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.

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’s Pugh offers advice on preparing now for regulation of CO2 emissions from power plants

In response to the Environmental Protection Agency’s proposed rule on carbon dioxide emissions from existing power plants, public power utilities should set up meetings (or continue to meet) with state environmental regulators and other state officials, American Public Power Association (APPA) Director of Environmental Services Theresa Pugh told attendees at APPA’s National Conference. At those meetings, public power officials should discuss their utility and the state-wide reduction targets and what that would mean in terms of electricity costs, additional renewables, and energy efficiency inside the fenceline and outside the fenceline (with customers), she said at the June 17 session. The meetings also should cover the state officials’ ability to meet their obligations administratively by 2016.

In discussing what utilities should do now, Pugh also advised them to meet state environmental regulators and state energy officers about operational and potential reliability issues associated with implementation of the proposed rule. She urged utilities to meet with state economic development agencies and local officials to discuss the potential economic impacts for factories and population growth concerns.

Utilities should look at what changes in dispatch of generation resources would mean and whether it would prevent a unit from running, Pugh said. If a utility wants to build a natural gas-fired power plant, determine whether it would be permitted, with an eye on the effect on meeting EPA’s nitrogen oxide (NOx) emissions limits, she advised. It isn’t always a slam dunk to replace a coal plant with natural gas units, she noted.

Public power utilities also should get involved in the public policy debate over the proposed rule by speaking at EPA public hearings on the proposal, filing comments on the proposed rule with EPA, and helping APPA identify major issues for the association’s comments on the proposed rule, Pugh said.

*This article originally appeared in the June 26, 2014 issue of Public Power Daily from APPA.
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Letter to the Editor regarding EPA’s emissions plan

The following Letter to the Editor was recently submitted to the Sioux Falls Argus Leader, the Aberdeen American News and the Brookings Register.

The Environmental Protection Agency recently issued regulations for existing power plants. While cutting carbon dioxide (CO2) emissions by 35 percent by 2030 may seem like an admirable goal, at what cost are you willing to achieve this goal?

The result of the EPA’s regulations could be more expensive electricity for South Dakotans. While the EPA would like you to believe the proposed cuts would actually lower your electric bills, in reality, these regulations will mean less money in your pocket.

At Heartland Consumers Power District, we believe that relying on diverse fuel sources for electric generation is the best way to keep electric bills affordable. We have generated electricity by coal, nuclear, solar panels and wind turbines. We take our responsibility seriously to provide reliable and affordable electricity while doing our best to protect the environment.

Each generating source has its place in a reliable portfolio. Each source has its benefits and drawbacks and working together, ensure the lights stay on in homes across South Dakota.

Utilities across the state, including Heartland, have implemented energy efficiency programs to help customers save money and use electricity more efficiently. We have also continually updated our plans to ensure they operate at peak performance with minimal impact on the environment.

These regulations will cause plants across the country to close, compromising both the reliability and affordability of electricity. Coal will not be the only victim as natural gas plants will also be impacted.

We care about the price of electricity because we’re a not-for-profit entity that looks out for our customers and their checkbooks. We’re concerned that the EPA is making a decision that could force an increase in the cost of electricity and erode the reliability of our power supply.

What’s at stake? If electricity prices rise, we’re worried that the trickle-down effect could be severe in communities served by Heartland. Higher electricity prices hurt businesses of all types, potentially leading to layoffs, or slower job growth. It is our belief that Congress, not the EPA and the Obama administration, should regulate matters that affect commerce, including the generation of electricity.

That’s why we’re encouraging everyone to speak up. Visit http://www.TellEPA.com and tell the EPA that we can’t afford more regulations and higher electric bills.

-Russell Olson, CEO, Heartland Consumers Power District