Emergency Order To Resume Limited Operation at the Potomac River Generating Station, Alexandria, VA, in Response to Electricity Reliability Concerns in Washington, DC

AGENCY:

Department of Energy.

ACTION:

Notice of emergency action.

SUMMARY:

Pursuant to 10 CFR 1021.343, the U.S. Department of Energy is issuing this Notice to document emergency actions that it has taken, and to set forth the steps it intends to take in the future, to comply with the National Environmental Policy Act (NEPA) in the matter described in this Notice.

On August 24, 2005, Mirant Corporation, and its wholly owned subsidiary, Mirant Potomac River, LLC (collectively referred to herein as Mirant), ceased operations at its Potomac River Generating Station (the “Plant”) in Alexandria, Virginia, after modeling that it conducted indicated that the Plant's operations were causing exceedances of the National Ambient Air Quality Standards (NAAQS) of the Clean Air Act. On the same day, the District of Columbia Public Service Commission (DCPSC) filed with the U.S. Department of Energy (DOE or “Department”), a petition for an emergency order pursuant to section 202(c) of the Federal Power Act (FPA), asserting that the Plant's closure reduced the reliability of the electrical supply to much of the central business district of the District of Columbia, many federal institutions, the Georgetown area in DC, as well as other portions of Northwest DC, and the District of Columbia Water and Sewer Authority's Blue Plains Advanced Water Treatment Plant (collectively referred to herein as the “Central DC area”), placing these electrical customers in risk of a blackout.

After an exhaustive review of the facts, and consultation with Federal and state officials responsible for environmental compliance and the private entities responsible for electricity transmission, the Secretary of the Department of Energy on December 20, 2005, issued an emergency order (the “Order”) directing the Plant's owner, Mirant, to generate electricity at the coal-fired Plant under certain, limited circumstances. The section below on “Further Information” includes information on how to obtain paper and electronic copies of the Order.

In emergency situations such as this one, the Council on Environmental Quality (CEQ) Regulations Implementing the Procedural Requirements of NEPA at 40 CFR 1506.11 provide that a federal agency may take an action with significant environmental impacts without observing the provisions of the NEPA regulations associated with preparing an Environmental Impact Statement (EIS). Instead, the agency should consult with CEQ to determine what alternative arrangements the agency will take in lieu of preparing a normal NEPA EIS. DOE has consulted with CEQ about alternative arrangements it will take in this matter and is publishing this notice to inform the public of those arrangements pursuant to DOE's NEPA regulations at 10 CFR 1021.343.

Consistent with its consultation with CEQ, DOE will implement the following alternative arrangements: (1) Prepare a Special Environmental Analysis (SEA) that will examine the potential impacts from issuance of the order, and identify potential mitigation measures; (2) provide opportunities for public involvement by disseminating information related to the environmental effects of Mirant's operations and by accepting public comment on this notice, the compliance plan Mirant submitted to DOE, and the SEA; (3) continue consultations with appropriate agencies with regard to relevant environmental issues; and (4) identify in the SEA any steps that DOE believes can be taken to mitigate the impacts from its Order.

DATES:

Comments on this notice and on issues to be addressed in the SEA should be submitted to DOE on or before February 21, 2006.

ADDRESSES:

Comments should be addressed to: Lawrence Mansueti, Permitting, Siting, and Analysis Division, Office of Electricity Delivery and Energy Reliability (OE-20), U.S. Department of Energy, 1000 Independence Avenue, SW., Washington, DC 20585-0119; telephone: 202-586-2588; fax: 202-586-5860; Lawrence.Mansueti@hq.doe.gov.

FOR FURTHER INFORMATION CONTACT:

For further information on this Notice, to obtain paper copies of the Order and compliance plan, to submit comments on the compliance plan, or for information on the emergency activities related to the Plant, contact Mr. Mansueti at the above address. In addition, all publicly available documents, including the Order and compliance plan, are available on DOE's Web site for this matter at http://www.electricity.doe.gov/about/dcpsc_docket.cfm or via hyperlinks from that Web site (referred to herein as the “Mirant matter Web site”). Copies of the SEA will also be available on the DOE NEPA Web site at http://www.eh.doe.gov/nepa/.

For information on the DOE NEPA process, please contact: Carol M. Borgstrom, Director, Office of NEPA Policy and Compliance (EH-42), U.S. Department of Energy, 1000 Independence Avenue, SW., Washington, DC 20585-0119; telephone: 202-586-4600; fax: 202-586-7031; or leave a toll-free message at: 1-800-472-2756.

