EPA's Sectorwide Rules for Power Plants Aim to Provide More Certainty for Industry

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The Environmental Protection Agency is coordinating its various environmental regulations for power plants to provide energy companies with the certainty they need to make the necessary investments in pollution controls, a senior agency official told state power regulators Feb. 14.

Gina McCarthy, EPA's assistant administrator for air and radiation, told the National Association of Regulatory Utility Commissioners that taking a sectorwide approach to its regulations will provide power plants the flexibility to direct economic investment toward meeting pollution standards rather than requiring them to install controls piecemeal. That approach would “tell the utility industry everything you need to achieve so one investment decision can be made,” she said.

Her remarks, made during NARUC's winter meeting, came as some state regulators worried the barrage of EPA regulations could force several power plants to close, leading to potential reliability concerns for some power grids.

EPA is developing regulations that would limit emissions of sulfur dioxide, nitrogen dioxide, mercury, and other toxic air pollutants from power plants. It is also working on new regulations for cooling water intakes at power plants, greenhouse gas performance standards, and the handling and disposal of coal ash waste. McCarthy said many of those pollution controls are years overdue.

“The Clean Air Act never anticipated we'd have the kind of uncontrolled units out there like we have today,” she said.

According to McCarthy, 100 gigawatts of the nation's 300 gigawatts of coal-fired fired power plants lack sulfur dioxide scrubbers, a technology she said has been in use for more than 35 years. Some of those plants were built after scrubbers became commonplace, she said.

Regulators Worry About Reliability.

However, in a resolution on environmental regulations proposed for consideration at the meeting, NARUC expressed fear EPA's pending regulations could adversely affect electrical reliability. The resolution asks EPA to consider the economic impact on the power sector as it works on its regulations and provide power plants the flexibility and time to reasonably comply with the requirements. It calls on EPA and state regulators to work together more cooperatively as the agency develops regulations for utilities.

McCarthy said EPA will consider reliability issues as it develops its modeling for the regulations, but she does expect some older coal-fired power plants would be forced to close. That could effect reliability in some regions, she said. However, as a whole, she said the power industry in the United States has excess capacity and an abundance of relatively cheap fuels, which should provide it the flexibility it needs to adapt to the new regulatory environment.

“The distinction between environment and energy is a bureaucratic one,” McCarthy said. “In the real world, people want to turn on the lights and breathe clean air.”

Bill Johnson, president and chief executive officer of Progress Energy, who also spoke at the meeting, called the estimated costs for required controls and short compliance times for EPA's rules “unprecedented.”

EPA's rules, combined with other regulations from the Federal Energy Regulatory Commission and Nuclear Regulatory Commission, present “a recipe for inefficiency, a recipe for system reliability problems, a recipe for unnecessarily higher costs,” Johnson said. He said the federal government's estimates on compliance costs were routinely too low and the timelines to meet the requirements were often too short.

McCarthy said she will work with regulators and power companies as EPA readies the rules to ensure they have the certainty they need to make their investments.

“What I've heard from the utility industry is because of the lack of certainty they can't invest. I'm trying to provide that certainty,” she said.

EPA Works on Several Regulations.

EPA is working on several regulations for power plants in 2011 with the intention of addressing all of that sector's regulations at one time.

The proposed transport rule would set state-level emissions caps on sulfur dioxide and nitrogen oxides emissions limits for power plants for 31 Midwestern and Eastern states and the District of Columbia. The final rule is expected in July (75 Fed. Reg. 45,075; 128 DEN A-8, 7/7/10).

In March, EPA will propose national emissions standards for hazardous air pollutants (NESHAP) for power plants after federal appellate judges ruled the Bush administration's Clean Air Mercury Rule emissions trading program was unlawful.

EPA is also expected to propose revisions to its cooling water intake requirements for power plants under Section 316(b) of the Clean Water Act in March. A final rule is expected in July 2012 (244 DEN A-8, 12/22/10).

Additionally, EPA will begin work on new source performance standards for greenhouse gas emissions from power plants under Section 111 of the Clean Air Act (25 DEN A-9, 2/7/11).

EPA issued a proposed rule for the safe disposal and management of coal ash from coal-fired power plants in May 2010. It is reviewing more than 400,000 comments received as of the close of the comment period in November (75 Fed. Reg. 35,128; 13 DEN B-1, 1/20/11).

By Andrew Childers