Is Obama shutting down a power plant near you?
Six years ago, President Obama threatened thousands of hard-working Americans livelihoods with two sentences. “So if somebody wants to build a coal-fired plant they can. It’s just that it will bankrupt them…”
And now, the President is trying to make good on his promise. The EPA’s new climate regulations would close down enough electrical generation capacity to reliably power 44.7 million homes. That’s enough power for twenty-one states west of the Mississippi.
More than 72 gigawatts (GW) of electrical generating capacity have already, or are now set to retire because of the Environmental Protection Agency’s (EPA) regulations. The regulations causing these closures include the Mercury and Air Toxics Standards (colloquially called MATS, or Utility MACT)[1], proposed Cross State Air Pollution Rule (CSAPR)[2], and the proposed regulation of carbon dioxide emissions from existing power plants.
To put 72 GW in perspective, that is enough electrical generation capacity to reliably power 44.7 million homes[3]—or every home in every state west of the Mississippi River, excluding Texas.[4] In other words, EPA is shutting down enough generating capacity to power every home in Washington, Oregon, California, Idaho, Nevada, Arizona, Utah, Montana, Wyoming, Colorado, New Mexico, North and South Dakota, Nebraska, Kansas, Oklahoma, Minnesota, Iowa, Missouri, Arkansas, and Louisiana.
Over 94 percent these retirements will come from generating units at coal-fired power plants, shuttering over one-fifth of the U.S.’s coal-fired generating capacity.[5] While some of the effected units will be converted to use new fuels, American families and businesses will pay the price with higher utility bills and less reliability for their electricity.
This report is an update of a report we first issued in October 2011.[6] In the original report, we calculated that 28.3 GW of generating capacity would close as a result of EPA’s regulations. At the time, we warned, “…This number will grow as plant operators continue to release their EPA compliance plans.” Unfortunately, this statement has proven to be true and will continue to grow in the future as new EPA regulations continue to be released. This latest update shows that 72.7 GW of electrical generating capacity will now close—a 44.4 GW increase.
To calculate the impact of EPA’s rules, we first assumed that EPA’s modeling of the regulations correctly predicted which power plants would close as a result of the regulations. Then, we looked at statements, filings, and announcements from electrical generators where they stated they would be closing power plants and in which they cited EPA’s regulations as the precipitating cause of the plant closures. We then compared EPA’s modeling outputs with the announcements and created a master list of plant closures as the result of EPA regulations (the master list is below).
Combining actual announcements with EPA’s modeling shows that EPA’s modeling grossly underestimates the actual number of closures. Originally, EPA calculated that only 9.5 GW of electrical generating capacity would close as a result of its MACT and CSAPR rules. Before President Obama’s newly proposed regulations on existing power plants even begin take effect, however, it is clear that actual number will now be much higher. We predict that over 72 GW of power generating capacity will likely close—over seven times the amount originally predicted by EPA modeling. Worse, as utilities continue to assess how to comply with EPA’s finalized rules, there will again likely be further plant closure announcements in the future. In our original 2011 report there were 30 states with projected power plant closures. Today, that number has risen to 37.
NERC is Concerned about Reliability even though It Underestimates the Amount of Closures
It should be further noted that the North American Reliability Corporation’s (NERC) original modeling of the MACT rule and original CSAPR rules estimated that under the worst case, or “strict” scenarios, 16.3 GW of electricity capacity would be closed due to the regulations, and the Department of Energy’s (DOE) “stringent” test showed that only 21 GW of generating capacity would be closed. [7] More recently, however, NERC has admitted that, “Since January 2011, the introduction and implementation of several environmental regulations combined with increased natural gas availability has contributed to the closure of nearly 43 GW of baseload capacity.”[8] NERC has shown concern that the closures will cause electricity reliability problems.
According to their 2013 Summer Reliability Assessment, some areas of the country have not been able to build enough generation capacity to meet recent load growth. A major reason for this is uncertainty surrounding environmental regulations.[9] Because of these deficiencies, some areas will see their generation reserve margins fall below target levels that can jeopardize power reliability. According to NERC, “Insufficient reserves during peak hours could lead to increased risk of entering emergency operating conditions, including the possibility of curtailment…and even rotating outages of firm load.”[10]
How much greater will the reliability problems be, given that retirements appear to be higher than initial NERC estimates, and additional burdensome regulations are continually being added?
Announced and EPA Projected Retirements Are Significantly Higher than DOE’s Worst Case Scenarios
As noted in our previous update, public statements and the Utility MACT itself showed that EPA relies heavily on a DOE study claiming that even under a theoretical “stringent” test, EPA Utility MACT and CSAPR regulations would only close 21 GW of generation. EPA then claimed this study proves regulations will not threaten reliability. Our analysis, however, shows that with the addition of President Obama’s newest proposed rules, EPA projections and operator announcements will total more than 72 GW of generation retirements—over 50 GW more than DOE’s supposedly ultra-strict test scenario.
