Resolution Concerning EPA’s Proposed Guidelines for Existing Fossil Fuel-Fired Power Plants

Summary

This resolution finds that the United States Environmental Protection Agency’s (EPA) proposed regulations for reducing carbon dioxide emissions from existing coal-fueled baseload generating units contradicts the position and recommendations of ALEC and many individual legislatures and other state policymakers who made recommendations to EPA to limit its focus to affected units. The EPA’s proposed guidelines to reduce carbon dioxide emissions from existing power plants are vastly different from any previous EPA emission reduction program. Instead of setting an emission limit for electricity generating units, the rule sets individual state emission rate goals and suggests building blocks for achieving those goals, which makes the proposed guidelines incredibly complex and difficult to evaluate since the impact will vary state by state.

As proposed, the guidelines include flawed assumptions and requirements that result in overly aggressive emission rate reductions in many states that will raise electricity costs for customers. In their current form, these guidelines could force premature retirement of additional efficient, low-cost coal-fueled generation, lead to the potential loss of billions of dollars in investments made over the last decade to make coal plants cleaner, and require construction of higher-cost replacement generation. The guidelines also usurp energy policy and regulatory roles that have traditionally been held by the states, without any clear Congressional authorization.

The resolution promotes collaboration among state policymakers to assess many issues and comment upon EPA’s proposal and encourages them to engage EPA after the regulation is finalized in 2015.

WHEREAS, the American Legislative Exchange Council (ALEC) supports an all-the-above energy strategy and reasonable environmental protection measures because it is in the best interest of the Nation and the States; and

WHEREAS, a reliable and affordable electricity supply is vital to the Nation’s and each State’s economic growth, jobs, and the overall interests of its citizens; and

WHEREAS, it is the prerogative of each State to ensure a reliable and affordable supply of electricity for its citizens; and

WHEREAS, the regulation of retail electricity sales and local distribution of electricity is a sovereign State function that the federal government has a legal obligation to respect and preserve; and

WHEREAS, on June 25, 2013, the President issued a memorandum to the Administrator of the U.S. Environmental Protection Agency (EPA) directing the EPA to develop guidelines to control greenhouse gas emissions from existing fossil fuel-fired power plants under Section 111(d) of the federal Clean Air Act and to seek input from states;

WHEREAS, ALEC, National Association of Regulatory Utility Commissioners, (NARUC), Southeastern Association of Regulatory Utility Commissioners (SEARUC), Southern States Energy Board (SSEB) and other associations of state policymakers and legislators, governors, environmental and utility regulatory commissioners, and attorney generals from over 30 states recommended ,through legislation and letters, similar approaches pertaining to affected power plant units to EPA to minimize job losses and electricity rate increases, impacts to state economies, and risks to grid reliability based on Clean Air Act Section 111(d) and its implementing 40CFR 60 regulations; and

WHEREAS, on June 2, 2014, the EPA issued proposed guidelines (“Clean Power Plan” or “Plan”) limiting carbon dioxide (CO₂) emissions from existing fossil fuel-fired power plants under Section 111(d) of the federal Clean Air Act and published them for comment in the Federal Register on June 16, 2014; and

WHEREAS, EPA, in its Regulatory Impact Analysis and databases, lists plant unit retirements for states and predicts that 46 to 49 gigawatts of coal-fueled generation will be shut down between 2016 and 2020 due to its Clean Power Plan [1] in addition to 71 gigawatts of coal-fueled generation EPA acknowledges has retired or will retire between 2010 and 2020, for a total loss of generation to power 60 million homes; and

WHEREAS, this shutdown of 33% of the US coal fleet in 5 years includes units at plants that have made or are just completing significant environmental investments to comply with other EPA regulations and does not include plant units scheduled for these retrofits that might be retired early in the face of the unworkable and unachievable goals measures, timeline and implementation schedule in EPA’s Plan; and

WHEREAS, EPA’s proposed Clean Power Plan does not comply with the aforementioned

recommendations of state policymakers and sets up States to lose more coal-fueled plant units than predicted by EPA if they cannot implement EPA’s unrealistic levels and schedule for efficiency improvements at affected units, and end uses by consumers, renewable and nuclear energy deployments, and natural gas electricity capacity factors; [2] and

