Meeting #24: Impact of Environmental Regulations on Demand Response

Friday, June 8, 2012
10:00am – 3:15pm ET
Federal Energy Regulatory Commission, Washington, DC


This session examined the impacts and implications for demand response programs of new and upcoming environmental regulations. Particular attention was paid to the federal Mercury and Air Toxics Standards (MATS) and Reciprocating Internal Combustion Engines (RICE) rules recently promulgated by USEPA. State-specific environmental regulations were also considered. The RICE rule imposes environmental requirements that could have significant effects on the ability of some back-up generators to respond to (or prevent) emergency situations and, indirectly, could affect choices of technologies and fuels used for back-up generation. The MATS rule adds to substantial existing drivers that are already leading to fossil unit retirements. In addition, the MATS rule will require temporary outages for repowering or pollution control installations. Demand response resources may be increasingly important for maintaining reliability as these rules and future environmental rules are implemented.


Final agenda - pdf

Reference Document


New USEPA Regulations and their Implications for Back-Up Generation
Joe Goffman, U.S. Environmental Protection Agency
Kevin Culligan, U.S. Environmental Protection Agency
Melanie King, U.S. Environmental Protection Agency
Stacy Angel, U.S. Environmental Protection Agency

This topic explored the implications of new USEPA regulations, in particular the Mercury and Air Toxics Standards (MATS) and Reciprocating Internal Combustion Engines (RICE) rules, for back-up generation. The panel addressed a variety of questions, including:

  • In general terms, what do these rules require? What are the benefits from these rules?
  • Will the RICE rule restrict the ability of diesel-fueled back-up generators to operate in emergency or non-emergency situations, and if so, what constitutes an “emergency”?
  • How will EPA consider the availability of back-up generators when considering a request from a power plant owner for additional time (a “fifth year”) to comply with the MATS rule?
  • What other power sector rules will have an impact on backup generation?
  • What is EPA doing during rule development and implementation to support (or at least not disadvantage) the deployment of distributed resources?

Potential Changes in Grid Operation Resulting from New USEPA Regulations
Gary Helm, PJM
John Shelk, Electric Power Supply Association
Joe Bowring, PJM Market Monitor

This topic built on the discussion of new environmental regulations and consider the broader implications for grid operations and demand response, with a focus on the PJM footprint. Panelists addressed these questions:

  • What are the expected or projected impacts of USEPA regulations on fossil unit retirements, temporary outages for repowering and pollution control installations, and reserve margins?
  • Are there ramifications for capacity expansion planning?
  • What effect might the new rules have on dispatch decisions in PJM?
  • What role can demand response programs play in maintaining reliability?
  • What is the future viability of legacy contracts which limit demand response in PJM to just summer peaks?
  • Is it necessary for PJM or states to modify demand response policies and programs, or electric rates, to meet this challenge?

State Agency Perspectives on the Impact of Environmental Regulations
Randy Mosier, MD Department of the Environment
Ali Mirzakhalili, DE Department of Natural Resources and Environmental Control
Vince Brisini, PA Department of Environmental Protection

Under federal environmental laws, State regulations must be at least as stringent as USEPA regulations; however, states are free to exceed the federal regulations. This panel focused on examples from a few states of state regulations that affect the ability of back-up generators to participate in PJM demand response on an emergency or economic basis. The panel also explored any recent changes the state EPA’s have made to respond to changes on the Federal level.