1 

 

November 30, 2011 

Via Electronic Mail and U.S. Mail 

The Honorable Cass R. Sunstein 

Administrator, Office of Information and Regulatory Affairs 

Office of Management and Budget 

Eisenhower Executive Office Building 

1650 Pennsylvania Ave NW 

Washington, DC, 20503 

Re: Electric System Reliability and the Utility Air Toxics Rule 

Dear Administrator Sunstein: 

We write in support of the U.S. Environmental Protection Agency’s (EPA’s) 

well-founded conclusion that EPA’s long-delayed hazardous air pollution 

standards for power plants (the “Utility Air Toxics” rule) can be implemented 

without substantial impacts to the reliability of the bulk electric power 

system. Available evidence, including Congressional testimony from all five 

FERC commissioners, demonstrates that any impact on the electricity system 

is entirely manageable, and can be addressed through improved planning 

processes – processes that FERC and grid operators are already undertaking. 

Despite that evidence, industry interest groups have persisted in claiming 

that the Utility Air Toxics rule will adversely affect reliability. First, the 

Electric Reliability Coordinating Council (“ERCC”), an industry advocacy 

group, recently wrote you arguing that the Utility Air Toxics rule would 

cause so many retirements as to trigger system-wide electric resource 

adequacy problems. The evidence, as discussed below, does not support this 

claim. 

Several regional transmission organizations (RTOs) have pressed for a more 

limited “safety valve” in the rule which would allow compliance waivers when 

particular plants which are necessary for reliability cannot retrofit or retire 

in time. Such highly localized reliability problems can be avoided by prudent 

advance planning. Indeed, many RTOs have begun to adopt such planning 

processes. If unavoidable local system constraints nevertheless prevent a 

particular plant, or plants, from complying with the law – and there is no 

evidence that any significant problems will emerge – EPA’s enforcement 
2 

discretion provides ample tools to prevent any serious reduction in system 

reliability without unfairly penalizing plant-owners. 

There is, therefore, no reason to weaken or delay the vital public health 

benefits which will result from the Utility Air Toxics rule – benefits which 

vastly exceed the rule’s cost. 

We discuss both sets of concerns in detail below. 

I. The Utility Air Toxics Rule and Resource Adequacy 

Although ERCC suggests that EPA’s reliability analysis is “missing” from the 

final rule, EPA actually conducted and presented an extensive reliability 

analysis. Based on that analysis, EPA concluded that falling natural gas 

prices and flattening electricity demand were more important in driving coal 

retirements than the rule, and that in any event any rule-driven retirements 

would not cause large scale resource adequacy problems. 

EPA’s analysis shows that the lower cost of alternative generating 

sources (particularly the cost of natural gas) as well as reductions in 

demand, have a greater impact on the number of projected retirements 

than does the impact of the proposed rule. EPA’s assessment looked at 

the reserve margins in each of 32 subregions in the continental U.S. It 

shows that with the addition of very little new capacity, average reserve 

margins are significantly higher than required (NERC assumes a 

default reserve margin of 15 percent while the average capacity margin 

seen after implementation of 15 percent while the average capacity 

margin seen after implementation of the policy is nearly 25 percent). 

Although such an analysis does not address the potential for more 

localized transmission constraints, the number of retirements projected 

suggests that the magnitude of any local retirements should be 

manageable with existing tools and processes. 

76 Fed. Reg. 24,976, 25,055 (May 3, 2011); see also EPA, Resource Advocacy 

and Reliability in the IPM Projections for the Toxics Rule (May 3, 2011) 

(modeling demonstrating that reserve margins will remain sufficient as the 

rule is implemented). 

Independent analyses, including the testimony of all FERC Commissioners 

(discussed below), support EPA’s conclusion that only localized impacts are 

likely. 

