Legal & Regulatory

DOE Issues First-Ever Emergency Order to Keep Open a Unit That Is Noncompliant with MATS

The Department of Energy (DOE) issued an unprecedented emergency order on April 14 to keep open a power plant that had been slated for shutdown under the Mercury and Air Toxics Standards (MATS) in a bid to secure electric reliability.

The DOE’s order was issued under the Federal Power Act Section 202(c). It inaugurates the so-called “reliability safety valve” that had been widely discussed since the Environmental Protection Agency’s (EPA’s) February 2012–finalized rule was still in the draft stage.

Order No. 202-17-1, signed by Energy Secretary Rick Perry, will allow Unit 1, a coal-fired unit at the Grand River Energy Center, which is owned by Oklahoma state agency Grand River Dam Authority (GRDA), to keep running until more units are brought online to ensure grid reliability.

“Without sufficient reactive power support, electric system reliability is at risk because excessive voltage could force transmission lines offline, consequently leading to other reliability problems, or could cause electric arcing that would damage transmission facilities,” the order says.

The power plant also houses another coal-fired boiler (Unit 2). A natural gas–fired combined cycle unit (Unit 3) is under construction on-site.

The Grand River Energy Center (GREC), owned by Oklahoma's state-owned electric utility Grand River Dam Authority, is located in Chouteau, Okla. It comprises two coal-fired units: the 490-MW Unit 1 and the 520-MW Unit 2. A 495-MW gas-fired unit is under construction at the site. It will feature the nation’s first installed Mitsubishi Hitachi Power Systems Americas M501J-series engine. Courtesy: GRDA — The Grand River Energy Center (GREC), owned by Oklahoma’s state-owned electric utility Grand River Dam Authority, is located in Chouteau, Okla. It comprises two coal-fired units: the 490-MW Unit 1 and the 520-MW Unit 2. A 495-MW gas-fired unit is under construction at the site. It will feature the nation’s first installed Mitsubishi Hitachi Power Systems Americas M501J-series engine. Courtesy: GRDA

GRDA had planned to retire Unit 1 on April 16, unable to comply with MATS, even after the EPA granted it the maximum two one-year extensions. However, on April 11, GRDA petitioned the DOE for an emergency order to ensure electric system reliability, because Unit 2 was offline for repairs owing to a fire caused by lightning. Construction for Unit 3, it said, was delayed by flooding in Louisiana until mid-July “at the earliest.”

According to the DOE, Unit 1 is effectively GRDA’s “only available unit to provide dynamic reactive power support to the region’s Reliability Coordinator, the Southwest Power Pool, Inc. (SPP), during low-load, high-voltage events.” SPP offered a letter of support to GRDA’s application for the emergency order, saying it will be a “critical resource in maintaining proper system voltage.”

The DOE also noted that if Unit 1 were unavailable to SPP, several mandatory reliability standards issued by the Federal Energy Regulatory Commission would have been violated.

The DOE has issued emergency orders under the Federal Power Act at least six times before to ensure grid reliability, but never to a plant noncompliant with MATS. In 2000, an emergency order was issued in response to the California energy crisis, and in 2002, another one addressed concerns about electricity availability in Long Island, N.Y. An August 2003 emergency order responded to the well-known blackout in the Northeast and Upper Midwest.

In August 2005, the DOE issued an emergency order requiring the Potomac River generating station to remain available to ensure compliance with reliability standards for the central D.C. area. Another order was issued in September 2005, responding to devastation caused by Hurricane Rita in Louisiana, and again in September 2008, in response to Hurricane Ike in Texas.

Hunton & Williams LLP on April 19 said that the DOE’s April 14 order is the nation’s first to respond to an environmental regulatory rule. It is also the first to constitute use of the Federal Power Act Section 202(c) as a “reliability safety valve”—but it may not be the last.

“In the run-up to EPA’s 2011 release of MATS, numerous commenters from industry as well as state and local government raised concerns that the regulation would force substantial coal-fired power plant retirements, undermining reliability of the electric grid,” the firm pointed out. However, it noted, language allowing a Federal Power Act emergency order to override the requirements of federal, state, or local environmental laws or rules wasn’t codified until passage of the Fixing America’s Surface Transportation (FAST) Act of 2015.

“It is important to note that FPA § 202(c) provides DOE significantly broader authority than the Department applied in this order,” the firm said. “The provision may be used to address ‘a sudden increase in the demand for electric energy, or a shortage of electric energy or of facilities for the generation or transmission of electric energy, or of fuel or water for generating facilities, or other causes’ of an emergency. Such emergencies may be localized or broad-based.”

—Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)