Senate Majority Leader says Congress could block Clean Power Plan

By Paul Cimapoli, News Director, American Public Power Association
From the May 7, 2015 issue of Public Power Daily

Senate Majority Leader Mitch McConnell, R-Ky., recently said that Congress could utilize a section of the Clean Air Act to block the Environmental Protection Agency’s Clean Power Plan, which aims to reduce carbon dioxide emissions from existing power plants.

McConnell made his remarks at an April 29 hearing to review the Fiscal Year 2016 funding request and budget justification for the EPA. The hearing was held by the Interior, Environment and Related Agencies Subcommittee of the Senate Appropriations Committee. EPA Administrator Gina McCarthy appeared before the subcommittee at the hearing.

The EPA’s Clean Power Plan was proposed by the agency in June 2014. It would require states to cut carbon dioxide emissions from existing power plants from 2005 levels by 30 percent by 2030. Under the EPA’s proposal, states would be required to submit state plans to the EPA in 2016 and to begin to meet interim goals in 2020.

McConnell said that one of McCarthy’s deputies recently told the Federal Energy Regulatory Commission “that multi-state plans are a significant part of your strategy.”

In comments to McCarthy, the Senate majority leader said, “I’d like to acquaint you” with Section 102(c) of the Clean Air Act, which he said requires Congressional consent for cooperative agreements. McConnell said that the law states that no such agreement “or compact shall be binding or obligatory” upon any state “unless and until” it has been approved by Congress. “Doesn’t seem ambivalent to me,” McConnell said.

“I can assure you that as long as I’m majority leader of the Senate, this body’s not going to be signing off on any backdoor energy tax,” McConnell said.

It remains unclear whether Section 102(c) of the Clean Air Act could be used to block multi-state agreements.

In March, McConnell wrote a letter to the nation’s governors in which he urged them to “carefully review the consequences before signing up for this deeply misguided plan. I believe you will find, as I have, that the EPA’s proposal goes far beyond its legal authority and that the courts are likely to strike it down. All of which raises the very important question of why the EPA is asking states at this time to propose their own compliance plans in the first place.”

Senate committee examines legal implications of EPA plan

Meanwhile, the Senate Environment and Public Works Committee’s Clean Air and Nuclear Safety Subcommittee on May 5 held a hearing to examine the legal implications of the Clean Power Plan.

In her opening remarks, Sen. Shelley Moore Capito, R-W. Va., who chairs the subcommittee, said that many states “have raised grave concerns about the legality of the rule and the implications for their citizens and ratepayers. In addition to significant Constitutional and other legal questions, states have expressed concerns about the feasibility of EPA’s proposed requirements and the likely impacts on electricity costs and reliability.”

Capito said that next week “I will be introducing greenhouse gas legislation with my colleagues that will preserve the proper balance of state and federal authority, help ensure reliable and affordable electricity, and protect jobs and our economy.”

Witnesses at the hearing included West Virginia Attorney General Patrick Morrisey. In his prepared testimony, Morrisey noted that West Virginia is one of 15 states involved in a lawsuit before the U.S. Court of Appeals for the D.C. Circuit. The legal action targets EPA’s authority to issue any rule regulating existing power plants under Section 111(d) of the Clean Air Act when EPA has already regulated the same source category under Section 112 of the act.

“If this administration elects to finalize this rule, West Virginia will challenge it in court and we expect that the coalition of 15 states that we’re currently working with will grow,” the West Virginia attorney general said.

Oklahoma Attorney General Scott Pruitt told the hearing that the EPA “does not possess the authority under the Clean Air Act to do what it is seeking to accomplish in the so-called Clean Power Plan.”

He said that the EPA, “under this administration, treats states like a vessel of federal will. The EPA believes states exist to implement the policies the Administration sees fit, regardless of whether laws like the Clean Air Act permit such action.”

Pruitt said that the Clean Air Act “hinges on ‘cooperative federalism’ by giving states the primary responsibility and role for regulation while providing a federal backstop if the states should fail to act.”