Impacts are limited, in large part, because the Utility Air Toxics rule is 

unlikely to cause an unmanageable number of coal power plant retirements. 
3 

The Congressional Research Service (“CRS”) in August of this year undertook 

a comprehensive survey of EPA’s regulatory efforts. CRS’s analysis 

demonstrated that the electric sector can comply with the Clean Air Act – 

including the Utility Air Toxics rule – without suffering the “train wreck” 

that industry has used as its main talking point in seeking to avoid state-ofthe art pollution controls. James E. McCarthy & Claudia Copeland, 

Congressional Research Service, EPA’s Regulation of Coal-Fired Power: Is a 

‘Train Wreck’ Coming? (Aug. 8, 2011). As CRS explained, most modern coal 

power plants have already installed the technology they will need to comply 

with the rules, id. at 31, meaning that retirements will occur largely among

“older, smaller, less efficient units” which are already leaving the market, id.

at 30. Nearly 60% of all coal plants already meet the proposed mercury 

standard, and already have scrubbers installed – suggesting, once again, that 

retirements will occur largely amongst smaller, older plants whose loss is 

unlikely to present a resource-adequacy problem. M.J. Bradley and 

Associates & Analysis Group, Ensuring a Clean, Modern Electric Generating 

Fleet while Maintaining Electric System Reliability: Summer 2011 Update

(August 2011). at 8-10. 

Retirements among this class of old, inefficient plants will not greatly reduce 

the resources needed to power the grid, if they do so at all. There is 

substantial unused capacity on the grid, including in existing gas-fueled 

plants. And as CRS notes, “the industry is capable of adding new generating 

capacity in a short time. From 2000-2003, electric companies added over 200 

GW of new capacity, far more than any of the analyses suggest will be needed 

in the 2011-17 timeframe.” Id. at 34. 

Other analysts concur that capacity reductions resulting from compliance 

with the Clean Air Act are likely to be relatively small, and readily managed. 

The North American Electric Reliability Corporation (NERC), in its 2011 

Long-Term Reliability Assessment (Nov. 2011), for instance, assessed the 

impacts of all EPA rules, not just the Air Toxics rule. It projects that, even as 

the EPA rules are implemented, “reserve margins” – the excess capacity 

companies maintain to ensure resource adequacy – remain above required 

levels. NERC Assessment at 7. NERC anticipates reliability problems only “if 

no action is taken to replace existing resources,” id. at 119, a scenario which, 

again, simply will not occur. See, e.g., CRS Report at 34; Bipartisan Policy 

Center, Environmental Regulation and Electric System Reliability at 25-26 

(June 13, 2011) (collecting analyses and concluding that any capacity needs 

“fall well within the realm of what the industry has constructed in recent 

periods,” particularly as, according to some analyses, the industry will have 

100 GW of surplus capacity in 2013, due to reduced electricity demand). 
4 

Thus, in every region of the country, even after the Utility Air Toxics rule is 

implemented, reserve margins are likely to remain above reliability targets. 

See M.J. Bradley and Associates & Analysis Group, Ensuring a Clean, 

Modern Electric Generating Fleet while Maintaining Electric System 

Reliability: Fall 2011 Update at 4 (Nov. 2011) (documenting that “projected 

reserve margins in 2014 range from 28% to over 40%, well above the required 

margins of between 12.5% and 15%). 

Downtime required to install controls at plants that will continue to operate 

also does not pose systemic reliability problems. As EPA has explained “these 

outages usually occur in the shoulder months ... when demand is lower (and, 

thus, reserve margins are higher).” 76 Fed. Reg. at 25,055. The necessary 

installations can be completed by the statutory three-year deadline without 

threatening reliability, according to EPA’s analysis; and if necessary, EPA or 

a state can grant up to a one-year extension to any plant that needs that 

additional time to install controls. CRS confirmed EPA’s conclusions, pointing 

out that the industry installed 60 GW of scrubbers in 2008-2010 alone, and 

that 96 GW of coal generation was retrofitted in five-years in the early 2000s 

– all without impairing reliability. That track-record demonstrates that the 

more limited retrofits necessary for compliance with the Utility Air Toxics 

rule can be completed successfully. CRS Report at 33. 

