Vitter wants to know if FERC is improperly backing EPA’s coal rules

Sen. David Vitter, R-La., who has long contended that the Obama Environmental Protection Agency is deliberately shutting down coal-fired power through a series of new regulations, now wants to find out to what extent the Federal Energy Regulatory Commission is also involved in that “war on coal.”

Vitter,  the top Republican on the Senate Environment and Public Works Committee, sent a Sept. 5 letter to Jon Wellinghoff, Chairman of FERC, regarding “coordination” with former EPA Administrator Lisa Jackson to give public support of controversial regulations that may lead to closure of generating facilities that would negatively impact grid reliability.

“I am not convinced that the FERC Chairman acted without political influence when he publicly supported EPA’s regulations that would shut down a significant number of power plants across the United States and increase Americans’ utility bills,” said Vitter. “In addition to the emails between FERC Chairman Wellinghoff and former EPA Administrator Jackson, which are suspicious at best, the FERC’s public assurances regarding impacts of these regulations have since been contradicted by the facts.”

Vitter added, “I would urge the FERC Chair nominee, Ron Binz, to commit to executing the Commission’s duties and policies free from political interference.”

In 2010, Vitter noted, EPA considered a number of regulations that could remove up to 78 GW of mostly coal-fired generating capacity by 2015. FERC supported these regulations and downplayed opposition claims of increased electricity cost and jeopardized grid reliability, said the Vitter statement.

Said the Vitter letter: “Specifically, I am concerned with a series of emails I have obtained showing communications with the former Administrator of the [EPA] at a time when EPA’s regulations were the subject of significant controversy due to their perceived potential to shutter a significant number of electrical generating units, increasing the cost of electricity and jeopardizing grid reliability. From the communications, it appears that on EPA’s behalf, and perhaps direction, you publicly indicated that regulatory actions would not impact electric generation or grid reliability. Unfortunately, your public assurances have since been contradicted by the facts.”

In October 2010, the North American Electric Reliability Corp. (NERC) estimated that up to 7% of national power capacity could be forced offline by 2015, Vitter wrote. “This estimate was made prior to the shuttering of nuclear facilities such as San Onofre, and before EPA began the process of slow-walking major air regulations, including ozone, as scientific and benefit justification remain lacking,” he added. “However, in response to the 2010 NERC report, you personally downplayed such claims that now seem likely to come true. As reported by Politico on October 26, 2010, you said, ‘the administration is working to ensure that the EPA rules have no effect whatsoever on domestic power supply…including boosting supply side resources’ and further state ‘the sky isn’t falling.’”

In the same Politico story, Vitter said that EPA spokesman Brendan Gilfillan addressed the NERC report by stating “by NERC’s own admission, its projections about electricity supply impacts rest on its own future-telling about future regulations that have not even been proposed yet” and further claimed “in reality, EPA has some discretion and will be more sensitive to reliability than NERC gives us credit for.”

Vitter said that on the same day, Dave McCintosh at the EPA emailed Jackson specifically requesting that she “consider calling FERC Chairman Wellinghoff to thank him for his very helpful comments in this Politico story.” It appears that Wellinghoff spoke with Jackson on Oct. 26, 2010, and that they agreed to meet on a monthly basis thereafter. “These internal EPA email exchanges raise issues related to your role as an otherwise ‘independent’ commissioner on FERC,” wrote Vitter.

Vitter cites recent ICF study as proof that the sky is falling

Despite these assurances, it appears that the sky may be falling for some Americans who will face higher electricity rates and lower reliability in the near future, Vitter said. On Aug. 21, 2013, the Department of Energy (DOE) released a report from ICF International indicating that up to 20% of coal-burning power plants in the eastern U.S. will likely close over the next five years. Although the report notes low growth in electricity demand, likely as a result of ongoing economic woes, the uncertainty related to current and future environmental regulations play a critical role in the negative outlook for the sector, Vitter noted.

The ICF report further said that assuming current market conditions, “the additional costs of retrofits needed to comply with more stringent environmental regulations might force a greater fraction of the existing coal-fired fleet out of the market through retirement or conversion to natural gas” and that “any requirements to incorporate CCS technology driven by climate change regulation, with its additional costs and technology risks, will further disadvantage new coal plants relative to gas.”

In light of these revelations, Vitter wants answers to these questions no later than Sept. 19:

  • Did anyone in the Obama Administration ask Wellinghoff to provide positive public statements, such as the one reported in the Politico story, in response to the NERC report? Please identify any such individuals.
  • Did any official within the Administration ask him to publicly support EPA’s regulatory efforts subsequent to the release of the NERC report? Please identify any such individuals.
  • Did anyone in the Administration attempt to influence his opinion on the impact that EPA’s regulations would have on grid reliability? Please identify any such individuals.
  • What analysis in 2010 did Wellinghoff rely on to come to the conclusion that EPA regulations would not impact capacity or grid transmission reliability? Provide copies of the analysis to the Committee.
  • From the email exchanges, it appears a call was arranged with Wellinghoff and Jackson to discuss FERC’s position on EPA policies. Please detail the items that were discussed during that phone call.
  • It also appears from internal email exchanges that the FERC chairman had a conversation with current EPA Administrator Gina McCarthy regarding grid reliability and supply in July 2010, at a time when McCarthy was heading the agency’s air office. What specifically did he discuss with McCarthy?
  • Does Wellinghoff still stand by his 2010 claim that the Administration can work to ensure that EPA rules will “have no effect whatsoever on power supply?” If so, why is the 2010 assessment so inconsistent with the new DOE report?
  • Does he believe he has in any way facilitated what has been described as a “war on coal?” Please explain.
  • How does FERC plan to respond to compromises in grid reliability or increased electricity prices due to EPA regulations?
  • Does the FERC chairman believe it is FERC’s role to facilitate regulatory actions or decisions that would force one form of energy out of the transmission grid in favor of another regardless of cost?
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.