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Tuesday, June 3, 2014

NH coal-fired power plants may not be pressured by new EPA pollution limits

New Hampshire’s participation in the nine-state pollution program called RGGI may protect our coal-fired power plants from the effect of proposed new carbon-emission rules, although it’s too early to tell for certain.

“Assuming that RGGI can be substantially the compliance mechanism for New Hampshire, we don’t anticipate this would have any additional impact on any power plants in the state,” said Mike Fitzgerald, an administrator at the state Department of Environmental Services, in a Monday afternoon telephone interview. ...

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New Hampshire’s participation in the nine-state pollution program called RGGI may protect our coal-fired power plants from the effect of proposed new carbon-emission rules, although it’s too early to tell for certain.

“Assuming that RGGI can be substantially the compliance mechanism for New Hampshire, we don’t anticipate this would have any additional impact on any power plants in the state,” said Mike Fitzgerald, an administrator at the state Department of Environmental Services, in a Monday afternoon telephone interview.

However, he added, this is still uncertain, since the proposal from the federal Environmental Protection Agency is in the preliminary stages and wouldn’t kick in until mid-2015.

Further, he noted ruefully: “The rule is 1,000 pages – we haven’t looked at it all.”

As announced Monday by President Barack Obama, the rule changes are designed to cut carbon dioxide emissions from power plants – the nation’s biggest source of that greenhouse gas – by a third over the next 15 years, compared to 2005 levels.

Details will be left to individual states, but it will undoubtedly require a sharp reduction in the nation’s use of coal in electricity-generation plants.

This has led to questions about the future of Schiller Station in Portsmouth and the huge
Merrimack Station in Bow, two coal-fired power plants owned by PSNH.

“There is bound to be continued debate around how best to achieve a national goal of a 30 percent reduction from a 2005 baseline, and we don’t yet know what final rule might emerge a year or so from now,” PSNH spokesman Martin Murray wrote in a email Monday afternoon. “We do know that the Northeast region is ahead of the curve as far as efforts to reduce emissions of carbon, and we expect that, moving forward, New Hampshire will continue to take a shared approach with other states in the region. It is clear from the EPA’s announcement that it recognizes and appreciates that collaboration.

“By our calculations, the RGGI region has already reduced carbon emission by about 40 percent compared to 2005. Carbon emissions from the PSNH power plant fleet in 2013 were 70 percent less than our 2005 emissions.”

New Hampshire has been part of the Regional Greenhouse Gas Initiative program since 2005.

RGGI (pronounced “reggie”) places a cap on the total amount of carbon that can be produced by power plants and establishes a mechanism for pricing and trading those units of pollution. Proponents of such a “cap and trade” system hope the invisible hand of the marketplace will create better outcomes than simple regulatory commands.

If Murray’s numbers hold true and can be factored into EPA calculations, PSNH and other power producers would face much less pressure to change in coming years – although they’ll still face pressure from existing limits under RGGI, which are getting progressively tighter even without federal rules.

In making the announcement Monday, Obama emphasized the public health benefits of reducing power-plant emissions, but concern about global warming has been the major driving factor in the carbon-emission rules. Limiting the release of carbon dioxide to slow climate change was also the main factor in creating RGGI, which involves nine states in the Northeast U.S.

The future of the Merrimack Station and Schiller Station power plants is complicated by several things:

First, they are the only power plants in the state owned by a utility, instead of being owned by other investors. New Hampshire partially deregulated its electricity industry but didn’t take the final step of wholly separating power production from power transmission; the question of whether PSNH should keep ownership is controversial for financial and regulatory reasons, even without new federal carbon-limiting rules.

Second, the economics of, and need for, coal-fired plants has been complicated by the rise of natural gas-fired power plants.

The low price of natural gas has reduced the need of coal-fired plants during much of the year, but it has increased their importance for fallback electricity production during cold winters, like the one we just had.

The problem is that bottleneck of gas pipelines leading into New England means that in the wintertime, when natural gas is needed for home heating, it’s difficult or extremely expensive for power plants to get enough natural gas to maintain production, leading to potential electricity shortages when need is great.

Schiller Station and Merrimack Station both ramped up during January and February to meet the state’s power needs.

With the Vermont Yankee nuclear plant closing this year, and the coal-fired Brayton Point and Salem Harbor plants in Massachusetts also shutting, there is much less margin for error in New England’s power grid – making the idea of shutting Schiller Station or Merrimack Station less palatable.

As initially presented, the new EPA rules appear to mimic the RGGI framework, but with an obscure-sounding complication: Rate-based as compared to cap-based standards.

“It’s like taking a trip. Are you looking at whether you’re going to regulate speed limit, or how far you actually drive?” Fitzgerald said.

RGGI caps the total amount of carbon produced each year, but the EPA rules limit the rate of carbon per megawatt-hour of electricity produced.

In other words, RGGI limits the total distance, while EPA rules seem to limit the speed. Further, RGGI is a regional system while the EPA rules handle its rules on a state-by-state basis.

“The details: how do you convert that regional cap on a nine-state basis and compared that to a number that EPA has given you?” Fitzgerald said.

David Brooks can be reached at 594-6531 or dbrooks@nashua
telegraph.com. Also, follow Brooks on Twitter (@GraniteGeek).