EPA Rules Won’t Cause Major Power-Grid Woes, McCarthy Says

U.S. regulators should give utilities upgrading their plants at least four years to meet restrictions on power-plant pollution, Dominion Resources Inc. Chief Executive Officer Thomas F. Farrell said.

“The compressed three-year time frame for compliance is not sufficient,” Farrell, who is also the company’s chairman, said today at a Federal Energy Regulatory Commission conference in Washington. The EPA has authority to extend the deadline for four years for plants that need upgrades, and President Barack Obama can delay it further by executive order, Farrell said.

FERC, which regulates the interstate transport of electricity, is examining the effect on the grid’s reliability of rules planned by the Environmental Protection Agency. The agency will issue power-plant standards for mercury and air toxics by Dec. 16, Gina McCarthy, the EPA’s assistant administrator for the Office of Air and Radiation, said at today’s conference.

The EPA has proposed letting individual power plants apply for more time to meet the pollution standards, according to people familiar with the process. The agency’s plan could still be changed or rejected by the White House before it is issued.

The process for delaying compliance “must be in place at the time the rule is issued,” Farrell said. He is also chairman of the Edison Electric Institute, a Washington-based industry group.

FERC Chairman Jon Wellinghoff said after the meeting that he doesn’t intend to ask the EPA to delay the deadline.

Coal, Oil Generators

Dominion, of Richmond, Virginia, is among coal-dependent utilities that would be most affected by the emissions limits. The mercury and air toxics rule will affect 1,350 generators that run on coal or oil at 525 U.S. power plants, Farrell said.

The Midwest Independent Transmission System Operator Inc., which runs a regional electric grid, would support a so-called safety valve to give some power plants additional time to comply with the EPA’s rules, Clair Moeller, vice president for transmission asset management for the group said.

“The compliance calendar of three years is likely unachievable by the majority” of generators in Midwest, he said.

Wellinghoff said he supports the general concept of the safety valve to ensure that specific risks to electric reliability are effectively resolved. Implementing such a measure is up to EPA, he said.

The discussion at the conference shows “we don’t even have the answers,” while EPA’s air-pollution rules are pending, said Nicholas Akins, chief executive officer of American Electric Power Co. (AEP) of Columbus, Ohio, who is seeking more time to comply.

Closing Plants

Power companies have said they may close aging coal-fired plants instead of investing in pollution controls. Utilities may be unable to build enough high-voltage transmission lines to deliver electricity to take up the slack, FERC Commissioner Philip Moeller told a House Energy and Commerce subcommittee in September.

“Generators should not have to choose between violating reliability standards and clean-air standards,” Moeller said today.

The commission doesn’t have the authority to delay EPA regulations. Utility executives want FERC to encourage the administration to extend the period to meet the standards.

“More time for compliance is absolutely required, at least six years in our perspective,” said Anthony Topazi, chief operating officer of Atlanta-based Southern Co.

‘Not Go Out’

In the 40 years since the Clean Air Act took effect, “EPA rules have never caused the lights to go out,” McCarthy said. “The lights will not go out in the future.”

The actions are required under the law and will result in a “modest level” of power-plant closures, he said.

Companies will seek low-cost and innovative ways to install pollution controls, McCarthy said.

“Generally speaking, the new EPA rules will not create a widespread resource adequacy issue,” Patricia Hoffman, the Energy Department’s assistant secretary for electricity delivery and energy reliability, said.

To contact the reporter on this story: 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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