 Percent By 2020

Environmental Protection Agency rules will only force electricity prices up even higher as the agency finalizes a slew of regulations aimed at the power sector, according to a new report.

The report by Energy Ventures Analysis found that the EPA underestimates how much its power plant regulatory regime will raise electricity and natural gas prices by imposing new regulations on power plants, most recently being the agency’s rules to cut carbon dioxide emissions from new and existing power plants.

These new rules to tackle global warming, combined with other rules to reduce more traditional air pollutants, will dramatically increase Americans’ utility bills by 2020, according to EVA’s report, which was sponsored by the coal company Peabody Energy.

“Annual power and gas costs for residential, commercial and industrial customers in America would be $284 billion higher ($173 billion in real terms) in 2020 compared to 2012 — a 60% (37%) increase,” the EVA report found.

The EPA’s so-called Clean Power Plan to reduce emissions from existing power plants aims to reduce carbon dioxide emissions from the power sector 30 percent below 2005 levels by 2030. The EPA says its plan will result in“approximately 46 to 49 GW of additional coal-fired generation” being “removed from operation by 2020.”

On top of this the “decrease in coal-fired power will also cause natural gas prices to rise up to 11.5 percent as an additional 1.2 trillion cubic feet of natural gas is used to make up for the lack of coal power in 2020,” EPA said. “Average retail electricity prices are projected to increase in the contiguous U.S. by 5.9% to 6.5% in 2020.”

The Energy Information Administration estimates that 50 gigawatts of coal-fired power are slated to shutdown by 2020, mainly because of an EPA rule targeting mercury emissions. This means that the Clean Power Plan could nearly double the amount of coal-fired capacity being retired by 2020.

Retiring coal-fired generators and using more natural gas-fired power and green energy comes at a cost, however, as new energy infrastructure must be built to accommodate the shift and gas prices rise as demand increases.

“The cost of electricity and natural gas will be impacted in large part due to an almost 135% increase in the wholesale price of natural gas (100% in real dollars), from $2.82/mmbtu in 2012 to approximately $6.60/mmbtu ($5.63) in 2020,” EVa reports. “These increases are due to baseline market and policy impacts between 2012 and 2020 as well as significantly increased pressure on gas prices resulting from recent EPA regulations on the power sector and the proposed [Clean Power Plan].”

U.S. industry would be hit the hardest, seeing their electricity and gas costs soar 64 percent by 2020 over 2012 costs. EVA notes that skyrocketing “operational costs in the industrial sector are of particular concern for energy intensive industries in the U.S. such as aluminum, steel and chemicals manufacturing, which require low energy prices to compete.”

“Industrial power consumers would be expected to pass energy cost increases on to their customers, affecting the costs of goods purchased by American consumers over and above increased monthly utility bills,” EVA reports.

“The EPA’s collection of regulations will force American families, businesses and manufacturers to shoulder the burden it stands to create,” said Chad Kolton, spokesman for the Partnership for a Better Energy Future — which opposes the EPA’s Clean Power Plan.

“Today’s report from EVA is consistent with what industry has been saying for months — the EPA’s regulatory agenda will do significant damage to the American economy,” Kolton said.

Environmental groups, however, have said the Clean Power Plan — and pretty much all major EPA rules in the last six years — are necessary to protecting public health and the environment. Activists have spent a large amount of energy, in particular, protecting the Clean Power Plan which they see as the centerpiece of President Obama’s climate agenda.

The Natural Resources Defense Council recently published a report saying the Clean Power Plan will actually save Americans money while fighting global warming. NRDC argues, in contrast to EVA, that EPA’s plan overestimates the compliance costs of cutting carbon dioxide emissions.

“It’s clear that EPA has ample room to significantly strengthen the Clean Power Plan, making deeper cuts to dangerous carbon pollution from power plants at a reasonable cost,” said Starla Yeh, the report’s co-author and NRDC policy analyst.

