REGULATION

How will Clean Power Plan compliance be tracked?

ATLANTA -- Critics of U.S. EPA's Clean Power Plan frequently argue that requiring states to reduce carbon emissions will threaten the grid's reliability and drive up utility bills.

Those are the big-ticket items to worry about, said Brenda Brickhouse, environment vice president for the Tennessee Valley Authority. She's also uneasy about something else: creating an inexpensive, uncomplicated compliance program to keep track of emission reduction data.

"I'm concerned about the compliance infrastructure that may be required for counting for all of these various factors and building blocks and translating it, and all of the verification monitoring and reporting," Brickhouse told EnergyWire after speaking on a panel about ways utilities can work with states to meet EPA's carbon reduction goals.

Broadly, EPA has asked states to reduce their carbon emissions by 30 percent from 2012 levels by 2030. The agency issued a proposed rule last June and expects to release a final one this summer.

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Each state has its own goal, and there are four main target areas, including adding nuclear energy and reducing demand through energy efficiency, to get there. EPA laid out those four building blocks as a road map that states can follow.

If states choose to use those building blocks, figuring out what kind of data to collect and keeping track of that information could be difficult, she said.

"If you try to translate that into a rule and a compliance obligation, then we have to start doing the accounting and math and the reporting and the certification and the verification for all of the numbers," Brickhouse said. "There's a compliance expense with the infrastructure and the people and the system and the reports."

Challenges for multi-state plans

TVA is the nation's largest public utility and serves 9 million people in seven Southeastern states. The utility's widespread region intersects with regulated energy giants Duke Energy Corp. and Southern Co.

TVA has discussed working with several states as one way to comply with EPA's proposed regulation that targets carbon emissions, but will wait until the final rule comes out before making any decisions, CEO Bill Johnson said in February (EnergyWire, Feb. 5).

For the utility, that could mean working with the states where it supplies electricity. TVA serves most of Tennessee and parts of Alabama, Georgia, Kentucky, Mississippi, North Carolina and Virginia.

Serving parts of multiple states highlights one challenge that larger utilities have when determining how to help each individual state meet emission targets. Many of TVA's large, centralized power plants serve more than just the state where they are located.

For example, TVA is shutting down two coal-fired units in Kentucky. Brickhouse said it's unclear whether those emissions reductions would be used to help other utilities in Kentucky meet that state's target, or whether TVA can use them elsewhere across its system.

The utility also has long-term agreements to buy wind from other states. As the rule is written, the states that have those wind turbines get credit for the emission-free electricity, but Brickhouse has a counterargument.

"I bought that wind, I want the credit," she said. "So it goes both ways. And there are winners and losers," she said.

Enforcing efficiency

Energy efficiency is another example where it's difficult to effectively track compliance, Brickhouse and other panelists said during the second day of a conference on how states can meet targets of EPA's Clean Power Plan.

"It's very complicated on how this gets enforced," said Danny Herrin, environmental affairs director at Southern Co.

This is in part because each state in Southern's territory has regulated utilities, independent power producers and municipal-owned electric companies. State public service commissions have authority over regulated utilities only, for the most part.

Incorporating energy efficiency adds another level of complication into long-term planning, he said.

"You can plan for reduced load," he said. "As a result of that, will it happen, how much will it happen, who gets dinged if it doesn't happen?"

Atlanta-based Southern and its four regulated utilities operate a dispatch system based on economics. Because the Clean Power Plan's goal is to reduce carbon emissions, utilities now have to lean more heavily on other fuel options regardless of cost.

"We tried to explain to [state regulators] the whole concept of how this redoes the whole energy system," Herrin said.

Southern has been working with state environmental and energy offices as well as utility regulators in the four states where it operates. Chief among the energy giant's concerns is whether those agencies are trying to do the most prudent thing when it comes to meeting EPA's targets, he said.

"There's a real concern here about how they do this," Herrin said.

Twitter: @BizWriterKristi | Email: kswartz@eenews.net

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