Results from RTO markets and RTO system planning documents similarly 

indicate that there will be no resource shortfalls resulting from compliance 

with the Utility Air Toxics rule. Most notably, PJM, the RTO covering much 

of the mid-Atlantic and Midwest, and which contains nearly 80,000 MW of 

coal capacity, now has results from its forward capacity auction. That auction 

requires generators to offer capacity for the 2014-2015 period (the compliance 

deadline for the Utility Air Toxics rule) three years in advance. The results of 

the forward capacity auction, according to PJM, indicate no resource 

shortfalls. Although coal resource capacity declined by 6,900 MW, demand 

response resources increased by 4,836 MW. As a result, according to PJM: 

For the 2014/2015 Delivery Year, PJM estimates that the RTO will carry 

a reserve margin by 19.6 percent .... Even with the potential retirement 

of coal capacity already announced by [certain entities], there are also 

announced commitments to replace a portion of that capacity with new 

gas-fired capacity. This means that the RTO will still carry a reserve 

margin in excess of the target 15.3 percent installed reserve margin. In 

short, includ[ing] the potential for new entry from other resources that 

has occurred in recent years [] a system-wide resource adequacy problem 

does not appear imminent in PJM from the reduction in cleared coal 

capacity in [the forward capacity market] and from announced 

retirements. 
5 

PJM Interconnection, Coal Capacity at Risk for Retirement in PJM at 33 

(emphasis added). (Aug. 26, 2011). See also M.J. Bradley and Associates & 

Analysis Group, Fall 2011 Update at 9 (documenting that ISO-NE has also 

secured sufficient capacity for 2014-2015). 

As PJM’s Senior Vice President for operations and planning has testified 

before FERC, “PJM has not identified any overarching reliability impacts 

associated with potentially retiring units that cannot be resolved with 

transmission upgrades within the four year period allowed by the proposed 

[Utility Air Toxics] rule.” Testimony of Michael J. Kormos, Senior Vice 

President, PJM, before FERC, Docket Nos. AD12-1-000, RC11-6-00 at 8 (Nov. 

30, 2011). 

MISO, the RTO covering the remainder of the Midwest and northern Plains, 

has expressed somewhat stronger concerns, but, like PJM, does not expect 

capacity to fall below “minimum capacity requirements.” Testimony of Clair 

Moeller, Vice President Transmission Asset Management, MISO, before 

FERC, Docket Nos. AD12-1-000, RC11-6-00 at 2 (Nov. 30, 2011 (Nov. 30, 

2011). Instead, MISO’s concerns are narrowly focused upon the specific 

reliability impacts of retrofits and retirements at “some key units.” Id. Those 

few units, if they exist, do not warrant a wholesale weakening of the Utility 

Air Toxics rule’s requirements. As set forth below, if such unavoidable local 

reliability problems emerge – and there is no reason to believe that they will 

– the Agency’s enforcement discretion is sufficient to avoid unfairly 

penalizing plant-owners which, despite their best efforts and thorough 

advance planning, cannot comply with the rule without compromising local 

reliability. Id. at 4-5. 

Although the ERCC letter you received reports some of the high-end

compliance cost predictions of MISO’s analysis, it does not provide the most 

important of MISO’s reliability conclusions: that the EPA rules have the 

potential to improve system reliability. MISO writes: 

The impact of EPA regulations on the Resource Adequacy of the MISO 

system is dependent on how the system is maintained during the 

retirement or replacement of affected units. Assuming a controlled 

replacement of capacity as it is retired, system reliability is actually 

improved. As the older and less reliable units are removed, the system 

average forced outage rate decreases marginally. . . . Removal of 

capacity without replacement is an unlikely scenario and maintenance 

of the Planning Reserve Margin is obligated under the MISO tariff. . . . 

