What jurisdictional challenges exist within states between air agencies and public utility commissions in determining how best to comply with U.S. EPA's Clean Power Plan? During today's OnPoint, Bob Martineau, president of the Environmental Council of the States and a commissioner of the Tennessee Department of Environment and Conservation, explains how states are working behind the scenes to figure out next steps on the power plan.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Bob Martineau, president of the Environmental Council of the States and a commissioner of the Tennessee Department of Environment and Conservation. Bob, thank you for coming on the show.
Robert Martineau: Thank you. Glad to be here, Monica.
Monica Trauzzi: Bob, you head up ECOS, which represents state end environmental agency leaders. I'd imagine the conversations have been quite rich recently with talk of EPA's Clean Power Plan. How do you balance the competing interests and opinions of a variety of states, specifically on the Clean Power Plan?
Robert Martineau: Well, I think that with an organization like ECOS, what we try to do is ensure the state's voice is heard at EPA, and we recognize particularly on an issue like the Clean Power Plan, there's a huge divergence of opinions on the particular policy decisions and the extent of the proposal, but we have -- one of the things we really worked with EPA as a voice where we were consistent among the states is to encourage early outreach, even prior to the proposal, to seek stakeholder input and particularly the states who would have to develop and implement these plans, and because this is a little bit different, when they used 111(d), that the states play an even greater role than other regulatory standards. The other thing was to ensure that the timing and the flexibility, and as you've seen the Clean Power Plan set a state-by-state proposed guideline, now you could agree or disagree with it, but that was a clear voice the states said to EPA prior to the proposal is we're not all starting in the same place, so one uniform number of a reduction target won't work, given the different states' unique characteristics.
Monica Trauzzi: So would you say that that early outreach was effective?
Robert Martineau: Well, I think certainly on some issues, and I commend EPA for the amount of outreach they did prior to drafting the proposal and putting it out for comment, and during the comment period, they held a number of outreach sessions with stakeholders as well as the regular public meetings and hearings. So it was effective in some of those things like to recognize the difference in where the states were starting with their energy portfolio and what their realistic targets would be. You couldn't have a one state or uniform number across the country. There's obviously vast difference of opinion on different aspects of the building blocks and the deadlines of 2030 and the interim goals that states have, and the extent of the comments that the states filed reflects that as well.
Monica Trauzzi: I recently interviewed California Air Resources Board Chair Mary Nichols, and she said that EPA's Clean Power Plan is putting EPA agencies, the air agencies in most states, in a position where they have the lead in complying with something that their public utility commissions have traditionally thought was their turf. How challenging is it within states to figure out how to proceed with compliance because of the jurisdictional hurdles?
Robert Martineau: I think for many states it is posing great challenges because you have a traditional regulatory development program at EPA, and then in most states that have Public Service Commissions that are used to setting rates and that set renewable portfolio standards and work with utilities and set utilities, planning for the future, these two have dovetailed. It's forced a lot of discussions that haven't taken place, even at the state level, between those PSCs and the environmental regulatory agencies. In my case, Tennessee's a little bit different. Because of TVA, we don't have a public service commission that regulates the utility there because of the unique relationship, but in most states, that dialog has started, and it does create a huge challenge, and I think that is one of the controversial issues is this primarily an environmental pollution control regulation or an energy policy initiative where -- which is traditionally more FERC's turf, or the state PSCs.
Monica Trauzzi: And so what does EPA need to do, then, to address some of these challenges, or should they be addressing these challenges in their final rule?
Robert Martineau: Well, I think that a lot of the comments went to transmission, reliability of the grid system and cost impacts because, obviously those public service commissions are very concerned about their cost of the rates to their utility rate payers, in particular low-income folks. So that dialog, and I know EPA and those state energy agencies, the PSCs have been talking, but it makes that job of developing a rule much more complex in this 111(d) plan because you're not just looking at sort of what's best technology. You have all these other concerns about making sure that we can maintain a safe and reliable energy -- electricity delivery system in this country.
