Clean air rules likely to cause power generation shortages in much
of US: NERC chief
Houston (Platts)--1Apr2015/643 pm EDT/2243 GMT
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,
markham.watson@platts.com
--Edited by Lisa Miller,
lisa.miller@platts.com
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