“It can do so relying more on energy efficiency and clean energy—such as wind and solar energy — which can help slash America’s biggest source of heat-trapping pollution,” Yeh said.

NRDC’s report argues that EPA overestimated the cost of increasing energy efficiency in the power sector by double what current projections are and overestimated the cost of green energy use by 50 percent.

Taking these factors into account, NRDC argues the Clean Power Plan will save Americans between $6.4 billion and $9.4 billion from energy efficiency by 2030 — well above EPA projected savings of up to $8.8 billion by that year.

“In 2030, energy efficiency savings could total 140 terawatt-hours more than what EPA projected,” NRDC reports. “Renewable generation could be 171 terawatt-hours higher than EPA’s projections. Collectively, that’s equivalent to the electricity used by 29 million homes in one year—roughly the population of the New York and Chicago metropolitan areas together.”

Read the full article here.

Nothing ‘Commonsense’ About EPA’s Proposed Rule

The U.S. Environmental Protection Agency this summer billed its proposal to cut carbon emissions from power plants as a “commonsense plan.” Unfortunately, what the EPA considers common sense actually defies that definition. Even worse, it will hurt families and the region’s economy.

Simply stated, this is a vital policy struggle about keeping your lights on and keeping your light bill affordable. The mission to reduce carbon emissions is being considered without regard to cost or effect on reliability.

 As an electric utility, our interest is in reasonable, balanced and predictable approaches to environmental improvement. Most folks would endorse this commonsense approach if given the choice. Sadly, that is not happening. Instead, the EPA has proposed a far-reaching plan with faulty assumptions, unrealistic goals and an overly aggressive timeline for compliance.

A key factor in customers’ electric bills is the cost of fuel used to generate electricity. For most utilities, fuel strategy has changed over the years. Natural gas shortages in the 1970s, rising costs and an act of Congress forced us to find an alternative to natural gas. We turned to coal, which remains relatively inexpensive and abundant today.

SWEPCO’s strategy of fuel diversity continues to benefit our customers, with coal helping to moderate volatile natural gas prices. Fuel diversity was and is a good decision for our customers’ finances.

The EPA’s proposed rule assumes the shutdown or restricted use of all of the SWEPCO power plants that provide our most reliable and economic 24/7 electricity in Arkansas, Louisiana and Texas. In addition, the rule would give priority to natural gas plants over coal, no matter the impact on reliability or costs for customers. Fuel costs may not matter to the EPA, but they matter to us and to our customers who will pay for the EPA’s plan in their electric bills.

The Southwest Power Pool, which ensures the reliability of the electric grid in nine states, assessed the impact of the EPA’s plan. Unless the plan is modified, the region faces the real possibility of rolling blackouts and cascading outages, according to the analysis. New power plants and transmission lines would be needed to maintain system reliability. However, the EPA’s plan does not allow sufficient time to build the needed infrastructure.

Another consideration is pancaking environmental regulations on top of one another — with no regard for the costs and time to comply with one set of rules before another set is imposed. SWEPCO and our power plant co-owners are upgrading emission controls at several facilities at a cost of $900 million — to comply with existing EPA regulations by 2015-2016 and to keep the lights on for our customers. With its aggressive targets and compliance dates, the EPA’s proposed carbon rule places those investments — and electric system reliability — at risk. It then leaves customers with the prospect of paying for higher-cost replacement generation and transmission to maintain reliability. If that sounds like paying for your power plants twice, that’s because it is.

At SWEPCO, we are encouraging folks to talk to the EPA. We are urging EPA to reconsider and modify its unrealistic assumptions; extend its schedule to allow a reasonable opportunity for compliance, and allow flexibility for continued operation of 24/7 base load power plants as needed to support reliability. We believe that is a commonsense approach that should be taken as the EPA receives public comment through Dec. 1 and then begins to finalize its latest rule.

