While there are a lot of what ifs, the recent Supreme Court decision to uphold the EPA’s Cross-State Air Pollutant Rule (CSAPR) at first glance could impact future generation and operating reserves in ERCOT, the Electric Reliability Council of Texas. In fact, back in 2011, in response to a request from the Texas Public Utility Commission, a preliminary analysis from ERCOT found that anywhere from 1,200 MWs to 6,000 MWs of Texas fossil fuel generation might be subject to closure or mothballing because of the impacts of the rules, putting Texas electric reliability at risk, especially at times of high demand or extreme temperatures. While the ERCOT preliminary analysis was admittedly rushed, and made some big assumptions, it did suggest the timing of implementation of those 2011 proposed rules was going to be challenging for Texas at certain times of year.
Well three years later, there is continued good news for development of more electric generation in Texas. Just a few days ago, ERCOT released its latest System Planning Monthly Report (March 2014), again showing there is a healthy interest in investing in Texas’s electric market. The report states that ERCOT is currently tracking 230 active generation interconnection requests totaling over 58,100 MWs of power. Again leading the way in these requests are wind — roughly 27,000 MWs in all — natural gas — at roughly the same — and solar — at some 3,300 MWs of power. In fact, the latest planning report shows that installed wind within ERCOT has already reached 11,065 MWs, and the expected amount of wind of those with signed interconnection agreements would reach 19,777 MWs by the end of 2017.
Some are sure to paint doomsday scenarios where EPA rules — supported by the US Supreme Court — send Texas into a spiraling electric reliability crunch. Those poor coal plants just can’t meet those pollution rules and stay open they will say. While there will be challenges, and there is a need to support strong ancillary services like demand response to keep the lights on, expected investments in both gas, but especially in wind and solar, should keep Texas’ humming along economically. With implementation of CSAPR, we should also get some relief from all that coal pollution.
In the ongoing tussle between states like Texas that have taken an-anti EPA position, and the Obama Administration and the EPA, the EPA won the latest round, as the US Supreme Court reversed the US Court of Appeals and found that EPA was within its rights to issue a Cross-State Air Polllution Rule (CSPAR) that required “upwind” states to control soot and ozone-forming pollutants that impacted down-wind states. Under the EPA’s rule promulgated in 2012, Texas’s largest and dirtiest coal plants would have been forced to make major reduction in their pollutants which impact nearby states like Arkansas and Oklahoma. Several states, including Texas’s Governor Perry and Attorney General Greg Abbot, immediately intervened and won a victory at the US Court of Appeals. With this week’s ruling, that victory was short-lived.
While it is unlikely that the EPA rule under dispute will be adopted in exactly its current form, expect to see a new EPA proposed rule with a slightly different timeline sooner rather than later. That rule is likely to give states some flexibility but it will require deeper cuts in pollution from Texas’s oldest fossil fuel plants. Likely impacted will be the big coal plants owned by Luminant for example. That’s good news for Texans living near the plant or in nearby cities that suffer the pollution, and also for our neighbors in Louisiana, Arkansas and Oklahoma. Afterall, it’s called the Good Neighbor Provisions for a reason!
If you want to read Sierra Club’s official position on this amazing legal victory — afterall we were one of many groups that filed a brief in support of the EPA — see this press release from national Sierra Club.
Well we expected it and it happened. Energy Future Holdings officially filed for bankruptcy in a Delaware Federal Bankruptcy Court. See here for information from EFH. The partnership – Energy Future Holdings — that bought out TXU in the largest leveraged buy-out — some $45 billion — in history back in 2007 and owned the state’s largest transmission company – ONCOR – the state’s largest generation fleet — Luminant — and the largest retailer – TXU Energy — has had to resort to bankruptcy to product itself against its huge debts. Their bet on big coal plants in Texas’ competitive market has not gone according to plan. Under the reported terms of the bankruptcy deal, EFH will be split up into two units and this time run separately. ONCOR, the regulated transmission, will be protected and run as part of Energy Future Intermediate Holdings, which is part of EFH. Oncor is a regulated utility that operates the power lines serving much of North and West Texas.
Texas Competitive Electric Holdings — which includes the company’s unregulated power company Luminant Generation and retail provider TXU Energy — would be transferred to its first lien lenders in a deal that would eliminate approximately $23 billion of its debt, the company said in a news release. This would include the three mega oal plants — Big Brown, Monticello and Martin Lake – which are the subject of numerous Sierra Club legal actions and enforcement cases. How their new owners plan to run these plants is still unknown. We hope they put them on a just transition toward retirement and invest in cleaner forms of energy. Stay tuned for more!