EPA Strains RICE Through the Reliability Screen: Rules on Pollution from Reciprocating Engines Modified To Reflect Reliability Requirements

January 15, 2013

On January 15, the U.S. Environmental Protection Agency ("EPA") issued new rules governing pollution from Reciprocating Internal Combustion Engines ("RICE") used for emergency electric generation. The new rules have been amended substantially to reflect electric system reliability requirements because RICE are frequently used for emergency and back-up power, helping to prevent blackouts when the grid is strained by outages in primary units, voltage deviations, or other reliability problems. The rules are of particular interest to Northwest entities that may use diesel generators for back-up or reliability purposes. The rules are also of great interest to rural communities in Alaska, which frequently rely on RICE for generating their electric power and for whom the new rule makes some special accommodations.

The new rule amends the limits for hazardous air pollutants ("NESHAP" in EPA-speak) aimed at controlling pollutants such as formaldehyde from stationary RICE, such as diesel-powered generators. Until 2010, stationary engines of 500 HP or less were not regulated under the relevant NESHAP rules. At that time, EPA issued rules that would have extended regulation to stationary engines of this size, but would have allowed limited exemptions for emergency engines operating less than 15 hours per year. Because the 15-hour-per-year limitation did not square with electric industry standards, representatives of the electric industry asked FERC to reconsider this limitation.

Recognizing that owners of emergency generators would likely retire those generators rather than applying expensive "aftertreatment" that is economically unjustifiable when a generator operates for only a few hours per year, and that the withdrawal of such generators could place the electric grid at risk during emergencies, EPA modified the rule. Emergency generators powered by diesel engines can now operate for up to 100 hours per year in response to emergencies like blackouts and floods without having to comply with the full range of pollution controls mandated by the NESHAP rules. Specifically, the new rule allows for generators to respond for up one hundred hours per year when a NERC-certified Reliability Coordinator or other authorized entity declares a Energy Emergency Alert Level 2 under NERC Reliability Standard EOP-002-3. A Level 2 emergency means that there is insufficient electric generation supply, and that additional supply is necessary to stabilize the power grid and avoid blackouts. It should be noted, however, that emergency engines will not be completely exempt from NESHAP requirements, but will be required to use ultra-low-sulfur diesel fuel beginning in 2015 and, if above 100 HP, will be required to report their operating hours to EPA.

The new rule also addresses the needs of rural utilities, where local grids can sometimes be stressed. In such situations, the new rule allows emergency generators to operate for up to 50 hours per year if they are dispatched by the local system operator to help that system operator avert voltage collapse, line overloads, and similar issues as long as the local operator complies with NERC standards.

The new rule also makes important concessions for rural Alaskans. Alaskans living in remote areas that are not served by the Alaska Railbelt Grid, and that rely on RICE generators with a capacity of less than 12 MW will be subject to management practices requiring periodic maintenance, but will not be subject to the more expensive NESHAP requirements.

Utilities with pallet- or trailer-mounted generators should be aware of one wrinkle in the rules -- such generators will not be considered "stationary" sources subject to the NESHAP rule unless they are left in place for a year, or for a full season for a seasonal source.

If you have any questions about the EPA rules discussed in this post, or other matters related to the utility industry, natural resources, water, or environmental law, please contact a member of GTH's Energy, Telecommunications and Utilities practice group or Environment & Natural Resources practice group.