June 13, 2011
The electric power sector in the United States faces a changing market environment, one that features reduced or flattened demand, low natural gas prices, new environmental regulations, and continued uncertainty about the future regulation of carbon.
These new conditions in the power sector are expected to increase the number of coal-fired power plants that will be retired in the next several years, which has led to concerns that the power sector could face reliability issues as utilities comply with new regulations.
Environmental Regulation and Electric System Reliability summarizes the current state of knowledge about challenges facing the electric power sector as it seeks to maintain reliability without jeopardizing important process on public health and environmental protections. The report assesses the possible impacts of regulation and identifies the range of strategies available to ensure a smooth transition.
The report finds that the impacts on the reliability of the electric system due to EPA regulations are manageable and that there are tools available at the Federal, state, and local levels to address localized reliability risks. Nevertheless, the electric power sector and its regulators face significant planning challenges if the aim is to avoid localized reliability problems and minimize impacts on electric rates. Further, while recognizing the political difficulties, the report finds that there may be an opportunity to enact a legislative fix that could guarantee the environmental benefits of the Clean Air Act and provide a lower cost transition for the power sector.
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Report, Staff Paper, Energy Project, The Electric Grid Initiative