EPA faults grid overseer’s analysis of power plant rule

Source: Jean Chemnick, E&E reporter • Posted: Monday, November 10, 2014

U.S. EPA pushed back yesterday against the electric grid monitor’s warnings about the Clean Power Plan’s threat to reliability, saying the organization’s report ignored major changes already taking place in the nation’s power system.

At issue is the North American Electric Reliability Corp. report that portrayed EPA’s proposal for reducing greenhouse gas emissions from power plants as a threat to reliable electricity by the plan’s initial compliance deadline in 2020. The report has quickly gained traction with congressional Republicans and industry foes of the EPA climate rule (Greenwire, Nov. 5).

EPA’s Office of Air and Radiation said the report, which was released Wednesday, offered no fresh analysis and overlooks new capacity that will be built by 2020. New natural gas and renewable generation, a staffer said, will help offset retirements of older coal-fired units, aided by improvements in efficiency that will decrease demand.

“The world is going to change regardless of this new proposed rule, and we know new capacity is going to be built, and NERC just ignores that completely,” the Office of Air and Radiation staff member said in response to questions from Greenwire.

EPA made the staffer available on the condition that his comments would not be attributed to him by name.

The agency maintains that the report doesn’t offer new data but draws on analyses from a variety of sources, including EPA’s own support documents for the June 2 power plant proposal.

“There are a lot of assertions and claims in the report that aren’t really substantiated by any particular analytics they mention, or supported by a deeper look into the issues,” the air office staffer said.

NERC’s report raises several potential problems with how the draft assigns state emissions targets and with its compliance timeline — pitfalls the organization says could undermine power supply.

The EPA draft assigns states responsibilities based on four “building blocks”: improved efficiency at coal-fired power plants; expanded operations of combined-cycle gas units; increased supply from “zero-carbon” wind, solar and nuclear plants; and more demand-side efficiency.

The NERC paper assumes states will use these building blocks as a compliance mechanism — even though EPA doesn’t mandate that they do so — and it predicts there will be reliability challenges with all of them.

For example, to achieve the 6 percent heat-rate improvement that EPA’s draft assumes is possible for all coal-fired units, utilities would have to periodically stop running plants and update their turbines — a burden NERC says could encourage them to retire those units instead. New renewable energy would need new transmission lines, and EPA overestimates when it assumes states would be able to improve their demand-side efficiency by 1.5 percent per year after 2020, it says.

NERC cites several potential problems with the draft’s assumption that all combined-cycle natural gas power plants can ramp up to 70 percent capacity to displace coal — a “building block” that accounts for the bulk of the stringent interim reduction targets many states face beginning in 2020.

The rule’s early target — which amounts to a 26 percent reduction compared with 2005 levels, starting in 2020 — is its clearest threat to reliability, NERC concludes.

But EPA says NERC approached its analysis incorrectly.

For one thing, the air office staffer said, NERC shouldn’t have assumed that states would simply use the building blocks as a compliance policy instead of crafting plans keyed to their concerns. And the interim compliance period between 2020 and 2029, he said, allows for year-to-year averaging, which would allow a state that doesn’t comply fully in one year to make up for it in another.

The interim targets are front-loaded — some states are required to achieve upwards of 80 percent of their overall reductions under the rule after 2020. The aide acknowledged that many stakeholders have raised that as an issue.

“We’ve heard a lot about this,” the staffer said. “Keep in mind that this is a proposal, and there’s a process by which we try to improve the rule for final. And we acknowledge that there are some important concerns out there that we intend to rectify.”

The agency’s release last week of a notice of data availability, which requested public comment on some changes to the original draft, showed EPA’s willingness to respond to input, he said.

Contentions by NERC and others that these early targets would jeopardize reliability are unfounded, the staffer argued, especially since states haven’t said how they will comply with the rule yet.

In an email yesterday, EPA argued that the grid is also compromised by more frequent and severe weather events linked to climate change, which frequently spur power outages in regions across the country.

The NERC report has been embraced by Republicans, who have signaled that they plan to make it a focus when they return for the lame-duck session next week. And the fossil fuel industry has also embraced it as a vindication of its message that EPA’s rule improperly tinkers with the power grid.

“Contrary to the agency’s own assertion, EPA’s carbon proposal will most certainly cause ‘the lights to go out’ on American families, businesses and our economy,” Laura Sheehan of the American Coalition for Clean Coal Electricity said in a release yesterday.

“While the Obama Administration peddles fire-and-brimstone warnings about climate change, the warnings we should be paying attention to are coming from NERC and other groups who are sounding the alarm on EPA’s faulty calculations and the grim consequences of taking affordable, reliable coal-based generation offline.”