Here’s a Utility Hiding Some Facts About the EPA Clean Power Plant Rule

November 18, 2014 | 6:14 pm
Mike Jacobs
Senior Energy Analyst

ERCOT, the electricity reliability organization for Texas, distorts the impacts of the EPA power plant carbon rules 111(d) by leaving out any context in its recent report.

Coal-burning power plant, source of CO2 emissions that EPA rule will regulate

Coal-burning power plant, a source of CO2 emissions that the EPA rule will regulate.

ERCOT describes the need for new power plants to be built in the years 2020 to 2029 in great detail, but fails to note that the amounts that would be needed due to the Clean Power Plan are really minor compared to the construction happening this year. ERCOT’s model says that between 2,800 and 3,500 MW of wind would be built by 2029. But the report does not mention that this year over 7,600 MW of windpower is under construction.

ERCOT describes the need for other types of power plants, but repeats the commentary out-of-proportion with the capability of the industry to fill the need. For new natural gas plants, ERCOT projects a need of 2,300 MW by year 2029. ERCOT talks about all that might go wrong, but doesn’t offer the fact that in Texas, 2,300 MW is the size of two big power plants. In a good year, the construction of new gas-fired plants in Texas has been over 3,600 MW completed.  In fact, the private sector in ERCOT has been prolific builder of generation. Since 1995, over 38,000 MW of gas-fired generation has been completed and brought into operation. So when ERCOT makes the scary noises and tells us we are going to need 2,300 MW and could see a 2% shortfall in reserves, they are playing a weak poker hand. There isn’t a lot of new power plants needed, and they hide that fact.


This post is part of a series on the EPA Clean Power Plan.

The solar power additions shown by the ERCOT model are large, but when compared to the baseline that ERCOT already expected, not so large. The increase by the year 2029 for solar in ERCOT is 3,600 MW. The baseline they expected was 9,900 MW.

Separate from its reliability review, ERCOT ventures boldly into a discussion of consumer costs.  I say boldly, because they’ve used “Emissions Allowance” costs as an assumed strategy to be used for 111(d) (which is neither a suggested building block from the EPA or a stated proposal from the environmental authorities who will set the compliance strategies). Worse, the ERCOT report fully misunderstood, or misrepresented, how a state can implement  a CO2 price adder.

Many folks would say the cost presentation by ERCOT of a CO2 price adder is thoroughly misunderstood. The idea of a CO2 price adder in the modeling of electric power plants does not create an equal amount of costs for consumers. If, in the real world, a CO2 price adder were used, the state would be able to decide if the money collected would be returned to consumers, rather than transferred to the other generators. The engineering assumption that this is a real cost is simply mistaken.

As for the technical requirements that ERCOT points to, these are described by ERCOT as “needing more study.” Agreed. However, ERCOT did not take notice of past studies that they themselves sponsored, in which they described much higher levels of renewable energy with manageable results.

ERCOT has great power and responsibilities. They should take care not to abuse their position and devalue the role they can and must play as a source of information regarding the electric power system.