When the EPA “respects the role of the states, the cooperative relationship works well. When the EPA exceeds the constraints placed upon the agency by Congress, the relationship is thrown out of balance and the rule of law and state sovereignty is affected adversely,” the Oklahoma attorney general said.

The Clean Power Plan proposal “throws the cooperative relationship between the states and the federal government off balance,” he said.

Other witnesses at the hearing were Roger Martella, Jr., a partner at Sidley Austin LLP, Kelly Speakes-Backman, commissioner of the Maryland Public Service Commission and Chair of the Regional Greenhouse Gas Initiative, Inc. Board of Directors and Lisa Heinzerling, Justice William J. Brennan, Jr., Professor of Law at Georgetown University Law Center.

In her written testimony submitted for the hearing, Speakes-Backman argued that the basic structure of EPA’s proposed rule is sound, “although the RGGI states recommend that EPA adopt certain revisions to ensure that early action is recognized, and that the state targets are verifiable, transparent, equitable, and enforceable.”

She also said in the written testimony that the RGGI states “have demonstrated that it is possible to achieve cost-effective pollution reductions while maintaining grid reliability, and while having a positive impact on ratepayers and our overall economies.”

RGGI is a regional carbon dioxide emissions program launched in January 2009. It was the first market-based regulatory program in the United States to reduce greenhouse gas emissions. The cooperative effort is mandatory in the participating states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont.

Speakes-Backman addressed some of the key lessons learned from the RGGI that can be applied to implementing EPA’s proposed Clean Power Plan in an exclusive interview published in Public Power Weekly in late 2014.

On the other side of Capitol Hill, the House Energy and Commerce Committee on April 29 approved legislation that would allow for judicial review of any final EPA rule to regulate carbon dioxide emissions from existing power plants under Section 111(d) of the Clean Air Act before the rule could take effect.

FERC commissioner discusses Clean Power Plan

Colette Honorable, a FERC commissioner, on May 5 discussed the Clean Power Plan in remarks before an audience of energy attorneys in Washington, DC.

“I’d like to talk with you very briefly about a few of my priorities as I see them in my first” four months at FERC, she said at the Energy Bar Association’s annual meeting and conference. Honorable was sworn in on Jan. 5 as a commissioner with FERC.

“Clearly, job number one for me is reliability,” Honorable told the gathering of energy attorneys. During a Senate Energy and Natural Resources Committee hearing in December related to her nomination as a FERC commissioner, Honorable said that electric reliability would be a top priority for her at the federal agency.

In her remarks before the Energy Bar Association meeting, she noted that the EPA is in the final stages of issuing the final rule under the agency’s Clean Power Plan. “EPA has sought advice and counsel from the FERC and I am eager to give that,” she said.
With respect to the Clean Power Plan, there are a “few issues that really rise to the top for me,” she said.

“One, clearly, is the reliability safety valve issue and the notion of developing some sort of a reliability mechanism that could be employed,” Honorable said.

Honorable said that “another takeaway for me” involves the “importance of collaboration and cooperation.” She said, “We really won’t get very far if we don’t work well together.” Honorable noted that she has “often said, no matter what you think about this plan, we absolutely are going to get a plan this summer – mid to late summer.”

She said that it “behooves all of us to prepare and do the work we do so well day in and day out to contemplate the possibilities, the scenarios, the plans and what we will do” if the rule is upheld.

“If we wait and do nothing, in my opinion, we’ve lost an opportunity,” she said.

Honorable also highlighted the “importance of the regions and the regional efforts that are underway.”

Public Power Risk Management Act is re-introduced in House, Senate

By Jeannine Anderson, News Editor, American Public Power Association
From the April 30, 2015 issue of Public Power Daily

The Public Power Risk Management Act, which passed the House unanimously in the 113th Congress but found itself stranded in the Senate, was re-introduced on April 28 in both chambers of Congress. The legislation is strongly supported by the American Public Power Association.

