State Regulators Submit Final Comments On Clean Power Plan To EPA

The White Bluff power plant near Redfield, which Entergy has agreed to shut down to meet new regulations.
Credit Arkansas Business

Arkansas Department of Environment Quality Director Becky Keogh and Public Service Commission Chair Ted Thomas submitted final comments to federal environmental regulators on Thursday, providing a snapshot of how the state intends to move forward to comply with President Obama’s Clean Power Plan.

In a two-page letter to Environmental Protect Agency Administration (EPA) Gina McCarthy, Keogh and Thomas cite Gov. Asa Hutchinson’s dual strategy of seeking compliance options to the wide-ranging federal mandate while pursuing legal challenges through the office of Arkansas Attorney General Leslie Rutledge. The memo to the EPA director also includes nearly 30 pages of comments from Arkansas regulators on the pros and cons of the president’s plan to shut down the nation’s coal-fired power plant fleet.

“The (ADEQ and PSC) submit these comments … with the caveat that we recognize and support the Arkansas Attorney General’s legal challenges to the Clean Power Plan and its ancillary components,” Keogh and Thomas wrote to McCarthy. “Rather, we are continuing to explore strategies for Arkansas to retain control and influence over our future, and to allow for growth in our state as our economic continues to expand.”

The Arkansas regulators also make note of Hutchinson’s other major directive from the ongoing stakeholder meeting process in response to the president’s far-reaching environmental mandate — that state regulators seek out the “lowest cost option to compliance.”

“At this point, we are fully engaged in discussion with our stakeholders on developing and implementing guiding principles which will shape our actions,” Keogh and Thomas wrote. “The agencies are committed with other state agencies, ratepayers and stakeholders, as we develop a roadmap and ultimately a state strategy for Arkansas.”

The letter to McCarthy, signed by both Keogh and Thomas, further states that the comments from Arkansas regulators are intended to offer constructive feedback to federal regulators so Arkansas can choose a flexible plan that allows the state’s energy grid to remain reliable and cost-effective for consumers.

“In finalizing the federal plan, (the) EPA should consider the impact of federal plan design choices on all states, including those that submit a state plan, and ensure a broad market for trading of compliance instruments between states subject to a federal plan and (those) subject to a state plan,” the Arkansas regulators wrote.

Keogh and Thomas closed the letter by urging the EPA to reconsider certain design choices for the Clean Energy Incentive Program, or CEIP, which rewards early investments by states in renewable energy choices to meet the federal carbon emission standards by 2020. State participation in the CEIP is optional, yet states that choose to participate in the CEIP must make known their intent by submitting a plan by Sept. 6, 2016.

Keogh and Thomas argue that current CEIP proposal by the EPA limits flexibility and thwart the president’s goal of incentivizing investment in renewable energy and energy efficiency programs in low-income communities.

NEXT STEPS FOR ARKANSAS
Arkansas regulators On Jan. 5, ADEQ and PSC hosted their final stakeholder meeting to discuss options for a state plan ahead of the federal deadline for states to submit last comments on these so-called 111 (d) regulations, which for the first time puts national limits on carbon pollution, establishes final emission guidelines for states to follow in developing plans to reduce greenhouse gas emissions from existing fossil fuel-fired electric generating units.

Final rules for the plan were published in the Federal Register on Oct. 23, triggering a 90-day comment period that ended Thursday. The EPA first released its final rules on President Obama’s far-reaching and controversial Clean Power Plan in early August, taking into account the more than 4.3 million comments received from states and stakeholders across the country following the first draft on June 2, 2014.

At the request of Gov. Hutchinson, Keogh and Thomas began the stakeholders’ group first meeting in the fall to get input on a new “emissions standard” roadmap for putting Arkansas on track to cut carbon pollution from the power sector 36% below 2005 levels by 2030.

After Thursday’s action, Arkansas regulators will have until Sept. 6, 2016, to submit a final implementation plan to comply with the president’s plan. Arkansas and other states can also choose to submit an initial plan with a two-year extension request, regardless of whether Arkansas chooses to go it alone or join a multi-state plan.

If the EPA does not respond within 90 days, then the extension is automatically approved. However, states must explain efforts they have made to evaluate various approaches to comply with the federal emission rules, demonstrate engagement with the public, and lay out steps and processes necessary to submit a final plan by Sept. 6, 2018.

States that choose to request an extension also must submit a process report by Sept. 6, 2017. Stakeholder input will be a key part of the plan, Thomas and Keogh said. If states fail to submit an approvable plan, then the EPA will step in and implement the proposed federal plan.

CO-OPS TAG EPA COMPLIANCE AT MORE THAN $30 BILLION
Meanwhile, in response to the EPA’s deadline for final comments, the National Rural Electric Cooperative Association said Thursday that federal regulators have dramatically underestimated the Clean Power Plan’s costs to electric co-ops.

The trade group said it conducted a new economic analysis as part of its comments on the federal plan and model trading rules for implementing rule 111-d. In the study, NRECA argues that compliance costs for the Clean Power Plan in the year 2030 would be 19 to 33 times greater than those estimated by EPA – between $2.5 billion to $3.6 billion, as opposed to EPA’s projection of $133 million to $109 million. NRECA further estimated a total cost to small entity co-ops of $11.7 billion to $20.3 billion over the full 2022-2030 compliance period.

“EPA has underestimated the Clean Power Plan’s costs to small entity electric cooperatives by an order of magnitude,” said NRECA Interim CEO Jeffrey Connor. “This translates into huge price increases for co-ops and challenges their ability to provide safe, affordable and reliable electricity to their member-owners.”

NRECA represents more than 900 private, not-for-profit, consumer-owned electric cooperatives, in 47 states, including the Electric Cooperatives of Arkansas. Mel Coleman, CEO of North Arkansas Electric Cooperative of Salem, was elected a year ago to serve a two-year term as the president of NRECA’s board of directors.

THIRD LEGAL APPEAL REJECTED
In a related but separate matter, the U.S. Circuit Court of Appeals for the District of Columbia again denied a request to halt implementation of the Clean Power Plan until litigation on the proposed carbon emissions rules runs its course.

In early August, Arkansas Attorney General Leslie Rutledge joined with West Virginia Attorney General Patrick Morrisey and 22 other states to ask the EPA for an immediate stay of its Clean Power Plan pending the outcome of an impending legal challenge to the rule.

Rutledge and the other petitioners argued that they would suffer irreparable harm if the D.C. Circuit did not put a judicial stay on the emissions regulations, which seek to cut carbon pollution from the power sector 32% by 2030.

“Today’s decision marks the third time that Arkansas Attorney General Leslie Rutledge has challenged the Clean Power Plan in court, and the third time that the challenge has been unsuccessful,” said Glen Hooks, director of the Arkansas chapter of the Sierra Club. “I urge our Attorney General to stop opposing clean air protections and wasting taxpayer resources on endless legal challenges.”