— Venita McCellon-Allen is president and chief operating officer of Southwestern Electric Power Co.

Read the article here.

EPA Impoverishing Seniors

The American people registered their disapproval of President Obama’s policies in the midterm elections. This means EPA’s proposal to reduce carbon dioxide emissions in new and existing power plants needs to be entirely re-evaluated with a commonsense approach.

Congress and this administration need to take into account the adverse financial impact upon millions on fixed and lower incomes who are already suffering from rising electricity costs and decreased reliability from past EPA regulations, and will face even more cost increases and electricity failures from these proposed regulations.

EPA should not continue to gloss over the fact that all Americans have been paying for years for increased costs of electricity due to environmental regulations and will pay an even heftier price for the proposed regulations — again, hurting those most vulnerable, including seniors. Sadly, many seniors just getting by on Social Security and limited, if any, retirement income will be forced to choose between heat during cold winter months and money for food and medicine.

Electric bills will again inevitably increase. Last winter, the great majority of increased demand during the polar vortex was supplied by coal-fired plants, but many are slated for closure in the next two years due to other EPA regulations. EPA’s latest proposal could finally push our grid over the edge by taking more plants offline and putting Pennsylvania’s electricity system at risk of failing.

We need to continue environmental progress without threatening seniors and all on modest incomes with economic hardship at the hands of the president’s EPA.

Dan Weber

Bohemia, N.Y.

The writer is president of the Association of Mature American Citizens (

Read the full article.


Grid Operator Says EPA Power Plant Rule ‘Clarification’ is Bad News for Coal States

One of the biggest electric grid operators in the country, PJM Interconnection, says its member states would have a harder time complying with U.S. EPA’s proposal to cut greenhouse gas emissions from the power sector under the agency’s clarified guidance for implementing state carbon budgets.

EPA’s draft rule from June 2 said states could take the pounds of carbon dioxide per megawatt-hour they could emit and translate it into an annual carbon emissions cap — a specific number of tons of CO2 per year. After many states and stakeholders asked for more information about making that conversion, EPA earlier this month issued a memo with examples of how to do the math to develop that “mass-based” standard.

How states interpret the new methodology could weigh heavily on whether they decide to convert to a mass-based standard and attempt a cap-and-trade system.

Under PJM’s initial interpretation of the rule, it expected the region would have to reduce carbon emissions from 442 million to 415 million short tons of carbon dioxide per year. Using the clarified method, PJM expects its regional cap would be about 358 million short tons of carbon dioxide by 2029.

“Higher-intensity states got hit pretty hard with the change,” PJM President and CEO Terry Boston said last week.

PJM conducted the analysis for the Organization of PJM States. PJM economists modeled 15 different compliance scenarios — considering different levels of new generation, energy efficiency, renewable energy, potential coal and nuclear retirements, and possible natural gas prices. They then compared the costs of those scenarios in PJM’s original interpretation of the rule with the costs based on the Nov. 6 guidance from EPA.

Multistate approach may be cheaper

Jennifer Macedonia, a senior adviser who tracks the issue for the Bipartisan Policy Center, said of all the stakeholders analyzing a mass-based approach, PJM had one of the least stringent interpretations.

“Rather than necessarily a difference in EPA’s guidance, the divergence reflects the difference in PJM’s interpretation of the earlier guidance versus EPA’s,” Macedonia said.

According to PJM, the new calculation method would make electricity more expensive than originally expected in the PJM region, which covers Pennsylvania, West Virginia and Ohio, plus 10 other states and the District of Columbia. Regardless, PJM found electricity production costs would still be lower under the mass-based approach.

PJM’s analysis also shows states could save money by working together as a region to implement a plan. A multistate approach would lead to lower compliance costs, fewer units at risk of retirement and lower prices for CO2, which would mean lower electricity prices across the PJM footprint, chief economist Paul Sotkiewicz told consumer advocates at a conference in San Francisco this weekend.

