When in Doubt, Blame the EPA

Sometimes it seems the EPA is the best thing to happen to Texas Republicans.

The federal agency makes a handy scapegoat for problems besetting Texas’ electric grid. Case in point: Last week’s hearing of the Senate Natural Resources Committee on EPA regulations. The tone was unrelentingly negative and gloomy. The theme: Blame the EPA.

It called to mind the great South Park satirization of scapegoating, “Blame Canada.”

The hearing opened with Trip Doggett, the CEO of grid operator ERCOT, telling the committee that Texas will have trouble keeping the lights on in the coming years. Doggett pointed to Luminant, Texas’ biggest private utility, and the company’s threat to shutter two lignite-fired units — the dirtiest in its fleet — in the face of new EPA regulations on sulfur dioxide and smog-forming nitrogen oxides. (On Friday, a federal appeals court in Washington, D.C., is considering a challenge to the rule, called the Cross-State Air Pollution Rule, by Texas and 14 other states.)

Doggett said the “uncertainty of the effect of the environmental regulations” was contributing to reluctance on the part of investors to build new power plants.

ERCOT likes to have a reserve margin — the difference between projected power needs and available generation — of 13.75 percent. If Luminant keeps its lignite plants on-line this summer, the reserve margin would be almost exactly 13.75 percent. Any less and the likelihood of power outages increases.

The picture worsens in the years to come, Doggett said. Very few new power plants are in the pipeline and the state’s population is growing.

“This is kinda alarming,” said state Sen. Craig Estes, R-Wichita Falls.

You would think the main problem here is that overbearing EPA. But if you were listening closely, both Doggett and Public Utility Commission Chairman Donna Nelson underscored problems in the power sector that have little to do with the EPA.

The fundamental problem, Doggett said, is that investors don’t think they can make money on new power plants right now, and there is very little state regulators are willing to do about that in Texas’ deregulated market. Cheap natural gas, now selling at a decade-low of $2 thanks largely to the fracking boom, has radically slackened enthusiasm in ERCOT by depressing profit margins

“The average wholesale price is not sufficient to induce companies to come in and invest because if they invest they can’t get their money back,” said Nelson.

Cheap gas, cheap electricity — that’s primarily what’s killed coal in Texas, not EPA regulations, though they’ve certainly hastened its demise.

But the deregulated system certainly doesn’t help with the crisis.

Donna Nelson, who’s taken a hard-line on anything that remotely smacks of meddling in the market, was at pains to explain how the PUC was acting to avoid blackouts.

“We are working hard to send the right signals,” she said.

The PUC is likely to raise a cap on wholesale electric prices (at $3,000/megawatt-hour, it’s already one of the highest in the world) in order to boost prices. That will almost certainly trickle down to consumers in the form of higher rates. Nelson said she was striving to find the “sweet spot” — not so high as to shock consumers with higher rates, not so low as to keep investors on the sidelines and plunge the state into dark.

Sen. Troy Fraser, chafing at the straitjacket, tried to send his own signal.

“We’ve got to send — and I hope the financial markets are listening to this hearing — because I want to send signals to those financial people: Come invest in Texas, we need generation built, we need steel in the ground and we’ll figure out a way to make it cost effective for you to do it. Because if you look at the out years, two or three years from now, if we don’t project that message lights are going to go off.”

Lights are going to go off.

The most vicious EPA-bashing was left to the brain trust at the Texas Commission on Environmental Quality. TCEQ, which is acting like a wholly-owned subsidiary of Texas fossil fuel industries, sent up one of their third-stringers — chief engineer Susana Hilderbran — to offer up a bill of particulars against EPA. Notably, the TCEQ has now morphed into an agency capable of predicting near- and long-term changes in the energy markets based on their interpretation of environmental rules.

“At a minimum the combination of these rules will likely mean that no new coal or petroleum coke power plants will be built in the U.S.,” said Hilderbran. “At its worst, the rules could result in shutdown of existing facilities in Texas, further straining electric reliability.”

