Five U.S. grid operators last week jointly urged the U.S. Environmental Protection Agency (EPA) to reconsider strict compliance deadlines proposed for a suite of rules because they feared "accelerated" generation retirements as owners assessed the costs of complying with them. The grid operators also asked the EPA to consider keeping some plants online if they met certain conditions, because taking them out of service would affect system reliability.

The grid operators included the Electric Reliability Council of Texas (ERCOT), Midwest Independent Transmission System Operator (MISO), New York Independent System Operator (NYISO), PJM Interconnection (PJM), and Southwest Power Pool (SPP). The organizations were jointly responding to a proposed EPA rule governing the national emission standards for hazardous air pollutants from coal and oil-fired steam-generation units (79 Fed. Reg. 24976, proposed on May 3, 2011).

In their comments, the group noted that retirements would be widely affected by a suite of rules, including the Cross State Air Pollution (CSAP) Rule, the proposed Clean Water Act cooling water intake rule, and the coal combustion residuals disposal rule.

The organizations said the rules could make generator assets "uneconomic" in the regional transmission organization (RTO) and independent system operators (ISO) market.

"Environmental compliance is a cost of doing business in a market environment," the organizations wrote. "However, if the impact of the EPA rulemakings increases retirements to the point of creating reliability violations without providing for adequate time to respond to the reliability concerns, this could undermine the reliability of the electric grid for an unacceptable prolonged period."

It is impossible to know how much reliability would be affected because there is no information about which and how many generators are looking to retrofit or retire units. Those decisions would be driven by EPA rulemaking and future market conditions such as the projected costs of competing fuels and forms of generation, the group said.

"Even if overall regional or national levels of capacity remain sufficient, local reliability impacts, the extent of which are still unknown, can have a profound effect on ensuring system reliability within specific areas that can serve substantial load, such as urban areas," they wrote.

RTOs/ISOs are responsible for ensuring the continued reliability of the bulk power system in order to keep the lights on for 146 million Americans. The ISO/RTO model is based on a market platform that provides financial incentives to facilitate adequate generation for reliability–but under it, grid operators receive limited notice of the intent to retire a generator unit, the organizations said. ERCOT and PJM, for example, would receive a 90-day notice for units taken out of service for periods of more than 180 days, while MISO requires 26 weeks.

The group asked the EPA to revise the rules and provide an extension process that would allow for the continued operations of units–calling them "Reliability Critical Units." These units could be identified by the ISO/RTO through its retirement analysis as necessary to maintain grid reliability, they suggested.

The extension would be tailored to the specific reliability need and would only be effective until such time as the reliability issue is quickly and efficiently remedied–whether through transmission reinforcements or replacement resources.

The group said the extension would act as a "safety valve," suggesting it should only be granted to generators who provide notice of retirement within 12 months of the rule’s effective date.

The group stressed that it was not taking a position on the "merits" of the rule or the EPA’s findings of the long-term benefits of the rule. It was focusing on addressing the potential reliability impacts resulting from the strict compliance timelines.