A controversial new federal clean air rule would result in Texas job losses, reduce grid reliability and threaten the state’s most vulnerable residents, according to industry and government representatives who testified Tuesday before a key legislative panel.

Sen. Troy Fraser chairs the Senate Natural Resources Committee.

The officials — including those representing the Public Utility Commission, the Electric Reliability Council of Texas and the Texas Commission of Environmental Quality — offered few suggestions on how Texas should meet the mandate. Instead, one speaker after another complained to state lawmakers about the dire consequences of the federal regulation.

At issue is the new Cross-State Air Pollution Rule, with an implementation date of January 2012.

Under it, Texas and 26 other states must make significant reductions in the soot and smog emerging from smokestacks because the contaminants cause further problems for downwind states.

By some estimates, the EPA rule could result in an annual electric generation loss ranging from 4,200 to 7,400 megawatts in Texas, which ERCOT and others have warned could lead to reliability problems.

The state Senate’s Natural Resources Committee convened a special hearing Tuesday that afforded industry officials and politicians an opportunity to air their grievances, perhaps impotently. The state has absolutely no authority over the EPA, and so must comply with the rule unless it is blocked in court.

State Sen. Troy Fraser, the Republican chair of the committee, said the quick implementation date made compliance “difficult or impossible.” He said he and other policymakers agreed with the importance of improving air quality, but that the state needed more time.

“This is also causing a lot of regulatory uncertainty,” said Fraser. “We’re asking people to put in a lot of money in projects, and they don’t know what the rules will be. We’ll also have a challenge to keep the lights on — and not only in Texas, but in other states as well.”

Donna Nelson, chairwoman of the Public Utility Commission,  described the new EPA rule as a “job killer” that could lead to rolling outages. “And outages can cost Texas billions and billions of dollars,” she said.

TCEQ chairman Bryan Shaw said the EPA employed incorrect assumptions when adopting the rule, and that it would have a serious, detrimental impact to the Texas economy.  “This puts at risk the weakest among us, the sick and elderly, the most vulnerable,” said Shaw.

Others testifying against the rule included Texas Railroad Commission member Barry Smitherman, Electric Reliability Council of Texas president Tripp Doggett and Luminant CEO David Campbell, who reiterated that it would force his company to shut down plants, cease some mining operations and lay off 500 workers. The Dallas-based company also filed a federal lawsuit Monday to remove Texas from the rule, and plans to file another lawsuit later this week to try to block it completely.

The Cross-State rule found its only supporter Tuesday in Tom “Smitty” Smith, director of the Texas chapter of Public Citizen, an environmental group. Smith enumerated a number of actions that government and industry could take to promptly meet the new mandate. For instance, ERCOT could easily increase the use of so-called “interruptible” load, whereby industrial electric users agree to have their electric service curtailed during shortage conditions.

In a prepared statement, Smith also said that “the Perry administration, the PUC and ERCOT could issue executive orders, rules or protocols to help keep the lights on.”  He said that shutting down older, more polluting plants would help create new market signals for the construction of cleaner-burning generation plants.

But while Smith’s comments were, for the most part, received politely — he did run afoul of state Sen. Kevin Eltife. Smith told the panel that many of those Luminant employees facing layoffs were already of retirement age, or could find other jobs. The comment drew an immediate rebuke from the state senator from Tyler.

“There are no other jobs, there are no other jobs for these people,” said the visibly angry state senator. “The global economy is in crisis. The government sector is broke and the private sector is not hiring.”

The EPA has said that it is willing to make technical adjustments that will give Luminant more leeway to comply with the rule and avoid job losses, but that the company must also acknowledge that it produces a large proportion of the state’s Sulfur Dioxide emissions.

“These emissions contribute significantly to air pollution and health threats in downwind states, and Texas is required under the Clean Air Act to ensure reductions,” said EPA deputy director Bob Perciasepe in a Sept. 11 letter to the Dallas-based company.

Perciasepe also wrote that “in its 40-year history, there have been no instances in which the Clean Air Act has contributed to electric gird reliability problems” and that “the successful history of this law demonstrates that we can reduce harmful air pollution while ensuring the reliable delivery of electricity to our families and businesses.”

Nearly half the nation’s electricity comes from 594 coal-fired plants, according to published reports. Texas is home to 19 of these plants, which is more than any other state  — and plans to build nine more.

— R.A. Dyer

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