June 2014 - for the online version go HERE.
A federal court decision allowing the Environmental Protection Agency (EPA) to move forward with a rule limiting mercury emissions from power plants has heightened concerns in some quarters about interstate pipeline infrastructure inadequacy.
In mid-April, the U.S. Court of Appeals for the District of Columbia said 1,400 coal- and oil-fired electric generating units (EGUs) at 600 power plants must meet air emissions standards finalized in 2011. The plants have up to four years to comply with necessary reductions in emissions of mercury and other air toxics, but the 2011 final rule had been held in abeyance because of a legal challenge.
In September 2013 the EPA issued a proposed rule, which, if finalized, will force newly built power plants to meet stricter standards on emissions of carbon dioxide, a leading greenhouse gas. Taken together, these two EPA actions have persuaded some electric utilities to close coal-and oil-fired power plants, leading some officials at agencies such as the Federal Energy Regulatory Commission (FERC) to worry that natural gas pipelines will have a hard time supplying replacement power plants using natural gas, especially in tough weather such as last winter.
American Electric Power has said it will retire almost a quarter of its coal-fueled generating units in the next 14 months. That is 25% of its capacity. In PJM, 13,000 MW of additional capacity will be retired by mid-2015. "Unless the market structure changes, the capacity replacements for these assets may not provide the same level of reliability we have experienced historically," says Nicholas Akins, chairman, president, and CEO, AEP. PJM is the Regional Transmission Organization (RTO) serving all or parts of the states of Illinois, Indiana, Michigan, Ohio, Kentucky, Tennessee, West Virginia, North Carolina, Virginia, Maryland, Delaware, Pennsylvania, New Jersey and the District of Columbia. AEP, Dominion and Exelon, among others, serve electricity customers within PJM, to name a few.
To the extent that EPA regulations drive some coal-fired generation plants out of business, pressure will be ramped up on pipelines to serve the gas-fired plants that take their place, if in fact gas-fired plants DO take their place. "Natural gas has proven to be the fuel of choice for new generation developing in our region," states Michael Kormos, executive vice president of Operations for PJM Interconnection. "Over 64% of new resources in our queue are proposed gas-fired generation."
A week before the federal court handed down its EPA/mercury ruling, the FERC’s unofficial "pipeline commissioner" told a Senate committee he preferred the EPA present better data before forcing electric utilities to close because of new environmental rules. Philip Moeller told the Senate Energy and Natural Resources Committee, which was meeting to consider issues related to grid reliability, "The sufficiency of our generating resources has been clouded by uncertainties arising from changing environmental regulation. I am not opposed to closing older and less environmentally-friendly power plants, but I am concerned that the compressed timeframe for compliance with the new environmental rules was not realistic given the amount of time it takes to construct new plants and energize transmission upgrades to mitigate plant closures.”
Mr. Barlas, a freelance writer based in Washington, D.C., covers topics inside the Beltway.