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CSAPR, the unfriendly EPA rule

By LindsayM

It’s the time of year when lamppost ghosts haunt front lawns, paralyzing 5-year-old pirates and superheroes in their Trick or Treating tracks. And for the power industry, it’s also the time of years when an unfriendly EPA rule known as CSAPR (pronounced by industry hipsters as “Casper”) is scaring the dickens out of some utilities.

Unlike the Friendly Ghost, the Cross State Air Pollution Rule (CSAPR) is not so personable, despite the EPA’s recent proposed easing of the rule. The rule is aimed at limiting the amount of SO2 and NOx emissions levels in 27 states. Granted, the EPA took into consideration additional data from states and companies and announced several proposed changes to the rule on Oct. 6. The proposed changes include budget increases in 10 states and unit level allocations in six states. 

Texas, which sued the EPA in September in an effort to block CSAPR, is one of the 10 states proposed to experience slight budget increases. EPA regional administrator Al Armendariz said the change in is being made because the EPA now understands it had been provided incorrect information from some utility companies, including Luminant.

Despite the changes proposed for Texas, many in the ERCOT region are still fighting the rule. Barry Smitherman, a commissioner with the Texas Railroad Commission, recently gave a testimony to a investigative committee, stating that CSAPR “was promulgated using a flawed procedural process and will jeopardize the reliability of the electric grid.”

Smitherman referenced a technical analysis wherein ERCOT engineers state that CSAPR would impact the reliability of the Texas Electric Market by requiring between 1,200 and 6,000 MW of generation to not run during certain periods of the year.

“Certainly anything that would take baseload generation off would provide some intermittency issues for ERCOT,” said Elias Hinckley, partner at Kilpatrick Townsend & Stockton LLP.

Yet another of the main concerns is the quick turnaround that CSAPR compliance will require.

Many companies, as well as the state of Kansas, have consented that their power plants will not have enough time to install the proper control technologies by Jan. 1, 2012, which is when EPA monitoring for CSAPR will begin. Northern States Power Co.-Minnesota, a unit of Xcel Energy, is the latest of nearly three dozen companies and states to sue EPA over CSAPR.

For now, power plants affected by the rule should continue the ghoulish process towards compliance. EPA is offering a CSAPR implementation training workshop on Nov. 10. The proposed changes will be open to public comment for 30 days from publication in the Federal Register, leaving the affected power generators an extremely short timetable to comply with CSAPR starting on Jan. 1, 2012.

Until the proposals are finalized, uncertainty continues to loom for the entire industry; not just coal-fired generators, said. “If you don’t have a clear picture of what retirements will be because of certain litigation, it’s tough to model out what the value proposition for any new generation is.”

CSAPR, you are truly the haunt of the power industry this Fall.

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