In any scenario the region would get a running start after adding in the power plants that will retire since the 2012 base-line year. Those retirements alone account for a decrease of more than 11 percent in PJM’s emissions, according to the report. But the figures also don’t consider new natural gas generation since 2012.

Still, the outcomes are endless and depend on a multitude of unpredictable factors, including how much states can ramp up energy efficiency and renewable energy and how much natural gas costs in the coming years.

“Under some assumptions, this looks easy,” Sotkiewicz said. “Under other assumptions, it looks very difficult and expensive.”

Read the article here.

Power Grid Operator: EPA Climate Plan Would Raise Costs

As Texas regulators weigh a response to President Obama’s proposal to combat climate change, the operator of the state’s main electric grid says the plan would raise energy costs and threaten reliability – particularly in the next few years.

In an analysis released Monday, the Electric Reliability Council of Texas (ERCOT) said the plan — which requires states to shift from coal-power to cut carbon emissions — would significantly increase power prices in the next few years. But those extra costs would fall in the next decades as Texans reaped long-term savings from investments in solar power and energy efficiency.

Under the federal proposal, Texas would need to slash carbon emissions from its power plants by as much as 195 billion pounds of carbon dioxide in the next 18 years, according to a Texas Tribune analysis. That 43 percent reduction is among the larger percentage of cuts required among states.

The EPA suggests that Texas could meet its goal though a combination of actions: making coal plants more efficient, switching to cleaner-burning natural gas, adding more renewable resources and bolstering energy efficiency. Texas would have until 2016 to submit a plan to meet its carbon target.

The ERCOT analysis comes as Texas regulators prepare to file formal comments to the EPA ahead of the Dec. 1 public comment deadline.

The state’s Republican leadership has loudly panned the proposal and is expected to sue once it becomes final. But behind the scenes, state regulators are examining how Texas might meet its carbon target.
The analysis compared how the grid would fare under several scenarios, all of which would speed up the shutdowns of coal-fired power plants — some of the worst polluters in the country.
Under the cheapest scenario, coal would generate just 16 percent of Texas’ power by 2029 — compared with 29 percent under normal market conditions. (In 2013, coal powered about 37 percent of the ERCOT grid). Natural gas, wind and solar power would pick up the slack. That shift would increase electricity bills by 14 percent by 2020, according to the analysis. By 2029, however, that added cost would fall to 5 percent.
Power prices would probably grow if Texas chose to adopt a “cap and trade” program – a scheme in which companies bid on the right to pollute.

The federal plan would also threaten reliability, the council said, as Texas leaned more on intermittent wind and solar fuels (the wind doesn’t always blow and the sun doesn’t always shine).

“Given what we see today, the risk of rotating outages increases,” Warren Lasher, director of system planning at ERCOT, said Monday in a media call.

The changes would hit coal-dependent communities around Dallas and Houston particularly hard, Lasher said. Those areas would quickly need new power lines to connect with new power sources. That could prove costly. For instance, officials project a major transmission project for the Houston area to total $590 million.

“All of those costs could ultimately be born by consumers in the power bills,” Lasher said.
The grid’s biggest challenges would come in the next decade, the council said. But investments in energy efficiency and wind and solar plants — which cost nothing to fuel — could ultimately lower prices over time.

Lasher said the council would like the EPA to allow more flexibility to states that run into reliability problems.

Read the article here.

Pence to Congress: Block Obama on Coal

Former Congressman and current Governor Mike Pence (R-IN) urged members of the Congress to use the power of the purse to stop the president from acting unilaterally on the issues of environmental regulations and immigration on Thursday’s “Laura Ingraham Show.”

“The power of the Congress is the power of the purse…whether it be blocking any executive amnesty, whether it be blocking the EPA’s efforts to continue to wage the war on coal, and President Obama announced a new chapter in the war on coal in his so-called deal with China yesterday, whether it’s defunding Obamacare…I certainly will be encouraging members of Congress from Indiana and beyond, use the power that the Congress has, which is the power of the purse, particularly in those areas where the president is threatening to use executive action” he said.

