Environmental regulations and grid reliability

Friday, January 6, 2012

As newly approved air emissions regulations for electric utility plants begin to take effect, federal and state regulators are forming plans to maintain the reliability of the electric grid while complying with the new regulations.  Last month, the U.S. Environmental Protection Agency issued its final Mercury and Air Toxics Standards.  The MATS rules require many utility generation units to use "maximum achievable control technology".  For this reason, the rules are sometimes also known as "utility MACT".

Before the rules were finalized, the nation's electric reliability organization NERC expressed concerns that the new air emissions rules could increase the risk of power outages and stress on the grid by forcing the early retirement of a significant portion of the nation's coal-fired generating stations.  In a battle of words that played out over November and December 2011, EPA and the U.S. Department of Energy countered by pointing out flaws in NERC's analysis.  The federal agencies also noted that NERC seemed to assume that no one would plan for or manage grid reliability in the face of coal plant retirements.  Nevertheless, the mercury standards and other anticipated rules are likely to affect the electric power industry to some degree.

Now that the air standards are final, federal and state energy regulators are planning a series of meetings to explore reliability issues provoked by these new and pending environmental rules for the power sector.  Commissioners from the Federal Energy Regulatory Commission (FERC) and will meet with members of the National Association of Regulatory Utility Commissioners (NARUC), the national organization of state public utilities commissioners.

FERC and NARUC hope that the open forum will provoke a broad discussion of utility issues in the wake of the new environmental regulations.  The first meeting of the FERC-NARUC Forum on Reliability and the Environment will take place in Washington on February 7, 2012.

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