Federal Court Ruling On Mercury Revives Gas-Electric Worries

A federal court decision allowing the Environmental Protection Agency (EPA) to move forward with a rule limiting mercury emissions from power plants has heightened concerns in some quarters about interstate pipeline infrastructure inadequacy.

In mid-April, the U.S. Court of Appeals for the District of Columbia said 1,400 coal and oil-fired electric generating units (EGUs) at 600 power plants would have to meet air emissions standards finalized in 2011. The plants have up to four years to comply with necessary reductions in emissions of mercury and other air toxics, but the 2011 final rule had been held in abeyance because of a legal challenge.

In September 2013, the EPA issued a proposed rule which, if finalized, forces newly-built power plants to meet stricter standards on emissions of carbon dioxide, a leading greenhouse gas.

Taken together, these two EPA actions have persuaded some electric utilities to close coal- and oil-fired power plants, leading some officials at agencies such as the Federal Energy Regulatory Commission to worry that natural gas pipelines will have a hard time supplying replacement power plants using natural gas, especially in tough weather, such as last winter.

American Electric Power has said it will retire almost a quarter of its coal-fueled generating units in the next 14 months or about ¼ of its capacity. For PJM, 13,000 megawatts of additional capacity will be retiring by mid-2015. “Unless the market structure changes, the capacity replacements for these assets may not provide the same level of reliability we have experienced historically,” says Nicholas Akins, chairman/president/CEO of AEP. PJM is the Regional Transmission Organization (RTO) serving all or parts of the states of Illinois, Indiana, Michigan, Ohio, Kentucky, Tennessee, West Virginia, North Carolina, Virginia, Maryland, Delaware, Pennsylvania, New Jersey and the District of Columbia. AEP, Dominion and Exelon, among others, serve electricity customers within PJM, just to name a few.

To the extent that EPA regulations drive some coal-fired generation plants out of business, pressure will be ramped up on natural gas pipelines to serve the gas-fired plants that take their place, if in fact gas-fired plants do indeed replace the coal-fired plants. “Natural gas has proven to be the fuel of choice for a new generation developing in our region,” states Michael Kormos, executive vice president of operations for PJM Interconnection. “Over 64 percent of new resources in our queue are proposed gas-fired generation.”

A week before the federal court handed down its EPA/mercury ruling, the Federal Energy Regulatory Commission’s unofficial “pipeline commissioner” told a Senate committee he was concerned that EPA needed to come up with better data before forcing electric utilities to close down because of new environmental rules. Philip Moeller told the Senate Energy and Natural Resources Committee, which was meeting to consider issues related to grid reliability, “The sufficiency of our generating resources has been clouded by uncertainties arising from changing environmental regulation. I am not opposed to closing older and less environmentally-friendly power plants, but I am concerned that the compressed timeframe for compliance with the new environmental rules was not realistic given the amount of time it takes to construct new plants and energize transmission upgrades to mitigate plant closures.”

FERC has long been worried about natural gas-electric utility interconnection. The past winter only intensified those concerns. In March, it issued a proposed rule revising the natural gas operating day and scheduling practices used by interstate pipelines to schedule natural gas transportation service. The proposed revisions include starting the natural gas operating day earlier, moving the timely nomination cycle later and increasing the number of intra-day nomination opportunities to help shippers adjust their scheduling to reflect changes in demand.

Proposed changes to GHG rule upsets energy industry

Gas industry sectors are unhappy with the EPA’s latest proposed changes to greenhouse gas (GHG) monitoring and reporting rules. In the proposed rule the agency issued in February 2014, it said it wanted to foreclose use of BAMM in 2015. BAMM stands for best available monitoring methods, which the EPA had previously said pipelines and producers could use until the start of 2015 in “unique or unusual circumstances.” Allowing companies to use BAMM was a concession the EPA made when it issued the final Subpart W rules – the section of the GHG rules related to natural gas and petroleum sectors exclusively. That was in November 2010. That method makes it easier for pipeline companies to estimate the GHG emissions from compressors and other equipment. But the BAMM concession has outlived its usefulness, the EPA says now. In addition, the agency wants to make changes in the GHG-related information companies can keep confidential.

In its proposed rule, the EPA says BAMM was approved as “a limited, transitional program to serve as a bridge to full compliance with the rule for cases where reporters faced reasonable impediments to compliance.” The problem is companies may have trouble coming up with GHG estimates without using BAMM since they will have to use prescribed monitoring and measuring formulas. In some cases, the data inputs for those specified methods may be missing, either too burdensome to find, or what would be considered confidential business information (CBI).

Faced with what appears to be a fait accompli, trade associations and pipeline companies are pleading with the EPA to give them some flexibility where annual measurement may be impossible or impractical due to safety or operational concerns. Lisa Beal, vice president, environment and construction policy, Interstate Natural Gas Association of America (INGAA), says, “For example, the transportation and storage segments must have alternative compliance methodologies when vent configuration precludes measurement. In addition, situations arise that prevent measurement due to safety concerns. Thus, the missing data provisions must address the void caused by eliminating BAMM, or BAMM sections must be retained.”

Jeff Applekamp, director, government affairs, Gas Processors Association, adds: “EPA suggests that the proposed revisions to the missing data provisions will provide an adequate alternative in such situations. But, in our view, these provisions will not be broad enough to cover all reasonably possible contingencies and the amount of information required under the missing data provisions, particularly in the reporting requirements, is excessive.”

Thomas J. Bach, QEP, director, environmental services, Kinder Morgan Energy Partners L.P., complains that the EPA proposed rule, if finalized, will force interstate pipelines to make competitive data public. In several instances, EPA is changing classifications for data that it previously deemed CBI without justifying its decision to reclassify the data. Examples include the proposed confidentiality determinations for annual quantities of gas transported through a compressor station, gas injected into and withdrawn from underground natural gas storage and LNG imported or exported.

OSHA holds hearing on crane operator certification

The Occupational Safety and Health Administration (OSHA) held a hearing on May 19 on its proposal to extend the deadline for certification of crane operators three years beyond the current November 2014 deadline. All OSHA standards on crane operation apply to underground construction. Debbie Dickinson, executive director, Crane Institute Certification, objected to the extension, forcing the OSHA to hold the hearing. She opposes the three-year delay arguing there are two fully-competent crane operator accreditation bodies, hers being one of them.

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