SUPPLEMENTARY INFORMATION:

Procedural Background

On August 19, 2005, Mirant submitted to the Virginia Department of Environmental Quality (DEQ) a computerized emissions modeling study Mirant had conducted of its Plant that indicated that emissions from the Plant caused or contributed to significant localized exceedances of the NAAQS. Also on August 19, 2005, DEQ issued a letter to Mirant which requested “that Mirant immediately undertake such action as is necessary to ensure protection of human health and the environment, in the area surrounding the Potomac River Generating Station, including the potential reduction of levels of operation, or potential shut down of the facility.” (emphasis in original). On August 24, 2005, Mirant shut down all five of the generating units at the Plant, and on the same day, the District of Columbia Public Service Commission (DCPSC) filed an Emergency Petition and Complaint with DOE and the Federal Energy Regulatory Commission (FERC) pursuant to the Federal Power Act (FPA). The DCPSC requested the Secretary of Energy to find that an emergency existed under section 202(c) of the FPA and to issue an order directing Mirant to continue operation of the Plant. The basis for the petition was that the shutdown of the Plant “* * * will have a drastic and potentially immediate effect on the electric reliability in the greater Washington, DC, area and could expose hundreds of thousands of consumers, agencies of the Federal Government and critical federal infrastructure to curtailments of electric service, load shedding and, potentially, blackouts.” On September 20, 2005, Mirant restarted its unit number one on an 8/8/8 basis—that is, in any given 24-hour period, the unit runs for eight hours at its maximum level of 88 MW, eight hours at its minimum level of 35 MW, and has eight hours when it does not run. DOE has been informed that both the U.S. Environmental Protection Agency (EPA) and DEQ acknowledge that the operation of this unit in this manner does not result in any modeled NAAQS exceedances.

Electricity Reliability

The coal-fired Mirant Plant consists of five generating units, two of which are cycling units that range in output from 35 MW to 88 MW, and three of which are baseload units that range in output from 35 MW to 102 MW. The Plant is one of only three sources of electricity to the Central DC area. The other two sources are two 230,000-volt (230 kV) transmission lines that deliver electricity from other generating sources in the regional electric grid operated by PJM Interconnection (PJM). Although there are other generating units in close physical proximity to the Central DC area, there are no transmission lines that would allow delivery of power from these other units to reach the Central DC area. Under North American Electric Reliability Council (NERC) standards, at a minimum, the power system must carry at least enough contingency reserves of electricity to cover the most severe single contingency. The standards require that an area's system always be operated with sufficient reserves to compensate for the sudden failure of the area's most important single generator or transmission line. Based on the fact that the Central DC area has only three sources of supply, the Plant and the two 230 kV transmission lines, in order to maintain a minimally reliable electric power system, the Plant must be available to run when one of the 230 kV lines is out of service, because if the remaining line failed there would be no other source of electricity to serve the Central DC area load.

The outage of one of these two lines is not merely a theoretical possibility. Since 2000, there have been 34 one-line outages for maintenance, and seven occasions where one of the lines has failed unexpectedly. DOE has been informed that, prior to 2000, there were two occasions when both of the lines failed simultaneously. Moreover, just days before issuance of the Order, PJM informed DOE on December 16, 2005, that on the previous night, “one of the two circuits critical to providing service to the District tripped. Continued [electric] service to certain load within the District was at that time entirely dependent on the remaining circuit.” Fortunately, full service to the line that failed was restored by the morning of December 16, 2005. Nonetheless, there can be no assurance that the Central DC area would be so lucky next time. In addition, the Potomac Electric Power Company (PEPCO) informed DOE that it needed to perform maintenance on the lines in January of 2006.

The Order

On December 20, 2005, DOE found that in the circumstances presented, an emergency existed within the meaning of section 202(c) of the FPA because of the reasonable possibility an outage would occur that would cause a blackout, the number and importance of facilities and operations in our Nation's Capital that would be potentially affected by such a blackout, the extended number of hours of any blackout that might in fact occur, and the fact that the current situation violated applicable reliability standards. PEPCO has applied to the DCPSC to construct two additional 230 kV lines that would supply electricity to the Central DC area and in the same application, proposed building two new 69kV lines to supply the Blue Plains wastewater treatment plant. Once completed, these lines will likely provide a high level of electricity reliability in the Central DC area, even in the absence of production from the Plant. However, it will likely take 18-24 months to construct the new lines.

