Welcome to 2011! Amidst news of falling natural gas prices and wind power projects meeting dead ends, most power generators will have a unified focus this year: preparing for EPA regulations in the hopper.
Waiting on regulation announcements and researching what needs to happen at power plants in order to meet standards – these seem to be in the crystal ball for the power markets this year. 2011 has commenced with a focus on greenhouse gas emissions regulations, as the EPA seeks to create a federal standard for greenhouse gases, and lawmakers have protested through at least four different bills to date. These bills seek to thwart greenhouse gas regulations from taking effect for two years.
Meanwhile, Texas and the EPA are involved in the fiercest part of the greenhouse gas regulations spat, as Texas is the only state that has refused to issue a greenhouse gas permit process. EPA filed a brief with the DC Circuit Court of Appeals in Washington on Jan. 6 saying that EPA is the “ultimate supervisor’’ if a state fails to develop or enforce an acceptable plan. Twelve other states continue to work with EPA to develop process guidelines.
On Jan. 7, Texas filed a brief with the Court saying that EPA did not follow procedures to seize control of the state’s permit process and did not provide sufficient notice or open the decision to comment. Texas and the EPA expect a ruling from the Court this week in their case.
Aside from greenhouse gas regulations, a number of other regulations are slated to be proposed or enforced in 2011 (see page 5 of this ICF International study). The North American Electric Reliability Council (NERC) predicts that these four rules could have the greatest impact on electric reliability:
-Clean Water Act Section 316(b), Cooling Water Intake Structures
-Coal Combustion Residuals Disposal regulations
-Clean Air Transport Rule
-Title III of the Clean Air Act; National Emission Standards for Hazardous Air Pollutants (NESHAP) for the electric power industry or Maximum Achievable Control Technology (MACT) Standard
In its 2010 Long-Term Reliability Assessment, NERC stated that the proposed rulemaking adds a degree of uncertainty to future planning of generation capacity needs. When considering the repercussions of these regulations on existing and planned generation capacity over the next 10 years, NERC found that, “Depending on the outcome of any or all of these regulations, the results may accelerate the retirement of some fossil fuel–fired power plants.”
John Moura, technical analyst for NERC, said the timing of several regulations being enacted in a short period of time will have its effect on electric reliability.
“The major driver of concern is going to be the time the industry has to react to these issues,” Moura said.
Recent studies by ICF International, NERC and Credit Suisse estimate anywhere from 10 to 75 GW of coal capacity are at risk for retirement by 2020. Retiring such a large percentage of the fleet could put electric reliability at risk, as could retrofits, Moura said.
“A utility has to take a unit offline to put a scrubber in. That kind of coordination in a condensed period of time can really create some issues both in the adequacy and in the operating reliability.”
2011 – a year for both regulation enforcement and the introduction of new proposals. Generators will seek to comply with new regulations and prepare for future regulations, while attempting to grow the North American electric system into an even more reliable, flawless network.
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