U.S.

Environmental Protection Agency

EPA Docket Center (EPA/DC)
Mail Code 28221T
1200 Pennsylvania Avenue, NW
Washington, DC 20460
a-and-r-docket@epa.gov
December 1, 2014
RE:

The U.S. Environmental Protection Agencys Proposed Rule: Carbon Pollution

Emission Guidelines for Existing Stationary Sources: Electric Utility Generating
Units; Docket ID No. EPA-HQ-OAR-2013-0602

The American Legislative Exchange Council (ALEC) submits these comments in response to the
U.S. Environmental Protection Agencys (EPA) proposed rule that aims to reduce carbon dioxide
emissions from existing fossil fuel-fired power plants by 30 percent from 2005 levels. The
agency refers to this proposed rule as the Clean Power Plan (CPP).
These comments identify concerns with the CPP and ultimately request that EPA withdraw the
proposed rule, consult with stakeholdersincluding members of ALECand work to reissue
the rule to resolve many of the important issues described below.
ALEC is the nations largest nonpartisan, voluntary membership organization of state legislators.
Made up of nearly one-third of all state elected officials in the U.S., ALEC provides a unique
opportunity for state lawmakers, business leaders and citizen organizations from around the
country to share experiences and develop state-based, pro-growth models based on academic
research, existing state policy and proven business practices. The ultimate goal of ALEC is to
help state lawmakers make government work more efficiently and move government closer to
the communities they serve, thereby creating opportunity for all.
When Congress created EPA in 1970, they did so with a deliberate vision for how national
environmental policy should be implemented. Based upon a view of cooperative federalism,
EPA would work closely with states to balance economic growth with environmental protection.
Indeed, the preamble of the federal Clean Air Act clearly reflects this cooperative federalist
framework when it states that all air pollution preventionand air pollution control at its source
is the primary responsibility of the States and local government, and that federal financial
assistance and leadership is essential for the development of cooperative Federal, State, regional
and local programs to prevent and control air pollution. Such an arrangement makes logical
sense since states have unique circumstances and conditions that policymakers need to consider
when implementing any sort of policy measure, especially those concerning environmental
protection.i

Earlier this year, ALECs member legislators considered and passed the Resolution Concerning
EPAs Proposed Guidelines for Existing Fossil Fuel-Fired Power Plants.ii The resolution finds
that EPAs CPP includes flawed assumptions and requirements resulting in overly aggressive
emissions rate reductions that will raise electricity rates for customers. Furthermore, in their
current form, these guidelines will also lead to a curtailment of operations for a significant
number of units that are able to efficiently generate reliable, baseload power. Finally, the
proposed guidelines fundamentally alter the relationship EPA has long had with the states by
allowing the agency to assume (without Congressional authorization) regulatory roles that have
traditionally been held by the states.
Faulty Underlying Assumptions Made by EPA
As a part of the CPP, EPA has assigned each of the 49 states with fossil fuel-fired power plants a
different carbon dioxide emissions limit that must be implemented by 2020 and achieved by
2030. These emissions limits vary by state and are based upon each states existing electric
generating mix and an EPA assessment of each states ability to implement four emissions
reduction measures referred to as building blocks. It appears that in developing these four
building blocks, however, the agency relied on faulty underlying assumptions that will make
each block extremely difficult, and likely impossible, to achieve.
Building Block 1 strives to improve the thermal efficiency of each coal-fired power plant by an
average of six percent. However, EPAs analysis did not account for variations in plant design,
the size or age of each plant and fuel variability. Coal units are typically designed to run as
continuous baseload power generators. As a result of the second building block, coal units would
run less often but would be forced to constantlyand inefficientlycycle up and down to meet
demand. This cycling would make EPAs expected heat rate improvements extremely unlikely to
achieve. Furthermore, since many coal units have already been modernized within the last
several years in order to increase efficiency in compliance with other environmental regulations,
the current technology and the law of diminishing returns will likely prevent considerable
number of these units from achieving significantly more efficiency, much less the six percent
EPA calls for.iii
Building Block 2 calls for the increased use of low-emitting power sources. This will mostly
entail dispatching combined cycle natural gas plants before older coal units. EPA specifically
calls for the capacity factor of these natural gas plants to increase to 70 percent, a number that
has never before been reached despite recent historically low gas prices. Typically, natural gas
plants follow the load of energy throughout the day because they are more versatile and better
suited that coal units to provide fluctuating amounts of electricity depending on daily variations
in customer demand. Furthermore, since natural gas is often used as a heating fuel in some parts
of the country, extended periods of extremely cold weather often puts strain on the natural gas
supply. Last years polar vortex also saw a higher than normal number of natural gas plant
outages and freezing equipment. Lastly, the existing pipeline infrastructure in some regions of
the country is not sufficient to accommodate the increased reliance on natural gas. Given that it
generally takes three to five years to permit, finance and build additional pipeline capacity, the
first interim emissions reduction goals in 2020 may be too ambitious.iv

