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.