Arizona commission says Clean Power Plan will be a disaster for that state

The U.S. Environmental Protection Agency’s CO2-reducing Clean Power Plan, due to be issued in final form later this year, is an illegal, badly-flawed plan that will shut down all coal-fired power in Arizona by 2020.

That is according to comments filed Feb. 18 at the Federal Energy Regulatory Commission by the Arizona Corporation Commission (ACC). The comments were filed ahead of Feb. 19 and Feb. 25 FERC technical conferences about the plan and its impacts on the power grid.

“The ACC has significant concerns with EPA’s Proposed Carbon Rule,” the filing said. “The assumptions that EPA has made about the Arizona energy market are inaccurate and lead to goals for Arizona that are unachievable unless all coal plants are shut down by 2020. It is not possible to shut down all coal plants by 2020 without impacting the reliability of electric service, jeopardizing national security by rendering energy infrastructure less resilient to natural or man-made disasters, and undermining resource portfolio planning. Further, according to a recent National Economic Research Associates (‘NERA’) analysis, the cost to states to implement the Proposed Carbon Rule is much higher than projected by EPA.

“The ACC opposes the Proposed Carbon Rule, and urges EPA to terminate this rulemaking and forego the rule’s adoption. In the comments that follow, the ACC will discuss the many deficiencies in EPA’s Proposed Carbon Rule. Even if EPA were to adopt mitigating measures, the ACC would still oppose adoption of the Proposed Carbon Rule because it is both technically and legally deficient. The Proposed Carbon Rule treads in areas that are outside of EPA’s statutory authority. Under the Proposed Carbon Rule, EPA’s policies on Greenhouse Gas (‘GHG’) would dictate electric dispatch issues and state renewable and energy efficiency policies in the future. This will have dire consequences on the reliability of electric service, national security and resource portfolio planning.

“The four building block methodology EPA proposes in the Proposed Carbon Rule to calculate Arizona’s goal is fundamentally flawed. It results in disproportionate and vastly different results on a state by state basis. Arizona ends up with one of the most stringent carbon reduction goals of any state, yet its current contribution to carbon emissions is lower than many states. EPA’s goal calculation methodology rewards states that are contributing significantly more to the national level of CO2 emissions because they have little or no [natural gas combined cycle] generation, and have not yet developed [renewable energy] and [energy efficiency] programs.

“On the other hand, EPA’s goal calculation methodology puts an unreasonably burdensome goal upon states like Arizona that have developed balanced portfolios of coal, nuclear and natural gas generation and have aggressively implemented RE and EE programs over the past decade. As a result, these states are required to reduce their CO2 emissions disproportionately to the level of CO2 emissions they contribute to the national total. In applying the four building blocks to calculate the state goals, EPA also has made many high level and generalized assumptions about Arizona that do not reflect the actual operation of the electric system, the realities of the state’s gas pipeline and electric transmission systems, the ownership of generation, and the progress Arizona has already made in the areas of RE and EE.”

The ACC said that Arizona currently has a “model” resource portfolio: 27.3% natural gas, 28.8% nuclear, 36.2% coal, 6.1% hydro and 1.4% renewables other than hydro. “This diversification protects consumers by ensuring adequate baseload and peaking capacity and by minimizing exposure to market fluctuations in any one fuel type as well as fuel disruptions,” it pointed out.

Arizona commission says EPA made a lot of flawed assumptions about coal

The commission later added: “Arizona has a younger coal fleet and Arizona utilities have made large investments in their coal plants in recent years to comply with EPA regulations. Two coal plants were placed in service less than ten years ago. Failure to consider the age of coal generating units will result in stranded investment from premature closure of coal plants, which will have significant retail rate implications and reliability implications.”

EPA assumes that coal units can be shut down in one year and then brought back on line in future years, the ACC said. “This assumption is totally unreasonable. EPA also assumes that certain coal units can be operated as cycling/peaking units, an assumption that is not true for the coal units in Arizona.”

In the 2014 integrated resource plans (IRPs) filed with the ACC, three of the four load-serving entities (LSEs) that file biennial IRPs include plans to retire, convert to natural gas, or reduce ownership in coal-fired power plants, the commission noted:

  • Arizona Public Service Retiring Cholla Units 1, 2 and 3 (647 MW);
  • Tucson Electric Power – Reducing ownership in Springerville 1 by 197 MW, reducing ownership in San Juan by 170 MW, converting Sundt Unit 4 from coal to natural gas (125 MW); and
  • Arizona Electric Power Cooperative – Converting Apache ST2 from coal to natural gas (175 MW).

The remaining LSE that files biennial IRPs (UNS Electric) has no ownership in coal-fired generation.

“In total, APS, TEP and AEPCO have announced plans to reduce their existing coal fleets by 1,314 megawatts through retirements, reductions in ownership and conversions to natural gas,” the commission said. “In addition, these three LSEs and UNS Electric, Inc. (‘UNSE’) plan to add significant amounts of renewable resources, energy efficiency programs and natural gas-fired resources in future years. As a result, while today the four LSE’s depend on coal to produce 47 percent of the electric energy supplied to their customers, by 2028, the four LSE’s will utilize coal for only 30 percent of the electric energy supplied to their customers. The ACC’s IRP process allows for evaluation of the various resource portfolio options being considered by the LSEs in Arizona. It is an important state level process that takes into account many factors to ensure that the portfolios of the Arizona LSEs reflect a careful balancing of competing considerations to ensure reliable and affordable electric service in Arizona.” 

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.