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Utility groups wary of US EPA's focus on coal-fired power plant upgrades

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Utility groups wary of US EPA's focus on coal-fired power plant upgrades

The Trump administration's proposed replacement for the Obama-era Clean Power Plan is designed to give states more flexibility to cut carbon emissions, but three of the nation's major electric utility trade groups are worried the U.S. Environmental Protection Agency's new plan still is too rigid.

While the Clean Power Plan encouraged a nationwide shift toward renewable energy sources, the EPA's proposed Affordable Clean Energy, or ACE, rule would determine that efficiency upgrades called "heat-rate improvements" at individual coal-fired power plants are the best way to reduce climate-changing carbon dioxide emissions from the power sector. However, the ACE rule's narrow focus on heat-rate improvements at individual units presents its own set of challenges, the Edison Electric Institute, American Public Power Association and National Rural Electric Cooperative Association said in separate comments filed with the EPA.

Issued in 2015, the Clean Power Plan sought to meet the goals of the international Paris Agreement on climate change by encouraging U.S. utilities to depend more heavily on zero-polluting generation. Under that rule, states were given three main options: improving the heat rate of existing coal-fired power plants, relying more heavily on lower-emitting existing natural gas plants, and boosting the use of renewable energy sources such as wind and solar. The Clean Power Plan also would have allowed states to use energy efficiency and participate in a regional emissions trading program to help meet their CO2 targets.

In contrast, the proposed ACE rule would define the "best system of emission reduction" for CO2 emissions as heat-rate improvements to existing coal-fired power plants. Proponents of the plan have argued that the rule's "inside the fenceline" approach represents a legal alternative to the Clean Power Plan, which was stayed by the Supreme Court in 2016 before it could take effect. By reducing the amount of heat needed to produce a unit of electricity, coal plants can reduce the amount of fuel used and CO2 emitted, the plan's supporters note.

The ACE rule also would allow plant operators to modify existing facilities without triggering additional environmental controls under a program known as new source review, possibly extending the lives of plants headed for retirement. Weakening new source review regulations could result in greater emissions over time by allowing coal-fired plants to run longer, critics argue.

Heat rates

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Under the ACE rule, states would have three years to prepare and submit plans that include performance standards for individual coal-fired power plants based on a menu of optional heat-rate improvement technologies. The options include installing intelligent sootblowers, boiler feed pumps, leakage controls, blade path upgrades and other new components. The performance standards would need to reflect the degree of emissions reductions specific plants could achieve through heat efficiency gains, but establishing reductions targets would be left to the states.

The EPA in its proposal said variations in heat rates among generators with similar design characteristics, as well as year-to-year variations in heat rates at individual units, means "there is potential for [heat rate improvements] that can improve CO2 emission performance." However, the Edison Electric Institute, or EEI, in its comments said the ACE rule fails to recognize that constantly fluctuating heat rates at individual units could make setting emissions targets for specific units difficult for states. "Put simply, emissions rates vary considerably over time," EEI argued.

Geography, elevation, unit size, pollution controls, firing method and utilization rates all are factors that can affect the efficiency and performance of a unit, the group said. The EEI also noted that heat-rate improvements degrade over time, creating another level of emissions rate variability. "These factors may make it difficult for states to establish an emissions standard for an affected unit that can be achieved continuously," EEI said.

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The American Public Power Association, or APPA, agreed, noting that emissions rates at individual coal-fired units may be achievable one year but not another because those units are required to ramp up and down to varying degrees as cheaper renewable and gas-fired energy sources are added to the electric grid. "Heat rate can vary within and among steam generating units for a wide variety of reasons that are beyond the control of the unit's owner or operator," the group said. "For that reason, the existence of heat rate variability is not a valid indicator of the need or opportunity for significant improvement in a unit's heat rate."

APPA also hired a consultant to evaluate the economic impact of implementing the heat-rate improvement technologies identified in the ACE rule, which found that potential heat-rate improvements at seven different coal-fired units would produce fuel savings of 1% to 2% compared to total generation costs. Meanwhile, the National Rural Electric Cooperative Association said "return on investment for many of these menu items will be hard to achieve." However, all three utility groups agreed that some units can improve their heat rate, and in turn their CO2 emission rates.

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Compliance flexibilities

The ACE rule would give states discretion to establish averaging times for emissions at affected power generators, and the EPA also has proposed allowing limited averaging across affected units within the same facility for compliance purposes. But all three utility groups are seeking additional ways to comply with the rule.

Averaging across a larger number of units — for example, those within a state — could help address overall emissions variability, while still ensuring that emissions rates are achieved," the EEI said. Given the annual and multiyear variability in emissions for some units, longer averaging periods could also be appropriate, the group said. And similar to the Clean Power Plan, EEI suggested allowing states to establish emission tradings programs as another compliance flexibility, noting that many individual power plant operators opted to participate in trading schemes under the 1990 Acid Rain Program to reduce sulfur dioxide emissions. The EPA also should allow states to adopt different compliance deadlines for individual units based on remaining useful life, cost, technical feasibility and other factors, APPA said.

If the ACE rule is not changed, the proposal risks violating Section 302(k) of the Clean Air Act, which requires the agency to establish standards that limit the quantity, rate or concentration of emissions of air pollutants "on a continuous basis," EEI said. "Courts have interpreted this requirement to mean that standards should apply at all times and that efforts to exempt periods of operation are contrary to the plain language and intent of the" law.