Texas vows to fight EPA's plans to kill coal-fired power generation 'all the way to the Supreme Court'

ERCOT warns that nearly 60% of its electricity from coal-fired power plants could be shuttered under proposed federal regulations, threatening U.S. power grids.

J.T. DEELEY coal-fired generating plant in Thompsons, Texas, now retired (Bloomberg photo)

ERCOT struggled to keep the lights on in Texas during July and August when the sun set at about 8:00 PM and the wind stopped blowing. ERCOT overcame those challenges and is now focused on the blackouts that could be coming due to the EPA’s proposed New Source Performance Standards and other regulations. The EPA designed its proposed rules to eliminate coal-fired power generation and limit natural gas-fired power generation by 2040. However, the deadlines for compliance begin in seven years, so effectively, the rules immediately stop new coal plant construction.

ERCOT is focused on five rules being considered by the EPA that could have severe negative impacts on the Texas grid, according to a presentation that ERCOT CEO Pablo Vegas made at the ERCOT Board of Directors meeting on August 31, 2023, summarized in this slide:

The “Key Takeaway” encapsulates the problem ERCOT is focused on: the EPA rules are intertwined and impact different generating units differently. However, combining all the rules will severely affect the Texas grid, especially during peak times.

The EPA proposed rule, the “Greenhouse Gas Rule,” which limits greenhouse gas emissions from coal and natural gas-fired power plants, is especially concerning to ERCOT, especially during peak demand times. A similar EPA regulation, designed to restrict CO2 emissions from power plants, was shot down by the Supreme Court in their 2022 decision in the case “West Virginia v. EPA.” The Supreme Court should make the same decision this time, but the case has to get to the Supreme Court first, and that could take years.

The other proposed EPA rules that concern ERCOT include those that require inactive coal plants to clean up contamination, cut pollution from power plants to mitigate air pollution across state lines, and set new standards for power plants to reduce toxins such as mercury. 

ERCOT said their next report to the PUC will include scenarios assuming the loss of 8,300 megawatts from coal plants. That sparked the ire of the PUC Commissioner Will McAdams, who said:

I fear that if we start subtracting massive amounts of megawatts out of the models, due to hypothetical federal regulations which we are sure to litigate and go all the way to the U.S. Supreme Court, which will take some time, I believe it will blow out the top of our models (and) unduly alarm the public. (emphasis added)

The PUC’s analysis of the impact of the EPA’s proposed regulations on the Texas grid included 48 potential “blackout scenarios” based on the retirement of coal and gas-steam plants producing 900 megawatts and 3,300 megawatts of the 14,321 megawatts currently generated from coal plants. The results of such closures would devastate the reliability of the Texas power grid. The PUC and ERCOT continue to analyze the various regulatory scenarios and plan to host a workshop in October “to review current analysis and obtain stakeholder input.”

In addition to analyzing the impact of the five proposed new EPA rules, ERCOT has been actively trying to line up additional electricity generation for the upcoming winter. ERCOT had been contacting owners of shuttered coal and natural gas generating plants. ERCOT asked CPS Energy, the San Antonio, Texas utility company, to reopen the J.T. Deeley coal-fired plant in Thompsons, Texas, pictured above, to reduce the threat of another winter grid crisis this winter. CPS Energy told ERCOT that, while the site has not been demolished, it cannot be restarted in time. ERCOT did succeed in keeping a Denton plant owned by Garland Power & Light open over the winter.

My take

ERCOT and the Texas PUC are justified in their actions to fight the EPA’s proposed rules because they have an obligation to the residents of Texas to do everything in their power to maintain a stable and reliable electricity grid. ERCOT’s analyses show that the EPA’s proposed rules would severely weaken and destabilize the ERCOT power grid, so they are obligated to fight them. To acquiesce to the EPA would be a dereliction of their duties to the residents of Texas.

ERCOT and the Texas PUC are undoubtedly working with other U.S. power grids to join in a lawsuit against the EPA. A coalition of grid operators suing the EPA to stop their reckless pursuit of regulations that could destabilize every power grid in the United States would be a powerful force.

The fight with the EPA will eventually get to the Supreme Court, and the EPA is likely to be slapped down again as overreaching its authority. In the meantime, EPA’s pending rules threaten the viability of all power grids in the United States.

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