Legal & Regulatory

New EPA Rule Calls for Flexibility

Quin Shea, vice president, environment for the Edison Electric Institute, comments on the Utility MACT rule that is expected to be finalized in November.

The short-fused deadlines, extent of coverage, and complexity of new air emissions regulations proposed by the U.S. Environmental Protection Agency (EPA) have been cited by several utilities as the reason for recently announced plant closures. Here’s how the Edison Electric Institute’s environmental point man sees the situation.

Which new air emission rule is the utility industry most concerned about?

Shea: The electric power industry values a healthy environment. Every year, electric companies comply with hundreds of federal and state environmental laws and regulations. They spend billions of dollars on environmental measures and operational controls to protect human health and the environment. At the same time, the industry takes great pride in its capability to meet the nation’s ever-growing demand for electricity in a reliable and affordable manner.

Maintaining this balance between protecting the environment and keeping the lights on is the main job for every electric company. In that vein, it is very important that our industry and the EPA work closely together on the range of rules that the EPA is promulgating for utilities.

Because of the proposed Utility MACT rule’s complexity and timing, we are urging the EPA to give electric utilities greater flexibility in implementing it. Greater flexibility will help to achieve the desired results. And it will do so without raising compliance costs or compromising electric system reliability.

What is the Utility MACT rule?

Shea: The Utility “Maximum Achievable Control Technology,” or “Utility MACT rule” as it is commonly called, is the EPA’s first-ever proposed rule to regulate power plant emissions of mercury and other hazardous air pollutants (HAPs). This new rule represents one of the agency’s most ambitious undertakings, both in scope and in potential impact.

The Utility MACT rule will create national emission standards for HAPs under section 112 of the Clean Air Act (CAA). The EPA proposed its MACT rule in March 2011, and the agency is scheduled to put the rule into final form in November 2011.

The new rule will affect almost all of the country’s existing coal- and oil-based generating units—approximately 1,350 boilers at 525 power plants. Once the rule is issued, power generators will have up to three years to install the necessary emissions control technology. They must reduce their HAPs emissions to a level equal to or better than the average emissions of the best-performing 12% of the plants for which the EPA has emissions data. For those planning to build new coal- or oil-based generating units, planned emissions must be based on the best-performing existing source.

What options do utility plant owners have, if any?

Shea: If plant owners decide not to install the necessary control technology, they have two options. They can choose to replace or repower their coal- or oil-based generating unit with another fuel source, such as natural gas or biomass. Alternatively, they can shut down the unit and, if needed, expand transmission capacity to maintain system reliability. The three-year time limit applies to these options as well.

The EPA predicted most facilities would be able to comply with the Utility MACT rule within the three years. The agency has said, however, that a one-year extension would likely be an option for utilities that are unable to meet that deadline.

In our comments on the proposed Utility MACT rule, we emphasized that if a plant owner does decide to comply by shutting down a generating unit, then that unit should be shut down within the three years allotted after the effective date of the final rule. This timeframe should be extended only if it is determined that operation of the unit is required for reliability purposes and the utility demonstrates that the reliability issue is being diligently addressed.

What additional flexibility do utility plant owners require?

Shea: For those plant owners that wish to choose one of the other compliance options, we also emphasized the need for flexibility in our comments to the draft rule. We urged the EPA to extend the compliance deadline by an additional year, as allowed under the CAA. This extra time will be needed for each of the compliance options.

In the instances where a plant owner wants to install control technologies, they will need their state regulatory agencies to issue permits as well as approve the design, engineering, siting, permitting, and financing of these controls before actual construction begins. And according to the National Association of Regulatory Utility Commissioners (NARUC), a retrofit timeline for multimillion dollar projects may take up to five-plus years.

If a plant owner decides to close a unit and upgrade existing transmission systems or build new systems to ensure continued reliability, utility experience indicates that the entire process of siting, planning, permitting, and constructing transmission generally takes more than three years, and typically takes four to eight years to complete.

Another factor that calls for more time is that the Utility MACT rule will require an unprecedented number of power plants to install controls at nearly the same time. Although the EPA acknowledges that the control technology industry would have to “ramp up quickly,” the agency does not take into consideration the reality that manufacturing delays could occur given the increased volume of orders.

In addition, once the Utility MACT rule takes effect, NARUC has cautioned that a retrofit timeline may need to be lengthened due to the large number of multimillion dollar projects that will be in competition for the same skilled labor and resources.

What also has to be taken into consideration when determining how much time it will take to install the necessary controls is that utilities schedule power plant maintenance—including retrofits and installation of environmental controls—during the spring and fall months. This is because peak demand on their system generally occurs during the summer and winter months, and electric utilities must have enough generation facilities online to meet the maximum demand on their systems. As a result, the majority of utilities will not be able to work year-round to install control technologies to reduce mercury and HAPs.

What was the EPA’s response to your suggestions?

Shea: The EPA has suggested a willingness to consider extensions on a unit-by-unit basis. But the number of generating units needing additional time likely will be sufficiently large that a case-by-case review of individual requests for extensions actually could delay overall compliance.

Given these realities, we plan to ask the president to issue an executive order using the CAA “exemption authority” for power plant owners or operators who are unable to comply with the Utility MACT requirements within four years (the standard three-year compliance period plus the EPA’s optional one-year extension). We will ask the president, or any designated agency or department, to grant these extensions in the instances where a utility is making a diligent, good-faith effort to comply but the control technology is unavailable, or in those instances where the appropriate national, state, or regional grid operator, North American Electric Reliability Corp., or state regulators certify that an extension of time is necessary to address reliability and economic impact issues.

What other steps to reduce mercury and HAP emissions are utility plant owners taking?

Shea: It is important to emphasize that although we are asking for greater flexibility in implementing the new MACT rule, electric utilities are not opposed to reducing their emissions of mercury and HAPs. In fact, electric utilities have made significant strides over the last two decades in reducing the industry’s overall emissions.

Coal-based power plants—which still generate nearly half of the nation’s electricity—emit about 70% less sulfur dioxide (SO2) and nitrogen oxides (NOx) emissions today than they did in 1990. And in the eastern United States, we have cut ozone-related summer NOx emissions by 80% during the same period. What is truly remarkable, however, is that while these emissions reductions were taking place, electricity demand grew 38%. Other regulations being proposed by the EPA also will lead to SO2, NOx, mercury, and other emissions being reduced by 80% to 90% in most eastern states compared to 1990.

In addition, companies also are investing in advanced generating technologies to reduce emissions even further. And we have begun exploring methods for capturing and storing carbon emissions.

The EPA’s Utility MACT is as complex as it is far-reaching. With greater flexibility in complying with it, we believe that the new MACT rule will achieve its objectives, while working to lower compliance costs, increase system reliability, and preserve valuable economic resources.

Dr. Robert Peltier, PE, POWER’s editor-in-chief, conducted and edited this interview.

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