Concerned about possible adverse impacts on coal- and oil-fired capacity in the state, the Colorado Public Utilities Commission on March 14 opened up an investigatory docket to look at the U.S. Environmental Protection Agency’s Mercury and Air Toxics Standards (MATS), which were finalized on Feb. 16.
The MATS requires all coal and oil-fired electric generating units larger than 25 MW that produce electricity for sale and distribution to the public to meet emissions limits for toxic metals, acid gases and particulate matter. MATS affects the majority of the coal and oil-fired units in the U.S. and will significantly impact the electric power sector across the country.
”As part of the Western electrical interconnection, Colorado may be exposed to reliability risks related to compliance activities undertaken throughout the interconnection,” the commission noted in the March 14 order. “Colorado may be particularly vulnerable to compliance activities undertaken by electricity generators in this state and in Wyoming. The core of the reliability risk is driven by the need to take coal units off line to install pollution controls, convert them to natural gas, or retire them. Failure by the various generating entities to coordinate activities related to MATS compliance may expose the entire system to both generation and transmission vulnerabilities. “
MATS affects about 5,800 MW of coal and oil-fired generating capacity in Colorado. This represents 42% of the state’s total generating capacity. With the exception of the new, 766-MW Comanche 3 coal unit, none of the coal plants in Colorado currently meets the standard, the commission said.
Despite the commission-approved plan for emission reductions required by Colorado’s Clean Air Clean Jobs Act, 49% of Public Service Co. of Colorado’s 3,227-MW coal fleet is not scheduled to meet MATS compliance within the three-year compliance timeline. The Colorado Department of Public Health and Environment is currently in discussions with the EPA regarding allowances to support the state’s current emissions reduction plan, the commission wrote. PSCo is a unit of Xcel Energy (NYSE:XEL).
Tri-State Generation and Transmission Association, which owns/operates over 2,300 MW of coal-fired generation in Colorado, is required to comply with MATS. “The inter-relationships between Public Service’s system and Tri-State’s system are significant,” the commission pointed out.
In February, the National Association of Regulatory Utility Commissioners established the Task Force for Environmental Regulation and Generation (TFERG) to coordinate the efforts of state commissions in response to the MATS. The Colorado commission said it has taken a leadership role in TFERG’s efforts to understand the status of the states in the Western interconnection with regard to the MATS regulation. This evaluation will involve both state and regional level implications.
“The commission is interested in a multitude of topics related to the MATS,” the order said. “Fully acknowledging that the commission does not regulate the activities of the non-jurisdictional electricity providers, the commission hopes that the importance of state and regional coordination will encourage electricity providers to work collaboratively to achieve EPA compliance while ensuring electric system reliability.”
Topics of particular relevance to the commission include:
- What strategies are the investor-owned and non-jurisdictional electricity providers in Colorado developing for MATS compliance?
- What methods are electricity providers using to determine which units within their systems will need to be retrofitted with additional pollution controls, converted to natural gas, or retired to achieve MATS compliance?
- What are the potential risks of MATS compliance to the reliable operation of the bulk electric power system both within Colorado and across the Western interconnection?
- What activities are being developed by the contingency reserve sharing groups with regard to ensuring reliability while complying with the MATS?
- Are stakeholders currently engaging in or planning to engage in efforts to coordinate system reliability with neighboring entities such as adjacent transmission and market operators?
- Do the electricity providers foresee challenges in meeting MATS timelines?
- What are the potential cost implications for ratepayers?