With the Environmental Protection Agency (EPA) expected to issue its final rule on power plant greenhouse gas emissions under the administration’s Clean Power Plan (CPP) early next week, reports strongly suggest the revisions will extend compliance deadlines in response to power sector complaints about a too-aggressive schedule in the proposed rule.
A July 28 report in the New York Times cites administration figures familiar with the plan in predicting that the final rule will push back the 2016 interim and 2020 final compliance deadlines, which a broad spectrum of power sector and state regulatory officials had complained were simply unworkable. Instead, the interim deadline will be pushed back to 2018 and the final to 2022, the Times said.
The Times report is buttressed by a discovery made by E&E EnergyWire on the EPA web site, a PowerPoint slide showing the new timeline that was apparently posted prematurely. The slide gives a Sept. 6, 2016, deadline for initial state plans, with the final plans due two years later, and the compliance period beginning on Jan. 1, 2022. The slide was taken down after E&E EnergyWire asked the EPA about it.
The EPA received so many comments on the proposed rule—more than 1.6 million—that it opted to extend the initial comment period by 45 days. Many of them, including those from states supporting the plan, argued for either extending the deadlines or removing the interim deadline altogether, saying the original schedule threatened reliability.
Too Much Too Soon
Industry panelists at the ELECTRIC POWER 2015 conference in April were unanimous that the aggressive schedule in the proposed rule would have broad negative consequences and possibly increase overall emissions compared to later deadlines that would allow more time for the power sector to make changes.
Aditya Jayam Prabhakar, policy studies engineer with the Midcontinent Independent System Operator (MISO), said that, while “the EPA has come up with an extreme amount of flexibility” in meeting the goals, the timeline was a serious problem. Rapidly boosting natural gas in the dispatch order, he said, would result in a “significant shift toward gas-fired resources from coal-fired resources” in a short amount of time. The problem, however, is that the proposed schedule did not allow enough time to build new gas-fired power plants. That presented a risk of too-rapid shifts in the generation mix before the resources are ready, he said.
MISO said later in June that the CPP could cut its total coal generation by half as soon as 2030.
Steve Corneli, senior vice president for sustainability strategy and policy for NRG Energy, also criticized the proposed schedule, predicting it could actually undercut the CPP’s goals. The rapid push for new gas capacity, which he said would have been the only way to meet the aggressive schedule, would result in more fossil generation over the long term. Pushing the deadlines out, he argued, would give states more time to develop thoughtful policies and create more long-term reductions at lower cost, as well as allowing time to achieve the targeted reductions before reliability concerns became critical.
Warner L. Baxter, CEO of Ameren Corp., who also spoke at ELECTRIC POWER, said the company argued for a longer compliance period in its comments to the EPA. In Ameren’s case, he said, the company’s carbon emissions must be reduced 62% by 2020. In some states, the target requires a 75% reduction by 2020. That, he complained, creates what amounts to a “regulatory cliff.” Such rapid changes would cost Ameren billions of dollars and imperil reliability as a result of early retirements.
With the D.C. Circuit having turned aside the first challenge to the rule as premature, opponents are gearing up to file suit against the EPA the moment the final rule is released. Though some have suggested states can simply refuse to comply, and Congress is considering various measures to block the CPP, the main challenge will likely come through the courts.
Given the expansive reading the EPA relied on in drafting the rule, opponents are taking heart in two recent Supreme Court rulings, one that went against the EPA, and another that, oddly enough, was viewed as an Obama Administration victory.
June’s decision in Michigan v. EPA striking down the Mercury and Air Toxics Standards because the EPA chose to ignore the costs of the rule suggests that the Court is likely to take a closer look at EPA attempts to expand its reach. Justice Clarence Thomas’s concurring opinion explicitly called on his colleagues to reconsider traditional deference to agency decisions where Congressional intent is unclear.
Meanwhile, a July 29 report from Reuters suggests an element of King v. Burwell, which upheld the Affordable Care Act, might be turned against the CPP. Chief Justice Roberts said in the opinion that the Court was entitled to depart from deference to agency interpretations when an issue was of “deep economic and political significance.” Opponents are expected to argue the CPP’s enormous impact on the power sector falls within that exception.
—Thomas W. Overton, JD is a POWER associate editor (@thomas_overton, @POWERmagazine).