EPA Issues Final Rule Impacting Emergency Generators, Including Those In Use For Demand Response Programs

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Summary

The U.S. Environmental Protection Agency ("EPA") has finalized amendments to its rules governing reciprocating internal combustion engines, including those used at many commercial and industrial facilities as a backup power supply and for participation in demand response programs. The amendments introduce new emissions control requirements, and will strictly limit usage of engines that do not incorporate the emissions controls. The amendments also introduce fuel quality requirements and require reporting of certain operations.

EPA has finalized amendments to its NESHAP for stationary reciprocating internal combustion engines, or "RICE." The rulemaking is intended to reduce emissions of sulfur dioxide, particulate matter, and other emissions. While it will impact other categories of RICE as well, its most notable impact is on a category of engines EPA refers to as "emergency engines."

Many engines covered by the RICE rule are maintained in order to be able to respond to emergency power needs, whether as a source of on-site emergency power for a loss of electricity from the grid to a site, or, increasingly, to serve as a source of power to support participation in various demand response programs. EPA made special provision for such "emergency engines" of less than or equal to 500 horsepower in a 2010 RICE rulemaking. That 2010 rulemaking introduced certain work practice requirements and hours limitations for the emergency engines, but did not require any emissions controls. EPA has now modified its 2010 approach in response to reconsideration requests from both industry and environmental advocates.

EPA's RICE amendments recognize the important role such emergency engines play in overall grid stability and reliability, but also introduce new requirements. The emergency engines can be used up to 100 total hours per year for purposes including "emergency demand response," "system reliability," and maintenance and testing without meeting emission limits contained in the RICE rule. Operations greater than 100 hours will subject engines to emissions control requirements.

Of the allowed 100 hours, up to 50 hours can be in non-emergency situations, including in support of "system reliability" programs. The emergency engines will be required to operate on ultralow sulfur diesel (ULSD) if they operate or commit to operate for more than 15 hours annually as part of such programs. And, entities operating emergency engines with capacity of 100 horsepower or more will have an annual reporting requirement associated with operations (or commitments to operate) amounting to more than 15 hours per year.

The RICE amendments will be formally published in an upcoming issue of the Federal Register. EPA's estimated capital and annual costs associated with the RICE amendments are $840 million in capital and $490 million in annual costs.

If you would like to review the impact of the rules on your business's emergency generator ownership or usage, or on your business's participation in demand response programs, please contact F. William DuBois.

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