Tags: epa | power | cost | coal

EPA Power Plan Risks Blackouts, Higher Costs, Grid Operator Says

Monday, 17 November 2014 05:17 PM

Texas will see big coal unit retirements, higher electricity bills, weaker transmission reliability and a greater risk of blackouts if a government plan to cut emissions from power plants is implemented as proposed, the state’s grid operator said.

The Electric Reliability Council of Texas Inc.’s analysis, posted on its website today, estimates the impact the Environmental Protection Agency’s Clean Air Act regulation will have on the state’s power generation. The plan would cut carbon emissions by 30 percent below 2005 levels by 2030.

Midcontinent Independent System Operator Inc., the grid that stretches across the Midwest to the Gulf Coast, previously said the proposal may add as much as 14,000 megawatts of coal capacity to earlier estimates of plants that may have to close because of other regulations. The chief executives of coal-fired utilities Southern Co. and American Electric Power Co. say blackouts and rising power bills may occur if they aren’t given more time to comply with the EPA proposal.

The North American Electric Reliability Corp., a not-for- profit group that assures adequate power reserves to keep the electric grid functioning, has urged EPA to consider delaying the first deadline of its plan.

The U.S., as part of a deal with China, agreed to reduce the nation’s total emissions by at least 26 percent below 2005 levels by 2025.

EPA says there have been no instances of lights going out because of the Clean Air Act. Liz Purchia, a spokeswoman, said in a Nov. 13 e-mail that any rate increase is “dwarfed by huge benefits” to public health. She said today the agency is reviewing Ercot’s analysis.

’Raw Deal’

“Texas is one of the handful of states that, in a way, kind of get really a raw deal from the way the plan’s goals are set up,” Steve Corneli, senior vice president of policy and strategy at NRG Energy, said in a telephone interview before the Ercot analysis was released. NRG is the second-biggest generator in Texas, behind Energy Future Holdings Corp.’s Luminant unit.

A state with a lot of combined cycle gas plants gets a very big assignment of emission reductions with the assumption that the gas plants will replace the coal units, he said.

Ercot said the EPA carbon emission reduction plan will force the shutdown of 3,300 to 8,700 megawatts of coal-plant capacity, and will cause consumer energy costs to rise by as much as 20 percent by 2020. The estimate excludes the costs associated with transmission upgrades and new capacity. Warren Lasher, Ercot’s director of system planning, said in a call with reporters to discuss the report that the EPA proposal also increases the risk of rotating outages.

Reliability Issues

The proposal may result in transmission reliability issues and will strain the grid’s ability to integrate new intermittent renewable generation, Ercot said in the analysis. Almost 10 percent of Ercot power output last year came from wind.

Texas will account for a quarter of the total U.S. reductions, with a cut of 39 percent in its carbon emissions from power plants required over the next 15 years, if the proposed rule is adopted. Kentucky and other coal-dependent states, including West Virginia and North Dakota, face requirements of less than half that.

EPA says Texas power producers could run their gas-powered plants more often, displacing dirtier coal.

Formal comments to the EPA proposal are due Dec. 1.

--With assistance from Mark Chediak in San Francisco and Mark Drajem in Washington.

To contact the reporter on this story: Harry R. Weber in Houston at hweber14@bloomberg.net To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Stephen Cunningham, Richard Stubbe

© Copyright 2018 Bloomberg News. All rights reserved.

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Texas will see big coal unit retirements, higher electricity bills, weaker transmission reliability and a greater risk of blackouts if a government plan to cut emissions from power plants is implemented as proposed, the state's grid operator said.
epa, power, cost, coal
Monday, 17 November 2014 05:17 PM
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