Building Block 3 would increase the use of zero-emitting power sources such as non-hydro
renewables and nuclear power. The U.S. is a vast land mass with wide regional disparities in the
availability and cost of renewable resources. EPA did not take these variations into account
before assigning a de facto renewable portfolio standard (RPS) for each state within a given
region. Similarly, the agency did not consider that some states existing renewable mandate
credits certain types of renewable resources in ways that actually reduce the absolute amount of
renewable generation needed to satisfy the mandate. For example, Delaware offers a 3.0 credit
multiplier for instate renewable generation while Colorado offers a 1.5 credit multiplier for
renewable generation at a community-based project. An increased reliance on renewable
energywhich is oftentimes generated far away from population centerswill also likely
require construction of additional transmission lines which, much like natural gas transmission
pipelines, will take several years to ultimately build.v
Building Block 4 calls for an increased end-use consumer energy efficiency that would reduce
energy consumption by an average of 1.5 percent annually. These energy efficiency goals do not
count efficiency improvements already made voluntarily by individuals and businesses. Since
many states already have energy efficiency programs, many of the easy, low-cost efficiency
options have already been employed, leaving larger, more expensive options available in order to
meet EPAs goals. Finally, EPAs call for a 1.5 percent annual reduction in energy as a result of
available efficiency measures is not supported by any peer-reviewed or technical study of energy
efficiency potential.vi
These faulty underlying assumptions are extremely concerning because if, for instance, coal units
cannot improve their thermal efficiency by an average of six percent, or pipeline and
transmission infrastructure cannot be constructed in time, or EPAs energy efficiency goals
prove to be untenable, states will have to rely upon other measures in order to reach their
emissions reductions target. This will likely entail even greater premature retirements of coal
units than what EPAs Integrated Planning Model (IPM) already expects to take place.
Economic Impacts of the Clean Power Plan
It is difficult and perhaps even impossible to overstate the importance of readily available access
to safe, affordable and reliable electricity to individual prosperity and economic wellbeing. This
is because electricity is an input to virtually everything we produce, consume and enjoy in
society. If electricity prices were to increase significantly, the cost to produce any good or
service would similarly increase significantly. Food, for example, would become more expensive
to consumers since about 40 percent of the energy required to grow crops and raise livestock
comes in the form of electricity.vii
EPA itself estimates that the CPP will cause electricity prices nationwide to increase by an
average of almost 7 percent in 2020 and up to 12 percent in some locations. Furthermore, EPA
projects annual compliance costs between $5.4 billion and $7.4 billion in 2020, rising up to $8.8
billion in 2030.viii Notably, these estimated costs do not consider the implications of more
expensive electricity across all industries and sectors of the national economy. Given the

