Economists sometimes get confused - especially when the real world doesn't fit into their neat boxes.
Life Along the Potomac
What federal regulators should do to ensure security, reliability, and cleaner air in our nation’s capital.
The District of Columbia Public Service Commission (DCPSC) successfully has used two little known provisions in the Federal Power Act (FPA) to prevent an aging generating plant crucial to the national capital region’s reliability from being abruptly shut down by Virginia’s environmental regulators. In the end, the immediate threat to the region’s reliability was obviated while the environmental concerns associated with the plant were not ignored. But just as important, the DCPSC action resulted in a model for how federal energy regulators and environmental regulators can address similar problems in the future.
The DCPSC effort began on Aug. 24, 2005, when Mirant Corp. announced that, by midnight on the same day, it would temporarily halt power production at its Potomac River Generating Station plant located in Alexandria, Va. The company said it took extraordinary action because it was unable to meet the deadline established by the Virginia Department of Environmental Quality (VDEQ) to eliminate modeled National Ambient Air Quality Standards (NAAQS) exceedances in the immediate area surrounding the plant.
Several hours after Mirant’s announcement, the DCPSC filed an emergency petition with the U.S. Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC) asking the two agencies to intervene immediately and avert the impending shutdown. Neither agency was able to act in the remaining few hours, and all power production at the plant was halted at midnight.
During the next several months, federal energy regulators conducted their investigation, and the Energy secretary and FERC ultimately took unprecedented action, using their authority to prevent an unacceptable risk to the security of the nation’s capital.
Built in 1949, the coal-fired Potomac River generation plant is designated by PJM Interconnection LLC (PJM), a regional transmission provider and energy market operator, as a facility critical to electric system reliability in Washington, D.C., and the surrounding area. The plant has five generating units with a total installed capacity of 482 MW. It is a major source of electricity for the central business area of the District of Columbia, many federal institutions, significant portions of Northwest D.C., and the District of Columbia Water and Sewer Authority’s Blue Plains Advanced Water Treatment Plant, the largest wastewater treatment facility in the world.
Despite its critical reliability role, the plant has been the subject of numerous environmental complaints alleging that its emissions protection technology does not comply with the state and federal environmental standards. In addition, the plant’s location in picturesque Alexandria, Va., together with the fact that all of the power it generates is exported across the Potomac River to the District of Columbia, has done little to endear it