If the units identified as at risk for retirement are all replaced with 

units that have better availability, system reliability will improve. 
6 

MISO, EPA Impact Analysis: Impacts from the EPA Regulations on MISO at 

33-34 (Oct. 2011). 

Consistent with these conclusions, all five FERC Commissioners have 

testified before Congress that the EPA rules can be successfully implemented 

with sufficient planning on behalf of the RTOs and other grid operators, and 

with FERC’s support. Although the Commissioners differ somewhat as to the 

best planning framework going forward, and as to how much implementation 

lead time planners will need, they agree that the rules will not trigger a 

resource adequacy crisis. Instead, the Commissioners expect reliability issues 

to be local, limited to a small number of specific plants, and primarily to be 

solvable at that level by grid planners – without any alteration of EPA’s 

proposed rule. 

According to Chairman Jon Wellinghoff, planning authorities already “have 

or could obtain all the necessary data and tools” to understand, and address 

“any potential local and regional impacts of these EPA regulations on electric 

reliability.” Testimony of Chairman Jon Wellinghoff Before the House 

Subcommittee on Energy and Power at 1-2 (Sept. 14, 2011). 

At the same hearing, Commissioner LaFleur likewise testified that grid 

planners will focus on problems at the level of “each case, each locality, and 

each region,” in order to develop “targeted and discrete solutions.” LaFleur 

Testimony at 1-3. As Commissoner Spitzer put it, “it will be the rare situation 

when a regulated entity finds itself, after adequate time for planning, in a 

position of having to choose between compliance with one regulator’s rules 

over another.” Spitzer Testimony. at 3. 

Commissioner Moeller has expressed the strongest concerns and has argued 

for a somewhat longer planning period and a greater role for FERC and EPA 

in this problem-solving exercise, but he, too, emphasizes that large scale 

resource adequacy problems are unlikely to occur, testifying: 

[T]he debate over the amount of coal generation that should be retired 

may miss the larger point. Except for most hydroelectric facilities, our 

existing electric generation is very likely to be retired in this country 

within 40 years, to be gradually replaced with newer generating plants. 

As I have emphasized, instead of concentrating on how many coal plants 

to retire, the focus should be on the timing of when specific units are 

likely to retire and what needs to be done to allow them to retire with 

the least disruption to the nation. 

Moeller Testimony at 4. 
7 

Finally, Commissioner Norris testified that he is “sufficiently satisfied that 

the reliability of the electric grid can be adequately maintained as compliance 

with EPA’s regulations is achieved.” Norris Testimony at 1. 

In sum, the settled consensus of most independent analysts, FERC, and a 

growing number of RTOs, is that the Utility Air Toxics rule will not cause a 

nationwide resource adequacy problem. Instead, it may accelerate existing 

market trends favoring the replacement of inefficient older coal plants with 

cleaner, more reliable power.1 To the extent that reliability problems occur 

during this transition, they can and should be managed without any 

alteration in the rule’s standards or deadlines. 

II. Addressing Localized Reliability Problems at the Grid Planning Level 

Although the specter of nation-wide blackouts that ERCC raises will not 

come to pass, grid planners will, of course, have to manage the retirement 

and retrofit of individual plants. Grid planners are familiar with this exercise 

and FERC’s recent Order 1000 will solidify their authority to properly plan 

for EPA rules. Prudent planning should resolve any problems before the 

statutory deadline. In the unlikely event that an individual plant, or plants, 

cannot comply in the four-year timeframe already provided by the Clean Air 

Act despite responsible grid-planning, EPA’s enforcement discretion provides 

it sufficient tools to fairly address that plant or plants. See 42 U.S.C. § 

7413(e)(1)-(2). EPA has, for example, the ability to issue consent orders (or, in 

an extreme case, a consent decree) for a specific plant or plants, which can 

provide for delayed compliance along a defined, and fair, schedule, while 

requiring appropriate steps to minimize toxic emissions during that time. 

