Operators Ask to Keep Coal Plants in Service Even if They Flunk EPA Standards

Tom Johnson | August 10, 2011 | Energy & Environment
A "safety valve" mechanism would keep some plants online if taking them out of service would endanger the power grid

The operators of the nation’s electricity grid want federal environmental officials to allow them to keep some power plants online — even if they fail to meet tough new pollution rules — if taking them out of service would affect system reliability.

In a joint letter to the U.S. Environmental Protection Agency (EPA), the regional transmission operators asked for the so-called safety valve mechanism. The signees included officials from the PJM Interconnection LLC, the operator of the nation’s largest power grid, which includes all of New Jersey.

The move comes in response to a new EPA rule, proposed in March, that establishes more stringent standards for mercury emissions and other hazardous air pollutants, which is expected to lead to the retirement of dozens of coal-fired power plants across the country. That eventuality has raised concerns that it will increase electricity costs for consumers and create reliability problems.

While not objecting to the merits of the draft rule or its long-term benefits to the environment and health, the operators asked for an extension to allow them to designate “reliability critical units” to maintain the safety of the grid and prevent problems.

“Given the potential for reliability impacts due to generation retirements, we ask that the final rule contain a narrowly-drawn reliability ‘safety valve’ such that a retiring generator could be granted an extension for the time needed to implement reliability solutions to replace the subject resource,” the regional operators wrote.

According to some studies, up to 20 percent of the nation’s coal fleet could be shuttered within the next decade due to the tough new rules being proposed by EPA. New Jersey has nine coal plants, most of which have or put in place pollution control equipment that will allow them to operate even with the tougher standards.

The two biggest coal plants in New Jersey will not be in violation of the EPA’s proposed rules because their owner, PSEG Power, agreed a few years ago to undertake more than $1 billion in improvements to the 630-megawatt Hudson and Mercer plants, installing sophisticated pollution controls to cut down on emissions. The investment at Hudson ran about $774 million; at Mercer, about $500 million.

Still, there are reliability concerns in northern New Jersey because of congestion on the transmission grid. The state also needs to replace 650 megawatts of capacity due to the 2019 retirement of the Oyster Creek nuclear power plant.

PJM also submitted its own comments to the federal agency, asking for a safety valve, mirroring the arguments it made with the other regional transmission operators. It argued for a one-year extension and possibly beyond under certain circumstances: provided the owner of the plant gives notice of an intention to retire the plant to EPA and PJM no later than one year after the effective date of the rule; PJM decides the unit is needed to maintain reliability; and transmission projects or replacement generation will fill the void left by the retired plant.

Although PJM said it does not foresee capacity problems in the region at this time, there could be local reliability problems arising out of the retirement of plants.