Final EPA rule contains improvements but also imposes more stringent targets for some states
August 4, 2015
Washington D.C., August 4, 2015—The American Public Power Association (APPA) is reviewing the extremely voluminous final rule issued by the Environmental Protection Agency (EPA) regulating carbon dioxide (CO2) emissions from existing coal and natural gas-fired power plants under Section 111(d) of the Clean Air Act. It appears at first blush that EPA has made substantial improvements over the proposed rule. However, APPA is concerned about unrealistic targets set for some states that will impose substantial additional costs on consumers.
“APPA supports the need to lower CO2 emissions and address climate change, and the EPA has offered some improvements in this final rule,” said Joe Nipper, APPA’s senior vice president, regulatory affairs and communications. “But for some states, the rule seeks to do too much too fast, which will adversely impact their electricity costs.”
The final rule incorporates a more rational approach to setting a uniform national standard for emission rates for coal and natural gas plants. Other positive changes in the final rule include — an extended interim deadline, more time for states to develop compliance plans, fairer treatment of renewables and nuclear generating units under construction, and the inclusion of a reliability safety valve. The addition of a program for renewable energy credits and guidance for interstate trading will give utilities more flexibility. Compliance targets are now more achievable for some states, including Arizona, Florida, South Carolina, Georgia and Tennessee.
However, the final rule has substantially raised CO2 reduction targets for other states (including Illinois, Kentucky, Nebraska, West Virginia, and Wisconsin), making their compliance burdens more difficult and expensive, and raising the possibility of significant rate increases for consumers.
While there are also adjustments to the building block assumptions, calculations and compliance options that offer a more realistic approach to CO2 emission reductions, many of the fundamental problems with the EPA’s unprecedented and sweeping interpretation of the Best System of Emission Reduction regime in the proposed rule persist in the final rule.
APPA is also very concerned that the final rule does not address the problem of potentially stranded assets for every state. Some states could be forced to shut down coal-fired power plants with remaining useful lives that have not yet been fully paid for. At the same time, utilities must scramble to meet customer demand for electricity with new generation sources — including renewables — that may cost more and offer less capacity than current sources.
Nipper emphasized that public power systems are pioneers in harnessing renewable energy sources and offering energy efficiency programs to homes and businesses — and they are committed to doing more in both areas.
APPA will continue to review the final rule with its experts and members and offer further analysis in the coming weeks.