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Related Practices
Related Practices

EPA Expands Demand Response Allocation for Emergency Generators

Beveridge & Diamond, P.C., February 1, 2013

On January 30, 2013, EPA issued the Final Rule “National Emissions Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines; New Source Performance Standards for Stationary Internal Combustion Engines” (78 Fed. Reg. 6674; the “Final Rule”), raising the cap on emergency generator use for emergency demand response from 15 hours to 100 hours per year.

The Final Rule amends the Clean Air Act New Source Performance Standards (“NSPS”; 40 C.F.R. Part 60, Subparts IIII, JJJJ) and National Emissions Standards for Hazardous Air Pollutants (“NESHAP”; 40 C.F.R., Part 63, Subpart ZZZZ) that regulate stationary reciprocating internal combustion engines (“RICE” or “ICE”) used for on-site generation of electricity.  The ICE NSPS and RICE NESHAP establish conditions under which generators may be considered “emergency RICE”: i.e., generators that are used primarily for back-up power and therefore not subject to the full regime of NSPS and NESHAP requirements that apply to generators that are for routine use.

In 2010, EPA revised the RICE NESHAP, imposing for the first time a restriction on the amount of time that emergency RICE could be operated for “emergency demand response.”  The term “emergency demand response” refers to programs in which companies contract with their local grid operators to provide back-up generation capacity for occasions when electrical demand overwhelms supply and grid failure (i.e., a black-out) becomes possible.  Such programs require a minimum commitment of availability to enroll a generator.  Although actual use of demand response has historically been rare and limited to brief operation of emergency generators, the commitment of availability is important to ensure grid reliability in exceptional cases such as extreme heat waves.  The RICE NESHAP restriction of 15 hours per year was lower than the commitment required for most emergency demand response programs, and thereby threatened the viability of these programs.

Beveridge & Diamond represented an industry coalition (EnerNOC et al.) in its challenge to the RICE NESHAP revisions, filing a petition for review in the U.S. Court of Appeals for the District of Columbia Circuit and petitioning EPA to reconsider and raise the emergency demand response limit to either 60 hours per year or the minimum annual commitment required by the system operator, whichever is lower.  The coalition argued that emergency demand response can be beneficial both environmentally (reducing the need for construction of new power plants) and economically (eliminating the disruptions caused by grid failure).  EPA initiated a new rulemaking process and received hundreds of public comments either favoring the proposal or arguing for no limit at all, and a much smaller number in opposition.  Ultimately, EPA revised the demand response limit for emergency generators to 100 hours per year in the Final Rule.  The increased allocation helps ensure the continued viability of emergency demand response programs, enabling a wide range of companies that maintain emergency generators to participate.

For more information, please contact David Friedland at dfriedland@bdlaw.com, (202) 789-6047 or Russell Fraker at rfraker@bdlaw.com, (202) 789-6048.

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