Pending US Environmental Protection Agency regulations for the utility industry could collide with the need to maintain reliability, a US Federal Energy Regulatory Commission member said Thursday, adding that it is FERC, not EPA that takes the heat from Congress if there is a major blackout.
FERC member Philip Moeller also questioned the need for the production tax credit for wind generation, citing oversupply issues such as those in the Northwest.
“If EPA starts putting the screws on the coal plants … we’re going to have a collision course with reliability,” Moeller told an audience at Platts Northeast Power Markets Forum in Arlington, Virginia.
While he said he understands the need for environmental regulations, he said there is “potential for an agency to push too far, too fast.”
The uncertainty over potential EPA regulations will add to the power industry’s worries over the next few years, he said, adding that if there are major reliability problems in the wake of new rules, “I am more likely to be called under oath [before Congress] than an assistant administrator at EPA.”
One of FERC’s responsibilities is protecting the reliability of the high-voltage interstate transmission system through mandatory reliability standards.
EPA has a number of pending rules that could lead to early generator retirements, including the Clean Air Transport Rule affecting 31 Eastern states, the maximum achievable control technology standard for hazardous air pollutants, and regulations on cooling water intake and coal combustion byproducts.
“I can be fuel neutral – I can’t be reliability neutral,” Moeller said, adding that he is “fascinated” to see how the interaction between Congress and EPA will play out. New transmission is one option that would bolster reliability, he said.
While Moeller touched on a number of topics, he also questioned the need for the federal production tax credit for wind generators, mentioning the oversupply situation in the Bonneville Power Administration’s service territory, where high water runoff, compounded by increasing wind resources and low demand, is forcing BPA to “spill” water.
The decision on whether to spill more water over dams and not use it for hydro generation because of the growing amount of wind power is at the heart of a BPA proposal to curtail wind resources when hydropower is abundant, and is pitting BPA customers against wind power developers. Wind interests say they stand to lose renewable energy credits and production tax credits if renewable generation is replaced with hydropower.
Moeller questioned whether wind generation should receive a production tax credit, 24 hours a day, seven days a week, if it is called on infrequently, saying: “I don’t know how long we can sustain that.”
And any increase in intermittent generation on the power system will continue to continue to create challenges in other regions, he said.
“You’re going to see this collision of public policy where we’re paying this production tax credit to the wind developers,” Moeller said.
“I thought [the collision] was about ten years away, but now I think it’s a lot closer to being addressed, due to the operational challenges that public policy puts on the system,” he said, adding that “I think Congress has to address the PTC eventually.”
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