Luminant Responds to Inaccurate Dallas Morning News Editorial

spot_PwrTxLogoOn July 24, the Dallas Morning News published an editorial with several inaccuracies about the Environmental Protection Agency's Cross-State Air Pollution Rule, Texas' inclusion in it and the possible impacts to the state.

Rule Background
In July of 2011, the Environmental Protection Agency released its 1,323-page final Cross-State Air Pollution Rule, formerly called the Clean Air Transport Rule.

Their proposed draft rule released a year earlier did not require reductions of sulfur dioxide emissions in Texas. But the final rule issued by the EPA in July 2011 imposes severe limits on Texas electricity generating plants, and requires compliance beginning on January 1, 2012. In other words, the pending federal government rules changed radically in one year. They went from asking for no changes to requiring massive reductions, with less than six months to comply.

The EPA included Texas in the final rule's annual sulfur dioxide emissions reduction program despite concerns expressed by a large and bipartisan contingent of Texas leaders about the lack of notice, insufficient time for analysis and the effects on jobs, electric prices and power supply reliability in Texas.

Impacts of a Compressed Timeline

Compliance might very well require generators to shut down or curtail some generating units and mining operations. Since the Electric Reliability Council of Texas requires 90 days of notice before ceasing plant operations, that gives Texas generators less than three months to make the operational decisions that will affect the Texas power grid.

Jobs will be at risk, because if the EPA is right that a key part of the solution is switching from burning Texas-mined lignite to Wyoming coal, then Texas lignite mines will be forced to shut down, putting hundreds of people out of work across Central and East Texas.

Electric reliability will suffer as plants are forced to reduce operations in order to comply with the rule. The Electric Reliability Council of Texas – which the Texas Legislature has directed to oversee power supplies in Texas – has already said this rule is unreasonable and threatens Texans' ability to have sufficient electricity.

Prices will rise as the most cost-effective sources of electricity – plants that burn inexpensive Texas lignite – will have to produce less, using more expensive fuels.

The bottom line: The timeline for making these reductions is unreasonable. If the deadline remains, it will put jobs, reliability and prices at risk.

Dallas Morning News Editorial Fact Check

On July 24, the Dallas Morning News published an editorial with several inaccuracies about the rule, Texas' inclusion and the possible impacts to the state. As outlined in greater detail below, the inaccuracies include:

  • Timing: The rule's requirement for compliance in less than six months means Texas generators only have options that are reductive, not additive. They can curtail operations, or shut plants. They can't install significant new control equipment, or build new forms of generation. And this problem isn't unique to Texas. Grid operators and generators in other regions, like the Southwest Power Pool, Georgia Power and Westar, have said they face the same challenge.
  • Lack of Adequate Notice: Texas was not included in the annual emissions reductions required in the draft, or proposed, rule issued last year, but was included in the final rule issued this year.That means that while other states will have had 18 months to prepare for compliance, Texas has less than six months.
  • Texas Compliance Status for SO2: Texas is currently in compliance for existing particulate matterclean air standards (EPA cites particulate matter as the driver for including Texas in the requirements for SO2 reductions). While Texas has achieved a 33 percent reduction in SO2 emissions in the last 10 years, CSAPR requires an additional 47 percent reduction in less than six months. That's impossible to do without seriously impacting the state's ability to generate enough electricity during periods of high demand like winter and summer.

DMN Writes: "The Electric Reliability Council of Texas' warning creates a false choice that misses an important point, that Texas has plenty of alternatives. The false choice pits clean air against reliable power. Texas must have both, and can achieve both through a continued push to develop alternative energy, embrace forward-looking conservation policies, and reduce emissions from coal-fired power plants.”

FACT CHECK: CSAPR's unreasonable and unrealistic timing rules out most alternatives. There is no quick replacement for the generation capacity that could be reduced as a result of CSAPR. It is impossible to engineer, permit, purchase and install additional power plant emissions controls in less than six months. This rule simply does not provide enough time to meet the reduction targets in a reasonable and responsible manner.

DMN Writes: "The sad fact is that North Texas remains in violation of federal ozone standards, and after years of denial, Texas is among the least prepared to comply with the new rules.”

FACT CHECK: The Morning News is confusing federal ozone standards with the mandates of CSAPR. Ozone is caused by a reaction of NOx and volatile organic compounds – not SO2. CSPAR mandates a far greater percentage reduction in SO2 emissions by Texas generators than it does for seasonal NOx. Generators are prepared to meet CSAPR's seasonal ozone compliance requirements by January 1, 2012.

Across Texas, ozone levels decreased by 27% between 2000 and 2009 – a larger reduction than in any other state. Statewide NOx emissions dropped 58% during the same period. As the DMN is aware, the majority of NOx emissions in DFW come from cars and trucks, not power plants.

