EPA Power Plant Rule Power Struggle


July was hot. Really hot. According to the Europe-based Copernicus Climate Change Service, July of 2023 was earth’s hottest month on record, with the average temperature up 1.5 degrees Fahrenheit from the average temperature for years 1850-1900.

“The era of global warming has ended. The era of global boiling has arrived,” UN chief Antonio Guterres proclaimed, calling for a bold plan to immediately slash carbon emissions, believed to be the cause of the warming of the planet.

It’s not like we haven’t been trying. President Joe Biden continues to feverishly push his climate agenda ahead of the 2024 election, and many of his proposals are included in the Inflation Reduction Act, pumping millions into programs aimed at electrification and efficiency, promoting more electric vehicle use and less burning of fossil fuels. And that’s not all.

Biden’s Environmental Protection Agency (EPA) is rewriting rules to mandate increased efficiencies for everything from gas stoves to water heaters. This year, they are taking an even greater top-down approach, going after power plants fueled by coal and natural gas, which are still the main sources of electricity generation in the country, by far.

“By proposing new standards for fossil fuel-fired power plants, EPA is delivering on its mission to reduce harmful pollution that threatens people’s health and well-being,” said EPA Administrator Michael Regan, in announcing the proposal in May.

The plan sets new caps on emissions for all coal and most gas-fired power plants in operation, requiring them to drastically cut carbon dioxide emissions or shut down, with benchmark deadlines beginning in 2032. The EPA rule directs plant operators to use carbon capture technology or blend gas with clean hydrogen. The problem is these technologies are largely unproven, still in development, and very expensive. There is not a single power plant in the nation currently using carbon capture sequestration (CCS).

“EPA’s proposal is unrealistic, unachievable, unlawful, and will reduce key generating resources just as Americans are increasing their reliance on electricity,” National Rural Electric Cooperative Association CEO Jim Matheson said. “This proposed rule will result in higher costs and greater uncertainty for Americans and magnify today’s reliability challenges with grave consequences for an already stressed electric grid.”

The rule would impact Dairyland Power Cooperative, which provides wholesale power to 18 Wisconsin electric co-ops and operates the coal-fired John P. Madgett (JPM) plant, located in Alma. JPM was a critical asset for Dairyland when natural gas prices skyrocketed amid the pandemic. Dairyland, which has a diverse portfolio that includes wind, solar, hydro, landfill gas, and coal, leaned on JPM to fill the need for reliable and affordable power, setting a new single-day generation record on May 18, 2022, which was not even a peak hot or cold day.

Under the new EPA rule, Dairyland would have to reduce emissions at JPM by using carbon capture or by co-firing natural gas. Brad Foss, Dairyland’s environmental and compliance director, said neither one is a good option.

“Logistically, there’s a lot of concerns with both of those scenarios; just getting a natural gas pipeline to the facility and the modifications that would be needed to even utilize or burn natural gas there would be pretty challenging,” Foss said. “With carbon capture, it’s some of the same hurdles with running a pipeline, and it’s an unproven technology.”

Foss said Dairyland did a study on the feasibility of running natural gas to JPM in 2012 which found at that time it would have cost $100-$230 million, which would be up to $300 million in 2023 dollars. And that doesn’t include the many other costs to convert or environmental challenges.

As for Dairyland’s proposed Nemadji Trail Energy Center (NTEC), which the co-op touts as “a flexible, low-emitting, and highly efficient natural gas facility that will support the rapid expansion of renewable energy resources,” Foss says it would not be hampered by the proposed EPA rule.

“The carbon dioxide emission limit that’s proposed in the rule is actually greater than the limit that’s in our air permit, so we would be in compliance right from the get-go with the Nemadji Trail Energy Center,” he said. “And that emphasizes the significance of making sure that we can get that plant permitted, construction started, and get it operational. That plant supports our plan for additional renewables coming on the system.”

Once approved, Dairyland will be a 50% owner of NTEC, along with partners Basin Electric Power Cooperative and Minnesota Power. The owners are still awaiting final federal approval.

Years-long delays in the permitting process for renewable-enabling plants like NTEC, and Dairyland’s Cardinal-Hickory Creek transmission line, are slowing the transition to more clean energy, and utility leaders across the nation say a mandate to install expensive, unproven technology at baseload gas and coal plants, or force them to shut down, will not solve the problem.

In a letter to the EPA, Wisconsin Electric Cooperative Association President and CEO Steve Freese said, “WECA believes the proposed rules contain timelines that are unrealistic and unachievable. The compliance deadlines endanger new and existing natural gas plants and all but ensure coal units will shut down. It is unlikely that the infrastructure could be put in place due to the Wisconsin Public Service Commission’s permitting process, cost, supply-chain challenges, public opposition, and land ownership/access. WECA believes the proposed rules threaten baseload electricity production, reliability, and affordability.”

Reliability may be the biggest threat of the three. The historically fuel-agnostic North American Electric Reliability Corp. (NERC), which develops and mandates reliability standards for the grid to prevent large-scale outages and catastrophic collapse, and the Midcontinent Independent System Operator (MISO), which directs the supply of electricity for 15 states including Wisconsin and part of Canada, have both recently broken with tradition and warned of the growing risk of blackouts if baseload power plants continue to be retired without adequate replacement.

“We’ve got less generation in this country today than we did 10 years ago,” Richard Burt of NERC’s Midwest Reliability Organization recently told electric cooperative industry leaders at WECA’s Energy Issues Summit. Burt said as more coal plants are retired and replaced with intermittent renewables such as wind and solar, the risk of an energy shortfall grows, and noted that even with all the new solar installations, solar generation increased from 1.7% in 2012 to 3% in 2022. The bulk of generation, about 60% nationally, still comes from coal and natural gas. In the MISO region, coal and natural gas provide more than 80% of generation on high-demand days.

With the adoption of more electric vehicles (a separate EPA rule restricts emissions in transportation, prompting 60% of all new cars to be electric by 2030) and electrification incentives for home heating and appliances, demand will continue to grow, Burt said, widening the risk of an electricity shortfall. In a risk assessment, NERC rated the MISO region as “orange” or “elevated risk” for this summer.

“Up until three years ago, we didn’t even do color-coded charts, because nothing was ever orange. And this winter is going to be red,” Burt said. “It’s meant to be a wake-up call.”

NERC writes the reliability standards that could prevent power plant operators from shutting a plant down in the interest of preventing rolling blackouts, which could put plant operators at odds with the EPA if the new rule takes effect.

The Edison Electric Institute, which represents investor-owned utilities, also argued against the rule due to the technical shortcomings of clean hydrogen and carbon capture.

Meanwhile, the EPA acknowledges that since 2005, the power sector has reduced carbon dioxide emissions 36 percent despite the increased production to meet growing demand.

Those who provide wholesale energy to Wisconsin electric co-ops, including Dairyland Power Cooperative, Great River Energy, Alliant Energy, We Energies, and Minnesota Power, have set goals aimed at reducing emissions.

“From deploying microgrids and renewables to launching demand response programs, electric cooperatives take an innovative and diverse approach as they work towards a responsible energy future,” NRECA’s Matheson said.

The EPA proposal will not be final until at least next year, and even then, it may end up before the U.S. Supreme Court, which just last summer rejected the EPA’s previous attempt to put state-level caps on carbon emissions.

“Everybody understands that ultimately we want to reduce carbon and add more renewables, and we’re going to get there, but it has to be at a controlled pace,” Dairyland’s Foss said. “The last thing we want to do is use unproven technology and put our ability to provide affordable and reliable energy to our members at risk.”

Especially when it’s really hot.—Julie Lund