EPA Good Neighbor Plan Reflects PJM and Industry Input

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The U.S. Environmental Protection Agency (EPA) on Wednesday released its emissions-reducing Good Neighbor Plan, noting the rule includes changes shaped by feedback from grid operators and other industry stakeholders concerned about maintaining reliability while implementing the new regulations.

The Good Neighbor Plan ensures that 23 states meet the Clean Air Act’s “Good Neighbor” pollution reduction requirements for power plants and industrial sources whose pollution crosses state lines, according to EPA. PJM worked extensively with other affected RTOs and EPA to address reliability concerns with the rule as originally proposed.

 “The agency made several adjustments to the proposed emissions reduction requirements for power plants – reflecting input received from grid operators across the country and other stakeholders – to ensure that the power sector can continue to deliver reliable electricity while also achieving cleaner and healthier air,” EPA said in a statement. “These changes are designed to provide owners and operators of power plants with the operational flexibility and predictability needed to ensure electric system reliability, particularly in the early years of the program.”

The Good Neighbor Plan is among several policies cited in PJM’s recent paper, Energy Transition in PJM: Resource Retirements, Replacements & Risks, as having direct impacts on generation in the PJM region, with “the potential to result in a significant amount of generation retirements within a condensed time frame.”

The rule could result in the retirement of as much as 4,400 MW worth of generation, according to PJM’s study; however, changes made in the final rule provide more time, out to 2030, for large coal-fired generators to install needed controls.

With the Good Neighbor Plan, EPA aims to cut nitrogen oxide pollution from power plants and industrial facilities in 23 states, under direction by the Clean Air Act to address pollution that “significantly contributes to unhealthy levels of ground-level ozone, or smog.”

Along with the rule, EPA published a document, “The Good Neighbor Plan and Reliable Electricity,” which describes the changes made to address grid reliability.

“EPA engaged with a full suite of power sector stakeholders while developing the Good Neighbor Plan – and listened,” the agency said.

It adopted several changes in the final rule to address reliability concerns, including:

  • Deferring “backstop” emission rate requirements until no later than 2030 for plants without current state-of-the-art controls
  • Allowing power plant owners/operators to “bank” emissions trading program allowances at a higher level through 2030
  • Establishing a predictable minimum quantity of allowances available through 2029

PJM expects to work closely with EPA and stakeholders to further the development of these reliability assurance provisions to accompany the final rule. The Good Neighbor Plan also includes additional flexibility measures, and cites the new Memorandum of Understanding signed by Department of Energy Secretary Jennifer Granholm and EPA Administrator Michael S. Regan to facilitate interagency collaboration to support reliability.