|
EPA emissions rule comes under scrutiny Utilities say one size fits all approach to regulating power plant CO2 emissions may not work in Alaska’s unique situation Alan Bailey Petroleum News
Following the early June release of the Environmental Protection Agency’s proposed new rule for curtailing carbon dioxide emissions from U.S. power generation plants, people have been trying to assess the potential impact of the rule on how electricity is generated, distributed and used. In Alaska the RCA, or Regulatory Commission of Alaska, has opened a formal docket to gather information about how the rule might impact the state. And on Oct. 16 the commission held a technical conference, to discuss with power utilities and others the various issues and questions that the rule raises.
A general theme that seemed to permeate the comments and discussions was that the circumstances surrounding power generation in Alaska are unique, thus making it inappropriate to try to apply a multi-state, one-size-fits-all approach to reducing Alaska’s carbon footprint.
Unlike in the Lower 48 states, Alaska has an isolated power grid, with a small total electrical load, and a number of very small, isolated rural power systems. The grid itself spans several main population centers, many miles apart and connected to each other by single transmission lines.
Reductions by 2030 The EPA rule sets each state a target to reduce its power generation emissions by 2030 by a specified percentage of those emissions, based on emissions data that the agency has assembled. The emissions encompassed by the rule come from large, commercial-scale generation facilities that deliver power for use by consumers. Each state must prepare a plan for how its reduction target will be met. If a state does not manage to prepare an EPA-approved plan within a required timeframe, EPA will step in and impose its own plan. And EPA has set interim state targets that would apply in the period 2020 to 2029, to reflect the ramp up of the impact of the state plans.
EPA has suggested four “building blocks” for emissions reduction: the improved efficiency of existing power stations; the replacement of existing fossil-fuel burning power stations by modern fossil-fuel plants that are less carbon intensive; the replacement of fossil-fuel-generated energy by energy that creates little or no carbon dioxide; and the reduction in electricity demand through improved energy efficiency. Comments on the proposed rule are due by Dec. 1.
Target for Alaska For Alaska, the EPA has set an emissions target for 2030 of 1,003 pounds of carbon dioxide per kilowatt hour generated. That represents a drop in emissions of 26 percent compared with the 1,352 pounds per kilowatt hour of emissions that the agency says the state’s major power stations were generating in 2012.
But the Alaska Railbelt power utilities have been making major changes to their power generation arrangements since 2012. At the beginning of 2013 Chugach Electric Association and Municipal Light & Power took over operatorship of the Southcentral Power Project, a new high-efficiency, combined-cycle, gas-fired power station that has been replacing generation capacity from the old, inefficient Beluga power station on the west side of Cook Inlet. Municipal Light & Power is also upgrading its own Anchorage generation facility, installing a modern, high-efficiency plant.
Chugach Electric has in the past sold power generated at Beluga to other utilities, including Homer Electric Association on the Kenai Peninsula and Matanuska Electric Association in the Palmer/Wasilla area of Southcentral Alaska. But both Homer Electric and Matanuska Electric are taking over their own power generation using efficient modern plants. Some people participating in the RCA conference commented that the new Matanuska Electric power plant, slated to come on line during the first quarter of 2015, appears to have a capacity below the threshold for the proposed EPA emissions rule, thus presumably taking emissions from that plant out of the emissions inventory to be tallied in 2030.
Also in the context of the size threshold for power plants, RCA chairman Robert Pickett commented that under the EPA rule Alaska would not appear to be credited for reducing the use of oil-fueled power generation across the state.
Chugach Electric Bradley Evans, chief executive officer of Chugach Electric, told the commission that in 2012 Chugach Electric’s carbon dioxide emissions rate was about 1,200 pounds per kilowatt hour, a figure just below the EPA’s baseline statewide number for that year. By 2016 Chugach Electric anticipates its emissions rate to drop to 941 pounds per kilowatt hour, an emissions rate below the EPA target for 2030.
During that 2012 to 2016 period Chugach Electric will have moved from an energy mix of 89 percent natural gas, 10 percent hydro and 1 percent wind, to 80 percent natural gas, 16 percent hydro and 4 percent wind, Evans said.
Evans commented that there needs to be an understanding of how EPA plans to measure the results of implementing the four emission-reducing building blocks that the agency proposes. For example, it is unclear how some new significant but modest-sized hydro and wind power plants might factor into EPA’s calculations for the 2030 target, Evans said. Evans also pointed out that, if a planned major hydropower plant at Watana on the Susitna River comes to fruition that “literally obliterates the emissions rate for everybody.”
However, renewable energy projects currently under consideration by Chugach Electric typically involve energy costs two to three times those of the gas-fired power that would be displaced, the utility said in written comments.
