Power Industry Ends Roller-Coaster Year, but 2012 Holds Plenty of Uncertainty, a "Navigating the Currents of Change" Webcast on Industrialinfo.com

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The North American Power Industry had a "roller-coaster" year in 2011, driven by an "onslaught" of new regulations from the U.S. Environmental Protection Agency (EPA) (Washington, D.C), according to Brock Ramey, Industrial Info's manager of North American Power. "Overall, the year was like a tennis match between EPA and Congress: New rules were proposed, finalized, and then sometimes sent back to the drawing board" in the face of congressional or industry opposition, Ramey said in an exclusive "Navigating the Currents of Change" interview.

This year, the EPA finalized and then revised a major new regulation, the Cross-State Air Pollution Rule (CSAPR), which covers power plant emissions of sulfur dioxide and oxides of nitrogen in more than two dozen states, typically located east of the Mississippi River. The rule has proven to be highly contentious, in part because of its short compliance timeline. More than a dozen states and several dozen utilities, regulatory bodies and industry groups have filed to stay the regulation. For more on this rule, see July 12, 2011, article - Environmental Protection Agency Finalizes Cross-State Air Pollution Rule and October 13, 2011, article - EPA Proposes Technical Changes to Finalized Cross-State Air Pollution Rule.

EPA's effort this year to reduce emissions of mercury and hazardous air pollutants also has proven to be highly contentious, Ramey noted. The agency's draft rule on Maximum Achievable Control Technology (MACT), issued in March, drew so much public comment and opposition that EPA delayed finalization of the rule for a month, until mid-December. For more about this draft rule, see March 18, 2011, article - EPA Releases Draft Rule on Mercury Emissions, New Source Performance Standards.

In the "Navigating" interview, Ramey noted that the Power Industry dodged additional regulation when President Obama stopped a proposed rule on ground-level ozone in September, and a congressional effort has headed off, at least for now, EPA regulation of coal combustion byproducts. He predicted EPA regulations could lead to the premature closure of up to 56,000 megawatts (MW) of power generation by 2015. That number could change, depending on the specifics of the forthcoming MACT rule. For more on how EPA regulation is driving power plant closure decisions, see August 9, 2011, article - Utilities Announce Coal Plant Closures in Response to EPA Regulations.

Project spending by the North American Power Industry totaled about $76 billion this year--$65 billion in the U.S. and $11 billion in Canada, Ramey said. Although some large power projects are scheduled to kick off in 2012, Ramey expects overall project spending to decline slightly next year, mainly because of the expiration of Section 1603 cash grants from the Treasury Department and uncertainty about whether Congress will extend production tax credits (PTCs) for renewable energy projects. Most federal PTCs are scheduled to expire at yearend 2012, though some expire at the end of 2013. In prior years, when PTCs were scheduled to expire, renewable energy project activity fell sharply until the uncertainty was removed and the credits were extended.

On the brighter side, Ramey noted: "Two nuclear expansion projects--Vogtle and Summer--are scheduled to kick off next year. Those projects have a combined total investment value (TIV) of $29 billion. There will be increased spending on environmental compliance. Natural gas-fired power development is expected to continue growing. We might even see construction begin on an integrated gasification combined-cycle (IGCC) generator, so coal is not dead.

"The nuclear renaissance is not dead either, but it is slowing down and shifting gears," Ramey continued. The two-unit, 2,700-MW South Texas Project, which carried a TIV of $16 billion, was placed on hold earlier this year, leaving the Vogtle and Summer expansions as the standard-bearers for the new-build renaissance. But Ramey sees an ongoing flow of nuclear power uprate projects over the next few years.

The North American transmission business likely will see a spurt of project activity in 2012 and beyond, Ramey said: "We're tracking about $17 billion of transmission work moving into construction annually for the next few years, rising to between $20 billion to $30 billion per year by around 2019." Noting the issuance of Order 1000 by the Federal Energy Regulatory Commission (FERC) (Washington, D.C.) and the Obama administration's push for expedited treatment of critical high-voltage transmission projects, Ramey commented, "We have an aging power-delivery infrastructure in this country. The federal government is pushing for accelerated construction of a dozen high-voltage transmission projects. Transmission project spending will be rising for some time."

Industrial Info has a variety of database tools and information resources that clients can use to stay current on North American Power Industry strategic trends and project spending activity. Those tools and resources will be exhibited at the upcoming Power-Gen International 2011 conference and exhibition, which takes place December 13-15 in Las Vegas. Industrial Info will be exhibiting at Booth 3421. Visitors can schedule appointments on the exhibit floor with the Industrial Info team using this form.

With so much dynamism and uncertainty in the power business, Ramey encouraged readers to attend the Power-Gen event. "The Power Industry is going through some serious change. That's why it is so important for utilities, engineering, procurement and construction (EPC) firms, equipment manufacturers and service providers to attend this important industry event, network with their peers and stay up to date on different strategic forces driving investment decisions today," Ramey said. "We look forward to seeing our clients and friends at Power-Gen 2011."

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Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.