FERC Issues Policy on Advising EPA on MATS Compliance Extensions

The Federal Energy Regulatory Commission (FERC) last week issued a policy statement explaining how it will advise the Environmental Protection Agency (EPA) on requests for extra time from generators to comply with the agency’s recently finalized Mercury and Air Toxics Standards (MATS).

Under the MATS rule promulgated in December 2011, generators must install pollution controls to curb mercury and other air toxics by April 2015 or cease operation, though the EPA allows generators critical to electric reliability to seek an administrative order to operate for an additional year. In its new policy statement, FERC says it will advise the EPA on whether failure to grant each extension request might lead to a violation of a FERC-approved reliability standard. FERC will not recommend that the EPA grant or deny any extension requests, or advise the EPA on potential impacts not within FERC jurisdiction over reliability standards.

“This policy statement outlines FERC’s advisory role within a narrow provision of the EPA rule,” FERC Chairman Jon Wellinghoff said. “Outside the narrow scope of this advisory role, FERC will continue to address these matters in our public forums, review information regarding the impact of compliance on reliability of the grid and consider if we need further steps to monitor how these regulations will affect the reliability of the grid.”

Under the FERC policy statement, generators should submit to FERC as informational filings copies of their requests to EPA for extra time for compliance. FERC’s Office of Electric Reliability will lead the review of the filings under FERC’s general investigative authority; the reviews will examine whether compliance with EPA’s rule could result in a violation of a FERC-approved reliability standard or other issues within FERC’s jurisdiction.

“There are no specifically required analyses to show that operation of a generating unit beyond the compliance date is critical to maintain reliability, though informational filings should provide the types of data used by the Commission to examine potential violations of its mandatory reliability standards, such as system planning and operations studies, system restoration studies or plans, operating procedures and mitigation plans,” FERC said in a statement clarifying the policy statement.

FERC also encouraged the EPA to seek advice from other reliability experts, including state regulators, regional market operators, planning authorities, and the North American Electric Reliability Corp. and its affiliated regional entities. It also cautioned that FERC’s recommendations on each extension request would not constitute a final determination that a reliability standard would be violated, nor will it be considered a final agency action that would trigger civil penalties or other enforcement actions.

FERC’s Policy Statement provides a structured framework for FERC to provide case-by-case advice to the EPA on the potential reliability impacts of a specific generator retiring or scheduling an outage to comply with the Utility MATS rule. The Policy Statement also underscores FERC’s intention to engage with the EPA in specific cases in which generators seek administrative orders from the EPA to extend their deadlines for compliance with the Utility MATS rule.

“The Policy Statement has a narrow scope limited to case-by-case input to EPA on the potential reliability issues raised by individual generators retrofit or deactivation timelines that fall within FERC’s reliability jurisdiction. FERC’s input is not binding guidance to EPA. Moreover, the Policy Statement does not address the broad scope of reliability concerns that industry and policymakers have raised in connection with the Utility MATS rule,” attorneys for law firm VanNess Feldman, Andrew Art, Tomás Carbonell, and Van Smith wrote.

It is important to note that concerns such as system resource adequacy and safety, coordination to schedule outages among generators within a region, and the potential regional reliability impact of multiple baseload generators that choose to deactivate rather than comply with the Utility MATS rule are not addressed in FERC’s policy statement, the attorneys said. “The limited scope of the Policy Statement may prompt renewed calls by policymakers as well as industry for a more comprehensive, coordinated regional process to address the broader reliability concerns with the Utility MATS rule.”

Sources: POWERnews, FERC, VanNess Feldman