Two out of three state witnesses at House hearing slam the Clean Power Plan

The House Subcommittee on Environment on Sept. 11 convened a hearing to examine the impacts of the U.S. Environmental Protection Agency’s Clean Power Plan, issued in final form on Aug. 3 and due for final publication in October.

That final publication date in the Federal Register is important, since federal courts have said they won’t review the plan until after that publication. The subcommittee is part of the House Committee on Science, Space, and Technology

The subcommittee’s GOP majority said the final regulation released by EPA on Aug. 3 created emissions requirements with more stringent emissions guidelines for states that rely most heavily on fossil energy for electricity. Western and Midwestern states are required to cut their use of fossil energy the most under this final rule, with over 20 states facing carbon reductions greater than 30% of current output.

Full committee Chairman Lamar Smith, R-Texas, said: “The Obama administration ignored the outcry from stakeholders and the American public when it issued the final rule on its Power Plan. It is well documented that the final plan will shut down power plants across the country, increase electricity prices and cost thousands of Americans their jobs. My home state of Texas would be one of the hardest hit. The state would be forced to close affordable coal-fired power plants, which also provide reliable electricity during peak usage times in the summer. This rule represents massive costs without significant benefits. In other words, it’s all pain and no gain.”

Subcommittee Chairman Jim Bridenstine, R-Okla., said: “We have a rule that will place tremendous costs on the American people for very little benefit. States are uniquely positioned to protect the environment in their states and support their local economies – a key fact the EPA disregarded in promulgating this rule. My home state of Oklahoma, which has been leading the charge against EPA’s onerous rule, recognizes that this rule will harm reliability and impose massive costs on its citizens. I applaud Oklahoma’s efforts to fight against the EPA and its activist, overbearing regulatory agenda.”

The subcommittee on Sept. 11 received testimony from: Dr. Bryan Shaw, Chairman of the Texas Commission on Environmental Quality; Craig Butler, Director of the Ohio Environmental Protection Agency; and Jason Eisdorfer, Utility Program Director of the Oregon Public Utility Commission.

Oregon PUC Viewpoint 

Eisdorfer wrote in his prepared testimony: For more than a year now, three Oregon State agencies, the Department of Environmental Quality (DEQ), Department of Energy (ODOE), and the Public Utility Commission (PUC) along with nearly two dozen major stakeholders, have been working together to understand EPA’s draft and now final Clean Air Act Section 111(d) rule, and we are now working on implementing the Clean Power Plan. In our initial comments to the rule back in October of last year, the Director of Oregon’s DEQ wrote on behalf of the state that the Clean Power Plan proposal is ‘a welcome federal response to reversing climate change and is a good first step in mitigating the effects of greenhouse gas pollution across the country.’

“Governor Kate Brown has stated that the EPA’s Clean Power Plan rule “is in the best interests of Oregon on many fronts. A healthy environment is essential to ensuring the health of Oregonians and protects our quality of life for many generations to come.’

“Climate change models in the northwest region forecast several significant impacts, including: (1) decreased snow pack and resulting changed river flow, temperature, and hydrology that effects hydropower generation and fish habitat; (2) rising coastal sea level rise; and (3) increased occurrence and size of wildfires. Ongoing research on the regional implications of climate change largely confirms observations, projections, and analyses made over the last decade and provide information about ongoing climate change impacts.

“EPA’s Clean Power Plan rule is intended to begin addressing climate change and its impacts. As we look at how Oregon fares in complying with the final rule, we can say that Oregon is in pretty good shape and there is a reason for this, Oregon has been planning for this eventuality for more than two decades.”

Eisdorfer cited as examples of progress so far state energy efficiency goals, a renewable portfolio standard and plans as of 2020 to shut the Boardman power plant or Portland General Electric, which is the state’s only coal-fired plant. “Oregon’s largest utility, Portland General Electric, is retiring the state’s only coal plant in 2020, more than 20 years ahead of schedule, based on a least cost and least risk determination by the Public Utility Commission,” he added. Because of the early closing of Boardman, between 3 million and 4.5 million metric tons of CO2-equivalent will be avoided per year for 20 years starting in 2020.

Oregon has a renewable portfolio standard that directs the state’s largest utilities to serve their customers with 25% renewable energy by 2025. Oregon is home to a full range of renewable energy resources, including wind, solar, geothermal, biomass, ocean energy, and hydroelectric power, and has a strong suite of policies to encourage the development and use of renewable energy in the state and the broader region, Eisdorfer noted.