agencys faulty underlying assumptions explained above, EPA likely underestimates the
financial impact of the CPP on electricity customers and the economic impact on states.
Since EPA has recently promulgated and finalized several environmental regulations on the
electric power sector, it may be helpful to not merely evaluate the impacts of the CPP in a
vacuum. Instead, taking a holistic look and considering the cumulative impact of the CPP Plan
along with the recent Mercury and Air Toxic Standards (MATS) and regional haze regulations,
may provide a more realistic idea of how customers and states will be burdened within the next
five years. A study recently released by Energy Ventures Analysis (EVA) does just this.
According to EVAs modeling, by 2020 these regulations, along with other changes in energy
prices, will increase residential electricity and natural gas costs by 27 and 50 percent,
respectively, from a 2012 baseline. This means that in 2020 the average U.S. family can expect
to pay $680 more for electricity and gas annually. This, of course, does not tell the entire story.
Roughly half of energy used in the U.S. is consumed indirectly and comes embedded in the
prices of goods and services. In other words, as mentioned above, as energy costsand
specifically electricity ratesincrease, the price of everything we consume will similarly rise.
This is significant because EVA expects the average electricity rate for industrial power to
increase from 6.7 in 2012 to 10.5 in 2020, an increase of 56 percent.ix
In todays globalized world, such cost increases would put American goods and services at even
greater competitive disadvantage. If electricity rates become too high, businesses with operations
in the U.S. could conceivably relocate to other countries in the world with more affordable
electricity rates. Ironically, if such a scenario were to in fact happen, the U.S. economy and
employment would take a hit while global carbon dioxide emissions would stay the same or,
more likely, increase.
Impacts on Grid Reliability
The potential impact of the CPP on the reliability of the U.S.s existing electric power
infrastructure is enormous. EPAs own IPM modeling suggests that approximately 50 gigawatts
of installed baseload capacity will be forced into retirement by 2020 as a direct result of the
proposed rule. This would come in addition to the approximately 70 gigawatts of installed
capacity that have already been retired or will retire in compliance with other EPA regulations,
most significantly the MATS rule. These combined 120 gigawatts of installed capacity is not a
small number; it is equivalent to roughly one-third of all installed coal generation in the U.S. and
is the amount of generation needed to power around 60 million homes under normal conditions.
Replacing this amount of installed capacity is going to be a daunting task and cannot be done
with intermittent renewable sources alone.
These reliability concerns may be best illustrated by the 2013-14 North American cold wave
colloquially known as the polar vortex. During this extreme weather event, American Electric
Power (AEP), one of the largest investor owned utilities in the U.S. with significant service
territories in the PJM region, was operating approximately 89 percent of their coal-fired capacity
that is slated for retirement in 2015. Alarmingly, PJM came within roughly 900 megawatts (or
less than 0.5 percent of the systems capacity) of having customer demand exceed available

supply.x During the same weather event, natural gas-fired power plants saw higher than normal
rates of outages due to equipment freezing. Furthermore, a number of electricity producers were
unable to secure enough natural gas due to a lack of adequate infrastructure.xi
When customers flip a switch, they expect the lights to turn on. They also expect their
refrigerators to keep food and medicine cold daily without interruption. Unfortunately, there are
dangerous, real-world consequences to eliminating unreasonably high amounts of baseload
generating capacity as the CPP proposes.
EPAs Relationship with the States
The proposed CPP also represents a fundamental change in the relationship between EPA and
the states in the environmental regulatory making process. Since the New Deal era, the
regulation of retail electricity sales and local distribution has been a sovereign state function.
Specifically, the Federal Power Act (1935) limits the authority of federal regulators to only
those matters which are not subject to the regulation by the States. In an unprecedented manner,
the CPP would effectively place energy policy nationwide under the purview of EPA.xii
Furthermore, EPA has historically interpreted its authority under the Clean Air Act as only being
able to regulate emissions directly at affected power plant units. However, with the proposal of
the CPP, EPA clearly intends to now go beyond the fence-line of the power plant by
systematically undermining the states that have carefully developed their electric generating
mixes to support their economies. In doing so, EPA has effectively claimed authority over a
broad portion of U.S. economic activity, which is significantly outside their statutory areas of
responsibility. Only EPAs first building blockimproving the thermal efficiency of existing
coal-fired units by six percentfalls within the fence-line of the power plant.xiii
According to 111(a) of the Clean Air Act, a performance standard is a standard that reflects
the best system of emission reduction (BESR) that has been adequately demonstrated.
Moreover, 111(d) requires states to develop performance standards for existing source
performance standards for designated pollutants, meaning the affected power plant units. In
promulgating the CPP and specifically the BESR (i.e., four building blocks), EPA essentially
treats each individual state rather than the units as designated pollutants. This is an
unprecedented departure from how EPA has historically developed emissions regulations. The
agency has also failed to demonstrate that the building blocks are adequately demonstrated or
achievable with reasonable considerations of cost, as statutorily required.
The CPP also notably lacks any sort of Congressional approval or electoral mandate. The 111th
and 112th Congresses both considered legislation that would create national climate change
mitigation programs, but failed to pass in bipartisan manners. During his 2012 reelection
campaign, President Obama largely avoided discussion of climate change and only announced
his Climate Action Plan after he had been reelected.xiv
Conclusion

