NRECA cites concerns on model trading rules under EPA Clean Power Plan

The National Rural Electric Cooperative Association (NRECA) said in comments filed Jan. 21 that a carbon dioxide (CO2) allowance trading program is not enough to overcome other problems with the Environmental Protection Agency (EPA) Clean Power Plan.

NRECA and 37 of its member generation and transmission (G&T) cooperatives have filed a petition for review of the 111(d) Rule in the D.C. Circuit challenging the legality of the EPA Clean Power Plan.

The EPA plan, formally issued last year, would have states write implementation plans to cut power sector CO2 32% by 2030.

“The Proposed FP /Model Trading Rules suffer from the same legal defects as the 111(d) Rule,” NRECA said in comments filed by its Environmental Counsel Rae Cronmiller.

NRECA said that a CO2 trading program is not enough to overcome the program’s lack of an adequate “safety valve” to ensure reliability.

EPA has invited comment on whether it should finalize a single approach – either a rate-based or mass-based approach – for every state in which it promulgates a federal plan, the association said.

“The agency has expressed a preference for finalizing only a single approach, however, and clearly favors a mass-based trading approach as ‘more straightforward to implement compared to the rate-based trading approach, both for the industry and for the implementing agency,’” NRECA said.

The rural cooperatives organization believes that EPA should allow trading between mass-and-rate-based states. NRECA also says that EPA has not sufficiently considered the “remaining useful life” of generating assets.

NRECA also suggests that EPA should embrace a larger potential role for biomass. Although EPA currently proposes biomass co-firing as a compliance mechanism for the model trading rules, biomass should also be a compliance option under a federal plan.

NRECA again asserted that the Clean Power Plan lacks an adequate ‘safety valve’ provision to ensure reliability.

FERC should be the lead agency on matters related to the reliability of the bulk electric system, consistent with FERC’s authorities under the Federal Power Act and in light of FERC’s extensive expertise, NRECA again stressed.

On Aug. 3, 2015, the EPA signed the final Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units under the Clean Power Plan. The rules cover generating units constructed by Jan. 8, 2014.

NRECA has frequently said that elaborate EPA rules such as the Clean Power Plan place a large financial burden on rural cooperatives.

According to the Energy Information Administration (EIA), rural electric cooperatives serve an average of only 7.4 consumers per mile of electric line and collect an annual revenue of $16,000 per mile of electric line. By comparison, investor-owned utilities serve an average of 34 customers per mile of line for the investor-owned electric utilities and collect $113,000 of revenue per mile of line, NRECA said.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.