Electric Supplies at Risk Under EPA Rules, FERC Member Says

Environmental Protection Agency rules might constrain U.S. electricity supplies, especially when customer demands are highest in summer and winter, a member of the Federal Energy Regulatory Commission said.

Electric utilities may be unable to build new transmission lines to cope with the anticipated closing of coal-fired plants if the proposed EPA rules to cut pollution take effect, Commissioner Philip Moeller told the Republican-led House Energy and Commerce Committee at a hearing today.

“I remain concerned that the timeline for electric utility planning and implementation is not compatible with the EPA timelines for its new regulations,” Moeller said today in Washington. “I see a need for FERC to become further involved in the reliability implications of EPA actions.”

Moeller was named by President George W. Bush in 2006 and re-nominated by President Barack Obama this year. He is a former congressional aide and was director of the Washington office of Alliant Energy Corp. (LNT), the owner of electric utilities in the Midwest.

His testimony was seized on by Republican lawmakers as a warning that the EPA isn’t only harming the American economy; it also may undercut the reliability of the electric grid.

“The Obama EPA’s unprecedented regulatory agenda brings with it a number of unprecedented problems,” Representative Ed Whitfield, a Kentucky Republican and chairman of the energy and power subcommittee of the Committee on Energy and Commerce, said today at the hearing.

State Regulators

State regulators from Georgia, Utah and West Virginia offered similar warnings, according to their prepared testimony posted yesterday on the committee’s website.

In “15 years of regulating the electric utility industry, I have never seen the number, the breadth, or the potential impact that this whole group of regulations will have on the industry and on my constituents,” Stan Wise, chairman of the Georgia Public Service Commission, said in his testimony.

The EPA is considering or has already approved measures to curb sulfur dioxide or nitrogen oxide in the eastern U.S. and Texas, limit mercury emissions and regulate coal ash and cooling water.

Comments by Moeller and Wise on implications of the EPA’s proposals to limit pollutants from power plants contrast with the assessment of FERC Chairman Jon Wellinghoff, who said the industry can add capacity to compensate for closed plants.

Industry Capability

Examining possible generator retirements alone isn’t enough to determine how the EPA’s proposed regulations will affect reliability, Wellinghoff said.

“I believe that given enough information and time, the electric industry can plan to meet whatever EPA regulations become final,” he said.

Democrats said today that the EPA rules would only force the closure of older power plants that haven’t installed modern pollution control equipment.

“Regardless of the EPA’s rules, these old plants are being replaced by modern gas plants,” Representative Henry Waxman, a California Democrat, said at the hearing. “Reliability of the electric grid is an important topic and it should not be used as an excuse to block important public health protections.”

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net Brian Wingfield in Washington at bwingfield3@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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