Demand Response Provisions for Emergency Generators Expire on May 1, 2016

April 28, 2016
Katherine L. Vaccaro
MGKF Special Alert

The federal regulatory provisions allowing emergency stationary reciprocating internal combustion engines (RICE) to participate in demand response programs, and to operate in response to certain deviations in voltage or frequency, for up to 100 hours per year will expire on May 1, 2016, in response to the D.C. Circuit Court of Appeal’s recent decision striking down these provisions.  The relevant regulations are promulgated under EPA’s National Emission Standards for Hazardous Air Pollutants and New Source Performance Standards.  Certain types of RICE, known as backup generators, are commonly used for standby power generation, including as part of emergency demand response programs.  The “100-hour allowance” historically enabled owners of emergency RICE to participate in capacity markets as demand-response resources without having to install pollution controls to meet the more stringent emission standards that apply to non-emergency engines.  But if these sources continue to operate as demand-response units after May 1, 2016, they will be considered non-emergency RICE under the rules.  Therefore, RICE owners who plan on continuing to participate in emergency demand response programs after May 1 will need to determine whether their engines can meet the emission limits and other standards that apply to non-emergency units.  Indeed, many existing RICE used for back-up power generation would not be able to satisfy the stringent emission standards for non-emergency engines without installing costly add-on controls.  Additionally, because the 100-hour allowance provisions are among the key compliance demonstration requirements for all emergency RICE, even engine owners not directly affected by the Court’s ruling should evaluate whether any permit updates will be needed based on the forthcoming regulatory changes.  For a fuller discussion of these issues, please refer to the September 11, 2015 environmental column in the Legal Intelligencer: Emergency Demand Response Provisions of EPA's RICE Rule.