‘ObamaAir’ Is Coming Unless Congress Stops It, And It Could Crash The Electrical Grid

David Stevenson Energy Policy Director, Caesar Rodney Institute
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At a time when federal incompetence is on display in foreign policy, the Veterans Administration, the CDC handling of Ebola, the IRS, and even the Secret Service, regulators want to nationalize the management of the electric grid. The result will be 30 percent higher electric bills, black outs, and no environmental benefits.

No matter, that the state-run grids are reliable, economically sound, and environmentally effective. Under federal control only the environment will be considered, with an expensive carbon tax and higher electric cost a specific part of the policy. Gina McCarthy, administrator of the EPA, said in Senate testimony July 23, the plan “is not about pollution control.” We have seen what “Obamacare” did to the health care industry. We can expect the same from “ObamaAir,” the combination of existing regulations, new proposed guidelines on existing power plants, and coming tighter standards on ozone emissions.

The new federal regulations on power plants may result in blackouts as early as 2020, according to the group charged with ensuring electric grid reliability. While the North American Electric Reliability Corporation (NERC) includes a disclaimer on taking a position on the regulatory plan, their list of concerns is thorough and devastating to the plan’s proponents. Proposed regulations hypothetically offer states flexibility with four “building blocks” to reduce carbon dioxide emissions from existing power plants. Below is a summary of the reliability report findings:

Building Block 1 will require coal fired power plants to become 6 percent more efficient. Regulators ignored differences in power plant design, age, and fuel variability in creating this assumed target. Coal fired power plants are designed to run continuously as base load suppliers. However, regulators would force them to run less and cycle up and down more which, in the end, results in lower efficiency. The net result will produce increased emissions, not less.

Building Block 2 will shift the dispatch priority from coal fired plants to natural gas fired plants. Fuel diversity is a critical factor in maintaining electric grid reliability. The regulatory plan would shut down about 40 percent of coal fired power plants in the country by 2020. NERC also points out that it takes at least five years to build new natural gas pipeline infrastructure. The regulatory timeline only leaves about a year. The winter priority for natural gas is heating, not electricity production, and power plant supplies are interruptible. Natural gas delivery infrastructure can freeze up during extreme cold snaps. It will be extremely risky to depend on natural gas supplies in winter.

Building Block 3 calls for more wind and solar power, and keeping open existing nuclear power plants scheduled for closure. Wind and solar power are intermittent requiring fossil fuel back up which reduces their carbon reduction impact. Because of cost, onshore wind will fill most of the renewable energy requirement. Wind power is often produced far from where it is needed forcing massive new transmission infrastructure which may not be ready in time. Many states do not have wind speeds high enough for commercial production and will have to import power. Regulators cannot figure out how to give importing states credit because producing states can claim credit for permitting the windmills, and double counting is not allowed. The nuclear power plants scheduled for closure are older plants requiring more costly maintenance at a time when power prices are falling. They cannot be “wished” into extended life times.

Building Block 4 calls for electric customers to use a lot less electricity. New energy efficiency (EE) goals do not count voluntary improvements made every year by individuals and businesses in their own best interest. Only utility-based subsidy programs will be counted towards the goal.  Many states already have programs that will be met with low cost EE options before the regulatory plan begins. This will leave only expensive options to meet goals that start after 2020. The regulatory goal is to improve EE 1.5 percent a year. NERC data from existing programs shows about one-tenth of that amount is practical.

All of these regulations are set to take effect this June 1. The time for rebuttal to these policies expired in December. The only way these EPA regulations can be stopped now is if the new Republican Congress makes stopping them a priority. Otherwise, prepare for an increase in your electric bills starting this summer.