FERC on May 17 approved a new policy procedure for power generators that need to ask the U.S. Environmental Protection Agency for any extensions, called Administrative Orders (AO), on the Mercury and Air Toxics Standards (MATS) that would be needed to ensure grid reliability as dozens of coal units are shut to comply with MATS.
The policy statement outlines how the commission will provide advice to EPA for it to rule on requests for AOs to operate in noncompliance with MATS during the extension period. This policy does not represent the entirety of the commission’s efforts to monitor the impact of EPA regulations generally on bulk-power system reliability, FERC noted.
The MATS final rule, released last December, limits mercury, acid gases and other toxic emissions from power plants. Under Section 112(i)(3)(A) of the Clean Air Act, affected sources are required to comply within three years of the MATS effective date. Some affected sources are eligible for a one-year extension (i.e. for a total of four years).
The EPA’s Office of Enforcement and Compliance Assurance released a policy memorandum dated Dec. 16, 2011, describing its intended approach regarding the use of CAA Section 113(a) AOs with respect to sources that must operate in noncompliance with the MATS for up to a year to address a specific and documented reliability concern (i.e. for a total of five years). The EPA Policy Memorandum contemplates that the EPA will receive AO requests: concerning electric generating units (EGUs) that may affect reliability due to deactivation; and concerning EGUs that may affect reliability due to delays related to the installation of controls.
On Jan. 30, commission staff issued a White Paper seeking comment concerning staff’s position on how the commission should advise the EPA on requests for extension of time to comply with MATS. The May 17 decision is the result of that process.
MATS will force power plant operators to retire coal units rather than make the required capital investments, with about 30 GW having already announced retirement plans nationwide. To replace this retiring generation and meet load growth requirements by 2015, another 30 GW-84 GW of new generation may be needed nationally, while 5 GW-26 GW may be needed in the Midwest ISO region, said a new report from The Brattle Group done on behalf of MISO.
FERC can advise EPA on extensions, not mandate
The EPA Policy Memorandum states that an administrative order cannot be issued prior to the MATS compliance date. However, provided an owner/operator has timely submitted a complete request and has been cooperative, the EPA expects to give an owner/operator “as much advance written notice as practicable,” FERC noted. The EPA Policy Memorandum states that in evaluating a request for an AO, the EPA will seek advice, on a case-by-case basis, from the commission and/or other entities with relevant reliability expertise. However, the EPA’s issuance of an AO is not subject to approval by the commission or any other outside entity.
“The Commission believes that it is important to provide as much guidance to industry as possible as to how the Commission intends to provide advice to the EPA on any AO request,” said the May 17 order. “In developing this process, the Commission considered how to provide a fair and transparent process for communicating the Commission’s expertise on reliability issues, while respecting that the EPA will seek the Commission’s advice in a timely manner so that EPA can decide whether to grant certain AOs.”
The commission’s Office of Electric Reliability will be designated as the lead office tasked with processing an owner/operator’s informational filing with FERC. Each such filing should include the same information that was submitted to the EPA under the EPA Policy Memorandum. While the commission does not propose mandating that planning authorities undertake specific types of analyses, the commission identifies certain types of information that are already available today and that the commission commonly reviews when examining potential violations of Reliability Standards. Including this information as part of the materials an owner/operator submits to the EPA, and therefore to the commission, would aid in the commission’s review of the informational filing.
As an example of separate activity that FERC plans on grid reliability, the commission said it intends to continue addressing these issues with state commissions in a regular public forum, the National Association of Regulatory Utility Commissioners/FERC Forum on Reliability and the Environment. The commission and its staff will also continue to review plans, reports and other information generated by the planning authorities, industry and other stakeholders regarding the impact of compliance with EPA regulations.