Evans also told the commission that unification of the dispatch of power on the Railbelt transmission grid could reduce emissions by enabling the more efficient use of power generation facilities. But executives from other utilities questioned whether unification of the grid would have a significant emissions impact.
Homer Electric Harvey Ambrose, director of power production and transmission for Homer Electric, told the commission that his utility’s implementation of new modern gas-fired power generation could reduce the utility’s carbon emission to below the EPA’s target level. But he questioned whether, in applying its rule, EPA would give credit for the power generation efficiency improvements that the Alaska utilities have been implementing since 2012.
Homer Electric is also considering three potential hydroelectric projects, a possible tidal power project and a community solar power project in the town of Homer, Ambrose said.
However, in written comments filed with RCA, Homer Electric, citing some practical issues such as relatively inflexible gas supply arrangements, said that it would have difficulty in integrating more than 2 megawatts of fluctuation power, such as wind power, into its system.
Municipal Light & Power Mark Johnston, manager of Municipal Light & Power’s regulatory department, also picked up on the question of whether the EPA would credit the Alaska utilities for the energy generation efficiencies that they had been achieving after 2012. Johnston questioned the application of the EPA rule in Alaska, given that carbon dioxide emissions from power generation in Alaska only account for about 7 percent of the state’s total emissions. That compares with power generation emissions amounting to about 34 percent of total emissions across the nation as a whole, he said.
The utilities need more time to evaluate the impacts on system reliability and electricity rates of potential changes to the power generation arrangements in response to the EPA rule, Johnston said.
Golden Valley Golden Valley Electric Association, the Fairbanks-based electric utility, obtains some of its power from a coal-fired power station at Healy, on the north side of the Alaska Range. Golden Valley is also in the process of bringing a mothballed second coal-fired plant on line at Healy. One question that the RCA has raised is whether EPA’s second building block, the replacement of relatively carbon-intense plants, could be achieved by phasing out the coal-fired plants and instead delivering power to Fairbanks from efficient combined-cycle, gas-fired plants in Southcentral. Power would need to be shipped along a power transmission line that connects Southcentral to Fairbanks.
Mike Wright, Golden Valley’s vice president of transmission and distribution, told the commission that shifting his utility to the use of Southcentral gas-fired power would put the utilities service area “on a 350-mile extension cord.” And, while the existing transmission intertie between Southcentral and Fairbanks had proved reliable over the years, the extreme cold in the Interior winter drives a need for highly dependable power supplies, Wright said.
In written comments, Chugach Electric said that the replacement of coal-fired power from Healy by gas-fired power from Southcentral would require the installation of a second transmission line to the Interior and either an upgrade to the old Beluga power station or the construction of a new gas-fired facility.
Wright also questioned EPA’s estimate for carbon dioxide emissions at Healy, saying that the agency had used an emissions formula rather than the actual emissions data for the operating coal-fired plant, and that the agency had not considered emissions from the second plant. And, were Golden Valley to have to shut down these plants, the utility, left with stranded assets worth around $450 million, would have to substantially increase its electricity rates.
Renewables? In addition, while Golden Valley does have the ability to add new renewable energy sources to its power generation portfolio, the impact on its electric rates of the use of more renewable energy would need to be considered, Wright said. In written comments, Golden Valley said that its ability to connect a renewable energy facility to its system would depend on the cost of the energy, the cost of connecting the facility to the power grid and the cost of integrating the energy into the grid.
In terms of energy efficiency, the fourth of EPA’s building blocks, Golden Valley has been operating energy efficiency programs since 1992, Wright said. In its written statement the utility said that because most of its members have already implemented energy efficiency measures it may not be possible to implement further measures, as suggested by EPA. Individual residential power loads have been dropping as a result of improved energy efficiency, the utility said.
In written comments, Chugach Electric said that, while its per-consumer load has been steadily dropping thanks to various energy efficiency improvements, the characteristics of that load provide only limited abilities for demand-side efficiency management.
Wind power Ethan Schutt, senior vice president for land and energy for Cook Inlet Region Inc., argued for the implementation of more wind power on the Railbelt grid, saying that in the grid there is a lack of a coordinated response to the use of available tools for integrating the fluctuating wind power. Cook Inlet Region Inc. built, owns and operates a wind farm on Fire Island near Anchorage and wants to expand that facility.
Alaska Environmental Power, an alternative energy company based in Fairbanks, submitted an RCA filing expressing frustration at what it sees as obstacles to independent power producers bringing renewable energy to the Railbelt grid. The company has been trying to persuade Golden Valley to purchase power from a wind farm at Delta Junction.
|