Pence further railed against the president’s new deal with China on carbon emissions, declaring “it is just astounding to me, the efforts of this administration, to use executive authority through the EPA. And I’m going to be calling on members of Congress to restrain that.”

He concluded by arguing that Congress should pass several individual appropriations bills rather than a single continuing resolution or omnibus spending bill and calling on individual voters to “come alongside their member of Congress and tell them ‘get back to the regular, orderly business of the Congress, do those appropriations bills so that we can have up or down votes on EPA, [and] up or down votes on border security.’”

Read the article here.

Overseers Flag Concerns as System Shifts to Gas, Renewables

A national surge toward natural gas and renewable energy driven by cheap gas and new government rules and policies is creating reliability concerns — especially in the Midwest, New York and Texas — and weakening buffers for blackouts, grid overseers warned today.

And those problems loom even before considering the impact of U.S. EPA’s power plant initiative, the North American Electric Reliability Corp. said.

Atlanta-based NERC’s annual long-term reliability assessment says reserves of on-hand electric capacity for grid reliability are declining in the Midwest, New York and Texas despite historically low demand for electricity.

Power plant closures, a slowdown in new construction and retirements triggered by new environmental regulations are hampering power supplies in those areas and cutting reserve margins, John Moura, NERC’s director of reliability assessment, told reporters on a call today. Moura noted that although Texas has new capacity coming online that will elevate reserves through 2018, the state’s reserve margins are slated to dip thereafter.

NERC is responsible for crafting reliability and security standards subject to reviews by the Federal Energy Regulatory Commission.

The grid monitor sees more than 83 gigawatts of fossil and nuclear capacity being retired between 2011 and 2024. Slightly more than 44 GW of coal-fired generation will be retired between now and 2024 and almost 30 GW of gas-fired generation, NERC said. The outlook is a slight decrease from its assessment last year, which foundmore than 85 GW of capacity could be retired by 2023.

Although NERC’s assessment did not include the potential effects of EPA’s proposed Clean Power Plan under Section 111(d) of the Clean Air Act, the report did analyze and question EPA’s assumptions about efficiency and infrastructure, and made clear the proposal has clear implications for grid reliability.

The Clean Power Plan will accelerate the nation’s shift toward natural gas, solar and wind, and a stronger focus needs to be placed on the long construction timelines for new transmission and pipelines, NERC said. Citing a recent study conducted by Energy Ventures Analysis, NERC noted that under EPA’s proposal, almost half the country’s generation could come from gas-fired generation by 2040 — and more than the traditional three-year lead time for gas pipeline projects will be needed.

“With this shift toward more natural gas consumption in the power sector, the power industry will become increasingly vulnerable to risks from natural gas supply and transportation issues,” NERC wrote. “Adverse winter weather, such as the 2014 polar vortex, provided an example of the potential impacts to supply and transportation.”

NERC also said that EPA assumes energy efficiency will grow at a rate that “exceeds recent trends and projections,” and that the implications of such an assumption — or the failure of that scenario to play out — are complex and could put states in precarious situations.

“What we’re really concerned with is really the spillover effect that can occur within that proposed plan, where if you don’t achieve those levels of energy efficiency that are expected, you’ll have to make up that carbon reduction in different ways, which could include [renewables], retirements of other coal resources,” Moura said.

A new resource mix is going to require new approaches to assessing reliability, something NERC through its Essential Reliability Services Task Force hopes to implement during the next one to two years, Moura said. Such an approach would consider the characteristics of wind and solar, and the need for services that baseload plants provide, including voltage support.

