HOUSTON–(BUSINESS WIRE)–Calpine Corporation (NYSE:CPN) today filed comments with the U.S.
Environmental Protection Agency (EPA) objecting to a proposed settlement
agreement between the EPA and a group of Demand Response (DR) providers
that would allow emergency backup diesel generators to quadruple their
allowed operating hours without having to install appropriate air
emissions controls. The proposed settlement would resolve a pending
federal judicial appeal of EPA regulations regarding the National
Environmental Standards for Hazardous Air Pollutants (NESHAP) for
Reciprocating Internal Combustion Engines (RICE).
“Encouraging the operation of dirty generating resources is not sound
environmental or energy policy”
“People tend to think of DR as a clean alternative to fossil-fueled
generation when, in fact, a significant amount of DR is provided by
emergency backup diesel-fueled generators that operate without air
emissions controls. DR resources are typically called on during the
hottest days of the year when the air quality is already at its worst.
Instead of reducing their electricity consumption, many DR suppliers
simply fire up their old diesel engines,” said Thad Hill, Chief
Operating Officer and Executive Vice President of Calpine.
Under the current NESHAP RICE standard, emergency backup generators are
permitted to operate up to 15 hours per year without any restriction on
air emissions. The settlement would quadruple allowable operating hours
to 60, ostensibly for emergencies but in reality for the economic gain
of those generator owners and at a cost to clean air.
DR is an initiative designed to reduce electric consumption from the
grid during periods of peak power demand. In the PJM market, DR
providers are paid to reduce consumption during such periods at the same
capacity price that power plants are paid to provide power. Some DR is
met by actual reduced consumption, but it appears that about a third of
the DR in PJM and adjacent markets is instead based on starting up
off-the-grid emergency backup generators to supplant electric supply
from the grid. In short, buildings and businesses are getting paid to
turn on their emergency backup generators for economic gain rather than
to respond to emergency conditions. In PJM, 14,000 MW of DR is expected
to be operational by 2014. A significant portion of this is based on the
aggregation of emergency generators spewing dirty exhaust for economic
gain rather than true emergency response.
“As a company that has historically supported progressive clean air
standards, we do not see any compelling justification for a waiver of
air emissions requirements for emergency backup generators that are not
actually providing local emergency service but are instead selling a
capacity product into the regional wholesale electricity market,” Hill
said.
Calpine’s comments point out that in addition to the direct adverse
impact on air quality, allowing these dirtier units to participate in
the market as capacity resources displaces investment in far cleaner and
more reliable generation.
“Encouraging the operation of dirty generating resources is not sound
environmental or energy policy,” Hill added. “The irony is that we may
end up seeing the replacement of a meaningful portion of retired
coal-fired capacity with diesel generation with no air emissions
controls due to the manner in which policymakers are allowing DR to be
implemented. The EPA should not allow the growth in ‘DR’ to become a
‘Diesel Renaissance.’ ”
About Calpine
Founded in 1984, Calpine Corporation is a major U.S. power company,
currently capable of delivering approximately 28,000 megawatts of clean,
cost-effective, reliable and fuel-efficient power from its 92 operating
plants to customers and communities in 20 U.S. states and Canada.
Calpine Corporation is committed to helping meet the needs of an economy
that demands more and cleaner sources of electricity. Calpine owns,
leases and operates primarily low-carbon, natural gas-fired and
renewable geothermal power plants. Using advanced technologies, Calpine
generates power in a reliable and environmentally responsible manner for
the customers and communities it serves. Please visit our website at www.calpine.com
for more information.
Forward-Looking Information
In addition to historical information, this release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Words such as “believe,” “intend,”
“expect,” “anticipate,” “plan,” “may,” “will” and similar expressions
identify forward-looking statements. Such statements include, among
others, those concerning expected financial performance and strategic
and operational plans, as well as assumptions, expectations,
predictions, intentions or beliefs about future events. You are
cautioned that any such forward-looking statements are not guarantees of
future performance and that a number of risks and uncertainties could
cause actual results to differ materially from those anticipated in the
forward-looking statements. Please see the risks identified in this
release or in Calpine’s reports and registration statements filed with
the Securities and Exchange Commission, including, without limitation,
the risk factors identified in its Annual Report on Form 10-K for the
year ended Dec. 31, 2010. These filings are available by visiting the
Securities and Exchange Commission’s website at www.sec.gov
or Calpine’s website at www.calpine.com.
Actual results or developments may differ materially from the
expectations expressed or implied in the forward-looking statements, and
Calpine undertakes no obligation to update any such statements.
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