Some in Congress Ready to Battle EPA

(Energybiz 8-10-2011) Congress is on respite. But the Environmental Protection Agency is on guard. Even before the contentious debt deal the regulatory body has been on the defensive and trying to fend off attacks from industry and those lawmakers who feel the body has gone too far and too fast. 
 
The argument got fresh fuel after a pointed exchange of letters between two policy leaders: The ranking Republican on the Senate Energy and Natural Resources Committee, Lisa Murkowski, and the chairman of the Federal Energy Regulatory Commission, Jon Wellinghoff. EPA has run amok, the senator notes, while the FERC chair is responding that her accusations are premature given that the environmental agency has yet to finalize many of the rules that would impact coal plants. 
 
FERC’s preliminary findings are suggesting that 81 gigawatts of existing coal generation are “likely” or “very likely” to be retired as a result of pending environmental regulations -- everything from mercury to coal ash to carbon. That’s 8 percent of the existing generation fleet. “EPA’s rulemakings could have a serious impact on the affordability and reliability of our nation’s energy supply, especially given the sheer number of new regulations the agency has rolled out in such a short time period,” Murkowski says. Her view is supported by the North American Electric Reliability Council, which last October issued a study saying that both the “pace and aggressiveness of these environmental regulations should be adjusted to reflect and consider the overall risk to the bulk power system.”
 
To put the matter in context, Murkowsi and other Senate Democrats from coal states have long tried to delay or derail EPA. FERC Chairman Wellinghoff, whose role is to carry out the will of Congress, understands her position. He just refuses to predict how the relevant regulations will ultimately read, which means that Murkowski won't get the exact figures -- and the ammunition -- she would like to further her agenda. 
 
“Therefore, this informal assessment offered only a preliminary look at how coal-fired generating units could be impacted by EPA rules, and is inadequate to use as a basis for decision­making, given that it used information and assumptions that have changed,” Wellinghoff has written, as reported by The Hill newspaper. 
 
Cross Firing Continues
 
Wellinghoff notes in his letter that the Bipartisan Policy Center disagrees with the findings of the North American Electric Reliability Council. The bipartisan group calls the pending EPA rules “manageable,” although it does acknowledge that compliance will be a challenge. The same think tank goes on to say that a plethora of low-cost natural gas can not only “pick up the slack” in some regions but is also just as big of a factor driving coal plant retirements as the EPA regulations. 
 
Those findings are generally supported by the Clean Energy Group, which commissioned Bradley & Associates to review EPA’s proposed rules. It concludes that with proper planning, the regulations would not just improve public health and the environment but also maintain reliability -- and that many utilities are now able to achieve success. 
 
“EPA has proposed achievable standards for coal-­fired power plants for mercury, acid gases, and other hazardous air pollutants,” it writes. “The proposed emission limits are well within the capability of existing pollution control technology, and allow options for cost­ effective compliance strategies.” And if need be, EPA has the statutory authority to grant extensions to those unable to meet immediately the new requirements. 
 
According to Standard & Poor’s, more than two-thirds of all coal plants in the United States are older than 30 years. They must either be retired or retrofitted. Only about 35 percent of all existing coal-fired facilities have installed pollution controls to comply with clean air rules, it says. 
 
Advocates for overhauling the coal fleet are citing statistics that the benefits of owning a cleaner fleet will far outweigh the initial costs of making those changes. Coal proponents, however, are countering that such swift changes will cost jobs and lead to double-digit rate increases. 
 
The cross firing will continue. While Congress is resting up, the EPA is methodically moving forward. Its detractors are unlikely to stop it altogether, although they could use their leverage to extract concessions from the agency. 
 
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