Court burns states on NOx emissions appeal

It’s the premise sequels are based on. In movie lingo: the return of the SIP Call.

On June 22nd, the D.C. Circuit Court of Appeals effectively squelched the request by a number of Midwest utilities for a bit more breathing room along the NOx emissions guidelines. This means that power generators in more than a baker’s dozen of states (including Ohio, Pennsylvania and New York) will be keeping a hawk eye out for details on each respective state’s SIP (state implementation plan) for reducing emissions, which they should have in hand by October 28th.

Jim Owen of the Edison Electric Institute (EEI) said the ruling wasn’t unexpected. “I don’t think people were shocked by the decision,” he commented.

Flashback: September 1998. The EPA has just finished beefing up its tough-on-NOx rules (known as the SIP Call) to support the Clean Air Act. Twenty-two states and the District of Columbia are required to have their SIPs ready by September 30, 1999. However, when a number of states file petitions with the court of appeals in October arguing that the EPA isn’t working with states and generators toward viable alternatives–that those alternatives are, in fact, being ignored–preparations for 1999 SIP readiness is put in legal limbo. Although some utilities continue to prepare for the reductions (85 percent from 1990 standards for generation over 25 MW by 2003), many put their proposed outlines on hold until the final ruling.

And, nearly two years later, the final ruling has come down from the mount–in favor of the EPA, leaving many states, and subsequent utilities, scrambling to cram for their fall deadline. Joe Maher, a spokesman for Duke Power, disagreed with Jim Owen’s lack of surprise. He believed that many utilities were caught off guard by the decision.

“The ruling was a surprise in that it lifted a stay despite the fact that the legal challenges to the eight hour standard have not been resolved,” Maher said. “It was disappointing,” he added.

In fact, history seems to indicate the courts were leaning toward the states and utilities. In May 1999, the U.S. Court of Appeals for the DC Circuit, in principle, “sent back” the 1997 EPA-adopted National Ambient Air Quality Standards (NAAQS) for reexamination. Later in the month, the court also stayed the SIP Call requirements, making the states grouped under the plan responsible neither to the September 30th deadline nor to the penalties attached. However, in the end, the states’ gamble didn’t pay off, snake eyes rolled to the top of the die and the EPA won out.

EL&P could not reach EPA administrator Carol Browner for direct comment, but she did release a statement heralding the court’s decision as “a major environmental victory for everyone living throughout the Eastern United States. It means that over a hundred million people will now breathe healthier air as the result of significant reductions in harmful emissions from the most polluting power plants throughout the region.”

The states and utilities, however, see this issue from another angle: the plan. The court battle wasn’t waged on behalf of dirty air, but against the rigid implementation plans and the constricted timeframes. “The issue seldom is whether you need to clean up the air or not. The issue is whether the process is the appropriate process for determining what has to be done–whether, from an administrative point, you’re following a fair and reasonable process and whether, from a technical point, you’re following good science,” Maher commented.

Out of pocket expenses

And breathing deep that fresh clean air a.s.a.p. will not come cheap. Maher estimates that compliance will cost Duke Power anywhere in the spectrum between $100 and $600 million (depending on the specifics of the state plan), and Jim Owens extrapolates the industry cost to rack up billions. Neither could pin down more specific numbers, citing the newness of the ruling.

“Even at the low end, it will be a lot of money,” Owens commented.

Even the EPA admits that the numbers will be high. In 1997, when the SIP Call idea was first being introduced, Browner told a Wall Street Journal reporter that she estimated the overall costs to be around $2 billion.

Barbara Martocci, representing the Tennesse Valley Authority (TVA), the nation’s largest electric power producer, said she couldn’t begin to estimate the future costs to TVA. “Until the plan is finalized, I can’t tell you if there’s anything TVA needs to do,” she commented.

She did, however, discuss a few specifics that TVA had already put into place in response to general environmental concerns.

Meeting the deadline

“We are already working on reducing our NOx by 75percent by 2005–with the 13 SCRs, low NOx burners and overfire air that we’re putting in at our plants,” Martocci said when asked to elaborate on TVA’s contemporary attempts to deal with emissions issues.

