On Feb. 19, I spoke at a Federal Energy Regulatory Commission technical conference on the Environmental Protection Agency’s Clean Power Plan. I wanted to share a summary of the written statement I provided to FERC.
The American Public Power Association (APPA) commends the Commission for holding this technical conference and appreciates the opportunity to participate. The Environmental Protection Agency’s (EPA) Clean Power Plan seeks to address climate change concerns by reducing the emissions of carbon dioxide (CO2) from existing and modified fossil-fuel fired power plants under Section 111(d) of the Clean Air Act (CAA). APPA agrees that such emissions should be reduced, but believes that EPA’s proposed rule aims to do too much too quickly and is simply unworkable. If the proposed rule is not modified, it will create unnecessary costs for the nation as a whole; impose those costs inequitably among retail electric consumers in different states; threaten the reliability of the nation’s electricity system; and compel a risky overreliance on a single fuel, natural gas, to generate the majority of the nation’s electricity.
APPA is the national service organization representing the interests of not-for-profit, publicly owned electric utilities throughout the United States. More than 2,000 public power utilities provide over 15 percent of all kilowatt-hour sales of electricity to consumers and do business in every state except Hawaii. All APPA utility members are Load Serving Entities (LSEs), with the primary goal of providing customers in the communities they serve with reliable electric power and energy at the lowest reasonable cost, consistent with good environmental stewardship. This orientation aligns the interests of APPA utility members with the long-term interests of the residents and businesses in their communities. Collectively, public power utilities serve more than 47 million customers.
The EPA proposal would have a tremendous impact on many of APPA’s members and their communities. APPA prefers congressional action to address climate change. However, in the absence of legislation, APPA wants to work with EPA to address the substantial problems with its proposed rule. For example, the proposal’s building blocks are unworkable, and few states will be able to meet the required interim emissions reductions by 2020. States (and public power utilities) need a longer glide path.
The EPA proposal also gives states too little time to develop their compliance plans. This problem is exacerbated if states want to develop multi-state or regional compliance plans or if a state must rely on one or more Regional Transmission Organizations (RTOs) to dispatch all or part of the state’s generation fleet. To ensure the reliable operation of the bulk power system, changes to the nation’s bulk transmission grid will need to be identified, planned, permitted, and built. The same goes for the nation’s interstate gas transportation and storage infrastructure.
As FERC Chairman LaFleur rightfully noted in her recent remarks at the National Press Club, the Commission will play a vital role in implementing the final rule. But equally important, the Commission can and should play a vital role in shaping the final rule before it is issued.
Therefore, APPA recommends that the Commission take several actions prior to the issuance of EPA’s final rule:
- Support the North American Electric Reliability Corporation’s (NERC) ongoing analysis of EPA’s proposal and any recommendations that NERC may offer in its report due later this spring.
- Support the inclusion of a “reliability safety valve” in the final rule.
- Support APPA’s recommendations to EPA (echoed by many states and other stakeholders) for changes to the proposal to give states more time and more discretion in implementing the final rule.
- Continue to seek improvements and efficiencies in coordination between the natural gas and electricity sectors.
- Expedite approvals for new infrastructure necessary to implement the final rule.
- Review RTO market structures, rules, and operations to retain the features that support and facilitate implementation of the final rule and to modify those features that impede economical and reliable implementation.
- Provide guidance to the states and other stakeholders on how to reflect public policy requirements associated with state implementation of the final rule in the regional and interregional transmission planning required by Order No. 1000.”
The reliability of the bulk power system must be preserved during the implementation of any final rule. APPA is concerned that the EPA proposal will not preserve that reliability unless significantly modified. Our concerns include:
- Inadequate time to build the natural gas infrastructure necessary to support the unprecedented increase in natural gas generation.
- The proposal’s overly optimistic assumptions about the availability and pricing of natural gas supply.
- Inadequate time to build the electric transmission facilities necessary to support the changed generation fleet, including the projected level of renewable generation resources.
- The amount of coal generation that would be forced into retirement.
- Relying on RTO-run markets regional planning processes, and diffuse governance structures to implement state compliance obligations.
- Lack of a reliability safety valve in EPA’s proposal.
These issues are discussed further in the full statement I submitted to FERC.