Impacts to Louisiana’s Energy Supply

fromEPA Cross-State Air Pollution

RulePaul Miller

Assistant to the Secretary

Cross-State Air Pollution Rule (CSAPR)

Intended to fix the legal issues surrounding the Clean Air Interstate Rule

• Replacement for the Transport Rule (July 6, 2010) which was the replacement for the Clean Air Interstate Rule (March 10, 2005)

Signed by the EPA Administrator on July 6, 2011

Applies to 28 States including 26 for Ozone Season NOx Emissions

Cross-States Air Pollution Rule (CSAPR) States

States Covered by the Original 2005 Clean Air

Interstate Rule

Electric Generating Units Affected in Louisiana

• 92 Generating Units Affected at 32 Locations across the State of Louisiana

• Initial Compliance 2012 Ozone Season• Major Allowance Shortfalls at all Solid

Fuel Generating Units in Louisiana– Big Cajun NRG/Entergy– Rodemacher Cleco/Lafayette/LEPA– Dolet Hills Cleco/ AEP– Roy S Nelson Entergy

Cumulative Impacts

• Ozone Season 2010 Total NOx Emissions 22,869 Tons

• CSAPR Total La Budget 13,432 Tons (includes new unit set-a-sides)

• Required Reduction/Allowance Purchase 9437 Tons NOx (based on 2010 Emissions)

• La Utilities Can Only Purchase 2821 Allowances (Variability) without Triggering the Rule’s Allowance Penalties in Subsequent Year (16253 Tons Max Allowable NOx Emissions)

Impacts Continued• An Emissions Total Greater Than 16,253

Tons will Require the Surrender of 2 Additional Allowances from the Subsequent Year Available Pool per Excess Ton of NOx Emitted

• Using 2010 Emissions 22,869 - 16,253 6616 X 2 = 13,232 allowances would have to be surrendered as a penalty in addition to the required allowances for the year

Impacts Continued

• La CSAPR Budget 37% < CAIR Budget• La Utilities Penalized for CAIR Emission

Reductions• For Example Cleco/AEP/Lafayette/LEPA

spent $20 Million installing Low NOx Burner and other Combustion Controls on Dolet Hills and Rodemacher Power Plants in Anticipation of CAIR

Other Considerations• Other States have Expressed Concerns over

a Lack of Sufficient State Budgets• Other State Shortfalls will Result in Few

Allowances to be Available in the Market• No La Utilities have new Control Projects

Underway (2-4 year Projects)• EPA Used the IPM Model to determine

what Units would Operate utilizing arbitrary factors such as anticipated fuel cost

Impacts to NRG Big Cajun 2

• 2012 Allowances 2842• 2010 Emissions 5265

Shortfall 2423SCR(s) WILL LIKELY BE REQUIRED COSTS???

Impacts to Dolet Hills

• 2012 Allowances 1056• 2010 Emissions 2135

Shortfall 1079SCR WILL LIKELY BE REQUIREDESTIMATED COST $150 MILLION

Impacts to Brame Energy Center

3Units 2 Solid Fuel / 1 Natural Gas• 2012 Allowances 1266• 2010 Emissions 1858 *

Shortfall 592* NEW Unit 3 going thru Shakedown

Actual shortfall will be largerSCR Will Likely be Required on Unit 2 as

well as some Allowance Purchase

Impacts to Roy S Nelson

• 2012 Allowances 1381• 2010 Emissions 2021

Shortfall 640

SCR WILL LIKELY BE REQUIRED

Louisiana’s Natural Gas Fueled Generation

• Generally a Challenge for Older Less Efficient Gas Units

• Collectively a Greater Challenge• Some Older Units may be Forced into

Early Retirement • Potential Loss of Employment for

Louisiana

Questions?

• Paul Miller paul.miller@la.gov

(225) 219-3841