Utilities Take Watchful Approach On President’s ‘Clean Power Plan’

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A day after President Obama unveiled the centerpiece of his climate change proposal, representatives from Entergy Arkansas Inc. and Arkansas Electric Cooperative Corp. (AECC) are taking a wait-and-see approach before responding publicly to how they will deal with the historic environmental mandate.

“It’s a lot to digest,” Sandy Byrd, vice president of public affairs and member services for the Arkansas Electric Cooperative Corp., said of the EPA’s 1560-page final rule.

The forceful EPA proposal establishes standards for regulating and cutting carbon emissions from existing power plants under Section 111(d) of the Clean Air Act, commonly referred to as the Clean Power Plan.

Under the new rules, the plan sets state-by-state targets for emission reductions, but allows states to develop their own compliance plans. The state targets are based on what EPA determined to be the “best system of emission reduction” (BSER).

In the final rule, EPA based the reduction standards on state-specific potentials for emission reductions on a set of “Building Blocks” that include both traditional smokestack controls as well as “beyond the fence line” measures. Although emission rate targets are set by the building blocks, there is no requirement that states use those specific measures for compliance, EPA officials said.

In Arkansas, the Arkansas target of 46% reduction in carbon emissions was reduced to about 37%. Also, the period for mandatory reductions begins in 2022, instead of 2020. Arkansas’ 2030 goal is 1,130 pound per megawatt-hour reduction, EPA officials said.

However, the interim goal of 1,411 pounds per megawatt-hour reflects a change federal regulators made to provide a smoother glide path and less of a “cliff” in the first phase of the program, federal regulators stated on Monday.

“The ‘cliff’ had been particularly significant for Arkansas,” EPA officials said in the Arkansas “fact sheet”  posted to the agency’s website on Monday. Nationwide, targets for all 50 states fall in a range of 771 to 1,305 pounds per megawatt-hour, mainly with cleaner-burning natural gas generation on the lower end of the scale and coal and crude oil-fired power plants on the higher end.

Byrd, former chairman of the state Public Service Commission, said AECC was pleased with the fact that the EPA has reduced the Arkansas’ carbon emission targets by 9%. She also said that the extension of the deadline would give AECC more time to plan on how to respond to the regulations.

However, the AECC and Entergy Arkansas Inc. would likely have to consider prematurely shutting down part of the state’s coal-fired generation, Byrd said, but a determination on what power plants would be targeted has not been made yet.

In addition, Byrd reiterated AECC’s earlier concerns that the electric cooperative’s biggest worry is what economic impact the new rules will have on the company’s operating costs, as well as the future rates for industrial and residential power consumers.

The former PSC chief also raised the possibility that AECC and other electric cooperatives across the U.S. will likely mount a legal challenge to the EPA’s final rule regulating greenhouse gas emissions at U.S. power plants.

“Yes, that is something we are looking at,” Byrd said of a possible lawsuit by the National Rural Electric Cooperative Association, the national group that represents more than 900 nonprofit, consumer-owned electric cooperatives across the U.S. “It would be a shame for our members to lose all benefits of what they have invested to bring affordable and reliable electricity to the people of Arkansas,” she said.

Meanwhile, Entergy spokeswoman Sally Graham also raised questions about the legality of the president’s climate change plan. She said the EPA’s final Clean Power Plan is complex, and it will take time for Entergy to conduct its full analysis.

Graham added that while Entergy was also concerned about the legality of EPA’s approach, the utility giant’s analysis will focus on five key issues: the compliance timeline; requirements that the rule will impose on each state; Arkansas’ ability to elect a mass-based approach and trade-ready plan; the impact of the nation’s existing nuclear fleet; and the overall impact of the rule on Entergy Arkansas customers.

Chuck Barlow, vice president of environmental policy and strategy for Entergy Corp., raised similar concerns in June 2014 when the EPA first released details of President Obama’s controversial proposal to reduce carbon emissions.

DIFFERING OPINIONS
Despite those views, the president and the EPA have a triumvirate of vocal and consistent support in Arkansas from the state chapters of the Audubon Society, the Advanced Energy Association, and the Sierra Club.

“The time for solutions is right now,” said Audubon Arkansas Executive Director Brett Kincaid. “Climate change threatens birds and people, and we need to take action. The Clean Power Plan gradually moves the country to a more sustainable energy future, significantly reduces pollution, and allows the state of Arkansas and our utilities the needed flexibility to create a pollution reduction plan unique to the Natural State.”

Steve Patterson, executive director of the Arkansas Advanced Energy Association, argues that the EPA listened and responded to concerns expressed by Arkansas regulatory officials, electric utilities, and business leaders in the more than 4.3 million comments that were submitted to federal regulators.

“In the agency’s final rule, EPA admitted that its final rule is more of a ‘glidepath’ for Arkansas through 2030 rather than the ‘cliff’ that was proposed last year. AAEA is now more confident than ever that the Clean Power Plan’s carbon reduction targets for Arkansas can be achieved while producing lower energy costs and more jobs for Arkansans,” Patterson said.

Glen Hooks, director of the Arkansas Sierra Club, took the time on Monday to celebrate President Obama’s declaration that the nation had a “moral obligation” to implement the key plank of his overarching climate change policy.

“This is a huge victory for the health and well-being of hard-working Arkansas families,” Hooks said. “The Clean Power Plan is the most significant single action any President has ever taken to tackle the most serious threat to the health of our families: the climate crisis.”

Hooks’ celebratory tone was the opposite of a terse statement shared by Attorney General Leslie Rutledge.

“Let me be clear. I favor clean air and will do everything I can to preserve it for future generations, but an out-of-touch plan that proposes even deeper cuts than the original 2014 version is not a balanced approach,” Rutledge said. “Today’s plan is simply the wrong direction and completely ignores the concerns that have been raised over the past several years about anticipated cost increases. My office continues to review the unlawful Clean Power Plan and is prepared to take any and all appropriate legal action to prevent its implementation.”

As supporters and opponents of the Clean Power Plan go back and forth in the hundreds of press statements, news releases and white papers sent out this week, it is clear from EPA and state regulators that the president’s top environmental issue will likely remain unsettled for several years, maybe even until 2022.

In Arkansas, Gov. Asa Hutchinson said he has directed leadership at the Public Service Commission and the Arkansas Department of Environmental Quality “to fully review this rule and develop the best response for our state.”