MERCURY: Colo. girds for showdown over power-plant emissions

Daniel Cusick, Greenwire reporter

Utilities, regulators, environmental groups and local governments will square off in Denver tomorrow for what could be one of the nation's most contentious debates over regulation of airborne mercury.

The Colorado Air Quality Control Commission is expected to adopt one of four competing proposals to reduce the heavy metal from coal-fired power plants. None of the proposals have unanimous support from stakeholders.

The proposals range from simple adoption of the federal Clean Air Mercury Rule (CAMR), which allows utilities wide latitude in how and where they control for mercury, to a more stringent approach that would control mercury from every source, regardless of its size or configuration.

The stakes are high for Colorado, where electricity demand is expected to rise with its fast-growing population over the next two decades. The state has 13 coal-fired power plants, with five more planned for completion between 2009 and 2020 at a cost of roughly $7 billion.

Yet despite Colorado's growing reliance on coal-fired electricity, it remains one of the nation's lower mercury emitters, according to U.S. EPA. As such, the agency gave Colorado an emissions-friendly cap for mercury during the first phase of CAMR implementation, from 2010 to 2017.

Under EPA's program, Colorado utilities can emit up to 1,412 pounds of mercury annually over the next decade without violating federal law. Yet estimates show that the state's current annual mercury releases are just below 900 pounds per year, resulting in a 500-pound gap between existing and allowable emissions.

While coal-fired utilities say the broad gap is necessary to ensure Colorado's mercury emissions remain under federal limits, others say it allows for significant new mercury sources that would further degrade the environment. State regulators, local governments and environmental groups hope to convince the commission to adopt tighter restrictions on Colorado's utilities than what is allowed under CAMR.

So far, there is little indication as to which approach the commission will adopt, or even whether Colorado can legally impose regulations beyond what is stipulated by CAMR. State law has prohibited agencies from exceeding federal mandates in the past. But legal interpretations are evolving, especially with an incoming Democratic governor and General Assembly, and stakeholder groups say they are prepared to test the boundaries of Colorado law with the new mercury rule.

"Our lawyers have said 'yes' [to a stronger rule], but obviously opponents disagree," said Dena Wojtach, an air pollution control specialist and mercury rule coordinator with the Colorado Department of Public Health and Environment. "That's one of the issues to be resolved at the hearing." Utilities seek 'flexibility'

The crux of the issue involves disagreement over exactly how much mercury Colorado power plants emit, and whether EPA's regulatory program fairly accounts for the seriousness of the state's mercury problem. Nine lakes and reservoirs in Colorado are subject to fish consumption advisories for mercury, two of which were added just this year.

A coalition of Colorado utilities -- including the state's largest coal-fired power producers, Xcel Energy and the Tri-State Generation and Transmission Association -- have asked the state to adopt CAMR without modification, essentially allowing coal-fired plants to emit the full 1,412 pounds of mercury annually without restriction or penalty.

Gary Magno, a Denver-based environmental analyst with Xcel Energy, said utilities seek "the flexibility and the options" provided under EPA's model approach for CAMR. He added that under the utility-backed proposal, any profits generated by the buying and selling of emissions credits would be spent on supplemental environmental projects at coal-fired plants. "It won't be going into stockholders' pockets," he said.

The utilities also maintain that their actual mercury emissions may be much closer to the 1,400-pound EPA cap than earlier estimates had shown, even though those estimates were self-reported by the plants' own managers. "We believe [the state's] baseline emission estimates are not correct," Magno said. "That 895-pound estimate of today could all of a sudden turn into 1,400 or 1,500 pounds once we start doing continuous monitoring on our units."

But critics and some observers of the Colorado rulemaking process say the federal program essentially asks nothing of the state's utilities during the first phase of implementation and would allow for significant expansion of coal-fired generation without trading and with no new controls for mercury.

"If Colorado doesn't pass a stricter rule, [utilities] could meet the Clean Air Mercury Rule without putting on any pollution controls for decades," noted Mike Durham, president of ADA-ES of Littleton, Colo., one of the nation's leading developers or mercury control technologies.

Wojtach said her agency has sought out a middle-ground position between CAMR's considerable leeway for utilities to emit more mercury and the firmer, "stack-by-stack" approaches sought by local governments and environmental groups.

Under a state proposal to be presented this week, Colorado would establish an 895-pound baseline for annual mercury emissions, essentially tying its rule to current estimates provided by the utilities under the Toxics Release Inventory program.

The remaining CAMR allotment -- 517 pounds -- would be held in a state account that could be tapped by utilities for future power plant expansions or new construction. The state would give priority for the remaining allotments to new projects and for utilities that act early to install new mercury controls on older plants.

"There are a lot of 'ifs' regarding our proposal," Wojtach said. "We can make [the allotments] available, but we can't force the utilities to enter into trade agreements with us. They can choose to operate under the existing baseline for as long as they want." Groups seek 'meaningful reductions'

But some groups are not satisfied with what they see as a "status quo" approach to mercury pollution in Colorado.

Environmentalists and some local government officials are pressing the commission to do more, arguing that pollution control technologies are readily available to take a much bigger bite out of the state's mercury emissions that earlier assumed.

In a legal motion filed this week seeking to delay any final rulemaking until early next year, Environmental Defense attorney Vickie Patton said Colorado's "current tack holds no promise whatsoever for meaningful reductions" in mercury. "Instead," she wrote, "the state has focused its efforts exclusively on implementing various approaches for trading this neurotoxin."

Environmentalists want the Colorado Air Quality Control Commission to reject CAMR's cap-and-trade program for mercury and instead require utilities to install advanced mercury controls at all of their coal-fired plants.

Environmental groups point to recent reports from manufacturers of air pollution equipment suggesting that mercury control technologies have matured to the point where they can be commercially applied, and that Colorado should take a closer look at such options before allowing utilities broad leeway on how they cut mercury emissions.

"Colorado's own proposed program for mercury is ... tightly tethered to an anachronistic misapprehension about the availability of mercury pollution control systems now in fact being deployed across the nation," Patton wrote in her motion to the commission.

David Foerter, director of the Washington, D.C.-based Institute of Clean Air Companies, which produced the data on commercialization of mercury control technologies, agreed that investment in mercury controls is up and that utilities have a broad range of options to address mercury emissions at the source.

But, he added, "the technology and [state and federal] policies don't always mesh well together." EPA, for example, continues to promote its cap-and-trade program for mercury partly on the assumption that pollution controls are not ready for wide-scale application.

"Commercial availability is a moot point, or at least it should be," Foerter said. "That's pretty clear from all the information that is out there. Even EPA in some of its documents seems to allude to the commercial availability of these things."

Hearings on the rulemaking process are expected to begin tomorrow and could run several days, officials said. A decision from the Colorado Air Quality Control Commission could come anytime after the hearings.