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Study Finds EPA Transport Rule Will Not Impact Electric Grid Reliability

The U.S. Environmental Protection Agency’s proposal to limit interstate air pollution from power plants will not threaten the reliability of the electric grid despite complaints from coal-fired power plants, according to an utility-funded report from M.J. Bradley & Associates LLC, reports The New York Times.

In a move to improve air quality in the eastern part of the country, the EPA recently proposed regulations to cut power plant pollution that drifts across 31 eastern states and the District of Columbia. The new proposal, called the transport rule, along with local and state air pollution controls, will help areas in the eastern U.S. meet existing national air quality health standards by reducing power plant emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx).

By 2014, the rule and other state and EPA actions are expected to reduce SO2 emissions by 71 percent over 2005 levels and NOx emissions by 52 percent.

The study (PDF) finds that utilities will be able to adapt to the agency’s proposed transport rule, despite recent studies indicating that low energy prices and EPA’s air regulations could lead to the retirement of between 25 and 40 gigawatts of the nation’s 1,030 gigawatts of capacity through 2015, as some coal plant owners choose to retire units instead of installing pollution control equipment.

According to the report, the power sector added four times that much capacity from 2001 to 2003, and even without new capacity, the expected retirements would not deplete the “cushions” established by the North American Electric Reliability Corp. to prevent outages, reports The New York Times. The organization expects to have 107.3 gigawatts of excess capacity nationwide in 2013.

Although some of the nation’s less efficient power plants may be retired, many existing coal plants will be retrofit with new pollution controls, according to the report.

The study reveals that approximately half of the nation’s coal-fired generating capacity (150 GW) has already installed SO2 scrubbers, another 55 GW plan to install scrubbers, and a significant number of coal units have already announced plans to retire, leaving approximately one-fourth of the nation’s coal-fired generation to add pollution controls, switch to a cleaner fuel, or retire, according to the study.

The study concludes that although some coal plants will retire instead of complying with the new regulations, the “electric system reliability will not be compromised if the industry and its regulators proactively manage the transition to a cleaner, more efficient generation fleet.”

The ruling may result in utilities using more of the existing capacity at natural gas-fired plants run by independent companies, according to the article. The report says natural gas plants capable of producing more than 200 megawatts were only being utilized at about 35 percent of their capacity in 2008, compared with 67 percent utilization for the largest coal plants.

American Electric Power Co. Inc. is one of the utilities raising concerns over the transport rule, which has openly criticized EPA’s air pollution regulations. The utility generated about 85 percent of its electricity in 2008 from burning coal, according to the New York Times.

The report was funded by eight utilities — Calpine Corp., Constellation Energy, Entergy Corp., Exelon Corp., NextEra Energy, National Grid, PG&E Corp. and the Public Service Enterprise Group (PSEG).

The New York Times reports that these eight utilities generated less than 10 percent of their roughly 660 million megawatt-hours from coal, of which three of them — Calpine, National Grid and PG&E — burned no coal at all.

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