Advanced Energy Perspectives

EPA GHG REGS: State Bills to Thwart Compliance with the Clean Power Plan Run into Opposition - from Utilities

Posted by Frank Swigonski and Caitlin Marquis

Mar 30, 2015 4:36:34 PM

    

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As the release of EPA’s final Clean Power Plan (CPP) approaches, utilities, regulators, and state officials across the country are weighing compliance options. After the final rule is released mid-summer, and after a lot more analysis and deliberation, states will craft implementation plans (SIPs) tailored to their particular circumstances. In some states, however, legislators have introduced bills aiming to slow or block their state’s compliance with the CPP. Increasingly, this legislation is meeting with resistance from stakeholders—most importantly, utilities.

There are a few types of bills that have been introduced by state legislators across the country. The American Legislative Exchange Council (ALEC) developed a model bill that has cropped up in several closely related iterations in different states. These bills would mandate legislative approval of a SIP before it could be submitted to EPA. This requirement is facing opposition from utilities, as well as others, because failure to receive legislative approval and submit a state plan would leave the state vulnerable to an EPA-imposed federal implementation plan (FIP). Utilities fear that a FIP could be more onerous than a state plan because it would not consider local input — where utilities would likely have considerable influence.

Pushback from utilities is perhaps most notable in Arizona, where an ALEC-style law is already on the books. Passed in 2010, House Bill 2442 requires “express legislative authorization” for any regulation of greenhouse gases. The Arizona Department of Environmental Quality (ADEQ) has identified this law as a roadblock in its CPP planning, and utilities see it as detrimental. Larry Lucero, senior director of government relations and economic development for Tucson Electric Power, the second largest regulated utility in Arizona, spoke out publicly against the restrictions. “The department [ADEQ] needs to have its handcuffs removed for this effort,” he said. “The utility will participate wholeheartedly [in the planning process].”

Arizona is now moving to undo the restrictions. A bill (SB 1007) that has already passed both houses and is expected to be signed into law would set procedures for legislative review but prevent the legislature from blocking ADEQ's plan.

Utilities are also opposed to restrictive legislation in Kentucky, where a bill (H.B. 388) passed into law last year limits the compliance options available to the state. Though different from ALEC bills currently under consideration, Kentucky’s law would similarly place the state at risk of a FIP instead of a state-tailored plan. Greg Pauley, president and COO of Kentucky Power, spoke out against the law, saying, “H.B. 388 may need to be looked at and re-evaluated as we move forward.” This message has been heard loud and clear by Energy and Environment Cabinet (EEC) Secretary Leonard Peters. "The one thing that we have repeatedly heard from the utilities is that we don't want a federal implementation plan,” said Peters “Our utilities would be, it's fair to say, very disappointed if we didn't put in a plan."

Facing similar resistance, some ALEC bills introduced in 2015 have already been defeated altogether, including Montana’s Senate Bill 236, Virginia’s Senate Bill 1365, and Colorado's Senate Bill 92, which was “postponed indefinitely” by committee. In the case of the Virginia bill, the final defeat came after multiple revisions that had already significantly weakened the proposed legislation.

Similarly, in Arkansas, Senate Bill 183 has been amended from its original form. As introduced, the bill would have required legislative approval of the state’s SIP and set a 2%  limit on rate increases that might result. In its current form, the bill omits the 2%limit, and would allow the Governor to approve the plan if the legislature fails to do so, in order to avoid a FIP.

Despite dilution in Arkansas and defeat in Montana, Virginia, and Colorado, ALEC-style legislation has found success in West Virginia, where House Bill 2004 was signed into law by Gov. Tomblin. Similar bills have also been introduced in Alaska, Florida, Minnesota, Missouri (H.B. 215 and H.B. 835), Nevada, Oklahoma, Tennessee, Texas, and Washington, but are still in the early stages of legislative consideration.

As legislators debate the merits of these restrictive bills, regulators are looking at potential consequences. In Minnesota, where HF 333 passed out of committee, Greta Gauthier, legislative director of Minnesota’s Pollution Control Agency, pointed out that the agency is already coordinating with a broad group of stakeholders to consider SIP impacts, including utilities, the Department of Commerce, grid operators, the PUC, and the Chamber of Commerce. Given the broad input, Gauthier said, "The bill's insertion of a legislative process on top of that sounds duplicative."

But in at least one state, lawmakers are considering proposals on both sides of CPP compliance. In Texas, competing bills would either authorize compliance with the CPP or prohibit it. Whereas S.B. 1432 would bar the Texas Commission on Environmental Quality (TCEQ) from implementing any federally enforceable greenhouse gas regulation, H.B. 3069 (and corresponding S.B. 1954) would direct the TCEQ and the Public Utility Commission of Texas to implement and enforce a state plan under the CPP. Similarly, H.B. 2080 would require Texas to comply with the CPP, and would grant TCEQ and the PUC authority to implement and enforce a SIP.

With the release of EPA’s final rule still months away and some legislative sessions just under way, additional legislation relating to the CPP will surely emerge from the states—along with continued resistance from utilities and others.

Ealier this year, the Advanced Energy Economy Institute commissioned The Brattle Group, a leading consulting firm to utilities and grid operators, to conduct a critical review of whether the Clean Power Plan would affect grid reliability. The Brattle Group’s conclusion: “Following a review of the reliability concerns raised and the options for mitigating them, we find that compliance with the CPP is unlikely to materially affect reliability.” Download the full report by clicking below.

 

Download the Report

Topics: EPA GHG Regs

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