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.”

Attorneys general say ‘numerous legal defects’ provide grounds for invalidation of EPA proposed plan for existing plants

By Paul Ciampoli, News Director, American Public Power Association
From the December 1, 2014 issue of Public Power Daily; Originally published November 26, 2014
The U.S. Environmental Protection Agency’s proposed plan to reduce carbon dioxide emissions from existing power plants “has numerous legal defects, each of which provides an independent basis to invalidate the rule in its entirety,” 17 attorneys general said in Nov. 26 comments filed at the EPA.
In June, EPA proposed emission guidelines for carbon dioxide emissions from existing fossil fuel-fired power plants, invoking its authority under Section 111(d) of the Clean Air Act (CAA).EPA’s proposal “attempts to use the Clean Air Act to override states’ energy policies and impose a national energy and resource-planning policy that picks winners and losers based solely on EPA’s policy choices, forcing states to favor renewable energy sources and demand-reduction measures over fossil fuel-fired electric production,” the attorneys general said in their comments. “But the Clean Air Act generally and Section 111(d) specifically do not give EPA that breathtakingly broad authority to reorganize states’ economies,” they said.

The attorneys general said that the proposed rule is unlawful because, among other things, EPA has chosen to regulate coal-fired power plants under Section 112 of the Clean Air Act. Section 111(d) specifically prohibits EPA from invoking that same section of the law [Section 111(d)] where the “source category . . . is regulated under” Section 112, the attorneys general said.

“Given the multitude of legal deficiencies in its proposal, some of which go to the heart of its authority to regulate fossil-fuel-fired power plants under Clean Air Act Section 111(d), EPA should honor the Act’s core statutory limitations on its authority and formally determine that Section 111(d) standards are not appropriate for fossil fuel-fired power plants,” they argued.

If EPA does finalize Section 111(d) standards for fossil-fuel-fired power plants, “it should not perpetuate the unlawful act by attempting to reorganize states’ energy economies, but should instead promulgate emission guidelines based on the best system of emission reduction that is actually achievable at individual facilities, which states could then consider in establishing performance standards to individual power plants in their jurisdictions,” the attorneys general added.

Stating that the EPA’s Mercury and Air Toxics Standard rule will cause the retirement of more than 34 gigawatts of fossil fuel-fired electric generating capacity, the attorneys general went on to cite a NERA Economic Consulting study that projects the EPA’s proposed plan for existing plants will result in between 46 and 169 additional gigawatts of capacity being retired unless EPA makes significant corrections.

Specifically, the study projects coal-unit retirements of between 97 and 220 gigawatts, as compared to 51 gigawatts under a baseline scenario, the attorneys general said.

“Retirements on this scale are likely to seriously threaten the reliability of our nation’s electric supply,” they argued. “State regulators and industry stakeholders have warned that the proposal will force them to choose between meeting its requirements at the risk of potentially violating” Federal Energy Regulatory Commission reliability mandates, “or complying with those mandates at the risk of failure to comply with the proposal.”

The attorneys general also said that the plant retirements “are likely to impose significant costs on ordinary citizens throughout the country. The NERA study projects an increase in total consumer energy costs of between $366 billion and $479 billion over the period 2017-2031.”

The comments were submitted by attorneys general from the following states: West Virginia, Oklahoma, Nebraska, Alabama, Florida, Georgia, Indiana, Kansas, Louisiana, Michigan, Montana, North Dakota, Ohio, South Carolina, South Dakota, Utah and Wyoming.

WECC also weighs in

Meanwhile, the Western Electricity Coordinating Council (WECC) is recommending that the agency provide adequate time to identify reliability implications of proposed state compliance plans.

WECC on Nov. 25 posted its comments to EPA on WECC’s website. Since WECC does not operate, site, or own generation or transmission infrastructure, it has no direct economic interest in how states comply with the EPA’s proposed plan, it noted.

“However, the implementation plans that states will develop to comply with the proposed Clean Power Plan will drive BES changes that must be assessed to assure continued reliable operation of the Western Interconnection,” WECC went on to say.

WECC said that the EPA should allow at least 180 days following the filing of state compliance plans for the North American Electric Reliability Corporation (NERC), WECC, and other reliability entities to concurrently evaluate the potential reliability impacts of those plans.

The proposed plan “is complex and could have far-reaching and possibly unforeseen impacts. The success of a state’s compliance plan and the reliability” of the bulk electric system “are best served if the complying states and participating utilities, transmission planning regions, and other stakeholders are provided ample time for reliability analyses,” WECC said. This would provide additional time for evaluation of reliability implications, multi-state planning and infrastructure investments, the council said.

WECC also said that the EPA should create and communicate a process for reliability entities such as WECC to highlight reliability implications of any state compliance plan in the Western Interconnection.

