Why the Clean Power Plan Needs a Dynamic Reliability Safety Valve

The U.S. Environmental Protection Agency's (EPA's) Clean Power Plan is arguably the most ambitious and far-reaching regulation in the agency's history. America's electric cooperatives oppose the rule for a variety of reasons, with its serious threat to electric reliability topping the list. So, even as the National Rural Electric Cooperative Association (NRECA) challenges the fundamental legality of the regulation in court, we are urging the EPA to incorporate into the rule a robust, dynamic reliability "safety valve." This crucial regulatory mechanism would adjust or postpone the Clean Power Plan's carbon dioxide (CO₂) emissions targets to ensure that power generators could increase electricity output to meet unexpected contingencies.

Safety Valve Critical for Co-ops

The safety valve issue is especially important to NRECA members, because co-ops have fewer generation options than other types of utilities for responding to unforeseen events that can trigger power outages. Such events include everything from heat waves and extreme cold spells to fuel shortages and the failure and unexpected retirement of other electric generating units, transmission lines, and gas pipelines. Any of these events, alone or in combination, could require numerous power plants to increase their electricity output-and potentially exceed their CO₂ emissions limits-to keep the lights on. And these events are not without precedent.

In 2012, Unit 3 at the San Onofre Nuclear Generating Station in California went offline after a small leak of radioactive steam was discovered; Unit 2 already was offline for scheduled maintenance. In 2013, Southern California Edison announced that both units, capable of producing 2,200 MW, would shut down permanently, removing a large supply of dispatchable, zero-emitting generation from the grid.

How would states, grid operators, electric co-ops, and other utilities respond to such exigencies with the Clean Power Plan in place? Grid operators and power producers would scramble to find replacement power. Renewables would be ruled out, because they are not dispatchable baseload sources of energy. Natural gas generation would be the likely candidate, but its CO₂ emissions would have to be offset under the rule. If electric co-ops were called on to respond, our emissions almost certainly would increase, because we rely on coal to produce more than half of our electricity.

So, what is the EPA's response to all this? Not a problem. There will be strong emissions trading markets from which generators in a tight spot can purchase allowances or credits.

Current Safety Valve Is Insufficient

If the EPA is right, power generators will never have to make use of a dynamic reliability safety valve. So there's no downside to incorporating one into the Clean Power Plan. But if the agency's assumptions about emissions markets prove to be too rosy, fossil electric generation will increase, possibly busting state emissions limits. No co-op or other utility should face steep penalties and fines for exceeding its Clean Power Plan emissions limits when responding to a grid emergency. But this is the scenario that many co-ops are likely to face unless the rule's current safety valve-which offers only a one-time, 90-day reprieve from emissions standards-is dramatically improved.

Given the reach of the Clean Power Plan and the complexity of the grid, it's not surprising that reliability organizations have flagged concerns, as well. The Electric Reliability Council of Texas has stated that, "if multiple unit retirements occur within a short timeframe, there could be periods of reduced system-wide resource adequacy and localized transmission reliability issues." The North American Electric Reliability Corp. found that the current safety valve "[p]rovides limited flexibility if a state encounters an unexpected reliability concern."

In light of these concerns, NRECA in December petitioned the EPA to accept public comment on its safety valve provisions in an effort to help the agency develop a more robust reliability mechanism. We recommended that a new safety valve contain several key elements, including:

a- Identification of triggering events, including unforeseen and unavoidable circumstances or systemic changes in the availability and operability of electric energy resources.

a- Clarification of who may apply for relief, which should include the owner or operator of an affected generating unit.

a- Expansion of available relief and remedial actions, including the ability of petitioners to request prospective and/or retrospective relief from an emissions requirement on an annual or multi-year basis.

a- Definition of the scope of relief, which should include adjustments in the compliance obligations of affected generating units without regard to any particular number of triggering events.

a- Mandatory consultation with the Federal Energy Regulatory Commission (FERC) on reliability, consistent with FERC's expertise and authorities under the Federal Power Act.

NRECA believes that the Clean Power Plan is well outside the EPA's legal authority and should be withdrawn in its entirety. Nonetheless, we are equally committed to helping America's electric co-ops find the most cost-effective means to achieve compliance should the rule survive court review. Adopting a dynamic reliability safety valve is essential to mitigating the impacts of the Clean Power Plan and ensuring that electric power remains reliable and affordable for all consumers. a-

- John J. Novak (john.novak@nreca.coop) is executive director, environment for the National Rural Electric Cooperative Association.

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