Will Air Quality Rules Put Power Reliability At Risk?

Do new air quality rules announced by the EPA raise the risk that some electrical utilities could have reliability issues in keeping the lights on? That was a chief question debated by attendees at a utilities forum in Washington, D.C. Tuesday.
by | February 8, 2012

Do new air quality rules announced by the Environmental Protection Agency in December raise the risk that some electrical utilities could have reliability issues in keeping the lights on? That was a chief question debated by attendees at a forum Tuesday in Washington, D.C. jointly hosted by the National Association of Regulatory Utility Commissioners and the Federal Energy Regulatory Commission. Utility regulators from states relying on coal power for electricity cautioned that without flexibility in the new regulations, consumers could face reliability and cost issues.

In late December, the EPA issued new standards to reduce the amount of mercury and air toxics that are released by coal and oil-fired power plants. They estimate that the annual cost of the rule will be $9.6 billion, but will bring $37 billion to $90 billion in health benefits in 2016 when the regulations are fully in place. Among other health benefits, the EPA says that the new rules will cut down on thousands of premature deaths and prevent 130,000 cases of aggravated asthma by 2016.

At the forum, a top EPA official, utility regulators and officials from industry pledged to work together so that utilities could meet the new regulations.

As EPA Assistant Administrator Gina McCarthy put it: "While EPA's authority is to implement the Clean Air Act and to do it as necessary to protect public health, we certainly recognize both the expertise and the processes of the work that must go on with our energy colleagues to ensure that we do that in a way that ensures that our families in this country will not just have clean air to breathe, but will have electricity that is reliable and electricity that they can afford."

Scott Henry, the president and CEO of the SERC Reliability Corporation, which helps utilities in 16 southern and central states to improve reliability, said he was encouraged by the conference's emphasis on all stakeholders cooperating to ensure reliability of the grid while meeting new EPA rules.

But Henry warned: "However, with the pending issues that we have, not just with respect to environmental regulation, but with a number of other public policy initiatives that are going on, that sphere of coordination has got to expand."

Electric utility regulators from states relying on coal-fired power plants warned that consumers could face reliability issues and cost hikes if there isn't some wiggle room in adapting the new regulations.

Stan Wise, who serves on the Georgia Public Service Commission, said in the last 12 years, his state's electric utility has spent $3.7 billion to control emissions and the state has reduced emissions from nitrogen oxides and sulfur oxides by 67 percent and 58 percent, respectively. But he warned that upcoming environmental regulations may cost even more. "[These are] huge costs, but will pale in what we'll see in the next decade or so under the appropriate rules," he said.

Wise said while health concerns are important, regulators should also be cognizant of how new rules affect the "cost, jobs, [and] reliability" of the electrical system.


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