Western regulators, utilities call for more time to implement EPA’s Clean Power Plan

By Phil Taylor | 02/26/2015 08:11 AM EST

DENVER — U.S. EPA proposed an unreasonable and costly deadline for states to begin reducing global warming emissions, according to utility officials and regulators in Western states who testified here yesterday before the Federal Energy Regulatory Commission.

The daylong meeting at the Renaissance Denver Hotel was the first of FERC’s three regional workshops to gather feedback on EPA’s Clean Power Plan, which calls for reducing domestic greenhouse gas emissions by 30 percent by 2030.

The draft rule released last summer also requires many states to show significant progress toward meeting those goals beginning in 2020, a timeline some states have criticized as too strict.

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Critics on yesterday’s panel included Ben Fowke, CEO of Minneapolis-based Xcel Energy Inc., which is Colorado’s largest utility, and Mike Hummel, associate general manager and chief power system executive for the Salt River Project, the utility that powers the Phoenix area.

"We know it can be done," Fowke said of EPA’s emissions goals. "We also know it takes time and a lot of coordination. And if you don’t have the luxury of time, you essentially sacrifice reliability and affordability."

All five of FERC’s commissioners attended yesterday’s workshop, which also included testimony from Joseph Goffman, associate assistant administrator and senior counsel in EPA’s air office. The audience numbered well over 100.

A key item on yesterday’s agenda was whether EPA’s plan — which calls for a mix of increasing the efficiency of fossil fuel plants, leveraging lower-emitting natural gas, boosting the use of renewable energy and reducing electricity consumption — can be implemented without disrupting the electric grid.

Panelists expressed optimism but urged EPA to provide a smoother path to achieving interim reduction goals. They also discussed the need for a so-called safety valve to EPA’s plan that would protect the continued operation of a power plant for a period of time if it were deemed essential to keep the lights on.

EPA Administrator Gina McCarthy yesterday told a House committee that she did not believe EPA’s emissions rule would threaten reliability. But if it does, EPA has tools to handle those situations, she said.

"We would be able to work through the issues, whether it’s a waiver or another process. The tools are available to us to use," McCarthy said in response to a question about whether waivers would be available to states with potential problems.

FERC Chairwoman Cheryl LaFleur yesterday reflected on McCarthy’s comments.

"All of us are dedicated to making sure there aren’t reliability concerns," LaFleur told EnergyWire between panels at the Denver workshop. "It’s a question of, ‘OK, how do we ensure that? What has to be in the final rule?’"

She said the purpose of the regional workshops is to "look under the hood" for tools to ensure reliability.

"Whether you call it a valve or a waiver or whatever noun you use, what kind of mechanism would best work to protect reliability in a way that’s consistent with the purposes of the Clean Power Plan?" LaFleur asked. "Every time we talk about it, I think we understand a little better what that might need to look like."

Hummel said EPA’s draft rule would require Arizona to cut CO2 emissions in half, but that 90 percent of those reductions would be required by 2020. The state would have to shut down its entire non-tribal coal fleet, he said.

"We essentially don’t have a glide path," he said. "We have a cliff."

Joshua Epel, chairman of the Colorado Public Utilities Commission, said the big issue with EPA’s rule is the timing.

He said his state could meet an appropriate target within 15 years, for example. He also urged EPA to provide "proper credit" in its final clean power rule for early emission reductions.

But Alan Minier, chairman of Wyoming’s Public Utilities Commission, said he’s less optimistic than Epel.

"It’s going to be very difficult to get the Clean Power Plan implemented on time," Minier said, adding that Wyoming needs revised emissions targets.

Regional approach ‘makes sense’ but is ‘very difficult’

The panel and commission members also discussed the idea of setting regional emissions reduction targets, an idea that garnered support as well as skepticism.

LaFleur said the West boasts significant renewable energy resources and has the potential to deploy them at a major commercial scale. But the West is also hampered by its geographic size and its lack of an electric coordinating authority, she said.

She asked panelists whether they felt a regional emissions goal might be appropriate given that some states can reduce emissions more cheaply than others.

Wayne Morter, director of power management for Seattle City Light, said a multi-state or regional approach "makes sense," both for reliability and cost.

Other panelists offered mixed reviews.

Fowke of Xcel Energy said a regional plan "would be great" but that EPA has to change the plan’s overall goals.

"When you have states that have such disparate targets, it’s going to be very difficult to work together in a coordinated fashion," he said.

Hummel said a regional plan may take significant time, but he was doubtful other states would want to work with Arizona.

"We are kind of the least attractive person at the dance," he said. "Not many people knocking at our door."

Melanie Frye, vice president of reliability planning and performance analysis at the Western Electricity Coordinating Council, said that, on average, the Western Interconnection is fairly close to being able to meet EPA targets. But the situation differs by individual states.

FERC Commissioner Norman Bay noted that a WECC study had found that nine of 11 states in the West would come close to meeting the emissions targets in the absence of new EPA rules.