In fact, the initial reliability assessment released by the EPA with their new CO2 restrictions on existing power plants even points out that regions in the Southeast and Northeast may experience effects from the regulation that “…raise concerns over reliability.”[11]
EPA Regulations are Already Causing Electricity Prices to Dramatically Rise
Unfortunately, recent EPA regulations are already greatly reducing U.S. coal power capacity and raising electricity prices for homes and businesses across the country. According to Dr. Julio Friedman, Assistant Secretary for Clean Coal at the U.S. Department of Energy, wholesale electricity prices could end up rising as much as 80 percent from the effects of these rules.[12]
This past winter demonstrated in real time the value of the existing coal fleet. During the winter of 2014, coal was the only fuel with the ability to meet demand increases for electricity, providing 92 percent of incremental electricity in January/February, 2014 versus the same months in 2013. Americans were harmed as the relentless cold indicated that prudent utility practices require large, baseload coal plants to stabilize the grid, keep society functioning, and maintain electricity availability. Many regions suffered; for example, in late January and early February 2014 some locations in the Midwest experienced gas prices as high as $35/MMBtu, and the Chicago Citygate price exceeded $40/MMBtu. Those figures are nearly 10 times higher than EIA’s estimated average price of $4.46/MMBtu for natural gas in 2014.
The result of these and ongoing EPA rules, if put into force, will be no new coal-fired plants in the United States and massive closures of existing coal plants. Since coal is our single largest source of electricity generation, replacing these units will require the construction of higher-cost renewable generating technologies and/or natural gas units that will need massive infrastructure improvements to meet the higher demand. And, consumers will need to pay for these changes. Those added costs will make utility bills unaffordable for many families and force industry to curb production, relocate, or shut down altogether slowing any further recovery in an already lagging economy.
BACKGROUND INFORMATION
LIST SOURCES
This list is derived from three sources: (1) EPA’s parsed modeling files, which identify the power-plant units that EPA models say will close as a result of either the Cross State Air Pollution Rule (CSAPR) or Mercury and Air Toxics Standards (MATS Rule); (2) news releases or press stories where a power-plant operator says a unit will or is likely to close due to EPA regulations; and (3) filings with state public utility commissions where a power-plant operator says a unit will or is likely to close due to EPA regulations. This list does not include the EPA’s parsed modeling files for the 111(d) rule. All sources are publically available information. Note that many of the plants originally projected to close by EPA modeling have already been retired.
EPA PARSED FILES
Process to Identify Units Closed by EPA Regulation
Individual power plants often have multiple boilers, called “units,” that generate electricity. EPA, in addition to overall modeling, models the impact that the Agency believes its regulations will have on each unit, at each power plant in America. EPA lists these results in “parsed files.” When producing parsed files for a regulation, EPA will first create a business-as-usual “base” case parsed file where the Agency details what it believes will happen absent EPA’s new regulation. Next, EPA creates a “policy” or “remedy” case parsed file showing how EPA believes plants will respond to a regulation. Thus, one can find the difference between these two cases, and figure out the impact EPA believes a regulation will have, by comparing the policy/remedy case parsed file to the base case parsed file. As such, the following steps were CSAPR and MATS Rule:
- For CSAPR, data from the parsed files for the CSAPR’s base case and remedy case were put on a single spreadsheet. The combined results were organized by plant name. Each plant listed in both the base case and remedy case was removed. Thus, the resulting list only shows those plants that EPA believes will close because of the
CSAPR. Plants projected to close under CSAPR rules were retained in this update despite the uncertain legal status of the rule. Regardless of the legal status, many of the plants that were originally projected by EPA modeling to be impacted have already been retired or converted. In these instances, some of the citations will reflect the public statements or announcements made stating these impacts rather than the original EPA modeling.
- For the MATS Rule, data from the parsed files for the MATS Rule’s base case and policy case were put on a single spreadsheet. The combined results were organized by plant name. Each plant listed in both the base case and policy case was removed.
Thus, the resulting list only shows those plants that EPA believes will close because of the MATS Rule.
- The resulting base case-free CSAPR list and MATS Rule list were then put on a single spreadsheet. The combined results were organized by plant name. In each instance where the CSAPR and the MATS Rule independently said the same plant would retire, one of the entries was deleted so as to not double-count it. The citation was modified to attribute the unit closure to both the CSAPR and MATS Rule.
POWER-PLANT OWNER PUBLIC ANNOUNCEMENTS
Ensuring that Retirements are Result of EPA Regulation
All retirements announced by plant owners in news releases or through public filings on this list were due to EPA regulation. In each such case, the source cited directly identifies EPA regulations as the sole or main reason for the power plant’s retirement.
Avoiding Double-Counting
If a unit was identified to close by both EPA parsed files and public announcements, then the duplicate entry was released. The unit’s citation was modified to indicate that both EPA and public announcements slated the unit for retirement.
FREQUENTLY ASKED QUESTIONS
Why is this list’s total retired capacity higher than EPA’s total?
The total retired capacity for this list is higher than EPA’s total because this list includes EPA’s projected unit retirements and unit retirements announced by power-plant operators. No unit cited by both sources was double counted.
Does this list include plants that will close even without the CSAPR or MATS Rule?
No. The parsed file results used in this list do not include business-as-usual base case results. In other words, if EPA modeled a unit to close even if the CSAPR or MATS Rule were not implemented, then that unit was not included.
