FERC member: You believe in mythical creatures if you think Clean Power Plan will be easy

A member of the Federal Energy Regulatory Commission, Tony Clark, issued an Aug. 3 statement on the U.S. Environmental Protection Agency’s 111(d)/Clean Power Plan rule saying that it would be like believing in “unicorns and leprechauns” to think implementation of this plan will be easy.

“I appreciate that the EPA took part in FERC’s reliability technical conferences on 111(d) regulations and subsequently engaged with FERC staff while finalizing this regulation,” said Clark. “While it will take some time to fully digest and analyze the final rule, I feel it necessary to outline the difficult path that now lies ahead

“Stakeholders testified at FERC technical conferences that realistic planning horizons for the major infrastructure projects necessitated by this regulation are often in the 5-12 year, or more, timeframe. Given that many states may not have compliance plans finalized until 2018, such a timeframe will be challenging for compliance targets that begin in 2022. Furthermore, the regulation makes it likely consumers will be required to bear the burden of stranded costs of investments forced to retire years before the useful life of the asset has expired.”

Notable is that the proposed Clean Power Plan issued last year had 2020 as an initial compliance deadline, but that has been pushed back to 2022 in the final version.

Clark continued: “Whatever EPA believes are the environmental benefits of this regulation, it cannot be said that it will be easy or inexpensive. Such is the stuff of unicorns and leprechauns. For if EPA’s energy vision was the most reliable and affordable means of providing power, we would not need the rule. Engineering experts, markets, utilities and their regulators would already be choosing these resources without EPA dictates. No amount of political posturing changes that fact.

“The action now moves to the states which must assess their next steps. Many are deeply opposed to this regulation that could strip them of their traditional ability to set reasonable energy and environmental policies that work for their citizens. States will be faced with an exceptionally difficult decision. Either ‘play ball’ with the EPA, cede greater authority to Washington and become complicit in a plan that complicates efforts to ensure reliable, affordable power; or choose to let the EPA go it alone via a potentially unattractive Federal Implementation Plan.

“As for FERC, we must continue to make the case for reliability and the proper functioning of FERC-jurisdictional markets. As the various compliance plans come together, FERC must take a leadership role by requiring that the Federal Power Act, which governs reliability, rates and markets, does not take a backseat to an energy plan promulgated under a separate statute.

“Setting aside arguments about whether this plan meaningfully improves the environment or addresses climate change, EPA’s new regulation is undeniably an enormous task for the people who actually plan, finance, construct, operate and regulate this complex US power system. Though EPA officials are writing these regulations, EPA officials are not responsible for ensuring reliable, affordable power. That task falls to America’s utility regulators, engineers, and operators. I am concerned there is an assumption that these dedicated experts will get the job done simply because they always have before. They are the best in the world, but no one should think reliability and affordability are slam dunks, lest we deny the science of electrical engineering. Make no mistake, this work is extraordinarily difficult and it will be even more so should this regulation come to pass.”

Honorable says EPA apparently listened to input

Colette D. Honorable, another FERC member, said in a separate Aug. 3 statement: “I would like to commend the Environmental Protection Agency for reaching this milestone and releasing the final version of the Clean Power Plan. Although I am still reviewing the rule, it is evident that the EPA endeavors to address many concerns it received during the comment period. I appreciate the EPA’s continued efforts to engage with stakeholders to understand how the Plan would impact the energy sector. These efforts included sending top EPA officials to all four of our technical conferences earlier this year, along with continued meetings with FERC representatives.”

Honorable added: “The agency appears to have made a number of substantial changes to the rule, including extending compliance timelines and adding measures to protect reliability. These changes clearly demonstrate that the EPA listened to feedback from FERC and other stakeholders, and incorporated these suggestions into the final product. The rule should be better because of it.

“Now the hard work begins. No matter what we individually think of the Clean Power Plan, we are obligated to the public we serve to engage and work together—collaboratively and cooperatively. As I have espoused since joining the Commission, collaboration and cooperation are indeed the foundation for our future work. Many states and regions are well on their way to meeting the rule’s objectives. And independent grid operators have suggested that regional approaches may work best for compliance. Over the months and years ahead, I will be focused on doing my part to support this very important effort.”

Moeller says this is a global problem, not a U.S. one

Commissioner Philip D. Moeller said in an Aug. 4 statement: “The Clean Power Plan (CPP) is really about reducing domestic coal consumption, not global warming. As with any rule of this magnitude, it will produce winners and losers among energy producers, energy consumers, and electric generation developers.

“However, the amount of domestic carbon reduction under the CPP will be swamped by increased global carbon emissions that are produced to meet the electricity demand of the unserved citizens of the world. As the International Energy Agency points out, there are over 1.2 billion people on this planet that do not have access to electricity. I’m fairly certain most of them want electricity, and the ensuing benefits it provides such as lighting and refrigeration that many citizens of the world take for granted. If carbon concentration is the problem, it must be addressed by the entire world, as the concentration of carbon—unlike Sulfur Dioxide or Nitrogen Oxides—is the same in Beijing, Bangalore, or Baltimore.

“That’s not to say we should stay idle on the issue. We should work extensively with all nations–especially those with unserved consumers–to improve energy efficiency and reduce incentives that promote the overconsumption of energy. And we should do the same thing here in the United States.

“A more effective way to improve domestic emissions is through the promotion of competitive wholesale electricity markets. Competitive wholesale markets have already improved emissions dramatically and everything I’ve seen indicates that trend will continue if the markets are not fundamentally altered. Yet I am very concerned that the CPP may disrupt this progress by substituting environmental dispatch for economic dispatch.

“The CPP will also result in a major transformation of the regulation of the electricity sector. The most radical change may be that state air regulators and other state officials without a background in the electricity sector are now going to be charged with developing a state compliance plan. This will be a huge challenge for them. My biggest concern is that individual state plans could disrupt existing competitive wholesale markets, causing inefficiencies that would actually increase emissions.

“It’s easy to claim that the CPP will provide more benefits than costs 15 years from now. But as my colleague Commissioner [Tony] Clark points out, there are real costs today. We will be closing coal plants, some of which haven’t been fully paid for and still have useful lives. That means that consumers will still be paying for plants that no longer produce electricity at the same time they are paying the costs of replacement plants that comply with the CPP.”

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.