OPINION: Wall Street Journal Editorial "If the Lights Go Out"

December 6, 2011

The Obama Administration is putting one of our basic needs at risk--our ability to keep the lights on. President Obama's Environmental Protection Agency is proposing costly new regulations on America's power sector that could have widespread impacts on the reliability of our electric grid. Analyses have projected that these new rules will cause a significant portion of our power supply to go offline. Despite clear warning signs, administration officials have done little to ease these concerns, and instead, continue to downplay the impacts of these new rules. Energy and Commerce leaders refuse to leave our electric reliability to chance and have called upon several federal agencies in recent weeks to provide information relating to the reliability and cost impacts of EPA's rules and ensure American families are not left in the dark.

December 6, 2011
The Wall Street Journal

If the Lights Go Out
Regulators are letting EPA compromise U.S. electric reliability

Say what you will about Obama Administration regulators, their problem has rarely been a failure to regulate. Which makes the abdication of the Federal Energy Regulatory Commission especially notable--and dangerous for the U.S. power supply.

Last week FERC convened a conference on the wave of new Environmental Protection Agency rules that are designed to force dozens of coal-fired power plants to shut down. The meeting barely fulfilled the commission's legal obligations, but despite warnings from expert after expert, including some of its own, the FERC Commissioners refuse to do anything about this looming threat to electric reliability.

The latest body to sound the EPA alarm is the North American Electric Reliability Corporation (NERC), which last Tuesday released its exhaustive annual 10-year projections. "Environmental regulations are shown to be the number one risk to reliability over the next one to five years," the report explains…

According to the report, "the nation's power grid will be stressed in ways never before experienced" and reliability depends on building new power plants to cover the losses. But the electric industry has only three years to comply under one EPA regulation known as the utility rule that is meant to target mercury and is due to be finalized soon, while many other destructive rules are in the works.

Replacing power is not like replacing a lost cellphone. There are bottlenecks in permitting, engineering, financing and building a new plant and then tying it to the electricity network. Over this same three-year window, NERC estimates that between 576 and 677 plants will need to be temporarily shut down to install retrofits like scrubbers or baghouses.

All of this has been obvious to anyone paying attention. In its draft utility rule the EPA itself warned that "sources integral to reliable operation" may be forced to shut down, before it sanitized these concessions from the final proposal. Twenty-seven states say their regional reliability is at risk, concerns echoed by FBR Capital, Credit Suisse, Fitch, Bernstein Research and several grid operators. FERC's own Office of Electric Reliability produced an alarming study, before its work was disowned by Chairman Jon Wellinghoff, as we reported in the September 26 editorial "Inside the EPA."

Southern Co., the utility that covers states from Mississippi to Georgia, says the EPA's timeline can't be met "at any cost" and that in its region "reliability cannot be maintained without load shedding"--that is, rationing power to large industrial consumers. American Electric Power, which operates in 11 Midwest states, says that option may be a "last resort" as well. This is the kind of political overhang that harms economic growth…

Read the full article online here.

...