A repeat of last winter's deep freeze could lead to electricity blackouts in a clutch of states spanning the Midwest to the Mid-Atlantic as proposed environmental regulations propel a switch toward natural gas-fired power.
PJM Interconnection, a regional grid operator, proposed new measures aimed at ensuring it doesn't again flirt with losing 22 percent of its electricity capacity as it did during the "polar vortex" in early January. Echoing the concerns of Republicans and some centrist Democrats who have admonished the Obama administration for rules that would restrain the use of coal-fired power, PJM noted the situation could become more dire under a "rapid transition" from coal to natural gas.
"Last winter’s generator performance — when up to 22 percent of PJM capacity was unavailable due to cold weather-related problems — highlighted a potentially significant reliability issue," it said. "PJM’s analysis shows that a comparable rate of generator outages in the winter of 2015/2016, coupled with extremely cold temperatures and expected coal retirements, would likely prevent PJM from meeting its peak load requirements."
The 2016 timetable is key because that is when new regulations designed to limit mercury and air toxics go into effect. Those rules will take many older, dirtier coal- and oil-fired power plants offline in the following years. The EPA says the rule will deliver $90 billion in health benefits and prevent 11,000 premature deaths annually once fully implemented at a $9.6 billion annual cost to business.
The rule's opponents have said that the winter that American Electric Power, the nation's most coal-dependent utility, experienced is a signal of what's to come. The Columbus, Ohio, company said 89 percent of its generators, ones that had been scheduled for shutdown under the mercury rule, were running to keep the lights on during the polar vortex.
Environmental regulations, including a proposed carbon emissions rule on power plants, aren't alone in driving a push toward natural gas. The hydraulic fracturing, or fracking, boom has lowered prices for natural gas compared with coal, making it an affordable power-generating option.
But the more conservative members of the Federal Energy Regulatory Commission have issued warnings about how new environmental regulations could hinder electricity reliability for several years.
"Just as the commission does not have expertise in regulating air emissions, I would not expect the EPA to have expertise on the intricacies of electric markets and the reliability implications of transforming the electric generation sector," Philip Moeller, a Republican commissioner at FERC, which regulates the electric grid, said in written testimony for a July House hearing.
The House Energy and Commerce Committee has held a number of hearings on the topic, and some senators have voiced their concerns.
Republican wariness over Norman Bay, President Obama's choice to head FERC who had previously led the commission's enforcement office, largely rested with Bay's lack of commission experience on electric reliability. He will take over for FERC Chairwoman Cheryl LaFleur in April 2015 under a deal brokered by senators and the White House.