Texas Regulators Air Concerns About EPA's New Greenhouse Gas Plan

Rarely a fan of Washington's oversight, Texas appears destined for another clash with the U.S. Environmental Protection Agency over greenhouse gas limits — this time, for existing power plants.

The rules, which President Obama has instructed the EPA to propose by June 2015, have only been suggested, but Texas regulators have already weighed in. Their opinion? The idea, though still scant on details, is no good.

That’s according to a letter written by the Texas Commission on Environmental Quality and the Public Utility Commission of Texas. The letter, sent to EPA administrators after the agency asked for feedback, outlines several concerns, including those about the federal rule-making process, but it also touches on a hot-button issue in Austin: electric reliability.

Texas regulators say they fear that new regulations would make coal production less economical, speeding up plant retirements and straining the grid.

“Generators should not be penalized for increased [greenhouse gas emissions] needed to maintain system reliability,” the letter said. “The PUC and TCEQ urge the EPA to consider all aspects of grid reliability in developing [a greenhouse gas] rule for existing power plants.”

The letter comes as regulators are grappling with how to ensure Texas’ long-term energy needs, as the state gets hotter and its population surges. Those questions have fueled a high-stakes debate about whether Texas should overhaul its energy market.

Federal regulators have already proposed greenhouse gas limits for power plants that have yet to be built. The rules would all but force new coal-fired plants to capture and store 40 percent of the carbon dioxide they produce, using costly technology.

The EPA says it is unlikely that any limits on existing power plants would be as stringent as what it has already proposed for new plants. (However the Electric Reliability Council of Texas, which manages the state’s grid, says it has just one proposed new coal plant in its records.) Electric utilities, along with the coal industry, have staunchly opposed the notion that more regulations are on the way.

“I would be very surprised if lawsuits would not be coming in response to the proposed rule,” said Trey Powers, executive director of the Texas Mining and Reclamation Association.

About 400 people late last year attended a hearing in Dallas on the possible rules. According to the EPA’s meeting notes, representatives from electric utilities and coal mining communities spoke against the idea, saying they would disproportionately burden poor, rural Texans whose communities are more dependent on coal power. Environmental groups, meanwhile, cheered the rules as an effort to combat climate change.

A third of all U.S. greenhouse gas emissions come from power plants, according to the EPA, and coal plants factor heavily in that equation. But coal generation, though it is quickly declining in Texas as old plants retire and it competes with cheap natural gas, still makes up about a quarter of the state’s energy portfolio, and regulators, amid the grid concerns, say they can’t afford to risk losing any generation.

Robbie Searcy, a spokeswoman for ERCOT, said the grid operator could not weigh in on the EPA's plans, but said it considers many issues — potential federal regulations included — when it is studying future grid reliability.

Whatever the EPA decides, lawsuits are likely to follow. Nebraska has already sued the EPA over its rules for new power plants. A group of states, including Texas, and industry coalitions has also challenged the EPA for requiring that power plants and other large greenhouse gas emitters apply for new permits. The Supreme Court will hear their arguments on Feb. 24.