Monica Trauzzi: And do you think that the Clean Power Plan as written would affect reliability?
Robert Martineau: Well, I think that's going to be a state and region by region, and I think EPA has gotten a lot of comments on that. In fact, I haven't looked at all of the states or the different regions, but it also, again, beyond just a state-by-state issue, many of those transmission and reliability issues are regional, so it's forcing not just the state energy environmental agencies and the state PSCs to talk together. It's having states talking among their areas regionally because many of the investor-owned utilities cross state lines, and the grid systems and the transmission systems cross state lines, so that makes it even more complicated to figure out what the impacts might be.
Monica Trauzzi: In Tennessee, will reliability be affected?
Robert Martineau: We're talking extensively with TVA about that. I think for us, in terms of hitting the target goals, Tennessee and South Carolina and Georgia were sort of three unique states that have under-construction nuclear facilities, and that is built in as a big part -- in the proposed rule, a big part of our compliance target. If those -- if there are delays which we can't control of getting the NRDC license for that facility or anything, then we'll have some potential reliability issues if we're having to assume we can do that. It may impact the ability of TVA and others to pursue other efforts to convert facilities from coal and natural gas or to shut them down.
Monica Trauzzi: So specifically on nuclear, what changes are you looking for from the agency on how it's handling nuclear in the power plan?
Robert Martineau: In our comments, what we said to EPA about the under-construction nuclear is that it really shouldn't be built into the determination of what constitutes best system of emission reduction. That for other sources of renewable or wind power, for example, maybe in other states that are under construction, those would be compliance options for them. They weren't baked into what target you have to hit by 2030, so from a simple equity standpoint, and then really the uncertainty of whether those nuclear plants come online on the time that they are anticipated to come online because, with an averaging period, it's not just 2030. You really have to be coming into compliance, and it's such a large portion of the state's reduction target is -- over 30 percent is based on the assumption that that nuclear plant is coming online.
Monica Trauzzi: And Tennessee has a proposed emissions rate reduction of 39 percent. What is your compliance mechanism shaping up to look like?
Robert Martineau: Well, and that's another one of the issues the president, when they announced the proposed rule, they said the overall target for reductions was 30 percent decrease as a result of the proposal based on 2005 emissions. Well, TVA had already been moving, as many other utilities had, in making the greenhouse gas and other reductions prior to EPA's proposal and had already, in fact, made a 30 percent reduction prior -- between 2005 and the proposal, so one of our concerns is inequity that we didn't get credit for those sort of reductions and now we're essentially being asked to make another 39 percent reduction, which is way more significant than the original overall goal of 30 percent. So getting credit for some of those early actions that states took in -- or utilities or states took in anticipation of potential greenhouse gas or other pollutants of concern, conversion to natural gas, shutting down or retiring coal-fired units or finding other renewable sources. There needs to be some credit for that as well so they're not sort of investments that utilities made and are recovering those costs are not just sort of lost in terms of getting credit for it.
Monica Trauzzi: And what conversations are you having with other states about a potential multistate or regional plan?
Robert Martineau: We really haven't had extensive discussions at this point. We're still trying to -- well, we don't know what the final rule's going to look like, and so we're trying to get our head around various compliance options just within the state so that we can anticipate then -- one of the things we may look to do is, because TVA has service areas in multiple states, is look at the TVA service area. Maybe we don't have a total multistate plan, but we would have some kind of overall TVA reduction that could get -- they can get allocated among the states where they have power generation. Another issue for many states, including ours, will be if you're investing or trying to get renewable energy, but you're buying it -- it's being generated out of state because states like Tennessee don't have a lot of wind power, for example, but may purchase that from Midwestern state, how do you credit that? Is it where the -- source of generation or where it's going to be consumed and who gets credit for that reduction in their renewable power goals.
Monica Trauzzi: All right. We'll end it there. A lot to look forward to and a lot to watch as that final rule comes out later this year. Thanks for coming on the show.
Robert Martineau: Thank you very much.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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