Utility MACT: A Monster of a Rule

Background

In April 2012, the U.S. Environmental Protection Agency (EPA) issued a new set of regulations requiring power plants to reduce emissions of mercury and other hazardous air pollutants (HAPs) within three years. The regulations are commonly referred to as the Utility Maximum Achievable Control Technology Standards (“Utility MACT”) or the Mercury and Air Toxics Standards (“MATS”) rule.

Regardless of which acronym you use, these regulations spell T-R-O-U-B-L-E to those of us trying to keep electricity reliable and affordable. By many estimates, Utility MACT is one of the most expensive regulatory programs in history, with industry costs totaling in the billions annually.

We all support reasonable, effective environmental laws and regulations that truly protect our air, water and natural resources, but as public policy the Utility MACT rules fail on most counts. The key shortcomings are as follows:

Overstated Benefits: The independent National Economic Research Associates (NERA) has testified that nearly all the environmental and public health benefits attributed to Utility MACT are, in fact, not related to the rule’s stated purpose of regulating HAPs. Rather, the EPA is counting as benefits the coincidental reduction of particulate matter that is already regulated to safe levels under other existing Clean Air Act provisions. The only analysis that the EPA conducted for the mercury and air toxics regulated by the rule showed benefits totaling $500,000 to $6 million per year – but the EPA claims that the benefits are actually worth $33-$90 billion.

Underestimated Costs: By the EPA’s own estimates, the costs of implementing Utility MACT are nearly $11 billion per year – significantly larger than the actual estimated benefits from the analysis of mercury and air toxics. But the imbalance could be much worse. According to NERA, “The U.S. electricity sector will have to raise about $84 billion of additional capital between 2012 and 2015” just to comply with the standards as proposed. Furthermore, the United Mine Workers of America estimates that “as many as 54,000 direct jobs [are] at risk in the utility, mining and rail transport sectors, in addition to 200,000 jobs in related industries and communities impacted by plant closures.”

Unachievable Standards: Utility MACT addresses three categories of air pollutants: mercury, acid gases and non-mercury metallic HAPs. To establish new emissions standards, the EPA looked at the best-performing plants and factories around the country in each of the three categories and determined that every source must match that performance in all three areas. In other words, they are imagining a Frankenstein-like facility (or “Franken-Plant”) – a mythical hybrid with a combination of the best emission controls from multiple facilities. Unfortunately, for companies trying to build a new coal fired generation unit, it may be difficult getting guarantees that available technologies can meet the new emission limits.

Unrealistic Timeframe: In requiring facilities to comply with Utility MACT by 2015, the EPA has established an irrational deadline that all but ensures compliance failure. A survey of owners of coal-fueled power plants conducted in fall 2010 found that control technologies can take from 4-5 years to design, permit, fabricate and install.

Strain on the Grid: The EPA has naively stated that “the requirements of the proposed rule can be met without adversely impacting electric reliability” – a statement contradicted by industry experts such as the Utility Air Regulatory Group and Federal Energy Regulatory Commission (FERC). In fact, FERC advised the EPA that is should perform a reliability analysis to evaluate potential impacts of the rule; the EPA did not include any such analysis in its rulemaking.

To summarize, the Utility MACT rule costs too much, accomplishes too little, requires unrealistic standards to be achieved in an unreasonable time frame and, if fully implemented, could endanger the nation’s electricity grid while also leading to double-digit electricity rate increases in many states.

Where Are We Now?

The Utility MACT rule was published in the Federal Register on February 16, 2012, and became effective on April 16, 2012. Legal challenges have been filed by 24 states (the most ever for an EPA rule), many utilities and groups ranging from the National Mining Association to the National Black Chamber of Commerce. On July 20, 2012 - thanks in large part to these lawsuits - the EPA announced it would reconsider components of the MACT rule that apply to new power plants.

In its process of reconsideration, the EPA found additional data that the agency did not previously consider. Based on this new data, the EPA is proposing to make the standards more achievable and provide some additional flexibility in their implementation. On Nov. 16, 2012, the EPA issued a revised version of the Utility MACT/MATS standards for new power plants and opened a new comment period for public and industry reaction. In comments submitted to the EPA on Jan. 7, 2013, rural electric cooperatives and other electricity generators expressed concern that the agency set the mercury limit at a level that is not measureable by existing technology and requested that a more realistic and measurable standard be established.

The EPA has yet to begin its reconsideration of the requirements for existing power plants. We have a long way to go to convince the EPA that those standards should be similarly revised.

Call to Action

On June 20, 2012, a vote to repeal the MACT rule fell just short in the U.S. Senate - though we appreciate the efforts of Keep Electricity Affordable supporters who took the time to make their opinions known to their representatives in Congress. Please continue to make your voice heard and visit our site to stay informed on this issue.

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