Kan. utility regulators order probe of EPA rule

Source: Jeffrey Tomich, E&E reporter • Posted: Monday, December 7, 2015

Kansas utility regulators voted yesterday to begin an investigation into what U.S. EPA’s Clean Power Plan will mean for utility rates in the state and the reliability of the electric grid.

The order by the Kansas Corporation Commission is based on a recommendation by commission staff and will focus on examining generation redispatch options that enable the state to comply with the rule while maintaining reliable, least-cost electric service.

The information gathered is required by newly exacted legislation adopted this spring that also created a joint legislative committee to review the state’s Clean Power Plan compliance strategy.

“This rule will impact the electric industry in a way that has not been seen since rural electrification in the 1930s. It will affect every budget, every business and every utility company in Kansas,” Commissioner Pat Apple said in a statement. “I’m pleased that the Commission has opened a docket into this matter, so that we can take a closer look into the rule’s implications, as well as to give members of the public a chance to weigh in, on-the-record.”

In its 28-page order, the commission authorized its staff to hire consultants and said it will convene “legislative-style hearings” and hold educational sessions on issues relevant to the investigation. It also authorizes staff and consultants to obtain relevant data from Kansas utilities.

The initial “special educational session” will be held Jan. 12 in Topeka and will include representatives from commission staff, the state attorney general’s office and the Kansas Department of Health and Environment.

Strong criticism from Kan.

Kansas has been among the states most critical of the Clean Power Plan and what the rule will mean for consumers.

Republican Gov. Sam Brownback said the final rule, issued Aug. 3, “is twice as bad for Kansas as the proposed rule released last summer and requires us to review not only the rule itself but reconsider the state’s overall approach to the Clean Power Plan.”

Kansas Attorney General Derek Schmidt, also a Republican, is among the state attorneys general who filed a lawsuit to halt implementation of the rule.

In formal comments to EPA last fall, the Kansas commission embraced its staff’s view that the proposed rule represented an intrusion by the federal government into an area regulated by states — one that could cost the state billions of dollars in higher electric rates (EnergyWire, Oct. 31, 2014).

The Southwest Power Pool, which operates the regional power grid across Kansas and much of the Great Plains, has also warned that implementation of the Clean Power Plan, as initially proposed, would be expensive for consumers.

But Little Rock, Ark.-based SPP also said costs can be mitigated by cooperation among states through trading emissions allowances or credits (EnergyWire, July 28). The grid operator has also urged states — even those like Kansas that are suing EPA — to develop state plans rather than refuse to comply and be prescribed a federal implementation plan (EnergyWire, Oct. 13).

The final rule pushed back the start of the compliance period by two years, to 2022, but also imposed more stringent CO2 cuts for Kansas than were initially proposed.

The draft rule issued in June 2014 required a 22.7 percent reduction in CO2 emissions for Kansas generators. The final rule requires a 43 percent cut. Only North Dakota and Montana saw a bigger shift.

Nearly two-thirds of electrical generation in Kansas is from coal. If the Clean Power Plan is implemented as currently structured, the commission said, electric rates are expected to rise “significantly.”