Let the Planning Continue, Part 2: Even in States that have Sued EPA, Progress Toward Compliance

Posted by Frank Swigonski and Caitlin Marquis on Nov 19, 2015 2:22:32 PM


This blog post is the second in a two-part series on states’ progress towards compliance under EPA's Clean Power Plan, and a follow-up to an earlier two-part series on states’ initial reactions. Check out Part 1 here, and the earlier series here and here.

The publication of the final Clean Power Plan (CPP) in the Federal Register on Oct. 23 prompted a suite of suits from states, both in opposition and in support of the rule. However, the vast majority of states have started some part of the process of convening stakeholders, soliciting public input, and talking with EPA - even if those states that are suing. “Officials in practically every state have been doing some amount of work,” Kyle Danish, partner at Van Ness Feldman, told InsideClimate News. Today’s post looks at the significant progress being made even in states that are suing EPA.

The Arkansas Department of Environmental Quality (DEQ) held its first stakeholder meeting last month. Over two dozen stakeholders, including AEE state partner Arkansas Advanced Energy Association, participated in the meeting along with the Arkansas Public Service Commission and the Arkansas Economic Development Commission. Two regional transmission organizations (RTO) that operate in Arkansas, Southwest Power Pool (SPP) and the Midcontinent Independent System Operator (MISO), also attended the meeting. Lanny Nickell, vice president of engineering and lead executive for SPP’s CPP compliance efforts, urged the state to work with SPP “early and often in the process.”

“We respect a state’s right to litigate, but we also believe we have to develop something on a parallel path in case the litigation is not effective,” added Nickell, referring to AG Leslie Rutledge’s  involvement in litigation against the CPP. MISO representative David Boyd joined SPP in support of a regional, trading-ready approach. “Think millions of dollars being on the table,” he said. “If you want to be part of a liquid market, you need a partner to trade with.”  Other participants noted that last month’s meeting was largely preliminary. “Engagement is very important to us,” Arkansas DEQ Director Becky Keogh said. “We want to engage with as many stakeholders as we can.” Meetings will be held every two months and will include additional subgroups that will formulate recommendations to DEQ.

When DEQ does move to develop a plan, analysis released by AEE Institute this week shows that Arkansas can reach compliance with minimal rate increases, even potential savings, in 2030. Using the new State Tool for Electricity Emissions Reduction (STEER), an open-access integrated resource planning tool, AEE Institute presented three specific scenarios representative of multiple model runs. Both the analysis and the model are available here. Steve Patterson, executive director of the Arkansas Advanced Energy Association, AEE’s partner based in Little Rock, said of the model, “We can now see that, under a range of assumptions about energy prices between now and 2030, there are ways to comply with the Clean Power Plan that allow Arkansas to keep improving its electricity system, keep creating jobs and economic growth, and still keep costs down.” As Maria Robinson, Senior Manager of Energy Policy & Analysis at AEE, told EnergyWire (sub. required), the model will be a key planning tool. "We definitely wanted to make sure that this was available as the stakeholders dig into their more serious planning," Robinson said.

Like Arkansas, Arizona DEQ is holding stakeholder meetings, on a schedule of every two months. The state is now in Phase III of its approach to CPP compliance. Arizona DEQ has formed a technical working group in which AEE has a representative, and met with utilities and the Arizona Corporation Commission (ACC). In an unusual decision, the ACC announced that it will join Arizona AG Mark Brnovich in litigation against EPA. “We need to ensure that this kind of Federal overreach does not impact our ratepayers,” said ACC Chair Susan Bitter Smith. “This ligation is one important tool the state has to guarantee Arizona’s energy resources will continue to be affordable and reliable.”

Without going so far as to join Florida AG Pam Bondi’s lawsuit against EPA, the Florida Public Service Commission (PSC) has also voiced concern about the final rule’s impact on reliability in the state. Mark Futrell, Director of the Office of Industry Development & Market Analysis testified at a PSC meeting on October 19 that the final emission targets for Florida are  easier under the final rule than under the proposal. Futrell also testified at a House Energy & Utilities Subcommittee hearing along with Deputy Secretary for Regulatory Programs at the Florida Department of Environmental Protection (DEP) Paula Cobb. Cobb noted that Florida intended to file an initial plan in 2016 and request a two year extension for a final plan. She noted that filing an initial plan did not obligate the state to file a final one, and refused to rule out the possibility of Florida ultimately accepting a FP. According to Cobb, the state is still in the very early stages of identifying stakeholders and designing a process for stakeholder participation in compliance planning.

