EPA Anti-Coal Regulations May Create a Less-Reliable Power Grid

Aug 20, 2012

Historically, coal has been used more than any other fuel source to generate electricity in the U.S. For a long time, we’ve seen EPA anti-coal rules threaten the reliability of the electrical grid. One of the conclusions in a new Government Accountability Office (GAO) report supports this stating that “while these actions may not cause widespread reliability concerns, they may contribute to reliability challenges in some regions.” That means lost jobs and economic growth.

By examining previous studies and interviewing players in the electricity industry, GAO examined the effects of four EPA rules:

  1. Utility MACT, A.K.A. the “Blackout Rule”;
  2. Cross-State Air Pollution Rule;
  3. Proposed Cooling Water Intake Structures regulation; and
  4. Proposed Disposal of Coal Combustion Residuals regulation

The GAO report found that the electricity industry could have trouble meeting deadlines for these rules:

Retrofits of generating units, transmission system upgrades, and the construction of new generating units can be major engineering undertakings, and several power company representatives and other stakeholders we interviewed said that completing some of these undertakings by compliance deadlines may be challenging in some cases.

One reason is supply chain worries:

Some power company representatives and other stakeholders stated that, because of the large number of potential retrofits, they had concerns about the availability of specific skilled laborers or equipment needed to install some controls.

According to the GAO report, there is concern that these EPA rules may cause reliability challenges in some regions. One study cited in the report found that electrical reserve margins in Texas and New England could fall below needed levels by 2015.

Two uncertainties hover over this report. First is uncertainty about the pace of economic growth. The report states, “[I]f the economic recovery is more robust, there could be more electricity demand than expected, which might increase the need for additional generating capacity in some areas.” EPA rules may prevent enough electricity capacity to be available should higher economic growth demand it.

Another second uncertainty is the price of natural gas. Because of the shale boom, its price has fallen and its use as a generation fuel has increased, but this creates new challenges. GAO was told by industry stakeholders that because of a lack of natural gas pipelines in certain regions and competing demand for natural gas to heat homes, there “could be interruptions in the delivery of natural gas to [electricity] generating units.” A robust electrical grid needs a variety of energy sources to ensure stability. Natural gas, coal, nuclear, hydro, solar, and wind all must play a role.

This report supports the argument that EPA rules targeting coal could have a negative effect on the reliability of the power grid. EPA needs to take this report seriously. They should reevaluate the efficacy of current rules and think twice (even thrice) before attacking coal use with even more regulations.

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