EPA regulations vs electric grid reliability

Debate continues over the impacts of new environmental regulations on the reliability of the U.S. electric power grid.  Players in the recent debates include the nation's chief electric reliability organization (North American Electric Reliability Corporation, or NERC) and the U.S. Environmental Protection Agency -- and now, the U.S. Department of Energy has weighed in.

Earlier this week, NERC released a report suggesting that new regulations under development by the U.S. Environmental Protection Agency may force the early retirement of many coal-fired generating plants.  NERC pointed to several rules under development and implementation, including EPA's Cross-State Air Pollution Rule (creating trading systems to control the emissions of NOx and SO2 from electric generators), Mercury and Air Toxics Standards (imposing emissions standards on coal and oil-fired electric generators for mercury, acid gases and particulate matter), and Cooling Water Intake Structures (regulating generators' intake of water).  On NERC's analysis, this could jeopardize the security and reliability of the electric grid.

EPA disputed these findings, noting that NERC's report contained "faulty characterizations" of its rules, that several rules were still in draft form, and that regulated generators would have more time and greater flexibility in adapting to the final rules.

Yesterday, the U.S. Department of Energy released its report, "Resource Adequacy Implications of Forthcoming EPA Air Quality Regulations" (41 page PDF).  The Department of Energy sided with EPA, noting that even under a "stringent" scenario in which a total of 29 gigawatts of coal capacity would be retired by 2015 -- a conservative assumption, according to the Department -- target reserve margins for generating capacity could be maintained across the country.  The Department also noted that mechanisms exist to help regulators keep the lights on if the rules prove too much.

The Department's report is not likely to end the debate.  Several of EPA's rules are still under development, such as the cooling water intake regulations.  The rules that are now final will take several years to ramp up.  Key agencies have vowed to maintain reliability no matter what happens -- but what impact will the environmental regulations have on the grid?