Ohio EPA Viewpoint 

Craig Butler, Director of the Ohio Environmental Protection Agency, noted that he provided testimony back in March to the House Subcommittee on Energy & Power when the CPP was only a proposal and the U.S. EPA was in the process of collecting and evaluating what turned out to be over 4.3 million comments. “While we continue to review the final rule presented by U.S. EPA on August 3, our fundamental legal and technical concerns persist or continue to grow,” Butler wrote in his prepared testimony. “The new data, assumptions and strategy used to develop the final CPP are different and have led to completely revised state compliance targets. This, in short, means that states can’t rely on analyses used to review the proposed CPP but rather need to re-launch a new effort to assess the final version.

Butler noted that a recent manufacturing rebound in Ohio has been due in no small part to the shale-gas production in the eastern part of the state, and like the state’s locally-mined coal, this gas provides a foundation for predictable and relatively stable low-cost power to industries and citizens across the state. While working to revive manufacturing output, Ohio has achieved significant emission reductions from its coal-fired power plants. Between 2005 and 2014, carbon dioxide emissions from these units were reduced by approximately 30%.

“Given these reductions, one would think that Ohio is well on a path to comply with the final CPP,” Butler said. “Unfortunately, while U.S. EPA suggests using a baseline for emission reductions is 2005, in reality they use 2012, meaning that any reductions prior to 2012 are not being considered for compliance with Ohio’s mandated reduction targets. Ohio’s coal fleet has and will continue to improve its operational efficiency; however requiring additional pollution control measures will be extremely costly and will undermine the long-term viability of these power plants.

“Ohio has already experienced a dramatic loss in generating capacity, losing some 6,100 MW between years 2010 and 2015, primarily due to U.S. EPA’s Mercury and Air Toxics Standards. A further reduction in usage of coal-fired generation is the biggest means for complying with the final CPP and is a serious concern with respect to end-user costs, infrastructure and reliability.”

Butler said that through trading-ready state plans or a federally driven market-based trading program, U.S. EPA plans to mandate significant expansion of renewable generation across the country – regardless of practicality or cost.

On Aug. 3, U.S. EPA released three rules that will have an adverse effect on coal-based electricity generation across the country, Butler added.

  • Finalizing emissions standards for new electric generating units was the first rule released. This rule creates a reliance on cost-prohibitive technology that will effectively prevent any new coal plants from being built across the country, he said. Carbon capture and sequestration (CCS), the only technology described in the rule, is proving to not be ready for wide-scale technical implementation. Costs are escalating to the point that, even with heavy subsidization, projects are being abandoned.
  • The second and third rules work together, Butler said. The second rule is the final version of the CPP. The third rule is a proposed “back stop” federal plan for states unable to, or choosing not to comply with the final CPP. These rules will result in an unprecedented overhaul of the power generation, transmission and distribution system by dramatically reducing fossil-fuel based generation and establishing aggressive renewable energy goals, he said.

“These rules together are an effort to circumvent Congressional authority by creating a large-scale program to revamp the power industry based on a rarely used provision of the Clean Air Act (CAA) and move to an environmental model to replace the long-standing economic model for the generation of electricity,” Butler wrote.

“U.S. EPA made certain changes in response to comments on the proposed CPP. Changes include pushing the initial compliance date to 2022 from 2020, creating a reliability safety valve to account for short-term grid problems, and making energy efficiency optional rather than a core requirement of the rule. However, it is also evident that U.S. EPA raised the rule’s carbon emissions reduction goal from 30 percent to 32 percent nationwide and changed many state mandated reduction targets. In Ohio, our mandated target is now roughly 11% more aggressive than the proposed rule. This now means Ohio will need to lower its carbon emissions rate by 37% between 2012 and final implementation of the CPP. In fact, 15 other states will need to achieve even greater reductions. The final CPP also dictates that natural gas generating units be deployed at a 75 percent capacity factor.

“Updated cost projections using the final rule have not been completed. However, the Public Utilities Commission of Ohio (PUCO) conducted a detailed analysis of the proposed rule estimating a 70 percent capacity factor and, as a result, predicted wholesale energy prices to be 39 percent higher in calendar year 2025, costing Ohioans $2.5 billion. Modeling to project the impact on the bulk power markets, wholesale energy costs and reliability of the power supply is ongoing both within Ohio as well as across the Interconnection Regions.”