Managing these issues, in other words, does not warrant weakening or 

delaying the EPA’s public health protections, but rather requires the sort of 

careful local and plant-specific planning and coordination by FERC, grid 

planners, and EPA that is already occurring. 

Specifically, in Order 1000, FERC directed all grid planning authorities (both 

in RTO regions and in the rest of the country) to incorporate the effects of 

public policies, such as the Utility Air Toxics rule, directly into their regular 

 

1 ERCC cites a Wall Street Journal editorial and fragments of some more than year-old 

assessments to argue for a larger resource impact, but these citations are neither 

authoritative nor compelling. The FERC “staff analysis” which ERCC asserts predicts 81 GW 

of retirements, for instance, was developed at some point in 2010, before EPA released the 

final CAIR or the proposed Utility Air Toxic rule, and before it become clear that EPA’s 

Clean Water Act 316(b) rules would not require cooling towers at most plants. The later, 

more complete, analyses we discuss above reflect current realities. See, e.g. Wellinghof 

Testimony at 8 (explaining that the 81 GW retirement figure was an “informal, preliminary 

assessment” that has since been revised downwards).
8 

transmission planning processes. 76 Fed. Reg. 49,842, 49,876-78 (Aug. 11, 

2011). Each planner will amend its rules in response to that Order no later 

than October 11, 2012 (for regional plans) or April 11, 2013 (for broader 

interregional planning processes) – well before the Utility Air Toxics rule 

compliance deadline. Most planners are already accounting for the EPA rules 

in their plans, and will use their Order 1000 compliance filings to further 

strengthen processes which are already in place. 

FERC and the grid planners are therefore able to manage the localized 

reliability impacts of the EPA rules as proposed. The Order 1000 reforms, 

and related measures (such as increasing the notice time which generators 

must give before retiring plants) will help planners maintain reliability as 

plants retire. See generally M.J. Bradley and Associates & Analysis Group, 

Fall 2011 Update (describing the many tools available to FERC and grid 

planners). 

Some RTOs have nonetheless requested that EPA build a “safety valve” into 

the Utility Air Toxics rule, which would waive the rule’s compliance 

obligations for plants that may not be able to retire without impairing local 

grid reliability. See, e.g. Safety Valve Proposal of PJM, ERCOT, MISO, SPP, 

and NY ISO (Oct. 14, 2011). The broad waiver process suggested by the RTOs 

is neither necessary, nor legally permissible. It is not necessary, because (as 

set forth above) few if any plants will face reliability-related difficulties in 

complying with the standards as proposed. It is not legally permissible 

because the Clean Air Act leaves the Agency no discretion to bypass its 

statutory deadlines. The Act directly and comprehensively addresses the 

timeline by which plant-owners must comply with its air toxics standards. 

The Agency can provide no more than three years for existing sources to 

comply. 42 U.S.C. § 7412(i)(3). EPA (or a state with an approved Title V 

permitting program) can extend that deadline for up to one year, on a plantby-plant basis, “if such additional period is necessary for the installation of 

controls.” 42 U.S.C. § 7412(i)(3). 

The speculative, limited, and highly localized nature of the suggested 

reliability challenges poses no threat to national security interests sufficient 

to justify the Presidential two-year exemption authorized by section 112(i)(4) 

of the Act, 42 U.S.C. §7412(i)(4). Nor could anyone plausibly claim that the 

“technology to implement” the Air Toxics standards is “not available,” as 

required by that section. Id. Perhaps for that reason, industry proposals 

invoking that two-year extension make no claim that the desired extensions 

would be provided only where necessary to secure national security interests; 

they instead ask the President to (illegally) authorize extensions that would 

be issued according to the economic- and business-considerations, inter alia, 

contained in state “integrated resource plans.” See Comments on National 
9 

Emission Standards for Hazardous Air Pollutants from Coal- and Oil-Fired 

Electric Steam Generating Units and Standards of Performance for FossilFuel-Fired Electric Utility, Industrial-Commercial-Institutional, and Small 

Industrial-Commercial-Institutional Steam Generating Units, submitted by 

Edison Electric Institute on August 3, 2011, at p.6. 