EPA said only 4.7 GW will close, so why are these numbers higher?
The 4.7 GW retired coal-plant capacity figure is from the EPA Regulatory Impact Analysis (RIA) for the MATS Rule alone. The CSAPR RIA projects an additional 4.8 GW of coal-plant capacity to retire due to the CSAPR. When combined, the RIA’s project 9.5 GW of coal-plant capacity to retire due to the MATS Rule and CSAPR. As noted above, additional plant retirements are due to actually announced retirements.
When a power-plant operator announces that it is closing a certain unit, how do you know that is because of EPA regulations?
In each case where a retirement is attributed to public announcements, the cited source material lists EPA regulations as the sole or main reason for the plant’s retirement.
Some groups have said EPA regulations will retire up to 103 GW of coal-fired generation, but this list only shows 72 GW. Does this mean those projections are wrong?[13]
No. If anything this list gives more credibility to those higher retirement projections. This list is very conservative; it merely shows what units EPA says its regulations will close, plus specific units that plant-operators have said will close because of EPA regulations. Those analyses that show higher power-plant retirements than this list lay out what the final overall impact of EPA’s regulation will be. On the other hand, this list focuses just on the currently disclosed impact. Thus, this list will likely grow far higher, especially as states realize what will be needed to comply with recently announced 111(d) regulations. However, because this list already finds many more retirements than EPA projected, the Agency’s claim that its regulations will have minimal impact on electric generation are clearly incorrect.
EPA has said that other projections showing a high coal generation retirements were based on incorrect assumptions. Is that the case for this list?
No. The only modeling in this list is from EPA. Thus, any mistaken assumption would be EPA’s mistaken assumption. Otherwise, the remaining data is from actual public announcements detailing the imminent or highly possible closure of specific units at specific power plants. Since our initial release in 2011 it is evident that any claims of incorrect assumptions regarding coal plants were unfounded.
Does this list account for other EPA regulations that may impact power plants?
This list only includes the parsed files for EPA’s CSAPR and MATS Rule modeling. No other specific EPA models were consulted to compile this list. While some of the public statements from power plant operators cite specific EPA regulations like CSAPR, MATS and 111(d), many times the statements are more general and broadly cite EPA as the catalyst for retirement. Regardless, all of the publically announced plant retirements listed are due to EPA regulations.
REFERENCES
[1] Environmental Protection Agency, Regulatory Impact Analysis of the Proposed Toxics Rule, Mar. 2011, http://www.epa.gov/ttn/atw/utility/ria_toxics_rule.pdf.
[2] Environmental Protection Agency, Regulatory Impact Analysis (RIA) for the final Transport Rule, http://www.epa.gov/airtransport/pdfs/FinalRIA.pdf. *** Note: At the time of this release, CSAPR is in legal limbo. In 2011, The D.C. Circuit issued a stay on CSAPR, but the D.C. Circuit’s opinion was vacated by the Supreme Court in 2014. EPA has filed a motion to have the stay on CSAPR lifted, but the D.C. Circuit has not yet ruled on the motion according to EPA’s website: http://www.epa.gov/airtransport/CSAPR/bulletins.html
[3] Assuming the 72 GW is made up solely of coal retirements with an 80 percent capacity factor
[4] http://quickfacts.census.gov/qfd/states/53000.html.
[5] Energy Information Agency, “Existing Net Summer Capacity by Energy Source and Producer Type, 2002 through 2012 (Megawatts)”, http://www.eia.gov/electricity/annual/html/epa_04_02_a.html
[6] Institute for Energy Research, IER Identifies Coal Fired Power Plants Likely to Close as Result of EPA Regulations, Oct. 7, 2011,http://instituteforenergyresearch.org/2011/10/07/ier-identifies-coal-fired-power-plants-likely-to-close-as-result-of-epa-regulations/.
[7] see North American Electric Reliability Corp, 2011 Long-Term Reliability Assessment, Nov. 2011, http://www.nerc.com/files/2011LTRA_Final.pdf.
[8] North American Reliability Corporation, “2014 Summer Reliability Assessment”, May 2014,http://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/2014SRA.pdf.
[9] North American Reliability Corporation, “2013 Summer Reliability Assessment”, May 2013, http://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/2013SRA_Final.pdf.
[10] ibid.
[11] Environmental Protection Agency, “Technical Support Document: Resource Adequacy and Reliability Analysis,”http://www2.epa.gov/sites/production/files/2014-06/documents/20140602tsd-resource-adequacy-reliability.pdf. Pg. 6.
[12] Aaron Larson, “CCS Could Increase Coal-Fired Electric Generation Costs By 70%–80%,” Power Magazine, February 13, 2014.
[13]http://www.ucsusa.org/sites/default/files/legacy/assets/documents/clean_energy/EPA-standards-and-electricity-reliability.pdf
EDITORS NOTE: The featured image is of the Big Bend power plant emits plumes of smoke and steam. TECO Energy-owned Tampa Electric still generates 55 percent of its electricity using coal. Source: SKIP O’ROURKE | Times (2002).
