By - Michael Drost

Regulators say EPA carbon reduction plan could threaten reliability

Energize Weekly, April 8, 2015

State regulators and utility executives told federal officials last week that the Environmental Protection Agency’s (EPA) proposed carbon reduction rule, or Clean Power Plan, requires too much compliance too fast and could threaten electric reliability and affordability up and down the Midwest.

Regulators from Indiana, North Dakota, and Texas three states currently engaged in a lawsuit over the rule, along with executives at St. Louis-based utility Ameren Corp said during a regional hearing of the Federal Energy Regulatory Commission (FERC) that the EPA plan, which calls a 30 percent reduction in carbon emissions below 2005 levels by 2030, would lead to significant coal-fired power plant retirements and doesn’t credit states for investing in renewable energy resources, and doesn’t include mechanisms that would ensure reliability, according to Midwest Energy News.

“I see the Clean Power Plan as the biggest challenge facing Texas’ ability to deliver power to Texans at affordable rates,” said Donna Nelson of the Texas Public Utilities Commission, while Missouri Public Service Commission member Steve Stoll said that there simply wasn’t enough time to meet with proposed interim compliance requirements

“The ship, quite literally, cannot turn on a dime,” he said.

Meanwhile, regulators, utility officials, and other stakeholders with regional grid operators Midwest Independent System Operator (MISO), Southwest Power Pool (SPP), and the Electric Reliability Council of Texas (ERCOT) told FERC that they are looking to develop a framework for a cap-and-trade pollution control concept that would help states come into compliance with the EPA rule. The comments are significant because federal lawmakers rejected a nationwide cap-and-trade rule in 2010.

The EPA plan would allow states to come up with their own plans to meet the carbon reduction targets the federal agency set for each state in its draft proposal released last summer. In 2014, nine Mid-Atlantic and Northeastern states set an overall cap on power sector carbon emissions of 91 million short tons, declining by 2.5% annually from 2015 to 2020.

Of particular importance to the stakeholders at last week’s FERC meeting was the creation of a mechanism that would allow utilities to trade emission allowances within and across state lines, setting an effective price on carbon. Officials associated with the Midcontinent States Environment and Energy Regulators (MSEER) say that their proposal would allow for each state to submit their own plan for approval by the EPA, according to RTO Insider. Once the plans are approved, the states would use trading to reduce the cost of meeting their carbon reduction goals.

See also:

MISO, SPP Stakeholders Developing Trading Plan to Comply with EPA Carbon Rule

States to FERC: Clean Power Plan too much, too fast

What is the EPA’s Clean Power Plan?

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