New EPA rule could lead to rolling blackouts in Texas, PUC chairwoman says

The head of the Texas Public Utility Commission expressed concern Friday that a new federal air quality rule, set to take effect Jan. 1, will cause disruptions in electric service.

If implementation of the Cross-State Air Pollution Rule is not delayed, "I have no doubt in my mind that this rule will result in reliability issues and rolling outages in Texas," Donna Nelson said at the start of the commission's meeting.

The rule, issued in early July by the Environmental Protection Agency, would require substantial reductions in emissions of nitrogen oxides and sulfur dioxide at power plants in 27 states.

The EPA says the rule will save and prolong lives by reducing harmful smog and soot pollution. Gina McCarthy, an EPA assistant administrator, said in a previous statement that power plants in the state "will be able to cut their pollution without jeopardizing reliable electricity service for Texans."

But Dallas-based power generator Luminant says it doesn't have enough time to comply and has asked that the EPA delay implementation.

The company says the industry's standard time frame for installing emission controls is several years, but the rule requires compliance in six months. So Luminant, a subsidiary of Energy Future Holdings, has said it may have to shut down some coal-fired power plants in East Texas.

"Curtailing plant and/or mine operations will be the only option" if the 1,323-page rule goes into effect as planned, Luminant said.

In an Aug. 4 letter to the EPA, Nelson said that the new rule is "overly burdensome" and that the federal agency "has ignored the effects of local transmission constraints when considering the impact of generating-plant retirements on electric reliability." Nelson became the PUC's chairwoman after former Commissioner Barry Smitherman was appointed to the Texas Railroad Commission last month.

PUC Commissioner Kenneth Anderson said Friday that the tight implementation schedule for the rule "will be impossible to meet" and urged that the state agency "file comments with the EPA asking them to, at the very least, extend the compliance deadline."

For the short term, Texas' power grid continues to be taxed by exceptionally high temperatures that have led to record-high electricity demand this summer, the PUC was told Friday by Mike Cleary, senior vice president and chief operating officer for the Electric Reliability Council of Texas.

Cleary said power supplies could be tight next week with schools reopening and adding about 1,500 megawatts of additional demand.

ERCOT set an electricity demand record of 68,294 megawatts on Aug. 3.

Oncor rate hike

In other action Friday, the PUC approved a rate increase for Oncor Electric Delivery, the chief electric transmission and distribution company serving North Texas.

A portion of the increase took effect July 1. When fully implemented Jan. 1, it's expected to raise the electric bill of a typical residential customer by about $1.60 per month.

The increase will boost Oncor's annual revenue an estimated $136.7 million, far less than the $350 million increase the company was seeking when it filed its request in January.

The settlement was supported by Oncor and interveners in the rate case, including the Steering Committee of Cities Served by Oncor, a group that includes Fort Worth, Arlington and other Tarrant County cities.

Jack Z. Smith, 817-390-7724