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EPSA Comments On EPA Proposed Waiver For Diesel-Based "Demand Response"
WASHINGTON, D.C. - The Electric Power Supply Association (EPSA) continues to object to efforts by Demand Response (DR) providers to convince the U.S. Environmental Protection Agency (EPA) to allow the use of on-site "behind-the-meter" (BTM) generators to masquerade as DR assets in the context of regional organized power markets. EPA this week issued a Notice of Proposed Rulemaking (NOPR) that would allow BTM generation that participates in "emergency" demand response programs to operate for up to 100 hours per year without having to install otherwise-applicable emissions control technology. The current limit is only 15 hours per year.
The EPA NOPR addresses the National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines. Known as the RICE NESHAPs rule, the new rulemaking addresses a proposed settlement between EPA and certain DR providers to resolve pending federal litigation. The new rule would allow DR providers to continue to rely on dirty diesel backup generators as DR resources instead of focusing on legitimate reductions in demand.
"The essential design and purpose of demand response is to encourage consumers to reduce their consumption of electricity in response to appropriate market signals, not to simply replace power from the grid with power from an on-site emergency diesel generator not subject to the same air emissions rules," according to EPSA President and CEO John E. Shelk. "The proposed EPA rule would encourage the continued growth of DR as a Diesel Renaissance rather than an environmentally-responsible way to help manage regional electric power needs."
"This issue is particularly important with respect to the operation of competitive regional organized power markets, where DR is in head-to-head competition with generation for the right to earn market revenues," Shelk added. "It is hard to fathom why replacing retired generating units or existing units with dirty DR resources is either sound environmental or energy policy."
EPSA notes that last week PJM announced the results of its annual capacity auction and indicated that, over the next three years, approximately 14,000 megawatts of existing generation in the PJM market is expected to retire, at least partly in response to increasingly stringent environmental regulations. At the same time, close to 15,000 megawatts of DR cleared this year's auction. Some estimates suggest that as much as half of this amount may be based on BTM generation rather than legitimate efforts to reduce consumer demand.
"While we appreciate the fact that EPA wants to ensure DR providers clean up their act by 2017, in the meantime, providing a waiver of emissions control requirements for BTM generation that competes with traditional generation subject to increasingly stringent EPA rules is nothing more than an economic subsidy that distorts the operation of competitive power markets. The irony is that it will result in more, not less hazardous air emissions," Shelk said.
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.