NRECA tells EPA that the Clean Power Plan leaves coal investments stranded

A National Rural Electric Cooperative Association (NRECA) official said at a Nov. 18 U.S. Environmental Protection Agency hearing on parts of the CO2-reducing Clean Power Plan that those parts are unworkable and a danger to the power grid.

John Novak, executive director, environment for NRECA, testified on the agency’s Federal Plan and Model Trading Rules, challenging EPA’s assertions that they represent a “readily available path forward” to Clean Power Plan (CPP) implementation.

“The proposed Federal Plan and Model Trading Rules fail to address the concerns that NRECA and our members raised in our comments, in our previous statements, and in meetings with EPA and others in the administration,” Novak said. “The bottom line is that electric co-ops and their consumer-owners will see higher electricity rates under the Clean Power Plan, whether they participate in a state implementation plan or the proposed Federal Plan.”

Novak pointed out that electric co-ops are heavily reliant on coal-fired generation, because they built coal-fired plants at a time when the federal government encouraged the use of coal to provide reliable, affordable electricity. The CPP will lead to the shutdown of co-op-owned power plants with significant remaining useful lives, and into which co-ops have invested billions of dollars on emission controls. Many co-ops have outstanding loans that were necessary to pay for environmental upgrades, and they need to run these units in order to generate revenue and pay off the loans, Novak pointed out.

He also took issue with EPA’s assertion that the CPP’s emissions trading provisions would provide sufficient flexibility to avoid the premature shutdown of co-op-owned plants. Because of their small size and reliance on coal, many co-ops would not be able to take advantage of the flexibility in the Federal Plan, such as the option to run lower-emitting natural gas power plants instead of coal.

Novak urged EPA to reconsider adding a dynamic reliability safety valve to the CPP. He said NRECA doesn’t believe the market will be able to adequately compensate for an unexpected electricity outage at a large nuclear power plant. This could force some coal plants to run more, putting them in conflict with their emissions requirements under the CPP.

In several instances, EPA’s final version of its Clean Power Plan moved in the right direction – by giving states more time to plan, pushing back the interim compliance deadline by two years (to 2022), and eliminating the requirement for energy efficiency. Unfortunately, EPA also significantly increased the burden for many cooperatives, and other utilities in states such as Montana, North Dakota and Wyoming where the emission reduction goals were increased by up to four fold, Novak said. EPA also did not adequately develop a reliability safety valve, or solve the real problem of stranded assets and remaining useful life, he added.

Electric co-ops are at the forefront in the deployment of renewable energy, such as community solar, Novak pointed out. Co-ops also have a long history of involvement in end-user energy efficiency programs. And co-ops’ carbon dioxide emissions are decreasing as they deploy more renewable energy and shift to lower-emitting generation, as their coal plants reach the end of their remaining useful lives, and their remaining debt is paid off. While the Clean Energy Incentive Program suggests some limited credits for specific renewable and energy efficiency programs, EPA should credit actions already underway, as well as those planned in 2020 and 2021, he said. For example, many cooperative customers meet the government’s “low-income” definition and efforts to improve their energy efficiency should be rewarded as they are implemented and not limited to an arbitrary time period.

“But the simple fact is that the Clean Power Plan and proposed Federal Plan don’t give co-ops enough time to manage the transition to lower carbon dioxide emissions, while continuing to provide affordable, reliable electricity to their consumers,” said Novak.

The National Rural Electric Cooperative Association is the national service organization that represents the nation’s more than 900 private, not-for-profit, consumer-owned electric cooperatives, which provide service to 42 million people in 47 states. It has joined one of the many lawsuits filed in federal court against the Clean Power Plan, which was published in final form on Oct. 23.

The Clean Power Plan requires 32% greenhouse gas reductions from existing power plants by 2030, with that interim compliance deadline coming in 2022.

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.