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A Project of The Annenberg Public Policy Center

Huntsman’s Blackout

Jon Huntsman falsely claimed that the Obama administration’s proposed regulations to cut pollution from coal-fired electric plants will “likely” cause blackouts “this summer.” That’s not true. Huntsman’s claim is contradicted by a Federal Energy Regulatory Commission letter cited by his own campaign, and by independent assessments as well.

No Blackouts ‘This Summer’

The Environmental Protection Agency has issued or is in the process of finalizing several regulations that would significantly affect coal-fired power plants. The new regulations include, for example, the Clear Air Mercury Rule, which will regulate mercury emissions from coal-fired plants for the first time, and the Cross State Air Pollution Rule, which will reduce the release of sulfur dioxide and nitrogen oxides from power plants in the eastern United States. In both cases, the EPA was acting under court order to comply with the Clean Air Act.

Huntsman, the former Utah governor who is running for the Republican presidential nomination, spoke of the cumulative impact of these and other EPA regulations on coal-powered generation plants during a Nov. 1 speech at the University of New Hampshire, where he unveiled his energy plan.

Huntsman, Nov. 1: Today coal is under siege from government regulations and litigation. There are even efforts to halt the export of our coal, which would destroy American jobs when we now need them most. This summer, in fact, we will likely see blackouts as a result of the administration’s assault on coal, which will take 8 percent of U.S. generating capacity offline.

We asked the Huntsman campaign to support the candidate’s claim that EPA regulations would reduce U.S. electricity capacity by 8 percent and cause blackouts “this summer.” We were referred to an Aug. 1, 2011, letter that was sent to Sen. Lisa Murkowski by FERC Chairman Jon Wellinghoff and two of its commissioners, John Norris and Cheryl LaFleur. The FERC was responding to Murkowski’s request for its assessment of “EPA rules affecting generation of electric power.”

But the agency’s letter does not support Huntsman’s claim. Quite the opposite.

The letter says “the retirement of coal units is expected to begin between 2015 and 2018,” and even then FERC expects to work with the industry to avoid disruptions in service. “As it has in the past, the commission would seek to find ways to require or allow utilities to operate when needed for reliability or other purposes while being compensated adequately and without violating other federal laws,” the letter says.

Wellinghoff, who was appointed to FERC by President George W. Bush and elevated to chairman by President Barack Obama, also addressed the reliability issue before a subcommittee of the House Energy and Commerce Committee on Sept. 14. In his prepared remarks, Wellinghoff said the industry “can plan to meet its reliability and environmental obligations.” He cited historical data to show the industry has done exactly that “when circumstances warranted.”

Wellinghoff, Sept. 14: As I have said before, available data indicates that the electric industry has added significant amounts of generating capacity when circumstances warranted. As a point of reference, EIA data shows that between 2000 and 2004, an annual average of 38.74 GW of capacity was added nationally, with a peak addition of 58.06 GW in 2002. Similarly, the electric industry has the ability to plan for the EPA regulations, which will affect the operation of some electric generation units.

To be sure, there are some who remain concerned about future reliability. FERC Commissioner Philip Moeller, who was appointed by Bush and reappointed by Obama, told the committee that “older, fossil-based generation” plants eventually should be replaced. “However,” he warned, “such retirements need to be handled in an orderly way to avoid regulatory, economic, and reliability chaos.”

But most experts do not predict chaos — and certainly not as early as this summer.

PJM Interconnection, a regional grid operator that serves 58 million customers in 13 states and the District of Columbia, issued a report in late August on the impact of two EPA rules — both of which have compliance deadlines of Jan. 1, 2015. The report concluded that “resource adequacy does not appear to be threatened” in delivery year 2014/2015.

Separately, the Bipartisan Policy Center — which was founded by four former Democratic and Republican Senate leaders — issued a report that said the impacts of the EPA regulations on the nation’s power sector are “manageable.” The potential for blackouts? The report, which was drafted by staff members of the center’s Energy Project, said “scenarios in which electric system reliability is broadly affected are unlikely to occur.”

‘Back-of-the-Envelope’ Assessment

Now, let’s look at Huntsman’s claim that the EPA regulations will reduce the nation’s electric generation by 8 percent. That figure also comes from the FERC letter to Murkowski and a press release the senator released in response to it.

Murkowski, Aug. 3: The commission’s staff has preliminarily estimated that up to 81 gigawatts of existing generation are ‘likely’ or ‘very likely’ to be retired as a consequence of new EPA rules. That’s nearly 8 percent of our installed capacity for electric generation and a retirement at that scale could have drastic consequences for many parts of our country.

But FERC’s letter also warned not to put too much stock in its estimate of coal-fired plants likely to be retired. The letter called it an “informal, preliminary assessment,” adding that “an in-depth analysis could not be conducted because complete information was not available.” In his Sept. 14 testimony, Wellinghoff pulled the plug entirely on his staff’s informal analysis. He told Congress it was an “adequate back-of-the envelope first assessment of the amount and location of potential generator retirements,” but he warned that such an informal analysis “is inadequate to use as a basis for decision making.” For one thing, Wellinghoff said, FERC “did not evaluate any alternatives that might be available to the regions to offset any generator loss such as new or planned generation or transmission, retrofits of coal-to-gas burners, demand-side resources, or energy efficiency strategies.”

There is no doubt that the EPA’s regulations and proposed regulations will have a significant impact on coal-fired power plants. American Electric Power of Columbus, Ohio, announced in June that complying with EPA regulations would cost between $6 billion and $8 billion and force the company to “retire nearly 6,000 megawatts (MW) of coal-fueled power generation; upgrade or install new advanced emissions reduction equipment on another 10,100 MW; refuel 1,070 MW of coal generation as 932 MW of natural gas capacity; and build 1,220 MW of natural gas-fueled generation.” Nearly all of the plant closings will occur by Dec. 31, 2014, or later.

Huntsman can offer his opinion that the EPA is moving too fast or that the regulations are too costly, or both. And, of course, there are those who will disagree with him. In his Nov. 1 testimony before a House oversight committee, Deputy EPA Administrator Bob Perciasepe cited both the health and economic benefits of retiring or upgrading aging power plants.

But Huntsman resorts to fear-mongering when he raises the specter of blackouts “this summer.”

— Eugene Kiely and Lalita Clozel