EPA GHG REGS: Round-Up of State Action and Reaction on Proposed Clean Power Plan

Posted by Matt Stanberry and Frank Swigonski on Sep 8, 2014 3:21:00 PM

111D-iconAs the deadline for comment on the EPA’s proposed Clean Power Plan approaches, more and more states are seeking input from stakeholders. In drafting their comments, the state utility commissions and air regulator offices have taken different approaches: some are holding formal public hearings, some are accepting public comments, and some are conducting private or invitation-only stakeholder meetings. AEE is tracking the comment drafting process in our 23 partner states, plus Texas and Florida. We have already submitted comments with our partners in Arkansas, Ohio, and Virginia, and we submitted our own set of comments in Florida.


In Texas, stakeholders began holding invitation-only meetings attended by the Texas Commission on Environmental Quality (TCEQ), Texas Public Utilities Commission (PUC) and Texas utilities and power producers. Donna Nelson, Chair of the PUC, publicly questioned the future of Texas’ deregulated energy market. “There’s almost nothing in this rule that there could be any other outcome other than the junking of the competitive market,” she said. The CEO of Luminant, Texas’ biggest retail power generator, Mac MacFarland said that the proposed rule “not only overestimates the feasible efficiencies at existing power plants, but also the called-for steep increase in renewable energy sources. The plan disproportionately impacts Texas, and, in our opinion, it oversteps the law.”


Belying Luminant’s concerns, USA Today reported that Texas has become ground zero for a “quiet renewable energy revolution.” Just this year, the state broke the national record for the most power produced from wind. In addition to its substantial renewable energy resources, Texas could also benefit under the proposed rule, according to a Rhodium Group study, from the increased use of natural gas, of which Texas is a major producer.


Bryan Shaw, a top Texas environmental regulator, said that Texas may choose to ignore the rules. If that happens, EPA would likely step in and write a federal implementation plan for the state to follow. Texas has challenged EPA rules in the past and has never been successful. The state is not currently participating in litigation against EPA’s Clean Power Plan.


The Illinois Commerce Commission (ICC) held the first of a series of three hearings on the Clean Power Plan this month. The ICC hearings are open to the public, but the Commission is only accepting testimony from stakeholders invited to testify. Stakeholder testimony from this month’s hearing, which is available online in written form, focused primarily on Building Blocks One (heat rate improvements at coal plants) and Two (redispatch from coal to natural gas generation where there is underutilized capacity) of the proposed rule. The next hearing is on September 23rd and the third and final hearing will be held October 30th.


Illinois has a fairly diverse energy mix that includes substantial amounts of wind, coal and nuclear. The Chicago Tribune reported that Dynegy, which owns nine coal generation stations in Illinois, has already made its coal facilities “as efficient as economically possible.” The Tribune also reported that Exelon is considering closing three of its six nuclear generating facilities. The state leads the nation in nuclear generation capacity but its facilities face steep competition from low natural gas prices and abundant wind generation.


The plight of Exelon’s nuclear facilities is not unique to Illinois. Utility Dive reports that, while the proposed rule was designed to encourage states with existing or under-construction nuclear capacity to invest further in the technology, it appears to be driving them to explore lower cost options like demand side efficiency and natural gas generation. As a result, EPA may be reevaluating the 6 percent carve-out for at-risk nuclear in the proposed rule.  According to E&E News (sub required), the agency has received repeated comments from stakeholders that, as currently written, the proposed rule would actually encourage fuel switching from existing at-risk nuclear to new natural gas generation.


The Arizona Department of Environmental Quality (DEQ) will ask EPA to reconsider the state’s emission targets in a conference call with the agency. The DEQ and Arizona Corporation Commission (ACC) have been holding meetings with utilities trying to model how the proposed rule will affect the Arizona. DEQ Air Quality Director Eric Massey said that he plans to ask EPA about who will get credit for Salt River Project hydropower sold to Colorado. Massey also pointed out that he believes EPA didn’t properly consider how the state uses its peaking natural gas plants for extended periods of time during the hot summer months. Arizona is in the throes of primary election season to determine who will run for the open Governor’s seat and several open Commission seats. The state has so far refrained from joining any of the lawsuits against the proposed rule.


Asa Hutchinson, Republican nominee for Governor of Arkansas, said that if he were elected governor, the state would join litigation against EPA.  The Attorney General for Arkansas noted that none of the state’s utilities have petitioned for Arkansas to join in any litigation. Advanced energy companies in Arkansas spoke out at an event hosted by AEE partner Arkansas Advanced Energy Association (AAEA), saying that the proposed rules would benefit Arkansas’s economy. Neil Elliot from the American Council for an Energy Efficient Economy told Arkansas Matters that the state could meet 40 percent of its emission targets from energy efficiency and “have substantial economic benefit for the state.”  Arkansas is in a better position to leverage energy efficiency than most southern states, noted Ken Smith, policy director at AAEA.


Michigan DTE Energy’s CEO Gerry Anderson said the proposed rule will usher in the largest period of investment in energy infrastructure since the oil crisis of the 1970s. “Compliance is going to fundamentally transform and modernize the power generation fleet in Michigan, and that’s true across the U.S.,” he said.


Western Resource Advocates released a report showing that New Mexico can easily achieve its emission goals. The report found that New Mexico can meet 84 percent of its emission reductions by 2030 through planned renewable and energy efficiency deployment and coal plant closures. Even so, some utilities are better off than others.


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Topics: State Policy Update, EPA GHG Regs