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EPSA Coalition Opposes EPA Settlement With Demand Response Providers
"...the Proposed Settlement does nothing to promote the reliability of the electric grid, and will instead distort competition in the country's energy markets and stifle the development of cleaner generation resources. Moreover, it will result in increased environmental impacts without corresponding benefits."
WASHINGTON, D.C. - On Friday, February 3, 2012, the Electric Power Supply Association (EPSA) and a coalition of regional competitive power advocacy organizations filed detailed comments with the U.S. Environmental Protection Agency (EPA) opposing a proposed EPA settlement with certain Demand Response (DR) providers. Joining EPSA in filing the comments were the Electric Power Generation Association (Pennsylvania), the Independent Power Producers of New York, and the New England Power Generators Association.
Under the Proposed Settlement, DR providers could at least quadruple the number of hours each year that their on-site "behind the meter" (BTM) generation could masquerade as "emergency" demand response without complying with the nation's clean air regulations. The settlement would, if adopted, modify EPA's National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines ("RICE NESHAP"). Excerpts from the comments follow (the full text and attachments can be found at www.epsa.org).
"...the Proposed Settlement does nothing to promote the reliability of the electric grid, and will instead distort competition in the country's energy markets and stifle the development of cleaner generation resources. Moreover, it will result in increased environmental impacts without corresponding benefits."
"In an abrupt departure from EPA's past rulings that emergency RICE should not be exploited for financial gain, the Proposed Settlement would inexplicably expand the limited exception allowed in the March 2010 Final Rule into a gaping loophole that would subsidize BTM generators at the expense of generators that participate directly in the wholesale markets. There is no justification for such a drastic reversal in policy."
"The Proposed Settlement provides no rationale or analysis whatsoever supporting such preferential treatment of BTM generators, and it is hard to imagine what possible justification there could be, given that where a generator sits relative to the wholesale meter clearly has no bearing on its emissions or the consequences of those emissions."
"DR Providers do not and cannot point to any rule that requires BTM generators to be exempt from emissions control requirements in order to provide emergency services. Indeed, BTM generators are fully capable of participating in emergency demand response programs even in the absence of any operating hour allowance simply by investing in emissions control equipment, like other generators that wish to participate in the wholesale markets."
"...the 60 hour allowance under the Proposed Settlement is not necessary for PJM's emergency program, but would merely permit BTM generators to receive extra capacity payments without incurring the costs of environmental upgrades faced by generators on the other side of the meter that wish to participate."
"The harm to the environment will be amplified because such BTM generators, which emit far more pollution than other generators, will be forcing out and replacing traditional generators, which have to comply with EPAs increasingly stringent emissions limitations."
CONTACT: JOHN SHELK
(202) 349-0154or 703-472-8660
EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities serving global power markets. EPSA seeks to bring the benefits of competition to all power customers.