EPA to State Utility Commissioners: It’s Up to You to Protect America from the Clean Power Plan

EPA’s reliability mantra

When it comes to reliability, I don’t trust EPA for a simple reason: On this matter, the agency has demonstrated that it is untrustworthy.

Consider, for example, the agency’s absurd Utility MACT. The rule was promulgated in 2012, and it will remain the most onerous regulation ever imposed on the electricity sector, until the agency promulgates the Clean Power Plan this summer. Regarding reliability, the utility MACT threatens to shutter up to 25% of the nation’s fleet of coal-fired power plants upon implementation this spring; EPA’s analysis, alas, severely lowballed retirements due to the rule, as noted last year by FERC Commissioner Philip Moeller.

Worse still, EPA completely whiffed on the nature of the threat posed by the Utility MACT. In its reliability analysis, EPA focused on how the regulation would influence peak summer demand. In reality, the rule’s most pressing peril involves electric reliability in certain regions—primarily in the northeast—during the winter. The problem is that the Utility MACT, by closing coal plants, increases demand for gas for electricity during cold winter months when gas demand is already high (for space heating), and the gas infrastructure doesn’t yet exist to meet this aggregate demand.* If next winter (after the rule’s implementation this spring), is anything like the last two winters, then there could be serious problems in New England. EPA’s utter failure to identify this threat does not inspire confidence.

EPA’s reliability assessments of the Clean Power Plan have been similarly unimpressive. As is explained here, the Clean Power Plan would fundamentally overhaul the electricity sector. Obviously, such a significant change engenders reliability concerns; EPA’s own preliminary analysis suggests as much. Despite the high stakes, EPA Administrator Gina McCarthy has averred that she’s “tired” of talking about the rule’s threat to reliability. For the sake of the U.S. economy, I hope she’s not too tired to do a better job than the agency did on the Utility MACT.

Unfortunately, current events suggest she won’t. This week, Office of Air and Radiation chief Janet McCabe’s told the National Association of Regulatory Utility Commissioners that regulated entities, rather than the federal government, are responsible for ensuring that EPA’s Clean Power Plan doesn’t turn out the lights.

As reported by E&E EnergyWire’s ($) Rod Kuckro

If states want U.S. EPA to build into its proposed Clean Power Plan a mechanism to protect against power outages and ensure reliable electricity service — a so-called safety valve — then regulators and power industry officials need to draw that out in detail, the agency’s top air quality official said this week.

“Let’s put some concrete ideas around that. How does time help with the reliability issue?” said acting EPA air chief Janet McCabe, speaking in Washington, D.C., at the National Association of Regulatory Utility Commissioners’ winter meetings. “The more specific people can be about those issues that are fully in front of us, that’s information that we can use.”

This blows my mind. The comment period for the rule already has passed and the agency has given itself a July deadline to finish the rule, which is only five months away. Yet the EPA now is saying that it needs ideas as to how to ensure the rule doesn’t endanger reliability. Shouldn’t the agency have foreseen this problem? It’s a pretty conspicuous one; after all, the entire electricity system hangs in the balance. I guess this sort of myopia should be expected, in light of the fact that the agency let a green special interest write this marquee policy.

*Such bottlenecks, FYI, are common whenever government reaches too deep into markets