“If we continue to go down the path of only looking at resource adequacy, that assumes every megawatt is a one-for-one replacement, and we need to start conducting future reliability assessments understanding that is not the case,” Moura said. “As we add in certain resources with different reliability characteristics, we’re going to need a new approach, new tracking, monitoring and measurement to ensure we can maintain the right [services for reliability].”

Separate report on EPA rule

Today’s report arrives on the heels of NERC’s issuance last week of a report that highlights grid reliability concerns with EPA’s Clean Power Plan (Greenwire, Nov. 7). EPA later criticized NERC’s draft analysis, saying the organization overlooked new capacity that will be built by 2020, namely new natural gas and renewable generation that would help offset retirements of older coal-fired units, aided by improvements in efficiency that will decrease demand.

Tom Burgess, NERC’s vice president and director of reliability assessment and performance analysis, told reporters that NERC is “looking at both sides of the coin,” including retirements anticipated for a number of reasons, as well as new generation on the horizon and the need for more infrastructure.

But John Moore, senior attorney with the Natural Resources Defense Council, said both the long-term assessment and NERC’s analysis of the EPA rule need to take a more holistic approach, and focus on the reliability benefits of clean energy as opposed to simply analyzing the challenges of a changing energy landscape.

“In particular, NERC should take a closer look at the reliability values of wind and solar,” Moore said. “For example, wind is now dispatchable and can provide vital grid reliability services. This is truly the time for regional and larger transmission system planning with grid operators and states working closely together to ensure these clean, renewable resources are sufficiently integrated so that we will have a reliable grid and lower customer bills.”

Burgess told reporters today that it’s too early for grid operators to estimate what kind of consequences a newly announced U.S.-China deal could have on EPA’s carbon proposal or grid reliability.

“We have an eye on it, and we’ll be monitoring it,” Burgess said.

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US Clean Power Plan Poses Risks to Electricity Reliability

The Environmental Protection Agency’s (EPA) Clean Power Plan could harm the reliability of the power grid and may need to be modified before it is finalised.

In an initial review released on Wednesday, the North American Electric Reliability Corporation (NERC) assessed how proposed limits on greenhouse emissions from existing fossil-fuelled power stations would affect the reliability of the bulk power system (“Potential reliability impacts of EPA’s proposed clean power plan”, Nov 5).

NERC was careful to emphasise that it is not arguing for or against the plan published in June, a central plank of the Obama administration’s strategy for curbing global warming, but it did raise questions about the realism of some of the plan’s assumptions about future electricity generation and consumption.

Between 108 and 134 gigawatts (GW) of existing generation capacity, around 10 percent of the total, is expected to be retired by 2020, the EPA says in its own assessment of the Clean Power Plan.

The plan envisages a wholesale shift from coal combustion towards more efficient and cleaner-burning combined cycle natural gas plants, an increase in renewables and big efficiency improvements to cut electricity demand through the 2020s.
NERC is worried such a rapid transition will damage capacity margins, make it harder to maintain aspects of power quality and leave the grid vulnerable to extreme weather. The organisation has questions about each of the four building blocks on which the EPA is relying to cut emissions to 30 percent below 2005 levels by 2030. Among the most pertinent is whether the widescale changes can be made in time.
The industry normally plans generation and transmission changes on a time horizon of 10-15 years, but the Clean Power Plan is looking at only 5-10 years.

The EPA’s assumption that better operational practices and equipment upgrades can cut the amount of fuel burned to produce a kilowatt of electricity (the “heat rate”) by 6 percent has also been brought into question.
For example, the EPA claims thermal efficiency could be boosted by regular steam turbine overhauls, while NERC warns that the outage time for such procedures means that regular turbine overhauls are generally neither practical or economical. NERC thinks that the EPA is overestimating the potential to make easy and cost-effective improvements. As the reliability experts note, operators already have plenty of price and cost incentives to run their units as efficiently as possible.

Another key element of the EPA’s plan is a big switch to the most efficient combined cycle natural gas power plants to slash emission rates.

