‘Safety Valve,’ Realistic Targets Vital To EPA Clean Power Plan, States, Utilities Say

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By Andrew Childers

Feb. 19 — A regulatory “safety valve” that would allow state and utilities additional time or flexibility to meet the Environmental Protection Agency’s proposed carbon dioxide limits for power plants is vital to the rule’s success, regulators and utility officials said Feb. 19.

To be most effective, the safety valve provisions and requirements need to be built into the EPA’s final Clean Power Plan rule rather than tacked on after the fact, as was done with the agency's air toxics standards for power plants, state and utility representatives told the Federal Energy Regulatory Commission.

Janet McCabe, the EPA’s assistant administrator for air and radiation, said states have offered practical recommendations for how such a safety valve could be constructed.

“EPA is taking all of this info and the suggestions commenters have provided to us very seriously as states and generators move forward with meeting their emissions reductions obligations,” she said.

The so-called safety valve would give states and utilities additional time or compliance options to meet the carbon dioxide emissions reductions targets in the EPA’s Clean Power Plan in the event of unforeseen circumstances such as generation retiring earlier than anticipated or delays in developing additional natural gas infrastructure. It would allow states to continue operating dirtier generating units to ensure grid reliability.

The EPA included a similar safety valve in its mercury and air toxics standards for power plants, but some states and utilities said it was included after the rule was completed, making it less effective than it could have been. And unlike the air toxics standards, which set standards for individual power plants, the Clean Power Plan looks at the power system as a whole. That needs to be taken into consideration as the EPA develops a safety valve, panelists said.

“It is really important in our view to write the processes into the final rule itself,” Craig Glazer of the ISO/RTO Council said.

FERC on Feb. 19 convened the first of four workshops examining the potential effect of the EPA’s proposed Clean Power Plan on the reliability of the electricity generating system. The proposed Clean Power Plan (RIN 2060-AR33) would set unique carbon dioxide emissions targets for the power sector in each state. State regulators would be tasked with determining how best to achieve those reductions.

Interim Targets Need Adjustment 

States and utilities also said the EPA’s proposal to set an interim target that front-loads many of the required emissions reductions could pose reliability concerns. Instead of setting an interim goal that states must achieve between 2020 and 2029, the EPA should allow states to craft their own path for coming into compliance with the final 2030 target, they said.

For example, Susan Bitter Smith, chairwoman of the Arizona Corporation Commission, said it will be impossible for her state to meet the EPA’s proposed interim target, which requires the majority of the emissions reductions to be achieved by 2020. The state’s natural gas pipelines are already operating at capacity, and 80 percent of the state’s land is either publicly owned or owned by tribes, making siting new infrastructure extremely difficult.

“In July, every single amount of power being generated from our power plants is utilized. We have no room for error,” Smith said.

The EPA has indicated it would be open to revising the interim targets. Most recently, Administrator Gina McCarthy told the National Association of Regulatory Utility Commissioners the agency could revise its approach to the interim targets in the final rule.

“Moving the glidepath will be very, very helpful,” Alexandra Dunn, executive director and general counsel of the Environmental Council of the States, said. “It will allow states to plan over a longer period of time. I think EPA has heard so much angst about the 2020 early deadline that I would predict they will make some changes there in the final rule.”

The rule’s timing could limit the ability of states to consider collaborative approaches. With the final rule expected this summer, states would have to begin submitting their implementation plans in 2016. Though states can get extensions to develop collaborative plans, it is not sufficient to facilitate the kind of cooperation necessary, Dunn said.

“I’ve had states say, ‘I don’t have time to work across state lines. I’ll have to write a plan that just addresses my state,’ ” she said.

Infrastructure Timing Important 

McCabe touted the EPA’s decision to provide states with a 15-year compliance period that would allow states and utilities to make the investments necessary to achieve the required carbon dioxide reductions. However, utility groups say more time will be necessary to develop the infrastructure necessary to comply with the proposed rule. Siting and building new natural gas pipelines can take three years, and building new transmission infrastructure can take a decade or more, according to utility groups.

Though the Energy Department said some natural gas pipelines are not currently being used at their capacity, Michael McMahon, senior vice president and general counsel of Boardwalk Pipeline Partners, who spoke on behalf of Interstate Natural Gas Association of America, said those underutilized pipelines may not be located where they could serve the areas of growing demand for natural gas for electricity generation. New natural gas pipelines are likely to be necessary to comply with the Clean Power Plan, he said.

New infrastructure development could be further complicated by new draft guidance from the White House Council on Environmental Quality that instructs federal agencies to study the climate change implications of projects under review, Susan Kelly, president and chief executive officer of the American Public Power Association, said.

States Fear Federal Enforceability 

States may be hesitant to take advantage of the emissions reductions tools outlined by the EPA, particularly energy efficiency programs, because including those provisions in an implementation plan would make them federally enforceable.

“To the degree those get put into a [state implementation plan], they feel there’s a big target on their chests for walking into lawsuits,” FERC Commissioner Tony Clark said.

Dunn said states have not yet begun drafting their implementation plans due to uncertainty about what the final version of the Clean Power Plan will look like. However, she agreed that some states are already leery of making energy efficiency programs that were previously voluntary a federal obligation.

“States are going to be reluctant to bring things into their plan that are currently voluntary partnerships with business,” she said.

To contact the reporter on this story: Andrew Childers in Washington at achilders@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com


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