Texas Lignite Industry

Texas Lignite  Because >95% of lignite mining operations in Texas are in support of electric generation…..whatever impacts the electric generators impacts lignite mining  40 coal-fired electric generating units - produce 21,238 MW  19 operating lignite mines  37% of Texas electric generation from coal  Texas is the 5 th largest coal producer in US

Economic Impacts - Texas

Economic Impacts – Northeast Texas

Texas: Our Growing State

Texas: No Megawatts to Spare

Pending and Proposed Regulations  Cross-State Air Pollution Rule - EPA  Greenhouse Gas Rules – EPA New power generation units Existing power generation units  Mercury Rule - EPA

Cross-State Air Pollution Rule  National regulation of power plant's impacting downwind regions.  Strict limits on SO 2 and NO X emissions from power plants in 27 states  SO 2 precursor to PM2.5 and NO X precursor to both ozone and PM2.5  Proposal phase, Texas was only included for seasonal compliance. Without notice, in final rule EPA forced Texas to comply with strict annual compliance

CSAPR Regulated States

CSAPR Legal Wrangling  Finalized July 8, 2011 with compliance by January 1, 2012  Stayed by US District Court of Appeals on December 30, 2011  August 21, 2012, the D.C. Circuit Court of Appeals vacated CSAPR, finding that EPA exceeded its CAA statutory authority  EPA appealed to Supreme Court, oral argument on December 10, 2013, with decision is expected within the next few weeks

CSAPR Potential Outcome  EPA estimates annualized costs of more than $800 million  Electric Reliability Council of Texas (ERCOT) predicted rule would cause between 1,200 to 1,400 MW loss during the peak demand  Potential for rolling blackouts  De-rate or idle electric generation units  Lignite mining operations would see significantly reduced tonnage demands

Greenhouse Gas Rule: New Electric Utility Generating Units  Sets standards for CO 2 for new coal and gas fired power plants  Prosed rule published April 13, 2013 received 2.5 million comments  Revised rule Published January 8, 2014  Ties CO 2 emissions to climate change  Allowable emission limits lower than those achieved by any currently existing coal-fired electric generation unit

Greenhouse Gas Rule: Existing Electric Utility Generating Units  Prosed rule to be published Fall 2014  Sets standards for CO 2 for existing coal and gas fired power plants  Allowable emissions limits could idle or de-rate existing units  No real plan for lost megawatts  Reduced tonnage demands for lignite mining operations

Mercury and Air Toxic Standards  Finalized December 16, 2011  Implementation delayed, anticipated 2016  Strict limits on Hg and other hazardous emissions from power plants  Standards are at lowest measurable detection limits of lab equipment  Allowable emission limits would idle or de- rate existing units  1,100 coal units to be affected nationwide

Potential Impacts  Combination of rules will lead to premature retirement of coal-fired units  Texas’s economy and projected growth indicate no megawatts to spare – would impact future economic growth potential  Jobs and economy of local communities will be hardest hit by pending rules

Potential Impacts  With so many pending regulations, predictable energy costs is impossible  Ultimately, regulations will result in a decline in lignite mining  Less mining means reduction in the $6.2B economic impact of lignite mining and coal-fired electric generation industry

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