Emergency Demand Response Provisions to Change for Emergency Generators

January 25, 2016
Katherine L. Vaccaro, Esq.
MGKF Special Alert - Forecast 2016

The federal regulatory provisions allowing emergency stationary reciprocating internal combustion engines (RICE) to participate in demand response programs for up to 100 hours per year are set to change by May 1, 2016, following the D.C. Circuit Court of Appeal’s recent decision striking down these provisions.  RICE are used in industry to drive process equipment, and certain types of RICE, known as backup generators, are used for standby power generation – in some cases as part of emergency demand response programs.  The “100-hour allowance” enables 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.  We do not know yet what the “new” RICE rule will look like; EPA could seek to introduce some scaled-back version of the current demand response provisions or elect to do away with them altogether.  Either way, we know the 100-allowance has a finite shelf life.  Therefore, current emergency RICE owners who want to ensure they can continue to participate in demand response programs beyond May 2016 should start thinking about whether they need to install additional pollution controls, as this process can easily take up to a year or longer.  And since 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 start thinking about whether their air permits will eventually need to be modified to reflect the forthcoming changes to these provisions.  For a fuller discussion of the RICE rule, see the September 11, 2015 environmental column in the Legal Intelligencer: Emergency Demand Response Provisions of EPA's RICE Rule.