‘Tight’ EPA timelines hover over end of utility regulators’ gathering

Source: Edward Klump, E&E reporter • Posted: Friday, July 18, 2014

DALLAS — Utility regulators closed their summer meetings yesterday, but they know the real work on U.S. EPA’s carbon proposal lies ahead.

Just not that far ahead.

The EPA proposal, released last month, is expected to be finalized next year. Initial plans on how states will move to curb carbon dioxide emissions from existing power plants are expected by mid-2016.

“The timeline may be too tight,” said Jon McKinney, a commissioner from West Virginia, adding that the flexibility he’d like for short- and long-term moves “is just not quite there.”

McKinney appeared on a panel during the final day of the National Association of Regulatory Utility Commissioners’ gathering here. Discussions at NARUC meetings have been heavy on EPA’s carbon proposal this week as commissioners, consultants, companies and advocacy groups try to sort through a policy the Obama administration says is a priority.

Possible approvals from a state’s governor and legislators are among the factors that will come into play, said McKinney. The commissioner also delivered a withering “top 10” list of what he called misleading statements by EPA.

Some other panelists agreed that timing for the process is aggressive, regardless of their views on the carbon proposal.

“It is a tight time frame,” said Dale Bryk of the Natural Resources Defense Council. “It’s a lot of complicated work.”

Still, Bryk said, interstate negotiation processes are doable, if challenging.

EPA’s Clean Power Plan seeks a 30 percent reduction in carbon dioxide emissions from power plants by 2030 compared with 2005 levels. Targets vary by state, and the agency said the goal is to begin progress toward reductions by 2020.

States would have to submit initial or complete plans by the end of June 2016 with one-year extensions possible for individual states to turn in full plans, according to an EPA online fact sheet on the proposal. Potential multi-state plans could be eligible for two-year extensions with a progress report in 2017.

“I think the real issue is time,” said Pat Vincent-Collawn, CEO of New Mexico-based PNM Resources Inc. “When the rule first came out, we said the good news is it’s not prescriptive, the bad news is it’s not prescriptive.”

Vincent-Collawn predicted that EPA will see “truckloads” of comments on the proposal that will be tough to absorb. EPA’s 120-day comment period runs through mid-October.

EPA appearance

Gina McCarthy, the administrator of EPA, spoke to NARUC attendees Monday and reinforced the agency’s attempt to give states flexibility. She also indicated that the carbon plan will be federally enforceable (EnergyWire, July 15).

Yesterday, EPA offered another featured speaker: Janet McCabe, acting assistant administrator for the Office of Air and Radiation. She joined a panel on compliance and enforcement to talk about the carbon proposal on power plants, as well as potential health and other benefits.

“This is hard,” McCabe said, “but we’re doing it because it is so important to the future of the people in this country and the future of the country.”

McCabe said EPA can’t know specific needs and opportunities and constraints in every state and said creative thinking will come into play to make the program workable.

“I will concede to you that there will be things that will need to be addressed in the rule,” she said. “I haven’t worked on a single EPA rule where that wasn’t the case. That’s why we do transparent processes that involve public input.”

The push will be for naught if states can’t develop and implement plans, McCabe said, and if companies don’t have opportunities to make carbon reductions that are possible.

She also addressed what she described as McKinney’s “colorful top 10 list.” The West Virginia commissioner’s complaints about EPA included what he called underestimating higher electric rates and major reliability issues, exaggerating health benefits and attempting to force a cap-and-trade program without federal legislation.

McCabe’s only issue with the list, she said, was McKinney’s characterization of EPA as being misleading. McCabe said there are issues where people have differences of opinion based on different experiences.

“There’s nothing on there that we haven’t heard and don’t think we need to engage on,” she said.

During a brief meeting with reporters, McCabe addressed the criticism that the timeline moves too fast, given possible state approvals and joint efforts.

“Well, we built in extra because of these very things, and I’m sure we’ll get lots of more specific comment now that the proposal is out there on whether those time frames are workable, and we’ll look at all of that comment,” McCabe said. “But it’s important that this program move along.”

Former regulators weigh in

Also this week, a group of former regulators issued a statement to express confidence in state utility regulators’ ability to do their part in implementing EPA’s carbon plan for existing power plants.

The signatories had served on bodies from around the country, including in the Northeast, as well as states such as Alabama, California, Colorado and Iowa.

The statement said EPA’s plan offers flexibility for states to create individual, multi-state or regional plans. It cited possible tools such as efficiency gains at coal plants, more use of renewable resources and energy efficiency.

“As former regulators, we consider an affordable and reliable energy supply to be vital to the nation’s future economic growth, security and quality of life,” according to the emailed statement. “We believe the basic structure of the proposed rule is well grounded and provides a sound basis for regulating the power sector’s emissions of carbon in the United States.”

Susan Tierney, a former regulator in Massachusetts who signed the group statement, said states can look for solutions in a variety of places, including making water systems more efficient.

“Can you connect the dots between this action and lowering emissions at power plants?” she said. “That’s the ultimate thing.”

Meanwhile, a white paper this month from the Wilkinson Barker Knauer LLP law firm suggested that a number of hurdles await states as they look at paths ahead under the EPA proposal.

States will have “relatively little time to make crucial decisions,” according to the paper’s executive summary. That includes deciding whether to act alone or with other states; determining what role independent system operators and regional transmission organizations may play; and seeing what enforcement measures may be necessary.

Other points could include carbon-driven planning, possibly leading to a “soft reintegration” of restructured markets, according to the paper, while approaches among states could require a number of approvals.

“The institutional decisions and design questions that states face are vastly underappreciated here,” said Raymond Gifford, a partner with the firm in Denver who was visiting Texas, in an interview this week.

Joshua Epel, chairman of the Colorado Public Utilities Commission, told NARUC attendees yesterday that he was pleased that EPA embraced principles such as flexibility for states.

But he also raised questions about the carbon proposal, including goals for what he called innovative states such as Colorado.

He said some building blocks contradict each other, such as boosting efficiency of coal units and encouraging use of natural gas. Epel said regulators have an obligation to come up with meaningful comments, and EPA should take them seriously and incorporate them.

McCabe, during her panel appearance, said EPA was not expecting state plans to use suggested building blocks in the way it used them.

“Any idea is welcome to us,” McCabe said.