MANAGER'S MESSAGE by Mike Kezar
Although the first day of summer does not officially arrive until June 21st, you would be hard pressed to convince Texas residents that summer is not already upon us. Temperatures from the mid 90’s to triple digits just to our north, coupled with an extended period of dry weather, have worked to make the landscape look like we are in the middle of July, rather than the middle of May. The hot weather has also impacted the electric grid. Just last Friday, May 13th, a shortage of available generating capacity pushed prices above $2,500/Mwh across the state. Clearly, and despite the efforts of the Texas Legislature, the Public Utility Commission, and ERCOT, available electric generating capacity remains a significant concern in Texas. And the Federal government is not helping the situation.
In March, the Environmental Protection Agency (EPA) proposed a new "Good Neighbor Rule" that is targeted at reducing power plant emissions in upwind states, when the calculated effect of those emissions is creating compliance problems for downwind states. In the case of Texas, EPA has determined that Texas power plant emissions of oxides of nitrogen (NOX) are impacting counties in Wisconsin. And while even a liberal interpretation of a map of the United States would indicate that Wisconsin is not a neighbor of Texas, EPA is proposing to significantly limit the amount of NOX emissions that Texas can produce on an annual basis. As a result, we estimate that approximately 12,000 MW of coal-fired generating capacity in Texas will retire in the next few years, and 8,000 MW of that total will take place within ERCOT’s footprint.
So, at a time when legislative and regulatory initiatives in Texas are targeting an increase in electric generating capacity to meet the power demands of the state, the Federal government is pursuing policies that would force the early retirement of existing generating capacity and make the challenge of maintaining grid reliability exponentially harder. STEC has been, and continues to be, engaged at both the State and Federal levels on policies that impact the Members. I am travelling to Washington DC today (May 16th) to meet with members of the Texas Congressional Delegation and explain the negative impacts that EPA’s proposed Good Neighbor Rule will have on Texas’ electric grid reliability. Our hope is that the EPA can be convinced to slow the progress of their rulemaking long enough for organizations like ERCOT to evaluate the impacts the rulemaking will have on reliability and to provide meaningful comments.