Where Lights and Lungs Meet

By Kennedy Maize

Washington, D.C., December 2, 2011 — Think the tension between electric reliability and environmental protection is just theoretical hand-waving? Debra Raggio, assistant general counsel at GenOn Energy, the non-utility generator formerly known as Mirant, will tell you you’re wrong, and she can back it up. Raggio told her tale of regulatory Catch-22 at the late November Federal Energy Regulatory Commission technical conference on reliability.

The theoretical issue is whether Sect. 202 (c) of the Federal Power Act is superior to environmental regulations imposed under the federal Clean Air Act. The FPA section gives the U.S. Department of Energy to authority to direct operation of power plants to maintain bulk system reliability and stability, with potential criminal penalties. But, as Raggio told FERC, “Unfortunately, neither DOE nor any of the relevant environmental authorities has taken the position that authority under Section 202 (c) of the FPA trumps environmental law.” The language in the statute offers no guidance, nor is there any case law to clarify issues.

So consider the year 2001 travails of Mirant’s Potrero plant, an elderly (built between 1965 and 1976) and dirty 200 MW+ oil-and-gas fired plant located inside the San Francisco city limits, acquired from PG&E during California’s legendary restructuring. Under agreement with air regulators, Raggio explained, the plant was limited to operating only 877 hours a year. But the California Independent System Operator said it needed to dispatch the plant more often in order to maintain system reliability. DOE ordered the plant to operate during the state’s 2000-2001 electricity crisis, using the authority of Sect. 202 (c).

In order to keep Potrero running, Raggio explained, Mirant got “written approvals from local and federal regulators – the Bay Area Air Quality Management District and EPA” — so the plant could run longer than 877 hours. “Nonetheless,” said Raggio, “Mirant was subject to a citizen lawsuit by the City of San Francisco and environmental groups for exceedance of the 877-hour operating limit and was forced to settle the lawsuit at significant expense.”

This wasn’t just a case of those loopy lords of NoCal. Consider Mirant’s experience in Alexandria, Va., where state air regulators wanted to shut down an ancient (opened in 1949) 480-MW coal-fired plant that provides power to the District of Columbia across the river from the plant. On the day Mirant shut the plant under the Virginia air quality rules (Aug. 24, 2005), DC’s Public Service Commission filed a 202(c) petition with DOE to compel Mirant to operate the plant. After legal and bureaucratic toing-and-froing, the plant continued operating and Virginia found Mirant in violation of its air permit and fined the company.

Raggio noted at the FERC meeting that had Mirant shut the plant under Virginia’s orders, a major DC sewage treatment plant would have tripped off, spilling untreated wastewater into the river.