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Power plant group warns against new federal regulations

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Posted: Friday, May 13, 2011 12:00 pm

By Colleen Flaherty

Killeen Daily Herald

The Electric Reliability Council of Texas, the state power grid operator and manager of the wholesale electric market, said this week that proposed Environmental Protection Agency regulations could force the shutdown of enough plants across the state to challenge emergency energy security.

In a study of four proposed regulatory changes released Wednesday, ERCOT said that the new rules could cause aging generation operations to close due to a financial inability to comply, particularly if expensive retrofits would be necessary.

The agency is still forming the new regulations, making it unclear whether a less expensive retrofit would suffice. It is also unclear when the regulations could take effect; some are currently being challenged by the state in a Washington, D.C., court.

"There is a lot of uncertainty in what will happen until the rules are finalized," Austin-based ERCOT spokeswoman Dottie Roark said Thursday.

Most of the regulations were introduced last year. They've been on ERCOT's radar since at least December, when the Public Utility Commission of Texas asked it to evaluate the changes' potential impact on generation facilities in Texas.

Those changes include the Clean Water Act's proposed new requirements for cooling-water intake structures to protect wildlife in nearby reservoirs; the Clean Air Act's proposed new emissions limits for hazardous air pollutants; the proposed Clean Air Transport Rule's regulation of sulfur dioxide and nitrogen oxides across state lines; and the proposed Coal Combustion Residuals Disposal regulations of coal ash and other plant emissions.

ERCOT's study found that shutdowns of power plants that can't afford an upgrade could reduce the state's emergency energy reserve to 2 percent of capacity, from above a target 13.75 percent by 2015.

Gas-fired plants make up more than half of ERCOT's installed capacity. Coal makes up about one-quarter.

David Knox, a Houston-based spokesman for NRG Energy, one of the state's biggest energy generators, said he's waiting to see exactly what upgrades will be required for some of NRG's coal and gas-fired plants to meet the proposed standards.

The company has the permits to build new plants, he said, but the dynamics of the energy market can complicate project financing; what it costs to build new energy plants per megawatt hour is significantly higher than the price at which that energy is currently sold.

He didn't say whether new plants would mean higher energy prices for consumers down the line.

ERCOT has no control over plant shutdowns, Roark said.

"Neither ERCOT nor the Public Utility Commission can tell generation developers when and where to invest or what type of generation to build," she said. "In the state's deregulated market, the generation owner bears the risk of investment and decides when and where to build new generation and what fuel type, and whether to retire or mothball existing generation."

Contact Colleen Flaherty at colleenf@kdhnews.com or (254) 501-7559. Follow her on Twitter at KDHfeatures.

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