Author: Dennis Tkacs
The Supreme Court ruled that the EPA erred in not considering the costs that would be incurred by utilities to comply with the regulations. The ruling sends the case back to a lower court for further action. Presumably, the EPA will structure a response that addresses costs and thus keep these regulations intact. One approach that would help the regulation would be to suggest a formula to amortize costs over a longer period and thus minimize yearly outlays for compliance.
Regardless, the regulations have caused power companies to make hard choices about their generating fleets. Newer, more efficient plants will likely see the investment needed to comply. In many cases, though, the costs can’t be justified, particularly with older, less efficient plants. In these situations utilities may elect to mothball an older plant, that is, to keep it ‘alive’ to potentially be returned to its fleet, or it may elect to simply shut down the plant completely.
Many utilities have elected to take the former course of action spending billions to decommission plants, in some cases remediating the site completely. In other cases, the utility has treated a plant as a ‘brownfield’ site on which it may situate new generating assets such as highly efficient and more environmentally acceptable combined cycle units.
When the Mercury and Air Toxics Standard was rolled out three years ago, many utilities looked on the regulations as being a given with which they had to comply. Decisions were made to close and decommission commercially unviable facilities. Despite the EPA’s setback in the Supreme Court, little will change. Once begun, actions such as decommissioning are not reversible.
But what use are marginal coal-fired generating plants? Given how generation is dispatched, lesser plants didn’t run much anyway, being relegated to roles providing ancillary services to the grid, that is, they provided voltage and frequency stabilization, a pivotal role in moving power from remote generating sites to high demand areas; for example, power from the Midwest being moved to the power-hungry Northeast.
Marginal plants also provided generation in times of high demand, the summer cooling and winter heating season. Consider the polar inversions that brought record cold conditions to much of the U.S. in 2014. In many cases, gas was diverted from generation to heating. What kept the lights on? Older coal-fired assets stepped in to address over 90% of the demand for more MWs.
So, while the recent Supreme Court ruling was significant, the regulations in question have already had an impact and have likely curbed emissions. Nevertheless, there are important considerations that have to be considered on both sides of the regulatory fence.
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