“As the reliability assurer for the Western Interconnection, WECC requests that the EPA consider the range of [bulk electric system] reliability issues that may result from the implementation” of the proposed plan “and allow time for necessary studies and reliability assessments, state planning, and industry development processes.”

WECC recommended creating a process within the proposed plan that considers timing adjustments or the granting of extensions if there is a demonstrable reliability need identified. “Once states develop implementation plans, WECC will be able to consider additional analyses to understand the reliability impact on an interconnection-wide basis,” the council added.

Heartland faces challenges from EPA

By Chuck Clement, Staff Reporter, Madison Daily Leader
The following article appeared on the front page of the August 29, 2014 issue of the Madison Daily Leader:

Heartland faces challenges from EPA

Emissions goals pose challenges; electric rate increases likely

The provider of about half of the electricity used by Madison’s electric utility customers has concerns about reaching the carbon-dioxide emissions reductions proposed by the EPA earlier this summer.

John Knofczynski, engineering manager at Heartland Consumers Power District, offered a presentation on Thursday to fellow members of the municipal Electric Advisory Committee that outlined the challenges one of Madison’s electricity suppliers faces if the current federal proposals remain the same.

Knofczynski warned that the current options for meeting a 35-percent reduction of South Dakota’s carbon dioxide emissions would mean a major restructuring of HCPD’s electricity supply and most likely higher costs to consumers.

Knofczynski said the EPA had an overall goal to reduce carbon-dioxide emissions across the nation by 30 percent less than 2012 levels. The EPA wants to reach that goal by 2030, but federal officials also have interim target levels that they want the states to reach by 2020.

The EPA has proposed that the states use four building blocks in the reduction plans: heat-rate improvements at existing power plants; substituting coal-based electricity with natural gas combined-cycle electricity generation; substituting renewable electricity generation; and demand-side (consumer) energy efficiency measures.

Knofczynski said that South Dakota only has one natural gas generation plant currently available, the Deer Creek Station owned by Basin Electric Power Cooperative. He said the Deer Creek Station would need to operate at more than a 70-percent capacity factor to offset generation losses from the coal-fired Big Stone Power Plant.

He also said under current EPA policies, electricity providers will not receive any credit for supporting renewable energy production that was active before the carbon-dioxide reduction policies go into effect.

Knofczynski told the advisory committee members that the EPA’s building blocks offered little in practical solutions to South Dakota consumers.

In his presentation, Knofczynski listed Heartland’s three primary electric power resources:

  • Whelan Energy Center Unit 2 near Hastings, Neb., which has a 225-megawatt (MW) output from its coal-fired generation plant. HCPD has 35-percent ownership equaling 82 MW; however EPA officials gave Nebraska a 26-percent reduction target.
  • Laramie River Station near Wheatland, Wyo., a three-unit, 1,710-MW coal-fired plant in which HCPD has a 3-percent share equaling 51 MW. Wyoming has a 19-percent reduction target, but Laramie Station is also currently managing a regional haze mandate made by federal officials.
  • Wessington Springs Wind Energy Center in South Dakota, consisting of 34 wind turbines providing 51 MW in total capacity. Heartland has purchased the full output from the wind farm since it went into service in February 2009.

Persons can send public comments by mail, e-mail or fax with the deadline on Oct. 16. All comments need to include the federal government’s docket ID No. EPA-HQ-OAR-2013-0602 in the message’s subject line.

The comments are mailed to Environmental Protection Agency; EPA Docket Center (EPA/DC), Mailcode 28221T, Attn. Docket ID OAR-2013-0602; 1200 Pennsylvania Ave. N.W., Washington, D.C. 20460.

Persons can e-mail comments to A-and-R-Docket@epa.gov or fax them to 202-566-9744.

Public power concerns shared at EPA power plants hearing

By Theresa Pugh, Director of Environmental Services, American Public Power Association
Published July 31, 2014 at blog.publicpower.org

On June 2, 2014, the U.S. Environmental Protection Agency released a proposed rule, under Section 111(d) of the Clean Air Act, to reduce carbon dioxide emissions from existing fossil-fueled power plants. EPA hopes to release the final rule in June 2015 and is now accepting comments on the rule and holding public hearings across the country.

