New rules from the Environmental Protection Agency (EPA) have several unintended consequences for the power sector, an expert said at a POWER magazine event on Dec. 7.

Floyd Self, an attorney with Florida-based law firm Berger Singerman, said that the bevy of new EPA rules have helped forged mergers between electric and gas utilities and necessitated new natural gas pipelines. They have also prompted the consolidation of energy production, and may bring about the demise of small utilities, especially municipal utilities and cooperatives.

“As cheap natural gas and environmental compliance accelerate, we need to question whether smaller utilities can ultimately survive, especially municipalities and coops,” he told attendees at POWER‘s day-long event, “Navigating Legal Implications of Power Industry Regulations,” held in Las Vegas, Nev. “[Municipal utilities and coops] are heavily invested in coal, they have a lot of debt,” he said. “I don’t know if some of these smaller utilities will have the scope or scale that will enable them to successfully get out of debt to make that transition over to natural gas. In my mind, the only way that some of these smaller utilities can ultimately comply is if they merge with other larger utilities.”

Floyd’s presentation was part of a session titled: “Surviving the Environmental Compliance Minefield: CCR, Ozone, 316(b), MATS 2.0, & More.” During the session, Attorney Tom Boer from Hunton and Williams outlined key aspects of the final 316(b) rule, also known as the Cooling Water Intake rule. The rule that became effective on Oct. 14 already has legal challenges filed in the First, Second, Fourth, Fifth, Sixth, Seventh, and Ninth Circuit courts of appeals. Legal challenges have been filed by regulated industry and trade associations, which argue that compliance will cost hundreds of millions of dollars, as well as environmental groups, which argue that the rule isn’t sufficiently protective to meet Clean Water requirements.

The rule is likely to be overturned, Boer said, though the EPA will undoubtedly post an iteration that will replace the rule. Boer advised industry to prepare to comply with the rule as a best business practice, however.

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