Dive Brief:
- The Illinois Environmental Protection Agency will propose amendments to state pollution rules to help generator Dynegy keep its fleet of coal plants in the state operating, the Chicago Tribune reports.
- Under the new rules, regulators would reportedly impose annual caps on criteria pollutants, rather than limits on the rate of pollution from each plant. The change could help the dirtiest plants in Dynegy's fleet to operate longer than they otherwise would.
- The proposed caps are well above emission levels from Dynegy plants in the past two years. The plan would have to be approved by the Illinois Pollution Control Board.
Dive Insight:
Subsidies for Dynegy's coal plants were removed from Illinois' mammoth energy reform law passed last year, and now Gov. Bruce Rauner's (R) EPA is stepping in with a plan to assist the struggling plants.
New pollution regulations would reportedly set the limit at 55,000 tons/year of sulfur dioxide for Dynegy's entire fleet of eight coal plants in the state. For nitrogen oxides, the limit would be 22,000 tons/year.
The new caps would be significantly higher than emissions from the Dynegy plants last year, the Tribune notes — 79% higher in the case of NOx. The caps would not be adjusted if Dynegy retires or mothballs any of its plants.
The new rules aim to help keep Dynegy's plants open by giving the company flexibility to operate its generators that don't have pollution controls, Illinois EPA director Alec Messina told the paper. Messina was previously head of the Illinois Environmental Regulatory Group, an industry group that pushes for looser regulation.
Dynegy acquired five of its Illinois plants from Ameren in 2013 and won waivers from the Pollution Control Board to delay installing scrubbers on those plants until 2020.
Those plants emit more criteria pollutants than Dynegy's other Illinois facilities, the Tribune notes. For SO2, the former Ameren plants emit 0.43 lbs/mmBtu, while the three other plants emit 0.05 lbs/mmBtu.
Changing emissions standards might allow Dynegy to avoid installing costly scrubbers on those plants, removing a massive expenditure on the horizon for the financially strapped plants. Dynegy's coal plants are struggling to stay profitable in power markets operated by the Midcontinent ISO in the face of cheap power from natural gas and wind.
In May, CEO Bob Flexon warned the Federal Energy Regulatory Commission that his Illinois plants would retire if new nuclear subsidies — part of last year's energy reform — were enacted.
"All of the generation in southern Illinois will vanish with the latest subsidy given to Exelon [nukes]," Flexon said. "Those plants were just put into the uneconomic category.”
It remains unclear whether the looser emissions standards would allow Dynegy's plants to stay profitable. Much will depend on the price of natural gas generation, which often sets the price in power market auctions today.
Dynegy officials stressed to the Tribune that Illinois emissions standards would still be more stringent than federal requirements, and that pollution still could have increased under the old rules. The paper has extensive details on the evolution of the regulations, including unearthed emails between state officials and reaction from key stakeholders.