While the circumstances under which additional extensions are available are 

constrained by the statute, EPA’s enforcement tools – in particular, 

administrative consent orders, and consent decrees – allow it to avoid 

unfairly penalizing any individual plant-owners who, despite a vigorous goodfaith effort to comply, cannot do so without compromising system reliability. 

Such plant-owners will need to demonstrate that compliance could not be 

achieved; the law does not permit EPA to simply ignore the Act’s 

requirements, or to issue a regulatory exception masquerading as an exercise 

of enforcement authority. Only by working assiduously to comply with Order 

1000 and to address as many reliability problems as possible before the Air 

Toxics rule’s statutorily-required compliance deadlines, can RTOs and plantowners place themselves in a position to make that demonstration if and 

when they fail to meet the standards by the prescribed deadline. See 42 

U.S.C. § 7413(e)(1)-(2) (penalties for violation of Clean Air Act requirements 

depend, inter alia, on “good faith efforts to comply” with requirements). 

Consent orders and decrees must, moreover, be narrowly crafted to minimize 

hazardous air pollutant emissions. Parties to a consent decree may not “agree 

to take action that conflicts with or violates the statute upon which the 

complaint was based.” Local Number 93, Int’l Assoc. of Firefighters v. City of 

Cleveland, 478 U.S. 501, 526. “[T]he focus of the court’s attention in assessing 

the agreement should be the purposes which the statute is intended to serve.” 

Citizens for a Better Environment v. Gorsuch, 718 F.2d 1117,1125 (D.C. Cir. 

1983).2 Given Congress’s strong statutory mandate for pollution control, 

consent orders or decrees would therefore need to restrict plant emissions as 

much as possible while maintaining grid reliability. “[R]eliability-only 

dispatch” requirements may consequently be imposed, to ensure that these 

few laggard plants cannot operate more than the grid requires, and thereby 

avoiding excess emissions while planners work to solve any issues preventing 

their full retirement. See John Hanger, & Clean Air Task Force, ReliabilityOnly Dispatch: Protecting Lives & Human Health While Ensuring System 

Reliability (Oct. 2011) (describing such dispatch rules). Notably, MISO has 

endorsed this dispatch model. MISO Testimony at 5. 

 

2 See also United States v. Carpenter, 526 F.3d 1237, 1242 (9th Cir. 2008) (holding that 

agencies may not “agree to settlement terms that would violate the civil laws governing the 

agency”); Executive Business Media, Inc. v. Dep’t of Defense, 3 F.3d 759, 761-62 (4th Cir. 

1993) (same). 
10 

This collection of tools, beginning with FERC’s improved grid planning 

protocols, and ending with EPA’s discretion to establish a limited number of 

delayed compliance regimes through consent orders or decrees, is sufficient to 

manage the Utility Air Toxics rule’s reliability impacts. As such, the 

appropriate response to reliability concerns is to improve planning, rather 

than to weaken the restrictions on hazardous air pollutants which Congress, 

and good public policy, mandate. 

III. Conclusion III. Conclusion

As EPA Deputy Administrator Bob Perciasepe recently testified, “[w]e do not 

have to choose between significant public health benefits from reducing air 

pollution from power plants and a robust, reliable electric grid.” Perciasepe 

Testimony to the House Committee on Oversight and Government Reform 

(Nov. 1, 2011). The data shows that the Utility Air Toxics rule will capture 

extraordinary public health benefits at limited cost to the industry, and 

without causing unmanageable reliability problems. On the contrary, FERC 

and the grid planners are already working to accommodate the effects of the 

rule. As older, dirtier plants retire or retrofit, the public will benefit from 

cleaner air and a more reliable power grid. 

Sincerely, 

/s 

Sanjay Narayan 

Craig Segall 

Sierra Club Environmental Law Program