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. [click to continue…]