UTILITIES

State regulators set sights on Clean Power Plan at winter meetings

It is highly unlikely that there will be a consensus emerging from the upcoming winter meetings of the nation's utility regulators on the merits of U.S. EPA's Clean Power Plan, believed by many to be the most complicated rule the agency has ever issued.

But there is optimism that the five-day gathering of more than 1,400 stakeholders starting Saturday in Washington, D.C., might result in a clear-eyed understanding of what it would mean for states to comply -- or not -- should legal challenges fail to upend the proposed rule.

This year's meetings feature numerous panels on aspects of how the CPP would affect grid reliability, the increased and prolonged use of natural gas as a generation fuel, the development of clean coal technologies, expanded use of demand response, and renewables, as well as state compliance options.

Key federal players will speak, including EPA Administrator Gina McCarthy and her air chief Janet McCabe, as well as Cheryl LaFleur, chairwoman of the Federal Energy Regulatory Commission, and FERC Commissioner Philip Moeller. Congress will be in recess so, in a departure from past winter meetings, there will be no lawmakers addressing the group.

EnergyWire spoke with a number of attendees to gauge their expectations.

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Chuck Gray, executive director of the National Association of Regulatory Utility Commissioners, recalled that in November "we had a good debate at our board of directors over a resolution [on the EPA proposal] that really showed that there's a wide range of different opinions among our membership on the proposed rule and the implementation of it."

"I don't think there's ever going to be a detailed consensus," Gray added.

Even if there is no consensus, the NARUC gatherings "certainly can" result in commissioners' changing their minds about a subject as controversial as the CPP, according to Susan Ackerman, chairwoman of the Oregon Public Utility Commission and of NARUC's Electricity Committee.

"One of the things I love about going to NARUC is you sit there and listen to other states talk about what their issues are and suddenly you are thinking about something that hasn't crossed your mind before," she said.

"I hope that is something that happens; that people as they start listening to where the other states are on the rule, that people see things that maybe they missed before or heard an idea that maybe they didn't think of themselves before."

These periodic NARUC meetings can "broaden your perspective," said Al Minier, chairman of the Wyoming Public Service Commission. But it also lets "people know what your particular situation is."

Minier is interested in how commissioners will interact and in "talking to people about where they are on the learning curve. There's been time for people to digest their various perspectives; from looking at comments, people have done a lot more homework."

Not only are the NARUC meetings an "opportunity for commissioners to talk about how other states around the country are dealing with [the CPP], but it's also a chance for utilities, [nongovernmental organizations], environmental groups and consumer groups to listen to the discussion from commissioners because there really hasn't been kind of a forum to listen on such a broad basis until these D.C. meetings," said Kevin Gunn, the former chairman of the Missouri Public Service Commission and now principal of Paladin Energy Strategies.

Getting "to see how other states are approaching [the CPP] or even thinking about it, that is the ultimate benefit here, that kind of ongoing dialogue," he said.

Reliability of electric service top concern

Maintaining a reliable grid should the CPP go forward is uppermost in commissioners' minds, Ackerman said.

That is especially true in states within the Eastern Interconnection, where there are already reliability concerns because of the planned closure of coal-fired plants in response to the EPA Mercury and Air Toxics Standards rule, she said.

All three members of the Alabama Public Service Commission are attending this winter's NARUC meeting. "In light of all of the critical issues that are currently facing the public utility industry we are vigilantly focused on ensuring that Alabamians continue to receive reliable utility services at reasonable rates," the PSC members said in a joint statement.

"Coal is a vital component of Alabama's utility industry and is in no way inferior to other means by which electricity is produced," the PSC members said.

"The reliability piece will be a developing story because the choices we make about designing a state program would be informed by what the reliability consequences might be," Minier said. "I don't get the sense that anybody's got a handle on that yet."

States weigh range of options for compliance

State compliance efforts, NARUC's Gray noted, are "going to be a shared decision" on the part of utility regulators, state departments of environment and gubernatorial offices. But "the agency that actually submits the compliance plan to EPA will be the air regulators since they're the ones that actually report to EPA," Gray said.