Kentucky, meanwhile, is back to the drawing board, with a new administration voted in Nov. 3, when Matt Bevin (R) defeated AG Jack Conway (D). Current Gov. Steve Beshear (D) had planned to prepare a transition document for the next administration based on the proposed rule, but the more stringent target for his state under the final rule prompted him to re-think that intention. During his campaign, Bevin promised to fight the regulation, saying, “The EPA has no binding authority over the states. None whatsoever.” The citizens’ group Kentuckians for the Commonwealth, however, has already started collecting feedback on a state plan, and intends to hold stakeholder meetings.

In Michigan, despite the AG’s involvement in anti-CPP litigation, Gov. Rick Snyder has announced that his state will submit a plan. Shutting down 25 coal plants already slated for retirement before the release of the final rule will help the state achieve 17% emission reductions in the next five years — a big step towards the 39% required by 2030. In the near term, the CPP is caught in the crossfire of an ongoing debate around a two-bill package (S.B. 437 and 438) that would eliminate the state’s renewable portfolio standard (RPS) and energy efficiency resource standard (EERS) and replace them with an integrated resource planning process. Both DTE Energy and Consumers Energy support the bills, with Consumers spokesman Dan Bishop arguing that the standards are no longer necessary in part because of the CPP. “In our mind, there is little question that inevitably there's going to be more investment in renewable energy and energy efficiency,” said Bishop.

In Missouri, Gov. Jay Nixon in 2014 initiated a Comprehensive State Energy Plan process that has been proceeding in parallel with the CPP. The final plan was released in October, and included recommendations such as making the state’s efficiency standards mandatory for investor-owned utilities (IOUs), and increasing the state’s RES requirements to 20% by 2025, along with establishing voluntary RES goals for non-IOUs.

The Electric Reliability Council of Texas (ERCOT) published its Analysis of the Impacts of the Clean Power Plan: Final Rule Update last month. ERCOT revised its estimate of coal plant capacity retirements sharply down from 50% of total ERCOT capacity under the proposed rule to about 25%, or 4,000 MW, under the final rule. The grid operator also said that compliance would cost $1 per ton of carbon dioxide by 2022, potentially raising prices by 16%. If Texas were to make use of its demand side resources and cheap renewable energy, the impact on customer bills could be reduced. Indeed, Texas has a history of using demand response, energy efficiency, and renewables to meet its energy needs. In a statement opposing the rule, a spokesman for Texas AG Ken Paxton said that “Texas has proven that you don’t have to destroy the economy to protect the environment.” Paxton has pledged to fight implementation of the rule and Gov. Greg Abbott has joined the state in litigation against EPA.

Even as politicians in Texas position themselves against the CPP, the Texas Commission on Environmental Quality (TCEQ), the regulatory body in charge of CPP compliance planning, is providing information to Gov. Abbott and “looking at all options.” AEE senior vice president Malcolm Woolf told E&E News that “even those states that are going to sue, when you talk to their air quality person, they've clearly been having lots of conversations and are thinking through ‘If we do need to comply, how would we do it?’ Politicians make rhetoric about the lawsuits, but at some point, they're going to turn to their professional staff and say, 'What's plan B?'" Woolf said. "Professional staff are getting ready for that."

Even in West Virginia, where the AG, Patrick Morrisey, is leading other states on anti-CPP litigation, the state Department of Environmental Protection (DEP) has started seeking public input on the CPP. The DEP in West Virginia is required to conduct two separate feasibility studies before it can start work on a compliance plan. The call for public input relates to whether drafting a compliance plan is feasible for the state or not. Gov. Earl Ray Tomblin has said that he intends to submit a compliance plan for the state.

SImilarly, North Dakota AG Wayne Stenehjem said, “It does not make sense for North Dakota to sit back and decide we’re not going to do anything. We need to be ready and try to comply the best we can while we continue along the litigation path …. If we do nothing, we’ll get a federal plan that will be even worse.”

Topics: State Policy, EPA GHG Regs