Based on this finding, on December 20, 2005, DOE issued an Order requiring Mirant to, among other things, (1) operate the Plant to produce the amount of power (up to its full capabilities) needed to meet demand in the Central DC area during any period in which one or both of the 230kV lines serving the Central DC area is out of service as specified by PJM for the duration of the outage, and (2) keep as many generating units in operation and take all other measures to reduce the start-up time of units not in operation, for the purpose of providing electricity reliability, as feasible, as determined by DOE after consideration of the plan submitted by Mirant pursuant to the Order and after consultation with EPA, without regard to cost, and without causing or significantly contributing to any exceedance of the NAAQS. A blackout in the Central DC area would have drastic impacts on the environment, as well as for the employees and citizens of the Central DC area, affecting hundreds of thousands of residents and workers, as well as public safety and protection facilities, including hospitals, police, and fire facilities. In addition, DOE has been informed that within 24 hours of a blackout in the Central DC area, untreated sewage from the Blue Plains Wastewater Treatment plant would be discharged into the Potomac River.

The time period for DOE's Order extends through October 1, 2006.

Mirant's Compliance Plan

Pursuant to DOE's Order, Mirant submitted a compliance plan (referred to as the Operating Plan by Mirant) on December 30, 2005. The plan outlines a proposed temporary phase, and two options for a proposed intermediate phase, Option A and Option B. All proposals include the use of “trona” (sodium sesquicarbonate, a naturally occurring substance similar to baking soda) and/or lower sulfur coal to manage air emissions. On January 4, 2006, DOE authorized Mirant to “immediately take the necessary steps to implement Option A of the intermediate phase proposed in the implementation plan,” stating that “Mirant represents that implementation of this option will produce no NAAQS exceedences.” DOE will work with EPA to verify the accuracy of that representation. DOE is still in the process of reviewing the other proposals described in Mirant's compliance plan in consultation with EPA.

NEPA Compliance Actions

Pursuant to CEQ regulations at 40 CFR 1506.11, DOE consulted with CEQ on December 20, 2005, December 22, 2005, January 13, 2006, and January 17, 2006, about formulating a plan for alternative arrangements. Under the agreed upon alternative arrangements plan, which will expire October 1, 2006, unless extended, DOE will:

1. Prepare a Special Environmental Analysis (SEA). The SEA will examine potential impacts resulting from issuance of the Order, and describe further DOE decisionmaking regarding reasonable future alternatives and potential further mitigation actions DOE may take in this matter. The analysis will present reasonably foreseeable impacts from possible changes in operations of the Plant over the time until two additional transmission lines planned by PEPCO are installed. DOE intends to issue its SEA no later than August 2006 and will make it available to the public on the DOE NEPA and Mirant matter Web sites as well as announce its availability in the Federal Register. DOE will consider information contained in the SEA, and public input received on the SEA, in any future decisionmaking in this matter.

2. Provide Opportunities for Public Involvement. DOE is currently accepting public comments on the compliance plan that DOE required Mirant to submit under the DOE Order. DOE also invites public comments on this Notice, as well as on issues to be addressed in the SEA. DOE will consider public input in determining appropriate mitigation measures and any additional actions DOE may take as DOE adaptively manages implementation of the Order. DOE will post on the Mirant matter Web site publicly available information (not exempt from disclosure under the Freedom of Information Act) regarding the environmental effects of ongoing or alternative operations of the Plant (e.g., reasonably available ambient air quality data and results of air quality modeling), that the Department receives from Mirant, EPA, and DEQ.

3. Continue Agency Consultations. DOE will continue to consult with EPA and DEQ concerning information on emissions, modeling results, potential mitigation measures, and any changes to the operation of the Plant. EPA will act as a “cooperating agency” (see 40 CFR 1501.6 and 1508.5) for purposes of providing reasonably available public information regarding the environmental effects of operations of the Plant to be disseminated via DOE's Mirant matter Web site and evaluated in the SEA.

4. Identify Mitigation. DOE will identify in its SEA any steps that it believes can be taken to mitigate the impacts from its Order. DOE will continue to track the impacts of its Order and public input and provide for appropriate mitigation where practicable. DOE will publish on its Web sites, as noted above, its discussion of which mitigation measures are adopted for any future decision, and if not, why they are not adopted.

DOE may modify, in consultation with CEQ, the foregoing alternative arrangements as conditions warrant and will notify the public in the Federal Register if it does so.