In relying on false underlying assumptions, EPAs proposed CPP will likely lead to significant
problems including rising electricity costs, losses in economic productivity, increased
unemployment, serious reliability concerns and a radical departure from how states and EPA
have traditionally worked together to develop and implement meaningful environmental
regulations.
In light of the concerns expressed above, ALEC respectfully urges EPA to withdraw the
proposed rule as written and issue new guidelines that (1) respect the primacy of states; (2)
maintain an adequate, reliable, affordable electric generating fleet; (3) are based on EPA
guidelines for cost-effective, achievable reductions at affected power plant units, rather than
states; (4) establish emissions guidelines based on adequately demonstrated systems that are fuel
and technology specific; (5) provide credit for significant emissions reductions already made or
being made; (6) avoid premature retirements and stranded assets; and (7) be fair and equitable to
all electricity customers.

William Yeatman, The U.S. Environmental Protection Agencys Assault on State Sovereignty, American
Legislative Exchange Council, 2013, http://alec.org/docs/EPA_Assault_State_Sovereignty, page 1.
ii
Resolution Concerning EPAs Proposed Guidelines for Existing Fossil Fuel-Fired Power Plants, American
Legislative Exchange Council, Adopted October 2014, http://www.alec.org/model-legislation/resolutionconcerning-epas-proposed-guidelines-existing-fossil-fuel-fired-power-plants.
iii
Potential Reliability Impacts of EPAs Proposed Clean Power Plan, North American Electric Reliability
Corporation, November 2014,
http://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/Potential_Reliability_Impacts_of_EPA_Prop
osed_CPP_Final.pdf, page 8.
iv
Ibid, pages 9-10.
v
Ibid, pages 11-13.
vi
Ibid, pages 14-16.
vii
Jayson Beckman, Allison Borchers, and Carol A. Jones, Agricultures Supply and Demand for Energy and Energy
Products, United States Department of Agriculture Economic Research Service, May 2013,
http://www.ers.usda.gov/media/1104145/eib112.pdf, page 10.
viii
Regulatory Impact Analysis for the Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission
Standards for Modified and Reconstructed Power Plants, U.S. Environmental Protection Agency,
http://www2.epa.gov/sites/production/files/2014-06/documents/20140602ria-clean-power-plan.pdf, page 3-22.
ix
Energy Market Impacts of Recent Federal Regulations on the Electric Power Sector, Energy Ventures Analysis,
November 2014, http://evainc.com/wp-content/uploads/2014/10/Nov-2014.-EVA-Energy-Market-Impacts-ofRecent-Federal-Regulations-on-the-Electric-Power-Sector.pdf, page 5-6.
x
Dennis Yablonsky, Shore up our electric grid: The federal government needs a comprehensive strategy to keep
the lights on, argues the CEO of the Allegheny Conference, Pittsburgh Post-Gazette, August 10, 2014,
http://www.post-gazette.com/opinion/2014/08/10/Shore-up-our-electric-grid-energy-strategy-DennisYablonsky/stories/201408100112.
xi
Polar Vortex Review, North American Electric Reliability Corporation, September 2014,
http://www.nerc.com/pa/rrm/January%202014%20Polar%20Vortex%20Review/Polar_Vortex_Review_29_Sept_2
014_Final.pdf.
xii
William Yeatman, EPAs Illegitimate Climate Rule: Hidden from Voters, Contrary to Congressional Intent, and
Crafted by Special Interests, Competitive Enterprise Institute, June 28, 2014,
http://cei.org/sites/default/files/Yeatman%20-%20EPAs%20Illegitimate%20Climate%20Rule_0.pdf, pages 1-3.
xiii
Ibid.
xiv
Ibid.