The Environmental Protection Agency’s new power plant rule leaves many electric cooperatives with a dire choice: Spend billions to install an inadequately demonstrated emissions technology that will make member costs skyrocket and may not even satisfy EPA’s requirements, or shut down massive amounts of generation whose loss will undercut grid reliability.
Nearly a dozen co-ops made such warnings in court filings supporting NRECA’s May 13 request to put the rule on hold. The request came after NRECA filed a lawsuit against the rule May 9 in the U.S. Court of Appeals for the D.C. Circuit, arguing the mandate is unachievable and unlawful.
“EPA’s overreach poses immense, immediate, and irreparable harms for … members, the electric grid, virtually all Americans, and the economy,” NRECA said in its petition for stay.
Co-op concerns over the rule were reinforced by a new report from the North American Electric Reliability Corp. warning of potential electricity supply shortfalls in several parts of the country this summer during extreme weather. The elevated risks stem partly from generator retirements and growing dependence on intermittent energy resources.
The power plant rule, which EPA released April 25, seeks to cut greenhouse gas emissions from existing coal plants and new natural gas-fired facilities.
The rule will force most existing coal plants to shut down or install technology that is capable of capturing and storing 90% of carbon dioxide emissions. New gas-fired units will likely need to be built with CCS or run at reduced levels under the regulation. Currently, no operating coal or natural gas power plants are utilizing carbon capture at-scale and with results that would comply with EPA’s regulations.
The Real-World Impact
Several generation and transmission co-ops joined NRECA in filing so-called “declarations of harm” with the D.C. Circuit showing the potential impacts of EPA’s rule.
East Kentucky Power Cooperative said installing carbon capture and storage at its Spurlock coal plant would cost an estimated $10.7 billion, even when factoring in federal tax credits for the technology. That investment would push up average electric bills for EKPC customers by 67% to 96%, without including the cost of adding CCS at the Winchester, Kentucky-based co-op’s other power plant.
If EKPC opts to build gas generation to meet growing demand, the co-op would have to construct two plants to equal the output of one larger facility given the capacity limits the EPA has placed on new gas units that lack carbon controls. That would essentially double the price tag of that new capacity.
And although EKPC is working to expand its renewable energy portfolio, those resources are “intermittent, running appropriately 25% of the time as compared to the higher, dispatchable capacity factors of retiring coal units or natural gas-fired units,” the co-op stated.
“We really believe that these are perverse rules that are going to have huge economic impacts on the end consumer and reliability issues [for] the end consumer,” EKPC CEO Tony Campbell said during a May 14 press call hosted by NRECA.
With EPA’s rule in place, “we’re moving too far, too fast,” Campbell said.
Even a CCS project already under development could struggle to satisfy the regulation. Minnkota Power Cooperative’s Project Tundra carbon capture and storage facility is not expected to reach commercial operation until 2029, 14 years after the project was first conceived. That’s well beyond the amount of time the power plant rule envisions for completing CCS projects, the co-op said in its declaration.
Even then, Project Tundra may not fully comply with the power plant rule, despite about $1.6 billion in capital costs, the Grand Forks, North Dakota-based co-op said. Minnkota has not made a final decision on whether to proceed with Project Tundra.
“I’m concerned … that what EPA has done in this rule ultimately is unrealistic for most plants in this country,” Minnkota CEO Mac McLennan said during the press call.
Basin Electric Power Cooperative in Bismarck, North Dakota, said its projected incremental capital costs through 2035 to comply with the rule will total nearly $10 billion. And Columbus, Ohio-based Buckeye Power Inc. estimated that replacing the output from Units 1 and 2 of its Cardinal coal plant with market power for just eight years will cost around $800 million to $1.3 billion under current conditions—costs it said will ultimately be borne by co-op members.
During the May 14 press call, NRECA CEO Jim Matheson noted the significant progress the U.S. power sector has made in cutting emissions but said current technology will not allow the Biden administration to reach its goal of a zero-carbon power sector by 2035 without encountering reliability problems.
“Let’s have a pragmatic, practical, common-sense conversation about energy policy,” Matheson said. “Not one that undermines reliability and is framed by an all-or-none dynamic.”
Hear from NRECA’s Ashley Slater and Minnkota Power Cooperative’s Mac McLennan in a new podcast episode on the EPA power plant rule:
Molly Christian is a staff writer for NRECA.