Hit the Ground Running on EPA’s Clean Power Plan: 12 Steps for Effective, Least-Cost Compliance
EPA is expected to finalize its Clean Power Plan (also known as its “111(d) rule”) today. Once published in the Federal Register, states may have only one year (or in some cases, two years) to develop initial compliance plans, so the pressure to move quickly will be extraordinary. A game plan will help officials responsible for a state’s compliance plan streamline its development.
The Regulatory Assistance Project (RAP) suggests that state regulators complete the steps below as quickly as possible after the rule is finalized in order to have in hand the basic information needed to consider alternatives and develop preferred compliance plans. States may have completed some of these steps already, even before a final rule is published. Although responsibilities for specific steps may lie more with one agency than another, RAP suggests that states optimize their execution through joint collaboration involving elected officials, air regulators, utility regulators, state energy offices, consumer advocates, and other state officials as appropriate. Here’s our list of steps to help states hit the ground running on EPA’s Clean Power Plan:
- Read the final rule, technical support documents (TSDs), and guidance as soon as possible. Given the likely size of the final rule, state agencies may want to divide this task among staff, briefing leadership on the results of their review.
- Pay close attention to the final definition of “affected” electric generating units, and update the list of electricity generating units in the state that are regulated by the rule. Make sure you know who owns and operates each affected unit, whether its output is subject to a long-term power purchase agreement, and whether there are any pending or proposed plans to retire or retrofit the unit.
- Determine the mass emissions limit for your state that is equivalent to your states’ emissions rate target in EPA’s final rule. EPA may provide states with equivalent mass emissions limits in the final rule or accompanying guidance documents. If EPA does not do so, states will need to do their own rate-to-mass conversions using methods described in the final rule, TSDs, or guidance documents.
- If your state develops its own mass emissions limit, ask your EPA regional office to confirm its equivalence to the emissions rate target EPA assigned to your state in the final rule. EPA may not be able to give final approval to your calculations at this stage, but should be able to indicate that your methods are fundamentally sound and consistent with the final rule, TSDs, or guidance documents.
- Develop or obtain a “baseline” forecast of your statewide CO2 emissions for every year through 2030 – both the annual mass emissions and the emissions rate. By “baseline,” we mean the emissions and emissions rate you would expect to occur if there was no Clean Power Plan. Include in this baseline the impacts that are expected to occur based solely on policies and programs already in place in your state for each year, especially any energy efficiency mandates or renewable portfolio standards. To the best of your ability, replicate the adjusted emissions rate calculation methods explained in the final rule, TSDs, or guidance documents when forecasting your state’s baseline emissions and emissions rate.
- Ask the owners of regulated units in your state to check your baseline forecast for reasonableness, if they were not involved in developing the forecast. Do the same with owners of renewable energy resources and with energy efficiency program administrators.
- Compare your baseline emissions rate forecast to the state targets assigned to you by EPA in the final rule. This will reveal how much additional effort, if any, is needed to comply with the rule. (It is possible that in some states, compliance can be achieved by fully implementing existing state policies, with no incremental policies or effort required.)
- Identify any pending state legislation, regulations, policy decisions, permitting decisions, etc. that could have a positive or negative impact on the state’s ability to reduce power sector CO2 emissions or comply with the rule. Make sure that Clean Power Plan compliance obligations are given due consideration in these decisions.
- Define the process your state will use to develop its compliance plan, including owners of affected power plants and other stakeholders. Several good resources, such as Best Practices in Planning for Clean Power Plan Compliance published by the National Association of State Utility Consumer Advocates (NASUCA), are available.
- Consider your compliance options. Implementing EPA’s Clean Power Plan: A Menu of Options, published by the National Association of Clean Air Agencies (NACAA), is a good place to start. Stakeholders will no doubt contribute additional suggestions during your deliberations.
- Catch up with your counterparts in other states. Many states are intricately linked through participation in electricity grid regional transmission organizations, and most regulators have already engaged with their colleagues in other states over Clean Power Plan strategies and issues, whether formally or informally, comprehensively or in more limited “modular” approaches. With the final rule, exploration of multi-state compliance options among interested jurisdictions can now turn to substantive considerations. States interested in this option will benefit from Multistate Coordination Resources for Clean Power Plan Compliance, published by the National Association of Regulatory Utility Commissioners (NARUC).
- Connect with your EPA regional office. States will ultimately submit their compliance plans to these EPA offices, and most air regulators have been in close contact with regional EPA officials since the Clean Power Plan was proposed. This relationship will be all the more important under a final rule, given the uncommon discretion afforded to states under the Clean Power Plan.
These “12 steps” represent only the start of the years-long compliance process ahead, but they will put states in good stead to develop an approvable, effective, and least-cost Clean Power Plan compliance strategy for the state.