New England states, feeling threatened by increased pollution from Midwest coal-fired generation, recently began lobbying for tougher national environmental standards tied to electric deregulation legislation. The perceived threat is based on the belief that coal-fired plants in the Midwest with excess capacity will increase exports to higher-cost New England states. This increased generation and exportation could lead to more pollution in the New England states. However, several recent analyses by Resource Data International suggest that such an argument ignores both the physical and economic realities of the U.S. electricity system.
The first reality is that the Midwest has less
excess coal-fired capacity than many analysts have indicated. Barge-served plants are often cited as most likely to increase exports. Typically, these plants have competitive coal costs. In 1995, the average capacity factor of these plants was a relatively low 65 percent. However, in analyzing whether or not excess coal-fired capacity exists, the capacity factors during different hours of the day must be examined. After accounting for plants out of service for major planned overhauls, RDI estimates that almost 70 percent of barge-served plants operated at full capacity during daytime, weekday hours. The remaining plants operated at slightly less than full capacity during daytime hours. In reality, therefore, it appears that excess capacity is available only during the nighttime and weekend hours. Due to operational constraints that require utilities to maintain a minimum level of generation running during off-peak hours, it will be difficult to export additional power into New England from these plants during the night.