Yesterday, I shared the American Public Power Association’s perspective on the proposed rule at a public hearing in Washington, D.C. and reiterated our key concerns:

  • The proposal goes well beyond what is permissible under the Clean Air Act’s Section 111(d).
  • EPA is mandating specific CO2 reduction requirements for states, which is a problem because the proposed rule provides no role for states in setting or modifying those standards. States know best what they can do.
  • The proposed rule tries to do too much too fast. It is “front-loaded,” requiring most emission reductions by 2020. Coupled with stringent compliance requirements, the 2020 deadline does not give states enough time to come up with plans, have them approved by EPA, and achieve their reductions.
  • EPA claims it offers states “flexibility” but that’s just a myth. In constructing its “building blocks” to determine a state’s reduction requirement, EPA has relied on such aggressive assumptions that its severely limits state compliance options. The building blocks have actually become roadblocks to success.
  • States do not get full credit for actions they took to invest in renewable energy and energy efficiency measures prior to 2012 [see our blog post on early action]. This penalizes states that have been “out in front” on emission reductions.
  • The reduction requirements for some states will force the premature closing of coal and natural gas-fired units, with heavy capital investment, that still have useful lives. And when fossil-fueled plants are shut down prematurely, reliable power supply — and customers’ electric bills — will feel the pain.
  • The state requirements do not take into account the fact that electricity demand is rising, thanks to population growth and an increase in energy-intensive manufacturing. Renewables and energy efficiency measures alone won’t be enough to meet the increasing demand for power.

APPA will continue to voice its concerns, submit written comments by the Oct. 16, 2014 deadline, and work to ensure that public power utilities are able to honor their commitment to keep the lights on at affordable prices, while continuing to care for the environment.

APPA shares Clean Power Plan concerns with House panel

This article appeared in the August 1, 2014 issue of Public Power Daily from the American Public Power Association. By Robert Varela.

APPA tells House panel of concerns about EPA’s proposed rule on carbon dioxide emissions of existing plants

The American Public Power Association (APPA) is very concerned about the potential impacts on public power utilities and their customers of the Environmental Protection Agency’s proposed rule on carbon dioxide emissions from existing power plants, the association told a House panel. The proposed emission reduction goals for some states “are unachievable and would require the early retirement of existing coal- and natural gas-fired power plants, which could result in stranded costs for utilities as well as local reliability impacts,” APPA said in a July 29 statement for a House Energy and Power Subcommittee hearing on the Federal Energy Regulatory Commission’s perspective on the proposed rule.

The proposed rule for existing plants “goes beyond what is permissible under Section 111(d) of the Clean Air Act,” APPA said, adding that it “is disappointed that EPA has decided to set binding state emissions goals rather than leave it to the states to set individual limits that are achievable at the affected source—the electric generating unit.”

APPA cited a number of concerns about the proposed rule:

  • Front loading — most of the emission reductions are required by 2020 for many states
  • Early action — there is little or no credit for actions utilities have taken to reduce emissions prior to 2012
  • Dispatch assumptions — EPA assumes that most existing natural gas plants can operate at a 70 percent capacity factor, but state air permits limit the operation of many plants; states and utilities do not control dispatch in regional transmission organization regions; and it is not clear sufficient pipeline capacity exists.

EPA should have consulted the Federal Energy Regulatory Commission on all of those issues, but there appears to have been little communication between the FERC and the EPA on this proposed rule, especially regarding electric reliability, APPA told the subcommittee. EPA consistently claims that its slate of proposed rules on the electric utility industry will not hurt reliability, but the agency “has no expertise in electric utility operations, and seems not to have given appropriate deference to the experts, including FERC Commissioners and staff, who oversee the reliability of the bulk power system,” APPA said.

FERC has made commendable efforts to highlight the impacts of EPA’s slate of proposed rules, but APPA “is not aware that the agency was consulted in any comprehensive way by the EPA.”

FERC’s approach to the reliability issue “suffers from a major shortcoming — the Commission’s lack of any apparent will to reform the problematic features of mandatory capacity markets operated by” ISO New England, the New York ISO and PJM Interconnection. APPA and many others “have concluded that the basic mandatory capacity procurement construct is not a ‘market’ in any meaningful sense of the word. It is instead a centralized procurement, based on a heavily administered pricing structure, governed by thousands of pages of complex rules, that generally does not produce needed new resources,” the association said.

Implementation of EPA’s proposed rule will entail the construction of new low-carbon dioxide generation, such as nuclear and natural gas plants, but a recent study by Christensen Associates concluded that the RTO markets “do not and cannot address long-term capacity needs,” APPA said. The study also found that “the RTO markets include some design elements that impede long-term investments and long-term bilateral contracts.”

The failure to recognize this reality has kept FERC from adopting fundamental reforms, APPA said. Instead, the commission has agreed to rule changes, such as administratively imposed floor prices on new natural gas or even renewable generation, that “further increase costs and impede needed new resource development,” APPA said. “These capacity markets therefore will exacerbate the reliability and economic costs” of the proposed Clean Power rule.

 Photo: House Energy & Power Subcommittee Chairman Ed Whitfield (KY). Copyright/Courtesy House Energy & Commerce Committee, www.flickr.com/photos/energyandcommerce.