Calling for clarity: CPP uncertainty driving multi-state cooperation

Publication Date
Author
Barbara Vergetis Lundin
Source
Fierce Energy
Year Published
2015

As speculation surrounding the impact of the U.S. Environmental Protection Agency's (EPA) Clean Power Plan (CPP) on power providers continues to circulate and research evolves, states can benefit from a project to facilitate interstate communication on energy and environmental issues affecting the Eastern Interconnection and the United States -- the final installment of the Department of Energy (DOE)-funded Multistate Coordination Resources for Clean Power Plan Compliance compiled by Eastern Interconnection States Planning Council (EISPC) and the National Association of Regulatory Utility Commissioners (NARUC).

The EPA designed the CPP to cut carbon pollution from the power sector by 30 percent from 2005 levels, placing planning responsibility with the states -- many of which have limited experience and resources in this regard.

"Multi-state cooperation is… attractive because it brings down costs to business as well as consumers, serves to prevent the reshuffling of electricity generation to states with higher emissions limits, increases the reliability of the grid and simplifies compliance," said James Bushnell, professor of economics at the University of California, Davis. Sign up for our FREE newsletter for more news like this sent to your inbox!

Bushnell, representing the university's Davis Policy Institute, in collaboration with Next 10 and Resources for the Future, co-authored the new report "State and Regional Comprehensive Carbon Pricing and Greenhouse Gas Regulation in the Power Sector under EPA's Clean Power Plan," which aims to determine what the EPA's proposed rule will mean for comprehensive carbon pricing efforts in areas like California, Washington, Oregon, and British Columbia.

"Most of the country is facing limits on greenhouse gas emissions from existing power plants for the first time, due to the EPA's Clean Power Plan," said F. Noel Perry, founder of Next 10. "The Clean Power Plan could facilitate state and regional efforts to develop comprehensive climate policies including carbon pricing. However, lack of foresight and certain regulatory frameworks could actually limit what states and regions can achieve -- thoughtful implementation and coordination are key."

As the rules are being finalized, the industry is looking for clarity on how new fossil sources of generation will be treated, how future megawatt hours of generation should be calculated, and the best approach to translating carbon-intensity numbers into mass of emissions totals.

By working together, states can effectively meet the short-term requirements of the Clean Power Plan; however, what that collaboration might look like and what incentives EPA might offer for states to cooperate have yet to be determined.

States are developing their compliance plans in anticipation of the CPP being finalized, exploring a variety of options, including single-state, multi-state, and unit-based plans. According to NARUC, there is ongoing, intense activity underway by states to better understand what these coordination efforts will entail if pursued as an option to successfully navigate the rules of compliance if the final plan goes forward.

Assistance from academia, think tanks, businesses, nongovernmental organizations, advocates and the EPA could play an important role in supporting state efforts. This fall, NARUC will convene a meeting among state commissions, consumer advocates, air agencies, and energy offices to see whether the multistate tools it has developed in conjunction with EISPC and others fit together -- and how.