CLEAN POWER PLAN

States still thinking about CO2 cuts regardless of rule status

Energy and environment officials from around the country are still considering opportunities to cut greenhouse gases from the electricity sector, regardless of the legal status of the Clean Power Plan.

At a discussion among state regulators and lawmakers yesterday, several officials said the Supreme Court's decision in February to stay implementation of the federal climate regulation has not blocked broader discussions within states about decarbonizing their power sectors.

"Even those states that have pressed pause per se are still having discussions about what life will look like under a carbon-constrained [future]," said Alexandra Dunn, executive director of the Environmental Council of the States, which represents state environmental commissioners.

Those conversations are happening through think tanks and with power companies and grid operators, Dunn said in an interview yesterday after moderating a discussion among two organizations of state regulators and lawmakers -- the Eastern Interconnection States' Planning Council and the National Council on Electricity Policy.

To be sure, there are still "skirmishes" over the rule, including legislators blocking funding for planning in multiple states and governors enacting orders to prevent substantial work on the Clean Power Plan, she said. But states are largely still having talks, they reported yesterday. It's just that "very few states want to have that conversation with the boundaries that the CPP could have placed around them," Dunn explained.

In Georgia, for example, the state has "stopped planning entirely because of the stay," Bill Edge, a spokesman for the state's Public Service Commission (PSC), said during that meeting.

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All five commissioners oppose the rule, along with every level of state government, he said. Edge noted that Georgia did appreciate the final Clean Power Plan giving the state credit for carbon-free nuclear generation that will come online in the coming years.

But while Georgia's Environmental Protection Division has said it has ceased all work, electric regulators aren't off the hook, added Sheree Kernizan, electric unit director for the commission.

Kernizan said that as part of its "normal course of business," the commission still must review Georgia Power Co.'s integrated resource plan, the company's long-term business blueprint that she said proposes much more renewable power.

Georgia is also meeting with other Southeastern states in a group organized by Duke University's Nicholas Institute for Environmental Policy Solutions, to look at modeling and power-sector data.

Before the stay, Kernizan said, "we had been meeting, meeting, meeting just furiously, every week almost, getting ready for outreach for the [Clean Energy Incentive Program] and doing all that planning."

"We were already on track under the proposed rules to kind of meet the goals anyway -- without doing anything -- and this was prior to the 2016 [integrated resource plan] that was filed this year," Kernizan said. "And they're talking about adding more renewables, continuing the energy efficiency programs that have been in place."

At another event at the Center for Strategic and International Studies in Washington, D.C., yesterday, former Federal Energy Regulatory Commissioner Philip Moeller said, "Utilities, generally speaking, are assuming that one kind of carbon regime is coming down.

"Remember, utilities are making 20-, 30-, 40-year investments," Moeller said. "They have to be thinking about these things so they don't make a mistake."

A 'frustrating' game of red light, green light

Dunn told state officials yesterday that the stay reminds her of high school, "when your teacher said you were going to have an exam and you were cramming, and all of a sudden the exam is canceled."

"There were all these really hard questions being asked ... and there really were no easy answers. Now that the court has pressed pause, it's like everyone says, 'Oh, good, we don't have to do that,'" she said.

Dunn added that groups like the Nicholas Institute for Environmental Policy Solutions in North Carolina are filling the intellectual policy discussion void, knowing that "the reality is, in about a year, the teacher may reschedule the exam."

At CSIS yesterday, former Colorado Gov. Bill Ritter (D), who heads the Center for the New Energy Economy, which has been organizing Clean Power Plan talks among Western states, said 10 out of 13 of the original attending states are still participating since the court stay in February.

Groups opposing the rule have said planning for it would be a waste of resources. But Ritter said "the resource that you're utilizing isn't great, and the value -- if the Clean Power Plan comes back and you've been at the table in a regional discussion and have some thought about how to move forward when you're doing that in tandem with your utilities -- there's a great deal of value."

Vicki Arroyo, executive director of the Georgetown Climate Center, which has also been coordinating state talks, agreed that power companies want to have that discussion, regardless of whether they support the rule.

While those talks are still happening, state officials in an unusually candid conversation at the other D.C. meeting outlined a number of consequences of the stop-and-go planning situation created by the stay.

Michigan is worried it may have wasted $200,000 on modeling on the rule that may be irrelevant in a year or more if the stay is lifted, said Al Freeman, a staffer for the state's Public Service Commission. Freeman said his agency also has been bumping heads with the state's attorney general, who is more opposed to the Clean Power Plan than the governor. And the state faces conflicts with Wisconsin about how to manage coal plant closures in its Upper Peninsula, he added.

Wisconsin is challenging the rule in court and has an executive order prohibiting planning.

Marcus Hawkins, a senior engineer for the Wisconsin Public Service Commission, said that order was narrow, and Wisconsin is still monitoring transmission planning by the Midcontinent Independent System Operator (MISO), a grid organizer.

"We encouraged MISO in their transmission planning processes to look at a more generic carbon-reduction future instead of a very detailed CPP-rule-like future where the rule and the makeup of the rule could change, let alone the timeline of the rule," he said.

Grid organizations leading on analysis

Electric regulators from D.C. said they are watching modeling from the PJM Interconnection, and officials from South Dakota noted that the Southwest Power Pool is conducting similar work.

The Southwest Power Pool "is also planning for carbon-constrained futures, so the [regional transmission organizations] are definitely considering it," said Darren Kearney, a utility analyst at the South Dakota Public Utilities Commission. "As a state, South Dakota has kind of stopped working on the Clean Power Plan, but we're still watching what the RTOs do. Carbon is going to continue to be constrained in the future, I think we all know."

Kearney also pushed back on the Obama administration's argument that the power industry was already starting to favor renewables and natural gas over coal power anyway.

"If the EPA believes that this rule doesn't really mean anything because the markets are picking the resources that are reducing carbon, then why are we all here wasting our time and money talking about this stuff?" Kearney asked. "Just let the markets pick and choose."

He said Midwestern cooperatives that built coal plants in the 1980s and are still getting use out of them will have to switch to wind or solar power, and ratepayers will end up footing the bill.

New Jersey officials, on the other hand, argued that they don't get enough credit for carbon-cutting work done before 2012.

Regulators yesterday also questioned what sectors might be next as EPA figures out how to regulate methane emissions from natural gas production.

Kim Jones, an analyst for the North Carolina Public Utilities Commission, said manufacturers are concerned that they are the next target, so they are loath to put forth any energy efficiency improvements for utilities to take credit for under the Clean Power Plan. They think they might need the credit themselves, she said.

State officials pointed out that the Clean Power Plan is just one of many federal regulations state officials must consider over the next few decades, and Dunn said some agencies are eager to turn their attention to a mounting number of rules.

Some states have said there's not much they can do on the Clean Power Plan without EPA's model trading rules, which Dunn said she no longer expects to come out this summer.

"A number of states are wanting to return to their core business," she said.

Reporter Rod Kuckro contributed.

Click here to read more about the Clean Power Plan.

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