U.S. Reps. Doug LaMalfa R-California, and Jim Costa, D-California, re-introduced the bill in the House as H.R. 2041. Sens. James Inhofe, R-Oklahoma, and Joe Donnelly, D-Indiana, re-introduced it as S. 1111 in the Senate.

The bill would allow public power utilities to enter swaps used to hedge commercial operations risks with non-financial entities such as regional utilities, natural gas distributors, and independent power generators — and not just big banks, large energy dealers, and other “swap dealers.” It would codify recent changes adopted by the Commodity Futures Trading Commission (CFTC).

The legislation is substantively the same as H.R. 1038 and S. 1802, the House and Senate versions of the Public Power Risk Management Act of 2013. H.R. 1038 passed the House on a vote of 423-0 in 2013. The Senate bill had 15 bipartisan cosponsors, but failed to advance during an end-of-session logjam in December 2014.

Heartland Power District8 web

After meeting with members of Heartland’s board and staff in March of 2014, U.S. Senator John Thune (R-SD) signed on as a co-sponsor of the Public Power Risk Management Act. Senator Thune is in the center in a blue tie.

“The CFTC appropriately and responsibly amended its rules to address this issue in 2014,” APPA President and CEO Sue Kelly said in an April 28 press release. “Introduction of the Public Power Risk Management Act today is a welcome step toward ensuring that this relief is permanent.”

The Public Power Risk Management Act of 2015 includes some clarifications and simplifications to more closely align the legislation with regulations adopted by the CFTC. One substantive change to the bill would allow the CFTC to refine the types of transactions that can qualify for the relief.

“It’s essential that public power utilities maintain access to swaps in order to keep power affordable,” APPA’s Kelly said last December.

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Commissioner Bay named to FERC chair

Commissioner Bay, on being named Chairman of the Federal Energy Regulatory Commission by President Barack Obama

“I thank President Obama for this opportunity to be the Chairman of FERC,” Chairman Bay said. “I am honored and humbled to work with my extraordinary colleagues on the Commission, as well as the many dedicated and talented staff at the Commission. This is a time of great change in the energy space, and it is more important than ever that the Commission use its authority with respect to infrastructure, markets, and reliability to further the public interest. I thank former Chairman Cheryl LaFleur for her leadership at FERC and look forward to working with my colleagues on the Commission and staff, as we build on the progress of the past to address the challenges of the future.”

Chairman Bay has served as a Commissioner since August 2014, and his term expires June 30, 2018. For his full biography, please go here.

Senate environment committee plans March 11 hearing on EPA rule on CO2

This article originally appeared in the March 9, 2015 issue of American Public Power Association’s Public Power Daily.

The U.S. Senate Committee on Environment and Public Works will hold a hearing Wednesday, March 11, to hear from state utility regulators on their views of the Environmental Protection Agency’s proposed rule limiting carbon dioxide emissions from existing power plants. The proposed rule is known as the Clean Power Plan.

The draft EPA rule, issued by the agency in June 2014, is designed to require states to cut carbon dioxide emissions from existing power plants from 2005 levels by 30 percent by 2030, according to the agency.

The Senate hearing is entitled, “Examining State Perspectives of the EPA’s Proposed Carbon Dioxide Emissions Rule for Existing Power Plants.”

Witnesses will include Thomas Easterly, a commissioner with the Indiana Department of Environmental Management; Todd Parfitt, director of the Wyoming Department of Environmental Quality; Michael J. Myers, section chief with the Environmental Protection Bureau at the New York State Attorney General’s Office; Ellen Nowak, chairperson of the Public Service Commission of Wisconsin; and Mary D. Nichols, chairman of the California Air Resources Board.

The Senate hearing will take place the same day as a regional technical conference that the Federal Energy Regulatory Commission (FERC) is holding on the EPA proposal in Washington, D.C. that will focus on the EPA rule’s potential effects in the East.

The House Energy and Commerce’s Subcommittee on Energy and Power will hold a hearing March 17 to examine the EPA’s proposed plan.