Selective catalytic reduction (SCR) retrofitting is only one of the costly stocks in the NOx soup, but it is the “look at me” child of the bunch. Fitting an existing plant with SCR technology is a bit like trying to change the flavor of your toothpaste while you’re in the process of squeezing the tube–and about as costly and time consuming as any scientific attempt to make your winterfresh cinnamon flavored.

Martocci says TVA is already in the process of implementing SCR technology. “We’ve got one SCR up and running already at Paradise in Kentucky,” she commented. “I am making an assumption that that will go a long way in helping [TVA comply with] that SIP Call, but I don’t know what the state is going to come up with.”

And that hurry up and wait problem with the SIP Call is certainly a crunch every utility will feel. The court’s decision has taken NOx compliance off the back burner, bypassing the frying pan altogether and heading straight into the fire. Owens believes that this ruling will shadow the industry, shifting priorities now that the SIP Call is back on track.

“The ruling is going to put a lot of pressure on states and utilities to try to come up with SIPs by this fall. And then, of course, there’s additional pressure for actual implementation–for doing the work to install the SCR retrofits [by 2003]. It’s going to be a very significant challenge to try and get that done,” he said.

Although some utilities, like TVA, have been already working toward retrofitting plants and lowering emissions–TVA announced a NOx reduction strategy two years ago–making a plan doesn’t keep all environmental emissions concerns at bay. In fact, the National Parks Conservation Association has announced intent to sue two of TVA’s coal-burning plants close to the Great Smoky Mountains National Park for opacity violations.

Keeping the lights on

But, no matter how much we want to breathe that clean air, we also want to keep our homes cool during the summer heat and watch Must See TV while we have our spaghetti. So, yet another factor of this debate centers on reliability. While the EPA doesn’t see much cause for concern in that area, EEI and the North American Electric Reliability Council (NERC) disagree. Current complaints already swirling about overstressed grids and rolling blackouts and brownouts have been fed by growing questions about the NOx SIP Call’s impact: Can an already burdened, coal-heavy grid be expected to weather this environmental riptide without collapse?

“With the timeline so compressed, it is going to take some creative outage planning,” Maher said. “Whether that has an impact on reliability remains an unanswered question at this point.”

An EPA study on reliability and the SIP Call found little cause for concern, but its lack of detailed scenarios and its “optimistic assumption that enough generation will be built” was criticized in writing by NERC’s own Reliability Impacts of the EPA NOx SIP Call study released earlier this year. The NERC study did agree with some of EPA’s analysis, finding little impact in the MAAC [Mid-Atlantic area council] and SERC [Southeastern Electric Reliability Council] regions. However, NERC believed that “there were some scenarios in ECAR [East Central Area Reliability] and MAIN [Mid-America Interconnected Network] that produced significant impacts or cause for concern.” And this was compiled months before a red-hot summer of stage one and two emergencies in California and blackouts in Detroit.

The studies also differed in the assumed amount of capacity to be retrofitted. The EPA numbered the MW to be 73,000, while the EEI-funded NERC study cited 151,000 MW–which could significantly impact both cost and reliability.

Owen, in fact, pointed directly to the study when asked about further ramifications (beyond cost and time crunch) of the June 22nd ruling.

“To make a very long story short, the report’s fundamental conclusion was that the time they had estimated it would take to bring those facilities offline and do the retrofit could bring up questions about reliability. So, that was another issue raised [by the ruling],” he said.

It seems the ruling has created more questions than it has answered. And, although the decision by the D.C. court effectively silences legal action for the states, it has done little to settle the churning whirlpool swirling around the issue itself. Environmental and health impacts, states battling to “point the finger” at neighbors (Pennsylvania sided with EPA, saying that wind from Midwestern states increases their NOx problems during the ozone season), an overstressed grid that really didn’t need another strike against it–all of these things are left hanging over the heads of 22 states and the District of Columbia, without any clear-cut paths through the maze. In fact, the ruling has mostly created chaos: states and utilities brainstorming plans of attack without a single word set in stone.

“While this [ruling] brings it closer to finality, the states that are affected, and the utilities that are involved, are going to have to evaluate what their next options are. I think people are weighing their next steps right now,” Owens concluded.

In other words, until the SIP Call rises from the deep with a map, no one’s picking out chisels and slate tablets.

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