NERC wants safety valve included in final CO2 rule

OREANDA-NEWS. The US electric grid reliability watchdog wants the Environmental Protection Agency's (EPA) proposal to cut CO2 emissions from power plants to incorporate a "reliability safety valve" in the form of compliance exceptions for reliability reasons.

The North American Electric Reliability Corp. (NERC) has two messages for federal environmental regulators working to finalize the CO2 reduction proposal, chief executive Gerry Cauley said yesterday at the Gulf Coast Power Association conference in Houston. The reliability agency this month will issue an assessment of EPA's Clean Power Plant proposal "to get the message to the EPA of the realness of the physical limitations and time limitations of getting ready to meet the targets," Cauley said.

The EPA will finalize the plan this summer.

NERC last November already released a high-level critique of assumptions and targets EPA used in preparing the proposal to cut CO2 emissions from the US power sector by 30pc by 2030 from 2005 levels.

As much as 140GW of mostly coal-fired generation will be forced to retire by 2030 or, if not shut, will run very infrequently under the CO2 plan and other EPA rules, according to NERC estimates.

The resulting shift in the generating fuel mix will require 50GW-80GW of new natural gas-fired generation, shifting dispatch patterns that may alter power transmission flow, straining existing grid facilities and management, according to NERC.

Adapting to lost coal capacity and developing needed pipeline or transmission infrastructure will make meeting the EPA's interim 2020 targets impossible for some regions, Cauley said.

NERC is most concerned about the plan's reliability impact on four regions: New York and New England, the Midcontinent Independent System Operator, the Southwest Power Pool and Texas.

"In our studies, we can get into situations of shortages or to the point of not filling the capacity margins we expect in those regions," he said.

For that reason, NERC wants to make sure the EPA's final rule includes a reliability assurance mechanism, or safety valve, so that "environmental rules do not trump reliability" standards and utilities can keep the lights on, he said.

"We cannot foresee all the issues that are going to come up and address them in advance," Cauley said. "We do not want to put companies in a situation where they have to choose between complying with environmental regulations or complying with NERC standards."

The two agencies appear to have had limited interaction. NERC has not offered formal comments on the Clean Power Plan. Cauley said NERC has participated in numerous technical conferences on the rule, but has had no direct meetings with EPA officials to discuss reliability issues.

The Federal Energy Regulatory Commission fully understands the reliability implications of the rule and should work closely with EPA on how exceptions will be granted, Cauley said.

EPA has said it worked with regional grid operators, state regulators and other federal and state agencies to make sure that "environmental requirements remain compatible with maintaining electric reliability."