At a Feb. 19 technical conference held by FERC to examine the EPA plan, the American Public Power Association’s president and CEO, Sue Kelly,urged FERC to take an “active role” on the EPA plan. See also Kelly’s blog on the topic.

Dozens of states face double-digit power price increases under EPA Clean Power Plan, Inhofe says

From the February 12, 2015 issue of Public Power Daily by the American Public Power Association

Originally published February 11, 2015

By Jeannine Anderson, News Editor, American Public Power Association

Under the Environmental Protection Agency’s Clean Power Plan, “at least 43 states will face double-digit electricity price increases,” Sen. Jim Inhofe, chairman of the Senate Environment and Public Works Committee, said at a Feb. 11 hearing examining the EPA’s proposed carbon dioxide emissions rules for new, modified, and existing power plants.

“Thirty-one states now oppose your Clean Power Plan,” the Oklahoma Republican told Janet McCabe, the EPA’s acting assistant administrator for the Office of Air and Radiation, who was the lone witness at the hearing. “I am concerned that your agency intends to impose the most expensive regulation in history yet fail to achieve your goals,” Inhofe said. An analysis by NERA, an economic consulting and analysis firm, says the EPA plan to reduce carbon dioxide emissions from power plants will cost “as much as $73 billion per year and upwards of $469 billion over the next 15 years,” he said.

“It’s difficult to know what the new source performance standards would cost, however, because no one will build a new coal plant,” Inhofe said. “We’ll have to take the president at his word from his interview with the San Francisco Chronicle in January of 2008 when he said, ‘So if somebody wants to build a coal power plant, they can. It’s just that it will bankrupt them.’”

Inhofe noted that by mid-summer, the environmental agency plans to finalize three separate rules to reduce carbon dioxide emissions at power plants.

Senators at the hearing questioned McCabe about the EPA plan, with Republicans generally opposing the plan, and Democrats generally supporting it.

The ranking Democrat on the committee, Sen. Barbara Boxer of California, noted that power plants produce 40 percent of U.S. carbon emissions. She called attention to a recent report by the National Oceanic and Atmospheric Administration (NOAA) and NASA that 2014 was the hottest year on record. “Climate change is happening now – we can’t afford to wait,” she said.

Chairman Inhofe and Sen. John Boozman, R-Arkansas, both cited a 2014 report by the Southwest Power Pool that warned that the EPA rule could result in cascading outages and voltage collapse.

“I have concerns regarding reliability,” said Boozman. The SPP report found that significant new generating capacity will be needed, as well as new transmission. All this will be costly, and will hurt electricity customers, he said.

In the October 2014 report, the Southwest Power Pool (SPP) said the EPA’s proposed rule on carbon dioxide reductions for existing power plants would hurt reliability. Under the current timetable for complying with the proposed rule, the SPP region could face severe overloads leading to cascading outages, the regional grid operator said. In comments  it filed with the EPA on Oct. 9, 2014, the grid operator said there was a “very real possibility” of cascading outages, rolling blackouts and voltage collapse in several states unless the agency delays its compliance deadlines by at least five years.

Boozman noted that the SPP had recommended that the EPA meet with the Federal Energy Regulatory  Commission in areas covered by regional power markets, to discuss possible impacts on reliability.

“Actually, those technical conferences are already scheduled, and the first one will be next week,” McCabe responded.

“Very good,” replied Boozman.

McCabe said the EPA expects that the final Clean Power Plan, which it plans to issue by midsummer, will be different from the rule as proposed in June. She said the agency has received “unprecedented” public comment on the proposed rule, with 2 million comments filed so far on the rule for new power plants, and 3.5 million comments received so far on the proposed rules for: 1) existing plants, and 2) modified or reconstructed plants.

“We are confident the final rule will be improved because of the input” from states, stakeholders, agencies and others, McCabe said. “We are preparing to provide states with the assistance they will need,” she added, explaining that the EPA plans to issue its proposal for a federal implementation plan (FIP) by midsummer.

