NMA Says New Grid Analysis Warrants FERC Examination of EPA’s Power Plant Rules

Warns rule will push electric grid “over the edge”

Washington, D.C. – The National Mining Association (NMA) has asked the Federal Energy Regulatory Commission (FERC) to carefully examine the impacts to the nation’s power grid from the Environmental Protection Agency’s (EPA) power plant regulations. In a June 16 letter to FERC Chairman Cheryl LaFleur, NMA President and CEO Hal Quinn cited a new NMA-commissioned study by Energy Ventures Analysis (EVA) documenting concerns that EPA’s greenhouse gas rules for power plants may further harm grid reliability that FERC has already judged to be “close to the edge.”

Summarizing key findings from the EVA analysis, Quinn said without the availability this winter of 26,000 megawatts of additional coal-based capacity expected to close between 2014-2016, wholesale power and natural gas price increases would have been “substantially more severe.”

The effects of losing this base load capacity would have pushed up wholesale electricity prices substantially in all regional markets. EVA estimated that with the scheduled coal plant retirements and related impact on higher commodity and pipeline costs, the effect would have added $35 billion to consumers’ natural gas bills last winter. Under similar circumstances this winter and with an unusually warm summer, EVA found the cost to consumers for both power and natural gas could reach $100 billion.

“If EPA’s 2012 power plant rules brought the electric grid ‘close to the edge,’ its carbon dioxide regulations announced June 2 will surely push it over the edge,” Quinn said.

In his letter to Chairman LaFleur, Quinn noted EPA downplays these potential costs by instead suggesting system operators could design more reliable power plans “after the fact.” “The more prudent course,” Quinn said, “would be to structure a rule so it does not imperil the reliability and affordability of our electricity supply in the first instance.”

Quinn concluded that in view of potential threats to grid reliability from these flawed power plant regulations, “an independent evaluation by the Commission does not require an invitation from EPA.”