Parties weigh in on FERC plans to handle MATS extensions

The North American Electric Reliability Corp. (NERC) and eight regional transmission entities told FERC that a lot of coordination will be needed as regulators consider what power generators qualify for one-year extensions on the three-year deadline to comply with the U.S. Environmental Protection Agency’s new Mercury and Air Toxics Standards (MATS).

The NERC filing from Feb. 29 was in response to a white paper issued Jan. 30 by FERC staff on how the commission should advise EPA on its decisions about whether to approve requests for MATS deadline extensions. EPA allowed one-year extensions if the parties can prove that this would aid in ensuring grid reliability. The MATS rule impacts mostly coal-fired power plants, with a number of generators still deciding whether to shut coal-fired units because of this rule, or make time-consuming changes that would cut toxics emissions and keep those facilities online.

FERC staff stated in the white paper that its proposal “would provide a fair, timely and transparent process for the commission to advise the EPA on requests for extension of time to comply with EPA’s MATS rule applying the commission’s expertise on reliability issues as appropriate in this context.” The commission could be of more assistance to EPA if the commission’s advice to EPA also reflected the views of the existing reliability infrastructure, which includes the independent reliability assessments performed by NERC and the eight regional entities, NERC said.

When MATS compliance plans are filed with the planning coordinators one year after the effective date of MATS, NERC, as it does currently, said it will work with the planning coordinators and regional entities to assess these plans and other reliability-related information in an integrated fashion, from both local operating area and regional perspectives.

The information from this effort will be used for NERC’s preparation of the summer-, winter- and long-term reliability assessments. The NERC filing said that in conducting these assessments, all requirements for a reliable grid will be considered, just as they are now, including: impacts on planning reserve margins; effects on local, regional and interconnection-wide operational reliability; and the expected operating procedures that planning coordinators will use to address NERC reliability standards.

By the time a request for an EPA administrative order extending a compliance deadline is made, NERC said it will have a distinctive understanding of the reliability implications in the local area and region in which the electric generating unit making the request is located. NERC, along with the technical expertise of the regions, is uniquely positioned to assess the particular information submitted with the extension request, and to provide views to the commission regarding both compliance with commission-approved bulk power system reliability standards and reliability implications more broadly.

NERC urged the commission not to limit its review of a request for an extension solely to whether, as the staff white paper stated, “there might be a violation of a commission-approved reliability standard.” It may be necessary for a planning coordinator to put in place operational procedures which may ultimately include firm load shedding to meet bulk power system reliability standards, NERC pointed out. Even though no reliability standards would be violated, there may be service reliability concerns.

NERC said it could provide its views on an extension request separately to EPA, but would prefer to share its integrated reliability assessment determinations with the commission and support FERC in providing informed recommendations to EPA. There are issues that the commission, along with state regulators, can address that go beyond NERC’s Federal Power Act (FPA) Section 215 reliability assessment authority. Combining this information with that provided by NERC, the commission, in coordination with the U.S. Department of Energy and state regulators, could greatly assist EPA regarding bulk power system reliability considerations, NERC added.

This suggested process uses the existing infrastructure to help ensure reliability, including the independent reliability assessments that only NERC and the regional entities can provide, and as called for in FPA Section 215. Further, it provides a basis for a coordinated federal/state approach to make environmental rule compliance extension decisions based on industry requirements to preserve reliability, NERC said.

The eight regional entities that contributed to the NERC comments include: Florida Reliability Coordinating Council, Midwest Reliability Organization, Northeast Power Coordinating Council, ReliabilityFirst Corp., SERC Reliability Corp., Southwest Power Pool RE, Texas Reliability Entity and the Western Electricity Coordinating Council.

NARUC says issues go beyond FERC standards

Among the other parties that submitted comments to FERC on the white paper was the National Association of Regulatory Utility Commissioners (NARUC), which represents state utility oversight commissions. NARUC said it supports FERC staff’s recommendation that the commission should focus its input to EPA on whether there would be any violation of reliability standards under Federal Power Act Section 215. NARUC said it recognizes FERC’s authority and staff expertise over these technical and physical reliability standards.

“State commissions, however, believe that reliability concerns should be considered in a broader context,” NARUC added. “The EPA Policy Memorandum provides state commissions with the opportunity to communicate directly with EPA on reliability concerns. State input to EPA may address issues beyond the FPA Section 215 reliability standards, including broader issues traditionally within state jurisdiction such as resource adequacy, integrated resource plans, generation resource mix, intermittent resources and other aspects of system planning that may affect reliability. FERC and the state commissions both have a clear role to play in advising EPA on reliability issues and state commissions will communicate directly with the EPA as outlined in the EPA Memorandum.”

The FERC staff white paper was discussed at the initial meeting of the NARUC-FERC Joint Forum on Reliability and the Environment on Feb. 7 in Washington D.C., which focused on the MATS final rule, NARUC pointed out. NARUC said this was “a successful kick-off meeting” and that there will be an ongoing dialogue between state and federal regulators, industry and all those involved in the implementation of the MATS and other environmental regulations being considered by the EPA.

Southern Co. Services points out EPA rule flaws

Southern Co. Services (SCS), which performs functions like the buying of coal for several Southern Co. (NYSE:SO) utility subsidiaries in the southeast U.S., submitted white paper comments to FERC on Feb. 29 that were critical of the administrative order (AO) issued by EPA related to the deadline extensions. Southern Co. is one of the largest coal-fired generators in the country, meaning it would be hit hard by the MATS rules.

“As currently outlined, the AO process contains several inherent flaws that will limit its suitability for supporting reliability,” SCS wrote. “For example, the AO process, by definition under Section 113 of the Clean Air Act, presupposes a violation of the MATS rule and, thus, forces generators to accept associated risks (regardless of any exercise of enforcement discretion by EPA). This, of course, does little to foster the sort of certainty and respite from litigation that is necessary and appropriate when a generator is required to operate to support system reliability.”

SCS continued: “Further undermining the suitability of the AO process for its intended purposes is the designed delay in issuance of any AO until too late in the planning process. It is essential that generation owners and planning authorities know promptly and with certainty whether a given facility will be available to operate so that appropriate coordination and staging of construction and outages can be undertaken. As it stands now, the AO process requires speculation regarding the issuance and effect of an AO, which renders the process ineffectual from the start. These problems are compounded by the potential that EPA will incorrectly equate protection of reliability with compliance or non-compliance with FERC-approved reliability standards. The AO process outlined by EPA does not address the fact that reliability cannot be assured or planned for by simply avoiding potential violations of approved reliability standards.”

In providing advice to EPA, the commission should employ and defer to the assessments by planning authorities, which involves a much more “proactive and holistic approach” to the reliability equation than the limited criteria identified by EPA, SCS said. The company also encouraged FERC to counsel EPA with respect to these and other issues and problems in pursuit of changes that will promote predictability and reduce uncertainty.

Even though the AO process is “unduly limited and inherently flawed,” SCS said the staff white paper is on the right track in terms of process and procedure and should be given favorable consideration by the commission.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.