DMN Writes: "Fault for this rests squarely with state officials and coal-fired power plant operators who have tried repeatedly to delay the inevitable.”

FACT CHECK: Texas's fleet of power plants has SO2 emission rates that are more than 20 percent lower than the national average. Over the last decade in Texas, SO2 emissions were reduced by 33 percent even while generation increased by 30 percent, and under current SO2 emission standards, the state is in compliance.
Under the previous rule, the Clean Air Interstate Rule program, which CSAPR is replacing, Texas was already making reductions and buying allowances to comply with federal clean air standards. In other words, Texas has not delayed anything—it has been in compliance all along with CAIR. It is the EPA that delayed issuing a replacement rule for CAIR for nearly three years and now expects Texas to implement drastic measures to comply with CSAPR in less than six months.

DMN Writes: "Owners of coal-fired power plants and ERCOT have had plenty of advance warning about the new federal rules. Complaining about the timetable gives operators another excuse to put off what they must do.”

FACT CHECK: Texas did not have adequate notice. The EPA's proposed rule, issued last summer, only required Texas plants to reduce emissions of NOx during the May-September ozone season. The final rule, released this month, went further by requiring Texas to reduce both NOx and SO2 on an annual basis as well.

  • TCEQ Chairman Bryan Shaw: "[A] lone sentence in a 256-page proposed rule can hardly be considered adequate notice … the EPA did not provide Texas with proposed emission budgets, time frames, etc., that were provided to every other state included in the proposed rule. Nor did the EPA contact Texas officials to alert them to Texas' inclusion in the final rule.”

DMN Writes: "Texas isn't being singled out. The EPA's rule applies to coal plants in 27 states, which, like Texas, also will have to make major emissions cuts. In Texas, for example, the rule would require an annual reduction of sulfur-dioxide emissions to 244,000 tons, or by 47 percent from 2010 levels.”

FACT CHECK: The other states had more notice because they were included in the proposed rule. Texas is the only state that was not included in the proposed rule's annual program that is now included in the final rule without any opportunity for comment. Additionally, on a percentage basis, the reduction Texas must make in SO2 is grossly disproportionate. Despite the fact that Texas' SO2 emissions make up only 11 percent of the SO2 emissions for all the states included in CSAPR, EPA mandates that 25 percent of the reductions must come from Texas.

DMN Writes: "In a recent Viewpoints column in this newspaper, Gina McCarthy, assistant administrator for the EPA's Office of Air and Radiation, noted that about 42 percent of emissions of soot-forming sulfur dioxide covered by the rule in Texas are produced at just three plants, which collectively account for only 13 percent of the state's electricity generation.”

FACT CHECK: A 13 percent reduction in Texas's generation capacity will essentially erase the state's reserve margin, greatly affecting reliability. A reserve margin is defined as the amount of generation capacity required by the state's grid operator, ERCOT, in order to ensure that when demand peaks, like it does on hot summer afternoons or during extreme winter weather, there is enough electricity to power the state.

ERCOT targets a 13.75 percent reserve margin. Before accounting for CSAPR, ERCOT was forecasting a 17.5 percent reserve margin in 2012.

Shutting down 13 percent of the state's generation means Texas would have only a 4.5 percent reserve margin. In other words, the safety margin would be only one-third of what the state has deemed to be necessary to protect against blackouts. That's a matter of concern to all Texans.

  • Former ERCOT Board Chair Mark Armentrout: "Projections for the next five years continue to show a decreasing reserve margin. Rules like this from the EPA will drastically alter the business risk to create new generation in our state, which has a steadily growing population. That means it is certain that the reserve margin decrease will be accelerated.”

DMN Writes: "McCarthy says that most operators will not face a heavy burden under this rule but that those not in compliance simply must step up and install the scrubbers and other technology to sharply reduce emissions as others have done.”

FACT CHECK: Installing scrubbers and switching technologies takes time – that's just a physical and engineering reality. It also takes time to implement increased use of non-Texas, lower-sulfur coal, allowing for the design, permitting, construction and installation of the equipment that is needed to switch fuel and still maintain historical power output from the plants. Could you instantaneously switch your car to burning compressed natural gas? No. Power plants can't make an instantaneous switch, either. And making that fuel switch means that workers at Texas lignite mines will lose their jobs, since there will be no demand for the lignite coal they produce.

  • Former TCEQ Chairman Kathleen Hartnett White: "Retrofitting plants that now use lignite would involve three to four years of engineering, fabrication, boiler reconstruction, new rail construction and complex new permits — at multibillion-dollar costs.”