Witnesses testify on whether states should ‘put their pencils down’ on stayed CO2 plan

While the U.S. Supreme Court has stayed implementation of the Environmental Protection Agency (EPA) Clean Power Plan, the debate over the regulation – including whether states should “put their pencils down” in the interim – continues.

The Senate Committee on Environment and Public Works heard testimony June 9 on the implications of the Supreme Court stay of the Clean Power Plan.

The Supreme Court has stayed the rule until legal challenges are litigated. The full U.S. Court of Appeals for the D.C. Circuit is expected to hear oral arguments in the carbon dioxide case in September.

“The five states we operate in have taken different approaches to the stay,” said Tri-State Generation and Transmission Association CEO Micheal McInnes. “Two states are continuing to develop plans – albeit at a slower pace– and three states have “put the pencils down,” McInnes said.

“Several state regulators justify moving forward based on EPA’s gentle threat that deadlines may remain the same if the rule is ultimately upheld, but we have argued there is strong legal precedent supporting deadlines being tolled,” McInnes said.

In a legal sense, when something is “tolled,” it is paused or delayed.

Allison Wood, a partner in the Hunton & Williams law firm, which often represents electric utilities in big clean air litigation, said that past experience suggests CPP compliance dates will be adjusted even if the rule is eventually upheld.

“As of now, the Power Plan has no legal effect, and its deadlines have no consequence,” Wood said.

Clean Power Plan opponents, however, are worried that EPA seems to be going ahead certain aspects of the program, including regional trading models and the Clean Energy Incentive Program, Wood said.

“In Missouri, opposition to the Clean Power Plan was been a bipartisan effort,” said state Rep. Jack Bondon of Missouri: Bondon (R), who added that key Democrats there are opposing the EPA plan. Bondon said the CPP would substitute the EPA preferences for clean energy for “well-thought out” decisions by Missouri policy makers. Missouri currently has power prices that are below the national average.

Tri-State’s McInnes said his cooperative has made much progress on cleaner generation without any CO2 reduction mandate.

“Since 2008, Tri-State has added nearly 250 MW of renewable energy and is under contract to add an additional 281 MW by 2017. In 2016, we project 25% of energy delivered by Tri-State and its member systems to cooperative consumers will be generated from non-carbon dioxide emitting sources,” McInnes said.

Tri-State does not project the need to build new generation until 2024-2026, so to comply with the requirements of the Clean Power Plan we would likely have to shut down existing plants, the CEO added.

Rep. Bondon noted that looming CO2 rules have already figured into bankruptcy filings by two major coal producers based in Missouri – Peabody Energy and Arch Coal, both based in Missouri, have recently filed for bankruptcy. “The coal industry has almost collapsed,” Bondon said.

But Committee member Sen. Ed Markey (D-Mass.) said those two coal companies opposed the Waxman-Markey American Clean Energy and Security Act of 2009 even though it would have included significant public funding for carbon capture and storage (CCS). “The coal industry exercised its veto power in the Senate,” Markey said. The Waxman-Markey legislation stalled and, along with it, plans for significant public funding of CCS, Markey said.

The current EPA Clean Power Plan would require states to draft plans to curb power sector CO2 emissions 32% by 2030.

Regional Greenhouse Gas Initiative (RGGI) Board Chair Katie Dykes testified that regional trading can speed the rate of CO2 reduction. “Collectively, the RGGI states have already reduced power sector carbon pollution by over 45% since 2005, while at the same time transitioning to a cleaner energy system. The RGGI states’ use of non-hydro renewables has increased by 74%,” Dykes 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.