Butler pointed out that there is a legal case pending in federal court that argues U.S. EPA does not have the authority under the Clean Air Act (CAA) section 111(d) to promulgate the CPP because the plain language of the statute does not allow a source category (such as coal-fired power plants) to be regulated under that section if they are already regulated under section 112 (the hazardous air pollutant section). In addition, the CPP is so restrictive that states or U.S. EPA will be forced to regulate activities outside the fence line of the regulated entities. This “fence line” or property line around a regulated facility represents the traditional confines of U.S. EPA’s authority. Ohio has joined the legal proceeding arguing that Congress could not have meant to grant U.S. EPA blanket authority under section 111(d) to directly or indirectly revamp the entire national bulk power system, Butler said.

Texas Commission on Environmental Quality Viewpoint 

Bryan Shaw, Chairman of the Texas Commission on Environmental Quality, wrote in his prepared testimony: “The final version of the Clean Power Plan is radically different than the EPA’s proposal and as such, the TCEQ is continuing to study and evaluate the impacts of the final rule. Currently, the following concerns with the rule have been identified.”

  • First, EPA’s methodology for determining the “Best System of Emission Reduction” marks a radical departure from historical practice, and the plain language of the Clean Air Act. “Specifically, the EPA has now asserted the power to determine BSER by evaluating technologies and methods ‘outside the fence’ of the facilities it claims to be regulating,” Shaw wrote. “This is the first time the EPA has not determined BSER based on technology or methods that could be applied to the source itself or materials being used by the source. In the past, BSER evaluations have included installing scrubbers, low emission combustion technology, pretreatment of fuels, and myriad other systems that a facility operator can control. But in this case, the EPA has evaluated States’ electric grids and energy policies as a whole, instead of the individual sources which it has authority to regulate under §111(d).”
  • Another major concern is that the final CPP will have an insignificant effect on global carbon dioxide concentrations, global temperatures, and sea level rise, Shaw said. “The final rule does not provide a single quantifiable climate benefit. EPA’s purported climate benefits are based solely on the Office of Management and Budget’s Social Cost of Carbon (SCC), and their claim that it will put the United States in a stronger bargaining position at the President’s upcoming climate summit in December. Aside from the obvious substantive objections I have to this line of reasoning, I submit to you that a regulation this expensive that entails such an unprecedented arrogation of power to the Executive Branch can not be justified as a bargaining chip or with fuzzy math.”
  • The EPA is deceiving the American public by claiming wildly inflated economic benefits only tangentially related to the purpose of the rule, Shaw said. “The rest of EPA’s claimed benefits from the rule are actually co-benefits from reductions of non-GHG pollutants such as nitrogen oxides and sulfur dioxide and even these benefits are suspect. Not only are criteria pollutants not the purpose of the final Clean Power Plan, the majority of claimed co-benefits are due to changes in ambient concentrations of ozone and PM2.5 in areas that are already attaining the NAAQS for these criteria pollutants. It is irrational for the EPA to claim a health benefit from reduction in a pollutant in areas where the EPA has already determined that the current concentration of the pollutant is adequate to protect human health.”
  • A more technical concern is the concept of “leakage” that the EPA has included in the final rule. “Leakage” is the shift of generation from existing units to new units that are not subject to the Clean Power Plan, resulting in a net increase in emissions, Shaw added. “The EPA is requiring states that choose to use a mass-based approach must address ‘leakage’ in their state plan; EPA also proposed to address ‘leakage’ in their proposed federal plan, if they decide to use a mass-based approach. EPA’s motivation for its ‘leakage’ policy is to remedy the nonsensical situation that emission standards for existing fossil fuel units under §111(d) are much more stringent than the standards for new fossil fuel units under §111(b). If EPA had followed the approach for determining BSER for existing units that it has used in all previous §111(d) rules and set BSER and the standards of performance appropriately, this issue would not even exist. Worse, this requirement would seem to only encourage companies to keep older, less efficient power plants operating longer, which ultimately could result in a less efficient and less reliable power generation fleet.”
  • The rule’s provision allowing states to request up to a two-year extension will do nothing to help  Texas implement the rule, Shaw said. “The time for states to make decisions whether to submit a state plan and what approach that plan might take, and then to develop a state plan is still a significant concern. The next scheduled meeting of the Texas Legislature isn’t until 2017. Any state plan for the Clean Power Plan will fundamentally affect state energy policy. If the Texas Legislature wanted to give specific direction on the implementation of a state plan, practically speaking, 2017 is too late. In order to have adequate time to develop a state plan, TCEQ estimates that decisions regarding the approach taken in a state plan would need to be made by late 2016. Essentially, the EPA’s schedule for the Clean Power Plan may force the Texas Legislature to have a special session, which would come at a substantial cost to the state.”
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.