WHEREAS, EPA says that its proposed Clean Power Plan will increase electricity costs for families, but this estimate is likely much lower than the real increase will be, based on the much greater price families now pay in states that have limits on CO2 emissions and families will be additionally impacted from higher prices for food when farmers pay more for electricity to grow crops and raise livestock; and

WHEREAS, devastating job and family income losses will occur from EPA’s Clean Power Plan, especially in local communities where coal and coal-fueled electricity production facilities are located and jobs cannot be replaced; and

WHEREAS, States with limited wind energy resources may need to take massive amounts of valuable agricultural land out of production with ground mounted solar panels to avoid retiring more baseload generation; and  

WHEREAS, ALEC agrees with the opinion issued by the United States Supreme Court regarding the EPA’s authority that “it would be patently unreasonable – not to say outrageous – for EPA to insist on seizing expansive power” and “[w]hen an agency claims to discover in a long-extant statute an unheralded power to regulate ‘a significant portion of the American economy…we typically greet its announcement with a measure of skepticism;” and

WHEREAS, the EPA Clean Power Plan uses arbitrary methods in its assessment, such as using one state’s renewable portfolio standard to justify EPA’s renewable guideline for a neighboring state; and an unworkable timeline for the bulk of the emissions reductions that must be made by January 1, 2020, just one or 2 years after implementation plans are submitted by states and approved by EPA;

WHEREAS, the proposed guidelines and plan, by EPA’s own estimates will have a major impact on the economy of each State and significant consequences for how electricity is generated, transmitted, distributed, and used within each State; and

WHEREAS, the proposed guidelines raise significant concerns related to legal authority, electric reliability, electricity affordability, achievability and timing; and

NOW THEREFORE BE IT RESOLVED, that ALEC recommends to its state legislators to work with their other policymakers to:

a) provide comments to EPA on the legal, reliability, affordability, achievability, timing, implementation scheduling and other issues that need to be more appropriately considered for individual and groups of States to eliminate or minimize the aforementioned risks; and

b) jointly develop state implementation plans to protect residential, industrial and commercial electricity users and ensure continued reliability of the electric system; and

c) continue to engage EPA and other relevant federal agencies after the regulation is finalized to eliminate or minimize the aforementioned risks and consequences.

BE IT FURTHER RESOLVED, that copies of this resolution are to be transmitted to the same persons as the previous resolution including the President of the United States, relevant department heads in his Administration, members of Congress, leadership in state policymaker associations, state’s legislative leadership, and relevant leaders in the international community interested in electricity prices, reliability, economic growth, job creation and carbon dioxide emissions. Staff is directed to advocate for the provisions in this resolution and collaborate with the aforementioned parties to educate and achieve the goals in this resolution.

Approved by the ALEC Board of Directors on October 11, 2014.

[1] Units the EPA predicts would retire are listed at: http://www.regulations.gov/#!documentDetail;D=EPA-HQ-OAR-2013-0602-0220.

[2] The EPA’s building block levels are unrealistic and unachievable. For example:

a. Many efficiency (heat rate) improvements have already been made to offset the auxiliary electricity requirements at power plants with environmental retrofits and owners and operators are interested in assuring customers have an abundant supply of power, so the potential for improvements is likely much less than the EPA’s 6 percent estimate;

b. Data published by the Energy Information Administration (EIA) shows that most natural gas combined cycle electricity generating units have never operated at the EPA’s estimated 70 percent capacity factor in any year. This highest annual capacity factor for natural gas was roughly 51.1 percent in 2012. Most existing natural gas plants were not designed, built, or permitted to run at the EPA’s proposed levels;

c. The EPA states that overall consumer end use energy efficiency should increase by 1.5 percent each year, which is unrealistic considering that the most cost-effective efficiency improvement (lighting) is already occurring through newly adopted federal lighting standards. Realistically achievable energy efficiency gains of about 0.5 to 0.6 percent per year are more likely according to the Electric Power Research Institute’s April 2014 report titled S. Energy Efficiency Potential through 2035.