President Obama today announced the finalization of the Clean Power Plan, allowing states more time to comply with the rules but making deeper cuts into allowed carbon emissions. The "most aggressive of the regulations," according to a report from The New York Times, requires the nation’s existing power plants to cut emissions 32 percent from 2005 levels by 2030, an increase from the 30 percent target proposed in the draft regulation.
The EPA's final rule did include a "glide path" for compliance to 2030, however, with incentives for states to move earlier to curb emissions and integrate more renewables, and a "reliability safety valve" to address individual outage concerns.
Obama's goal, besides what his legacy will be, is to fight climate change. The Administration believes cutting carbon emissions will stop global warming, prevent premature deaths and asthma attacks. The White House also claims that the Clean Power plan will save the American family nearly $85 a year on their energy bills in 2030 and $155 billion from 2020-2030.
The rule also demands that power plants use more renewable sources of energy like wind and solar power. While the proposed rule would have allowed states to lower emissions by transitioning from plants fired by coal to plants fired by natural gas, the final rule is intended to push electric utilities to invest more quickly in renewable sources, raising to 28 percent from 22 percent the share of generating capacity that would come from such sources. Credits for electricity generated from renewables in 2020 and 2021 will be awarded to projects that begin construction after participating states submit their final implementation plans.
EEI: 'Most Far-Reaching Regulation Ever to Impact Electric Power Sector'
The power delivery industry, in general, hasn't come out with a glowing endorsement or condemnation quite yet. Edison Electric Institute President Tom Kuhn issued the following statement yesterday in advance of the release of the final Clean Power Plan:
"Without a doubt, EPA's final Clean Power Plan slated for release tomorrow will be the most comprehensive, far-reaching regulation ever promulgated by the federal government to impact the electric power sector.
"Our industry already is making significant investments to transition to a cleaner generating fleet and to enhance the electric grid. This transition is exemplified by the 73 GW of publicly announced coal plant retirements or retrofits scheduled to take place by 2022—enough to power 36 million households. Overall, the industry's capital expenditures are projected to be approximately $100 billion per year through 2016, with a record-high $108.2 billion estimated for 2015.
"As we await release of the final Clean Power Plan, our primary concern remains the overall timing and stringency of the near-term reduction targets. The industry asked that EPA provide sufficient time for states to craft compliance plans and then subject those plans to critical reliability reviews, and we are hopeful the final guidelines will address this issue.
"Until we review the final guidelines in their entirety, it is difficult to assess whether they address the range of concerns we have raised over the past year. Ultimately, it is imperative that the final guidelines respect how the electric system works and provide enough time and flexibility to make the necessary changes to achieve carbon emission reductions.
"EEI and its member companies are committed to ensuring that electricity continues to be reliable, affordable, and increasingly clean. Throughout this rulemaking process, we have worked on a good faith basis to improve the final guidelines in order to minimize the costs to customers and to protect the reliability of the system."
NERC Response: Reliability Assessment Coming
NERC stated that it appreciated that the Environmental Protection Agency’s final Clean Power Plan rule reflects changes identified in NERC’s two special reliability assessments
"While we continue to review the details, initial reports indicate that the final rule addresses several topics identified as needing attention by the NERC reports and many stakeholders. Over the past year, NERC published two reviews of the potential reliability impacts of the draft Clean Power Plan. The Initial Reliability Review focused on the four building blocks in the draft plan, while the Phase 1 Special Assessment looked at potential transmission and infrastructure constraints. Both assessments provided recommendations to policymakers and stakeholders concerning potential reliability challenges arising from the proposed rule. NERC’s principal finding recommended additional time in order to allow for extensive planning and significant investments in new energy infrastructure that will be needed to achieve emission reduction goals.
NERC, as the electric reliability organization, is directed by the Federal Power Act to conduct periodic assessments of the reliability and adequacy of the bulk power system in North America. NERC conducts these assessments based on independent analysis of the information on the state of the grid and the plans of the users, owners and operators of the grid.
NERC plans a third reliability assessment based on EPA’s final rule of the Clean Power Plan, expected by the second quarter of 2016. This assessment will review the final rule’s known requirements and emerging state implementation plans. NERC remains focused on assuring the reliable operation of the bulk power system based on our decades of experience and statutory responsibilities.
States May or May Not Comply
A handful of states have already indicated they may not submit compliance plans to the EPA, while Senate Majority Leader Mitch McConnell (R-KY) has urged states to "just say no" to complying with the plan, according to a Utility Dive report.
In addition to expected political backlash, the release of the final plan will have legal implications as well. A coalition of 14 states has appealed to the D.C. Circuit Court to block the rule's release, and a case pertaining to the regulations is widely expected to end up at the Supreme Court.
"These rules, if implemented, would cause West Virginia coal miners to lose their jobs and West Virginians’ electricity bills to skyrocket," the Office of the West Virginia Attorney General states on its website. "The proposed rules upset the careful balance of ensuring reliable, affordable electricity while encouraging job growth and responsible protection of the environment. Because EPA's actions are destructive to West Virginia, the Office of Attorney General is taking every reasonably necessary action to stop them."