At the moment, coal-fired plants tend to provide base load power at a steady rate, while combined cycle natural gas plants play a load-following role, increasing and reducing output throughout the day in response to changes in demand. The Clean Power Plan assumes the roles will be reversed. But coal-fired plants take much longer to reach operating temperature and emit far more carbon dioxide in the meantime, making them ill-suited to a load-following role. Using coal-fired power plants in this way could actually raise emissions.
NERC is also worried that the system will become over-reliant on gas, narrowing the diverse fuel mix required to minimise the risk from unforeseen events.

“Fuel diversification is … a component of an ‘all hazards’ approach to system planning,” it says. Quite apart from the speedy construction of lots of new power plants, the grid’s integration of more wind and solar will require more transmission lines connecting remote rural areas with the major cities. However, obtaining all the necessary permits and rights of way, as well as all the design, engineering and construction work for a new high-voltage power line generally take well over five years.

Put simply, NERC worries that the Clean Power Plan is pushing too far too fast and does not pay sufficient attention to the question of electricity reliability, pushing up costs and increasing the risk of power failures. 

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Report Shows EPA Rule Plays ‘a Guessing Game’ with Reliability — Whitfield

The chairman of a key House Energy and Commerce subcommittee yesterday embraced the U.S. power grid overseer’s statement that U.S. EPA’s greenhouse gas proposal may endanger power supply.

Rep. Ed Whitfield (R-Ky.) said in a statement that the North American Electric Reliability Corp.’s new report, released yesterday, underscores what he has said for months: that the Clean Power Plan is “unworkable” and a threat to grid reliability (Greenwire, Nov. 5).

“EPA is seeking to eliminate one of our nation’s most abundant and affordable sources of power, but the administration has yet to provide honest answers about just how damaging the consequences will be for our nation’s power grid and our economy,” Whitfield said. The Subcommittee on Energy and Power chairman is a strong proponent of his state’s coal industry.

The report raised concerns about the EPA draft — especially its first set of carbon reduction targets that would phase in in 2020. Those interim targets ramp up too quickly to allow for construction of the new pipelines and transmission infrastructure needed to allow combined-cycle natural gas units to operate at higher capacity, the report stated. EPA should look at including a “safety valve” in its rule to allow coal plants to go outside the EPA emissions limits if required to ensure adequate power supply, it said.

EPA and its supporters say that the agency has a close eye on any reliability implications of its rule and that states have the flexibly to craft plans that would not create disruptions.

But Whitfield promised continued committee oversight. “We can’t afford to play a guessing game when it comes to energy reliability, and we will continue to do everything we can to ensure American businesses and families are not left in the dark,” he said.

The subpanel has already held three hearings on the Clean Power Plan, including one in September with state energy and environmental regulators (Greenwire, Sept. 9). Republicans and industry have also urged the Federal Energy Regulatory Commission to take a more active role in vetting the proposal (E&E Daily, July 28).

Philip Moeller, a Republican member of FERC, said that he supports NERC’s courageous role in assessing reliability implications of EPA’s initiative, and that he wants the final rule to be cost-effective and not endanger reliability. But Moeller said he’s convinced the proposal, as it stands, will not achieve the agency’s goals and will harm grid reliability.

Moeller added that the report validated his concerns that much of the flexibility in the country’s energy system has decreased with the implementation of new mercury and toxins rules.

“When NERC assessed [the Mercury and Air Toxics Standards] it endured harsh criticism from both the chairman of [FERC] and the EPA Administrator but the projections of retirements turned out to be remarkably accurate,” Moeller wrote. “I have had the same concerns that are validated in the NERC report about how the four building blocks as proposed will impact reliability. Most of the flexibility in the system has been removed due to MATS retirements.”

The “building blocks” are a set of assumptions the draft uses to assess states’ ability to reduce power grid carbon intensity.

