Federal Regulations Threaten Reliable Electricity

By Jay Holmquist | New federal regulations will have far-reaching impacts on the electric industry, and consumers, in the years ahead. There will be at least five major rules that will have a significant impact on the cost of generating electricity with our nation’s coal resources.

The EPA continues to work on rules to tighten the air quality standards for certain air pollutants. We expect to see EPA’s proposal regulating emissions of Hazardous Air Pollutants (HAPs) from power plants sometime this year. Also expected are EPA’s proposed regulations to determine whether existing power plants will need to retrofit their cooling systems with cooling towers to minimize “entrainment and entrapment” of fish and other organisms in water intake structures.

The EPA will likely finalize the Clean Air Transport Rule (CATR) that will impact certain parts of the U.S., and may finalize new coal ash regulations in 2011, although they may get pushed into 2012. EPA will also implement its stationary source New Source Review/Prevention of Significant Deterioration climate change regulations and begin the process of setting New Source Performance Standards for “greenhouse” gases from large emitters like power plants and refineries.

The latest in a series of recent studies sounds a warning that new EPA regulations can be expected to shut down at least 50,000 megawatts of coal-fired generation capacity nationwide and impose compliance costs as high as $180 billion for the coal plants that continue to operate. This study is the fourth since last spring to reach similar conclusions. The study analyzes economic factors that will affect the choice of retrofitting or retirement for every coal plant currently operating in the U.S.

The study does not even address the cost issues related to greenhouse gas regulations! It focuses on the proposed EPA regulations that will require installation of costly new control equipment, which would likely result in the retirement of tens of thousands of megawatts. Combining all potential retirements could mean the shutdown of as much as one-fifth of installed coal capacity in the U.S.

Where will reliable supplies of electricity come from in the future if the role of coal declines as predicted? Consumers must pay close attention to this question.