FERC To Decide Mirant Immediate Future

FERC To Decide Mirant Immediate Future

Alexandria intervention questions Mirant motives in shutdown.

<sh>PEPCO Real Estate

<bt>In a letter dated July 21, U.S. Rep. James P. Moran (D-8), made a proposal to PEPCO to take over the Mirant Plant, close it down, and develop the land for other uses. His suggestion was based on his understanding that "PEPCO and its ratepayers have a $105 million pre-petition general unsecured claim against Mirant" which is in bankruptcy proceedings.

"PEPCO may be in a unique position to trade equity for debt. Through this exchange, PEPCO could acquire the generators enabling Mirant to increase their shareowner value and reduce its debts. In return, PEPCO could shut down the Potomac River Plant and gain control over valuable real estate it presently owns, but has leased to Mirant...," Moran wrote.

"If developed properly, the land could prove valuable to PEPCO and the citizens of Alexandria ... In short, significant benefits could accrue to both PEPCO and the City of Alexandria well above the present benefits derived from continuing the plant's operation," he stated. PEPCO never responded, according to Tim Aiken on Moran's congressional staff.

<sh>In the Air

<bt>Results of the City of Alexandria's independent study undertaken by AERO Engineering Services maintained that "historical emissions from the plant show wide spread, chronic public exposure to levels in excess of EPA's national Ambient Air Quality Standards." Some of these exposures range up to 18 times accepted levels, according to an Aug. 29 city news release.

In order to further study these results and their impact on those living and working in Alexandria, the city announced the retention of Dr. Rebecca Bascom, M.D.,M.P.H, Professor of Medicine, Pennsylvania State University, College of Medicine. A nationally recognized expert on the health effects of air born pollution, according to the release, she will "review the results" of the city's study.


As of 5 p.m. Monday, Aug. 29, whether Mirant's Potomac River Generating Station remains closed or is directed to fire up its generators is in the hands of the Federal Energy Regulatory Commission. Among those petitioning FERC for permanent closure was the City of Alexandria.

Mirant's immediate fate came under FERC's jurisdiction when the District of Columbia Public Service Commission (DCPSC) filed an Emergency Petition and Complaint last Thursday regarding Mirant's decision to unilaterally close down its five generators at midnight Aug. 24. This followed a breakdown in negotiations with the Virginia Department of Environmental Quality on potential solutions and remedies pertaining to excess pollutants being emitted by the plant as defined by EPA's national ambient air quality standards (NAAQS).

DCPSC stated in its FERC filing, "The proposed shutdown will have a dramatic and potentially immediate effect on the electric reliability in the greater Washington, D.C., area and could expose hundreds of thousands of consumers, agencies of the Federal Government and critical federal infrastructure to curtailment of electric service, load shedding and, potentially, blackouts."

They also raised the specter of national security by stating, "A major load shedding event triggered by the shutdown ... could endanger homeland security and threaten the ability of the Nation to function worldwide and domestically."

DCPSC concluded its petition by further requesting that FERC and the U.S. Department of Energy waive their regulations "that may be otherwise applicable" to their submission and grant immediate relief. That did not happen and, as a result, an estimated 13 parties, including Mirant, have submitted intervention motions to influence FERC's decision.

TWO OF THOSE filing included the City of Alexandria and the Virginia Department of Environmental Quality. In the latter case, the State Attorney General filed a petition by the FERC deadline but no other action by DEQ has been decided upon as of Tuesday afternoon. "We just have to wait and see what happens now," said Bill Hayden, DEQ, spokesman.

"This is all being done on some sort of emergency basis. But, Mirant's actions to shut down was not done on an emergency basis. It was unilateral and planned as they stated prior to negotiations with DEQ," said John Britton of Schnader Harrison Segal & Lewis, LLP, who represents the city, along with City Attorney Ignacio Pessoa, in this motion to intervene.

How long FERC will take to act on the DCPSC petition and the counter motions remained speculative. "They will probably hold FERC hearings once they determine if they will allow the various interventions," Britton said.

"But, I think they'll want to expedite this because of all the claims made by the various parties. The modeling show pretty egregious violations," he said.

Alexandria's motion questions the motives behind Mirant's decision to independently shut down the plant void of an edict from DEQ or EPA. "Alexandria has a strong interest in participating in this proceeding... to ensure a review of Mirant's corporate motives and agenda in what appears to be an attempt by Mirant to escape from its contractual obligations and relinquish its duty to the public," the motion states.

Britton also noted in the motion, Alexandria's interest is "to determine the reasonableness of the DCPSC's, PEPCO's and PJM's (the electric grid transmission organization) reliance on the nearly 60-year-old plant for transmission reliability, a plant that even Mirant characterizes as obsolete."

DCPSC admitted in their filing, "PEPCO has developed as a second scenario, which assumes that if the Potomac River Plant is shut down ... there may nonetheless be sufficient transmission capability to supply the load provided by the Potomac River Plant." But they also pointed out they considered "such a scenario to be highly precarious."

PRIOR TO THE RELEASE of the modeling study Alexandria had basically espoused two solutions to the air quality problems: (1) Shut the plant down permanently; or (2) Make the necessary improvements to bring the plant in to compliance with NAAQS.

With the filing of the city's motion, the second alternative seems to have been removed from the table, according to points made in that document. "Any activity involving the operation of the plant, in particular capital improvements related to pollution control or production capacity modifications to the plant, implicate Alexandria's zoning ordinances," it states.

Both in the motion and in a letter sent to Robert G. Burnley, director, DEQ, signed by Mayor William D. Euille, the city now emphasizes the need for the plant to permanently close rather than make upgrades. The letter also cites Mirant's own admission that the plant's estimated life, as of January 2002, was only five years.

"In light of these facts, approving capital improvements which would prolong the life of the plant ... would contravene the spirit, if not the letter, of the Clean Air Act ... Accordingly, the city must conclude that the only appropriate enforcement action is the complete cessation of operations at the facility as soon as is practicable," Euille stated in his letter.

Noting actions by the City Planning Commission and approved by City Council to revoke Mirant's two special use permits and the noncomplying use status of the generating station, Euille emphasized, "any capital investment in the Potomac River Plant, including additional air pollution control equipment, raising the stacks, or changing fuels would require City Council approval."

He went on to point out, "any significant modifications to allow the plant to continue operation would themselves have significant negative zoning impacts on the community. Staff could not support, nor would the Council likely approve, modifications which had such impacts."

ALEXANDRIA'S MOTION takes issue with the Mirant modeling position that their tests were based on a "worst-case" scenario in assessing the downwash pollutants. Britton and Pessoa, noting that the city has conducted its own modeling test, make the point, that both analyses "show the areas of noncompliance (with NAAQS standards) are widespread and severe."

They state, "These are not theoretical, worst-case violations. Rather they are based on actual emissions data submitted by Mirant to VDEQ and reflect actual, operating conditions. It is Alexandria and its residents who bear the public health and environmental costs caused by the excess emissions from the Potomac River Plant," they stated.