Texas electricity regulators say new federal environmental rules could cause enough power generators to shut down that it could threaten outages.
The Electric Reliability Council of Texas, which operates the state power grid, released a study on Wednesday showing that new rules from the Environmental Protection Agency could cause operators of older natural gas-fired plants to shut them down rather than spend the money to comply. But it depends on whether the EPA will require an expensive type of retrofit or if something cheaper will do.
Shutdowns could reduce Texas’ extra power plant capacity to meet emergencies to 2 percent in 2015 if no replacement plants are built, the study says. And right now, power prices are too low to lure investors to new power plants projects.
ERCOT’s target is 13.75 percent, and the state grid currently exceeds the target.
“Near-term, you may see new gas units built if we see the right price signals in the marketplace,” said John Ragan, NRG Energy’s regional president for Texas.
NRG, the second-largest generator in Texas, operates a number of coal and natural gas-fired plants.
Ragan said he doesn’t expect to have to shut down his older plants because he understands the new EPA rules make allowances for older plants. The ERCOT report conceded it isn’t clear what retrofits of older gas plants would satisfy the new requirements.
The largest generation company, Energy Future Holdings, agreed: “ERCOT’s report … is indicative of the uncertainty these changes could bring once the applicable rules are finalized,” spokesman Allan Koenig said in an email.
The EPA now requires power plants to install equipment that will minimize the impact on fish that live in the reservoirs used to cool the plants. Ragan and the ERCOT study say it’s not clear whether the rule requires a specific type of retrofit.
Also, the EPA is revising rules on air pollution, mercury emissions and the handling of coal ash waste.
Some groups that have studied the impact of the rules on the U.S. power fleet concluded the country would lose dozens of coal-fired power plants, shut down because retrofits are too expensive. One study speculates Texas could lose more than a dozen coal-fired plants.
But ERCOT doubts any coal-fired plants here will shut down because of the regulations. Many plants already have strong pollution controls, and the plants use various types of coal to meet environmental requirements, the study says.
The problem is, replacing the older natural gas plants that might shut down costs money and could take time.
NRG’s Ragan said he has a permit for a new natural gas plant, but he cannot finance it unless power prices rise.
