Here’s what utility groups are saying about EPA’s power plant rule
Policy & Regulation

Here’s what utility groups are saying about EPA’s power plant rule

The power industry is fractured over EPA’s proposal to regulate emissions from coal- and gas-fired plants. Key concerns involve the readiness of compliance technologies under the rule.

Reaction to the U.S. Environmental Protection Agency’s proposal to cut carbon pollution from coal and natural gas-fired power plants has been mixed, according to comments filed with the federal agency.

Some utility trade groups say the EPA’s proposed rule should not be finalized, while others say improvements are needed. Still other utilities have thrown their support behind it.

The Edison Electric Institute (EEI), the association that represents U.S. investor-owned utilities, said its members are not confident that technologies designated as the main compliance options under the proposed rule will be technically feasible given the projected implementation timelines.

Those technologies are carbon capture and sequestration (CCS) and hydrogen co-firing.

EEI said the rule as proposed should not be finalized, saying it would negatively impact reliability and affordability for utility customers. The EPA rule would not be made final until next year.

The group said if EPA does move forward with the standards as proposed, it should provide electric companies as well as states with “as much compliance flexibility as possible” to address achievability concerns. EPA also should commit to providing broad enforcement discretion should the technologies not perform reliably or be available on the agency’s projected timeframes, EEI said.

The proposed rule was announced by EPA in May and would require coal-fired plants that plan to operate past 2039 to install CCS to capture 90% of their CO2 emissions. Coal plants intending to retire before 2032 or retire by 2035 and run at a 20% capacity factor or less would not face limits under the rule.

Gas-fired combustion turbines larger than 300 MW and with at least a 50% capacity factor would have to capture 90% of their carbon by 2035 or co-fire with 30% hydrogen starting in 2032. Those plants would need to co-fire with 96% hydrogen starting in 2038.

Other groups echoed EEI’s concerns about the ability of hydrogen and CCS technologies to emerge and deliver under the proposed timelines.

“EPA couples these inadequately demonstrated technologies with unworkable timelines that will be impossible to achieve,” said the National Rural Electric Cooperative Association (NRECA), which represents 900 nonprofit electric co-ops and other rural electric utilities.

In order to get around EPA’s combustion turbine requirements, NRECA said the proposal would likely lead to the building of more, smaller units that operate at less than 50% capacity.

The Electric Power Supply Association (EPSA) said the EPA is underestimating how much gas- and coal-fired capacity would retire due to the proposal. EPSA represents the interests of independent power producers.

“At a time when our nation should be retaining needed existing resources and investing in new infrastructure in response to policy decisions which are driving an increase in electricity demand, this proposal will likely force a substantial amount of generation to either run less or pull the plug on their power plants entirely,” EPSA said in its comments.

A rosier outlook

Some utility interest groups are looking at EPA’s proposal more favorably.

The Energy Strategy Coalition–whose members include Calpine, New York Power Authority and Pacific Gas and Electric–said the EPA is on solid legal grounds to use CCS and clean hydrogen as best available compliance technologies.

With the support of favorable incentives in the Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act (IRA), the group said its members are investing to scale up CCS and clean hydrogen for emission reduction at fossil-fired plants.

The coalition said a technology can be “adequately demonstrated” even if it is new and not yet broadly adopted.

“Given adequate lead time, both technologies meet this standard,” the group said.

Constellation Energy, which has invested in both CCS and hydrogen blending initiatives, also offered strong support for the EPA proposal.

“Far from being too restrictive, the guidelines offer flexibility and build on technology and processes that the industry is already putting in use to great effect today,” said Joe Dominguez, Constellation President and CEO. Constellation also operates one of the largest fleets of nuclear power plants in the country.

He added: “I am disappointed to see many of my peers represented by the Edison Electric Institute and others working to block these very practical measures rather than offering constructive solutions and recognizing the imperative of moving our industry toward a carbon-free future, as we inevitably must do.”

Xcel Energy said it believes much of the EPA’s proposal is workable but added recommendations for certain compliance flexibilities where necessary. For example, the utility urged EPA to set the capacity factor limit for new low-load natural gas units at 25%, assessed over a 36-month period.