Bound to silence by politics, state regulators plan quietly

Source: Emily Holden, E&E reporter • Posted: Thursday, July 28, 2016

NASHVILLE, Tenn. — Meetings of state electricity regulators have for years been dominated by conversations about how to cut greenhouse gas levels under U.S. EPA’s Clean Power Plan.

But at a conference here of the National Association of Regulatory Utility Commissioners this week, mentions of the federal climate change rule were few and far between.

More than five months since the Supreme Court halted implementation of the rule, a majority of states are no longer actively talking through compliance options. And regulators from those states don’t want to disrespect the wishes of their political leaders by speaking about the Clean Power Plan publicly, several commissioners noted.

“There’s a split within NARUC, within the states,” said Philip Jones, a member of the Washington Utilities and Transportation Commission. “Some states can talk. Some states cannot talk openly.”

Jones said that as a result, broad discussions have gone from “about 50 or 60 miles per hour to 5 miles per hour.”

That means multi-state talks that could decide the direction of the power industry are on hold.

But at the same time, electric and air officials are still looking at modeling and taking meetings with utilities and advocates, according to multiple industry insiders who spoke on and off the record. They’re just doing it quietly.

“You don’t want to get cross-wise with the elected officials in your state,” said Joe Nipper, senior vice president of the American Public Power Association. “But as a matter of prudency, if it is sustained, we should be using this time to some extent to do some planning.”

Talks came ‘screeching to a halt’

The Supreme Court issued its stay of the rule in February, just days before the last NARUC meeting.

“We all had spent the previous NARUC talking about the Clean Power Plan,” said Nancy Lange, a Minnesota regulator who moderated the only panel on the rule at this week’s meeting. “That all kind of came screeching to a halt both within our national conversations as regulators and certainly within some of our states.”

Some state regulators say the slowdown is for the best. They note that a Donald Trump presidential administration could try to take the Clean Power Plan apart or the courts could order EPA to make big changes to the rule. They would rather wait and see how that turns out.

But others worry that they’re wasting valuable time. If not for the stay, they say, states now would be laying out their initial plans and setting a foundation for concrete compliance talks.

A main way utilities expect to meet the Clean Power Plan goals is to use a carbon trading system — where companies that have not cut emissions enough can buy allowances from companies that are ahead of the game.

In that system, some states like Washington would have extra allowances. But states with utilities that need to buy allowances are no longer at the table.

“We really need to be talking to Montana and Utah … and other states around the country,” Jones said.

Those states, however, can’t talk. “That’s the political atmosphere in their states, either through the governor or the legislature,” Jones said.

So green states instead are putting their resources toward their own plans to cut carbon.

“We’re focused on the strategies of decarbonizing our economy and not on speculating what the D.C. Circuit and ultimately what the Supreme Court’s going to do,” said Joshua Epel, chairman of the Colorado Public Utilities Commission.

In Washington state, officials are working out a plan to cap and reduce carbon levels.

“Our states are going to do this anyway,” Jones said. “I’m not thinking about whether or not I’m going to get credit for this with EPA in a rule published in 2018.”

A case of ‘CPP fatigue’

Travis Kavulla, NARUC president and a Montana regulator, said details of how states might comply with the Clean Power Plan are “not really worth a full, daylong explanation” at this point.

“Frankly, the more consequential questions really are acts of political discretion,” Kavulla said. “I don’t expect those to resume until the stay is lifted.”

There’s also a certain amount of “CPP fatigue,” according to Scott Rupp, a member of the Missouri Public Service Commission.

“We don’t want to talk about it anymore,” Rupp said, responding to a Twitter post.

Regulators largely didn’t have to this week, although they did spend time trying to resolve daunting questions about the future of a lower-carbon power industry.

They debated the merits of net metering — a policy that was meant to incentivize rooftop solar power but has some utilities complaining it undermines their business model (EnergyWire, July 27).

They heard from Exelon Corp. CEO Chris Crane, who said nuclear power needs a carbon price to compete with natural gas, solar and wind and continue offering its environmental benefits to the grid (ClimateWire, July 26).

And they listened to the usual presentations calling for more funding for research into carbon capture and sequestration, as some states still hope for a way forward for their coal industries.

In their everyday jobs, though, state regulators cannot avoid the specter of the Clean Power Plan.

Even with it on hold, utilities in many states are filing their long-term plans for how much they will invest in renewable power versus fossil fuels. Those plans come in sweeping, regularly updated documents called integrated resource plans (IRPs).

Appalachian Power Co. included thoughts on the Clean Power Plan in its recent IRP draft for Virginia regulators, said Scott Weaver, manager of strategic policy analysis for the utility’s parent company, American Electric Power Co. Inc.

Two Indiana utilities that have touched on the rule in their recent IRP presentations assume that a national carbon policy will go into effect in 2023 or 2024, depending on how much extra time they expect states to get if the courts uphold the rule.

Power companies don’t have the luxury of assuming that the Clean Power Plan or a similar regulation won’t move forward, Nipper noted. He said the municipal utilities his group works with are “taking advantage of the break to do more assessment.”

He said they’re also counting on the time for the economics of shifting from coal to greener power to improve.

For example, the single panel at NARUC on the Clean Power Plan highlighted recent modeling that showed the country is increasingly on track to meet the rule’s carbon requirements, although some states aren’t as well-positioned as others.

The Bipartisan Policy Center presented data showing that because of lower-than-expected natural gas prices, lower renewable power costs and extended federal tax credits for renewable power, the country as a whole is set to meet the early goals of the rule. A study released today by Duke University’s Nicholas Institute for Environmental Policy Solutions has similar findings (EnergyWire, July 27).

“While regulatory decisions to go forward and to stop have been made, the world spins on,” Lange said.