Lifeline for Dying Power Plants Surfaces in U.S. Carbon Rule

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Obama's Clean Power Plan in Two Minutes

Fossil fuel-fired power plants that will be slated to close because of federally mandated limits on greenhouse-gas emissions were thrown a potential lifeline on Sunday.

Bowing to industry demands, the U.S. Environmental Protection Agency included a so-called safety valve in its Clean Power Plan that eases compliance with pollution restrictions if they threaten to shut power plants needed to keep the lights on.

“I would never accept a scenario where affordability or reliability came into question, because electricity is the engine of our economy,” U.S. EPA Administrator Gina McCarthy said in a call with reporters Sunday. “We’ve even created a reliability safety valve so that if a catastrophe threatens reliability we can respond.”

Power generators needed to maintain service on the electric grid may be subject to weakened emission standards for 90 days in the event of an unforeseen system disruption, the EPA said in its final rule. The unit may continue to operate under the modified standards after that period, provided its excess emissions are accounted for and offset elsewhere.

“It’s a theoretical opportunity for power plants and states to go in and say we need to maintain the operation of plant A, B and C for reliability purposes,” William Scherman, who leads the energy, regulation and litigation practice at Gibson, Dunn & Crutcher LLP in Washington, said Sunday.

Utilities, federal energy regulators and electricity grid operators including the New York Independent System Operator Inc. called on the EPA to impose a safeguard to prevent service disruptions, warning that states may see waves of power plant retirements under the new carbon regulations.

Reliability Reviews

“Our primary concern remains the overall timing and stringency of the near-term reduction targets,” Tom Kuhn, president of the Edison Electric Institute, a trade group representing the power industry, said in a statement Sunday. “The industry asked that EPA provide sufficient time for states to craft compliance plans and then subject those plans to critical reliability reviews, and we are hopeful the final guidelines will address this issue.”

McCarthy said Sunday that she doesn’t expect her agency will ever have to use the safety valve. One already exists for a federal program regulating mercury released by power plants, and provisions in the Clean Power Plan would be similar to that, she said.

Mercury Rule

Under the mercury program, power plants due to shut because they can’t meet federal standards may operate in non-compliance for as long as a year for reliability purposes.

EPA’s final rules are among the broadest the agency has ever developed and are forecast to radically alter the nation’s future mix of energy resources. They’re designed to shrink power plant carbon emissions 32 percent by 2030, compared with 2005 levels. That’s up from the 30 percent proposal that the agency made last year.

States must submit plans to the agency by 2018 outlining how they’ll achieve EPA targets set by the EPA through 2030.

“This is an opportunity to deal with a situation that, frankly, we don’t see happening,” McCarthy said. “It’s an opportunity for us to have an insurance policy against any situation that would threaten the energy system that would require us to provide some opportunities for additional flexibility.”

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