Gunn described that dynamic as "weird" because PUCs are the most qualified to respond to the EPA proposal, but they won't be taking the lead.

"It's still unclear how commission involvement is going to be in actual compliance; is it going to be cost recovery; is it going to be rulemakings?" Gunn said.

Still, even state regulators opposed to the CPP realize there's a responsibility beyond litigation, Gunn said.

"Litigation isn't a compliance strategy; so no matter how much you don't like the CPP, you may end up having to comply. The timelines are short, the timelines are tight. Reliability is a concern. We need to talk about it and figure out the best way to move forward, even if you feel like it's horrible. You have to prepare with the eventuality that you have to comply."

Veteran Georgia utility regulator and NARUC Gas Committee Chairman Stan Wise expressed a similar view. All five members of the Georgia Public Service Commission oppose the Clean Power Plan, he said. But they also realize the proposed rule likely will be adopted in some form.

He doesn't see simply choosing not to abide with the rule as an option. "I think we need to do what we can to protest this rule, work to change this rule, to ultimately challenge this rule," he said. "But we'll probably have to work to implement it."

Mississippi regulator Brandon Presley said he's hoping to have some face time with EPA officials, but he's looking forward to hearing other state regulators' perspectives on how to handle the proposal.

"A lot of us have heartburn on this and how the rule is rolled out," said Presley, chairman of NARUC's Consumer Affairs Committee.

The Mississippi PSC isn't waiting for state lawmakers to take action on how to respond to the CPP. "We have already pre-emptively begun the process of hiring our outside consultants and counsel to weigh in on the issue," Presley said. "We're already engaged."

There is no session dedicated to the potential for regional compliance systems, but it is likely to be the subject of hallway and reception discussions among the regulators.

"I think most regions are going to have to look at cooperating because, as you know, electricity is interstate in nature. You can't put the walls up around your own state and comply probably," Ackerman said. It could be "less costly for consumers and maybe more effective."

Gunn certainly thinks "this meeting can shine a light on that."

"A lot of states haven't crossed the threshold into starting to think how a regional approach may work," he said. "This may be a meeting where that crystallizes thoughts.

"At the end of the day, when they look at what's the cheapest and best approach to do, they're going to look at a regional model. I just don't think they're there yet," Gunn added.

Tuesday session features federal, state regulators

One of the meeting's highlights will be a session Tuesday afternoon that could evolve into a discussion of the merits of states going it alone versus regional collaboration, as well as the consequences of noncompliance and having a federal implementation plan imposed.

It will feature FERC's Moeller and EPA's McCabe, as well as five state commissioners.

"Hopefully, we'd go toward a discussion about how it can work the best it can given the profound nature of what they're proposing," said Moeller, a CPP skeptic.

"I understand why EPA's going about it the way they are under what they say is their legal limitations. But to have state implementation plans overlay what is fundamentally interstate commerce is awkward at best and has the potential for a lot of economic and reliability inefficiencies," he said.

"They're air regulators; we're energy regulators. I wouldn't expect them to be experts on electricity, which is why frankly they should be talking and listening to us," Moeller said. "I really want whatever they propose to be workable and minimize the disruptive effect of it."

Among the changes in the CPP he advocates are with the compliance timeline, the base-line year EPA uses for compliance and credit for nuclear generation, previous closure of coal plants, and early action to foster renewables.

"It's fundamentally unfair when states such as Wisconsin have pumped billions of dollars into cleaning up their coal fleet and don't get credit for it. And similarly the states that have been aggressive on renewables, you're not sending a very good message there when you're not giving prior credit," he said.

"A variety of these things, if rectified, can make the transition smoother."

For those who can't get their fill of the Clean Power Plan at NARUC, just wait a day. On Thursday, FERC will host an all-day technical conference on the effects of the plan on electric reliability, wholesale electric markets, and electric and natural gas infrastructure.

Click here to see the full NARUC agenda.

Reporter Kristi E. Swartz contributed.

Twitter: @RodKuckro | Email: rkuckro@eenews.net

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