On Tuesday, February 7th, the National Association of Regulatory Utility Commissioners (“NARUC”), the national organization that represents State public service commissioners, and FERC held a meeting of the Forum on Reliability and the Environment (the “Forum”).  FERC and NARUC jointly created the Forum as part of an effort to create an open and transparent venue for determining the electric utility industry’s ability to meet future environmental restrictions and rules. The Forum will coincide with NARUC’s three yearly meetings and is intended to explore reliability issues that stem from new and pending environmental rules that will affect the power sector.  The goal of the Forum is to ensure that both regulators and system planners are able to continue to respond to system reliability issues while meeting new environmental requirements.  FERC Commissioners Cheryl LaFleur (D) and Philip Moeller (R), and NARUC First Vice President Philip Jones of Washington and Treasurer David Ziegner of Indiana co-chaired the meeting. 

The environmental regulation that has triggered this discussion is the Mercury and Air Toxics Standards (“MATS”) rule recently finalized by the Environmental Protection Agency (“EPA”) and scheduled to publish in the Federal Register on February 16, 2012.  The MATS rule will require the nation’s coal and oil fired power plants to comply with stringent emission requirements in a relatively short period of time.  As a result of the MATS rule, the EPA estimates that at least 4.7 GW of coal-fired capacity will become uneconomic to maintain by 2015, that the regulation will cost industry approximately $9.6 billion annually, and that retail electricity prices will likely increase by an average of 3.1% in 2015.  While many commend the measure as an overdue public health protection, others, troubled by the scope of the final rule and the short compliance period, are concerned about the reliability of the nation’s electricity grid.  Of particular concern is that the MATS rule will accelerate the closure of coal-fired power plants critical to meeting the country’s electricity needs, threatening the stability of the of the electric power system in some areas of the country.  Any coal-fired units that elect to remain in service will need to factor in the additional costs of complying with the rule.  With the MATS standards finalized, the Forum will proactively explore the reliability issues that MATS may cause for the power grid going forward.  NARUC’s next meeting is scheduled for July 22-25, 2012 in Portland, Oregon.

To view the EPA’s final rule on MATS, click here.