EPA didn’t give adequate time to respond to the cross-state rule. EPA miscalculated the amount of power generation in Texas. EPA used an air monitor in Illinois to prove that Texas affects air quality out of state. (Hilderbran said the monitor shows Texas’ sulfur dioxide contribution as minuscule, just .18 micrograms per cubic meter. “That’s approximately a baby aspirin spread over 350 acres.”)

One fed-up environmentalist, Luke Metzger of Environment Texas, tweeted during the hearing: “Listening to lies from TCEQ is making me sick.”

Later, Metzger said, “It’s infuriating that an agency that’s ostensibly out to protect the environment doesn’t say a single thing about the environmental impacts, and in fact is completely misleading and regurgitating industry talking points.”

But TCEQ doesn’t lie so much as take outlier positions on the science and cherry-pick irrelevant statistics to reach a predetermined conclusion. As one example, the agency has repeatedly attacked the EPA’s new mercury rule, which targets coal-fired power plants for a 90 percent reduction in mercury emissions, as being based on bad science. The agency has put itself in the company of Rep. Joe Barton, the Republican from Ennis who’s one of the closest allies of the oil, gas and coal industries in the U.S., but out of step with the medical and scientific community.

To pick one small example out of many possibilities: On Wednesday, Hilderbran told the committee, “U.S. power plants only contribute two percent of mercury deposition on average to water bodies in the U.S. with the rest coming from natural and international sources.” This echoes what TCEQ’s chief toxicologist, Michael Honeycutt, told the U.S. House Science Committee last year. Honeycutt expressed concern in testimony that “claims of mercury causing lower IQ and heart disease scares the public into avoiding seafood.” Mercury is a neurotoxin known to have harmful effects on fetuses and children.

Although she provided no citation for that statistic it appears to be based on EPA modeling that looked at the amount of mercury deposited in lakes and streams from the atmosphere. The EPA found that on average, U.S. power plants contributed about 5 percent of the total mercury deposited in bodies of water in 2005. That fraction is expected to fall to 2 percent in 2016 because of more stringent anti-pollution rules. The rest does come from natural and international sources.

However looking at averages across the entire U.S. obscures the more salient issue of mercury “hotspots,” typically located near mercury-emitting industrial facilities like a coal plant. The EPA modeling exercise found that in some bodies of water the contribution from power plants was as high as 30 percent. The portion of mercury in fish tissue that can be attributed to power plant-related mercury is as high as 40 percent, the EPA found. Naturally-occurring mercury, typically from volcanoes, tends to fall more uniformly across the landscape. When just looking at anthropogenic (human) sources, coal-fired power plants contribute over half of all mercury emitted into the atmosphere.

Hilderbran’s point also ignores historic contributions from coal-fired power plants, mercury that’s accumulated in bodies of water and in fish tissue over time.

“From our perspective this is just another example of the agency trying to misrepresent the science on the issue,” said Elena Craft, a toxicologist with Environmental Defense Fund’s Texas office. “There’s a clear path from mercury from power plants to the fact that we have children born in the United States who have blood mercury concentrations in excess of EPA’s health-based standard.”

Craft added that pollution controls on industrial sources have translated into measurable reductions in the mercury concentrations in fish. In Florida, for example, mercury concentrations in fish fell by 60 percent after nearby industries installed anti-pollution devices that reduced mercury emissions by 99 percent.

“We know that these pollution controls work and we know that they work to reduce mercury in those bodies of water that are closest to those facilities,” she said.

But never mind all that.  At the hearing, Hilderbran’s prepared remarks hit the mark.

“I’m flabbergasted,” said Sen. Craig Estes, a Wichita Falls Republican. He noted that the state of Texas has now sued EPA 24 separate times since Obama took office.

Added Sen. Fraser, “Pretty amazing they won’t allow Texas to solve their own problems.”