Taking a different view on merchant development.
The Nov. 15 issue of included an article entitled...
Life Along the Potomac
What federal regulators should do to ensure security, reliability, and cleaner air in our nation’s capital.
to the local authorities and residents.
Acting on these complains, the VDEQ issued a consent order in 2004 that required Mirant to perform certain actions to determine whether the plant’s emissions were in compliance with NAAQS. On Aug. 19, 2005, Mirant delivered to the VDEQ results of a computerized modeling study of the plant performed pursuant to the consent order. That study appeared to indicate that the downwash effects of emissions from the plant contribute to violations of air quality standards for ambient sulfur dioxide (SO2), nitrogen oxides (NOx), and certain particulates. On the same day, the VDEQ issued a letter requesting Mirant “immediately undertake such action as necessary to ensure protection of human health and the environment, in the area surrounding the [plant], including the potential reduction of levels of operation, or potential shut down of the [plant].” The letter told Mirant to provide a summary of actions being taken no later than 2 p.m. on Aug. 24, 2005. At midnight on Aug. 21, 2005, Mirant reduced the output of all generating units at the plant to their minimum load levels and then announced that it would be shutting down all units at midnight on Aug. 24, 2005, because it could not satisfy the VDEQ’s demands at any level of output.
Desperately trying to avert the shutdown, the DCPSC filed on emergency petition with the DOE and FERC the evening of Aug. 24, 2005, when Mirant’s decision to completely shut down the plant became public. The DCPSC invoked two rarely used provisions as the basis for federal intervention in the plant’s shutdown: Section 202(c) and Section 207 of the FPA. Section 202(c), 16 U.S.C. § 824a(c) vests the authority in the secretary of energy to issue an order requiring “generation, delivery, [and] interchange of transmission of electric energy” when “an emergency exists by reason of a sudden increase in the demand of electric energy, or a shortage of electric energy of facilities for the generation or transmission of electric energy or of fuel or water for generating facilities, or other causes” in order to “best meet the emergency and serve the public interest.” Although not often used, this em ergency authority was famously invoked by Energy Secretary Bill Richardson during the California crisis and then again by Secretary Spencer Abraham during the 2003 Northeast blackout.
In contrast, Section 207 of the FPA, 16 U.S.C. § 824f, never had been used previously, and no precedent, judicial or administrative, existed for its application at the time the DCPSC filed its petition. The provision enables FERC—whenever it finds, upon complaint of a state utilities commission, such as the DCPSC, and after notice and opportunity for hearing, that “any interstate service of any public utility is inadequate or insufficient”—to “determine the proper, adequate, or sufficient service to be furnished” and “fix the same by its order, rule or regulation.” Section 207 specifically prohibits FERC from ordering any enlargement of generating facilities or compelling the public utility to sell or exchange energy when doing so would impair its ability to render adequate service to its customers.