The agency prefers that states submit their own plans for complying with the Clean Power Plan, McCabe said. She noted, however, that the Clean Air Act calls for a federal backstop for states that either cannot or will not create their own plans.

Senator from Nebraska voices concerns
Sen. Deb Fischer, R-Nebraska, pointed out that Nebraska is the only state whose electricity is provided entirely by consumer-owned utilities — either public power utilities or rural electric cooperatives.  She said she is worried that the costs of complying with the EPA rule “will be directly borne by Nebraska consumers, via their power bills.”

Fischer also questioned the “building blocks” proposed by the EPA as possible ways of complying with the rule on CO2. The Nebraska Department of Environmental Quality has said one of the building blocks is unachievable for her state, she said, asking McCabe whether the EPA planned to correct this.

“We received many, many comments and are looking at them very closely,” replied McCabe, adding that the building blocks are meant as a starting point for states, not as requirements in and of themselves. “In the final rule, we very much want to maintain flexibility” as to how states meet the requirements, she added.

“Flexibility sounds great,” said Sen. Roger Wicker, R-Mississippi. “But if the only way we can achieve this is to shut down our power plants, then we have no flexibility at all.”

Nebraska’s Sen. Fischer questioned the EPA’s assumptions on heat rate improvements at power plants, and noted that generating units are the most efficient when at full load.

“These are important issues” that the EPA is examining carefully, McCabe said.

“Will you commit to me that, when contacted [by Nebraskans], you will respond – and keep me updated?” Fischer asked.

McCabe said she would.

“I think you’ll be getting a lot of calls,” observed Fischer.

“We’re happy to get them,” the EPA official said.

“It’s clear that carbon is a problem,” said Sen. Benjamin Cardin, D-Maryland. “Carbon causing climate change is real,” and extreme weather events caused by the warming trend are costing billions of dollars, he said.

“We have a responsibility to act,” Cardin said, noting that Maryland is part of the multi-state Regional Greenhouse Gas Initiative (RGGI). The steps his state has taken to reduce its carbon dioxide emissions have been good for Maryland’s economy, he said, adding, “We believe a healthy environment and a robust economy go side by side.”

Citing problems with shrimp and lobster fisheries, Sen. Sheldon Whitehouse, D-Rhode Island, said, “Climate change is taking dollars and jobs out of New England’s economy.”

“I support this rule wholeheartedly,” Whitehouse said. He urged his Senate colleagues to “look at both sides of the ledger” when thinking about this issue.

The regulation of carbon dioxide “has been a long time coming,” said Sen. Thomas Carper, D-Delaware, who said his state has made significant investments in energy efficiency. He expressed concern about “inequities in the state targets” in the EPA plan.

“This has been raised by many stakeholders,” McCabe replied. “We certainly don’t want a rule that would disincentivize states from taking early actions.”

Carper pointed out that Delaware is a very low-lying state, subject to being eaten away by rising sea levels.

“I’m trying to make sure my state remains on the map,” he said.

“Ninety-five percent of our electricity comes from coal,” said Sen. Shelley Moore Capito, R-West Virginia. “We export half the electricity we produce.” She said she is worried about the costs the EPA rules will impose on taxpayers and electricity consumers in West Virginia. She also chastised the EPA for not visiting her state, which she said is the second largest producer of coal, after Wyoming.

“States that are very coal-intensive will remain coal-intensive,” said McCabe, adding that she is from Indiana, another state that relies heavily on coal for its electricity. The Clean Power Plan “was designed in a way to acknowledge the differences” between states, she said.

“We very much tried to build this into the rule,” McCabe said. “It is not reasonable to expect a West Virginia or an Indiana to become a Delaware.”

McCabe said the EPA expects coal to continue to have an important place in the U.S. energy mix. The agency projects that in 2030, coal will produce about 30 percent of U.S. electricity, with natural gas also producing 30 percent, she said.