Last week, President Obama announced that he is quashing a proposed new ozone rule that would have imposed as much as $90 billion per year in compliance costs, with potentially devastating effects for business activity. But the new ozone rule was just the tip of the iceberg in the Obama administration’s regulatory free-for-all. The EPA’s Cross-State Air Pollution Rule (CSAPR), for example, is still set to go into effect, which, according to the Electric Reliability Council of Texas, which runs the electrical grid in our state, could eliminate a critical volume of electric generation in Texas within the next year.
At the Huffington Post, EPA administrator Lisa Jackson recently lamented that “misleading claims about the EPA’s work have been making their way into the mainstream debate. The most notable is an industry report that the EPA is responsible for an unprecedented ‘train wreck’ of clean air standards that will lead to the mass closure of power plants.” Actually, just the CSAPR by itself is going to lead to the mass closure of power plants.
The EPA’s grounds for dismissing the claims that this single rule could cause power outages are glaringly flawed: The mandated 47 percent reduction of sulfur dioxide (SO2) emissions, effective January 2012, will make it impossible to use native Texas lignite coal to generate electricity. (Texas generates approximately ten percent of electricity from lignite.) And, despite the EPA’s vague contention to the contrary, there is no immediately available alternative. Power plants designed to use lignite cannot simply switch to the lower sulfur coal from the Powder River Basin in Wyoming that is used by many Texas plants. Reconfiguration of the plants now burning lignite would take three to four years, with costs in the billions. Construction of natural gas plants would take the same amount of time.
The EPA estimates the total electric generation capacity in Texas at 90,400 megawatts (MW). ERCOT measures that capacity at 72,570 MW. To get to over 90,000 MW, EPA evidently assumes that installed wind facilities in Texas — approaching 10,000 MW — have a capacity factor of 100 percent. This is absurd. The Department of Energy generously averages the capacity of U.S. wind farms at around 25 to 30 percent of installed capacity. ERCOT derates wind to 8.7 percent of capacity because wind is unpredictable and unreliable, especially under the summer’s peak demand. The EPA also includes retired and moth-balled power plants in their calculation of the Texas generation capacity. That is an odd one. Most retired plants are old, inefficient facilities that would require extensive retrofits to meet The EPA’s current emission limits.
Peak electric demand in Texas this summer exceeded ERCOT’s forecast for 2014. Demand in July was 12 percent higher than for any prior July. Demand in August exceeded July. With a total generating capacity of 72,570, and this summer’s daily demand over 68,000 MW, the state’s surplus generating has become razor thin. With temperatures above 100 degrees for 75 consecutive days, the state’s power grid has been running, on some days, with a surplus capacity of only 50 MW. ERCOT’s current target reserve margin is over 10,000 MW—a 13.75 percent surplus, enough power to cover contingencies of weather and plant operations. The EPA slipped Texas into this rule to prevent the interstate transport of emissions that “might” impact St. Louis and one county in Illinois. If Texas loses five to ten percent of base-load coal-fired generation in 2012 because of this new EPA regulation, next summer will bring dangerous rolling brown-outs. Lisa Jackson exhorts us to have “a real conversation about protecting our health and the environment.”
If only she practiced what she preaches.