UPDATE 1-US rules seen shutting 20 pct of coal power capacity

Wed Jul 27, 2011 3:24pm EDT

 * Grid operators must ensure reliability
 * Midwest ISO, Southeast and PJM to be hit hardest
 (Adds background from U.S. Department of Energy)
 NEW YORK, July 27 (Reuters) - The U.S. power industry will
probably retire up to 20 percent of the country's coal-fired
electricity generating capacity this decade, due to proposed
federal environmental regulations, consulting firm ICF
International (ICFI.O) said in a report on Wednesday.
 Fairfax, Virginia-based ICF, which helps utilities meet
environmental rules, among other things, said grid operators
and regulators in charge of reliability will have to work with
environmental regulators to ensure the system remains reliable
as 30 to 50 gigawatts of coal-fired generation are shut.
 "This type of large-scale retirement can be accommodated
without sacrificing system reliability, provided that the
retirements are undertaken in a coordinated manner and with
sufficient flexibility," ICF said.
 ICF said the units would likely retire due to various
proposed air emissions rules by the U.S. Environmental
Protection Agency (EPA) with implementation deadlines over the
next few years.
 To meet the proposed rules, ICF said many utilities will
retire older and smaller coal plants rather than spend millions
to retrofit the units. Most retirements will occur in the
Midwest and Southeast, which has the largest concentration of
coal-fired capacity.
 "The scope and scale of this potential loss of generation
capacity is unprecedented, and there is little comparable
real-world experience to draw upon," ICF said.
 Shutting a plant is not as easy as it sounds.
 It requires an economic decision by the owner, a request to
deactivate the plant, analysis by a regulator on that request,
possible assignment into so-called reliability must run (RMR)
status, possible development of replacement capacity and
finally removal of the plant, ICF said.
 Many plants slated for closure will probably have to delay
their decommissioning for years to ensure reliability of the
power grid, ICF said, under special RMR rules designed to keep
plants running long enough to support reliability concerns.
 Plants that fail to retrofit or retire by the EPA deadlines
"could incur heavy civil and criminal penalties", ICF said.
 The Midwest ISO, which operates the power grid in all or
parts of 12 U.S. Midwest states and the Canadian province of
Manitoba, could lose 11 GW of coal plants, according to ICF,
which would affect reliability in some states.
 Two other regions ICF pointed to with a lot of small and
old coal plants are PJM, which operates in all or parts of 13
U.S. Midwest and Mid-Atlantic states and the District of
Columbia, and the SERC region, which oversees all or parts of
16 U.S. Southeast and Central states.
 The Ercot grid in Texas and the Southwest Power Pool, which
operates grids in nine Great Plains and South Central states,
have also said the proposed EPA rules could hurt reliability in
their regions. [ID:nN1E76I1WG]
 As of July 2011, generating companies have already
announced plans to retire about 23 GW of coal power plants.
 A gigawatt equals 1,000 megawatts. A megawatt is enough
energy to power about 1,000 homes.
 Coal, which provided more than half of the nation's power a
few years ago, has been steadily losing ground primarily to
natural gas.
 The share of electricity generated by coal during the first
quarter of 2011 was the lowest in more than 30 years at just 46
percent of total generation, which is 3 percent lower than the
same period last year, according to federal data. See
 (Reporting by Scott DiSavino; Editing by David Gregorio)