Moeller said EPA should work with policymakers to improve the siting and permitting processes for new pipelines and wires, and acknowledge that such infrastructure is difficult and timely to site and construct.

“There is no way this amount of new capacity can be built by 2020 under the current regulatory construct,” he wrote. “If EPA wants to get serious about this situation they should work with policy makers to improve the siting and permitting processes for new pipes and wires. That will enable markets to deliver cleaner electricity to the nation.”

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NERC Says Schedule for US EPA’s CO2 Rule Could Threaten Power Grid Reliability

The US Environmental Protection Agency’s proposed rule to reduce carbon dioxide emissions from existing power plants has aggressive schedule and includes assumptions that may jeopardize the reliability of the US power grid, the North North American Electric Reliability Corp. said Wednesday.

EPA’s proposed rule, which would to cut CO2 emissions to 30% below 2005 levels by 2030 — with an interim reduction target starting in 2020 — calls for states to develop their own implementation plans. Once the rule becomes final, which is scheduled for June 2015, states would develop compliance plans and EPA would act on them, something that could occur by 2018 or later, leaving little time before 2020 for the power industry to address reliability challenges associated with the changes, NERC said.

EPA estimated that US generation capacity would be reduced by 108 GW and 134 GW, depending on state implementation plans and the number of coal-fired units that are shut, NERC said.

“The number of estimated retirements identified in the EPA’s proposed rule may be conservative if the assumptions prove to be unachievable. Developing suitable replacement generation resources to maintain adequate reserve margin levels may represent a significant reliability challenge, given the constrained time period for implementation,” the reliability group said.

The use of gas-fired generation is expected to rise under EPA’s proposal, but pipeline expansions will take time to meet some of those needs and “growing gas and electric interdependency challenges impede the electric industry’s ability to obtain needed natural gas services,” NERC said in a report.

Further, one of the options available to states is to boost energy efficiency and reduce power usage, but EPA assumes states and the utility sector will expand efficiency savings programs from 22 TWh/year in 2012 to 108 TWh/year in 2020, reaching 380 TWh/year by 2029. Under such aggressive forecasts, EPA projects that efficiency gains will rise faster than electricity demand and that total electricity demand will shrink after 2020. If those efficiency gains cannot be met, additional CO2 reduction measures would be needed, likely through reduced fossil fuel generation, NERC said.

The changes in the generation resource mix and changes in power flows on the transmission grid resulting from the EPA proposal may present reliability challenges that should be examined further by independent system operators, utilities and others in the power sector, NERC said.

“Based on our preliminary assessment of the proposed rule, we believe there must be further detailed engineering analysis to demonstrate whether the assumptions and targets are feasible in the time-frame proposed,” NERC CEO Gerry Cauley said in a statement.

If the environmental goals of the proposed rule are to be achieved, EPA and policymakers “should consider a more timely approach” that addresses bulk power system reliability concerns and infrastructure deployments, the report said.

In a late Wednesday statement, EPA said that in its “40-year history, there have been no instances in which the Clean Air Act standards have caused the lights to go out and the Clean Power Plan reflects the EPA’s continued commitment to ensuring reliability as standards and programs move forward.”

“During the development of power sector rules, EPA devoted significant attention to ensuring that the Clean Power Plan’s public health and environmental protections are achieved without interfering with a reliable supply of electricity. EPA’s analysis of the Clean Power Plan finds that the proposal would not raise significant concerns over regional resource adequacy or raise the potential for interregional grid problems. Any remaining local issues would be managed, as they are today, through standard reliability planning processes.”

The agency also said that as it worked to develop the proposed Clean Power Plan, it worked with the Federal Energy Regulatory Commission, the Department of Energy, regional reliability organizations, RTOs and ISOs, state public utility commissions and others “to ensure that environmental requirements remain compatible with maintaining electric reliability. We plan to continue working with these entities after the rules are in place to ensure that implementation goes smoothly and without interfering with electric reliability.”

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