Comments of WPPI Energy - Great Lakes Legalgreatlakeslegalfoundation.org/wwcms/wp-content/uploads/2014/12/WPPI.pdf · Comments of WPPI Energy Carbon Pollution Emission Guidelines

BEFORE THE UNITED STATES

ENVIRONMENTAL PROTECTION AGENCY

Comments of WPPI Energy

Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units

Docket No. EPA-HQ-OAR-2013-060279 Fed. Reg. 34,830 (June 18, 2014)

Andy KellenVice President, Power Supply ResourcesWPPI Energy1425 Corporate Center DriveSun Prairie, WI 53590(608) [email protected]

November 28, 2014

Comments of WPPI Energy in Docket No. EPA-HQ-OAR-2013-0602

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TableofContentsI. Introduction ..........................................................................................................................1

II. Executive Summary..............................................................................................................3

III. Overall Impacts of the Proposed Rule..................................................................................4

A) The 2012 baseline does not recognize proactive measures taken to reduce emissions before 2012. ............................................................................................4

B) The proposed rule has the potential to severely impact utilities with load and generating resources in different states. ..................................................................6

C) The proposed rule does not promote a realistic multi-state approach. ....................7

D) The proposed rule’s emission reduction goals are improperly front-loaded. ..........7

E) The proposed rule will challenge the ability of utilities to maintain electric system reliability..................................................................................................................8

IV. Building Blocks as a System ................................................................................................8

A) The goal-setting formula’s use of 2012 as a baseline is problematic. .....................9

B) It is unlikely that Building Blocks 3 and 4 will meaningfully displace existing fossil fuel-fired generation.....................................................................................10

C) The four building blocks will likely operate together to decrease the efficiency of coal units................................................................................................................11

V. Building Block 1 (Heat Rate Improvements) .....................................................................12

A) The proposed rule does not account for heat rate improvements already undertaken. ............................................................................................................13

B) The proposed rule does not account for heat rate increases from compliance with other environmental regulations. ...........................................................................13

C) Heat rate improvements likely require longer time periods. .................................14

VI. Building Block 2 (Redispatch) ...........................................................................................15

A) Under the proposed rule, NGCC units would become baseload resources. ..........15

B) The proposed rule assumes a level of NGCC redispatch that is unlikely to be feasible by 2020.....................................................................................................16

C) EPA used the wrong rating for NGCC units to determine assumed output. .........16

D) The proposed rule does not account for increased duct firing as NGCC operations increase. .................................................................................................................18

VII. Building Block 3a (Renewables)........................................................................................18

A) EPA incorrectly accounts for baseline renewables in its goal-setting calculation.19

1. Out-of-State Renewables..............................................................................19

2. Behind-the-Meter Facilities..........................................................................19


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3. Biomass Facilities.........................................................................................19

4. Green Pricing Programs ...............................................................................20

5. Summary and Suggested Approach..............................................................20

B) States should get credit for additional renewables that come on-line before 2020................................................................................................................................21

VIII. Building Block 3b (Nuclear) ..............................................................................................21

A) EPA should eliminate the at-risk nuclear provision from the goal-setting calculation..............................................................................................................22

B) EPA should account for the closing of nuclear units at the end of their operational lives........................................................................................................................23

IX. Building Block 4 (Energy Efficiency)................................................................................23

A) The proposed rule penalizes states with higher initial levels of energy efficiency during the interim period. ......................................................................................23

B) EPA should allow states to take full credit for in-state energy efficiency measures................................................................................................................................24

C) States should get credit for energy efficiency programs implemented before 2020................................................................................................................................24

X. Conversion of Rate-Based Goals to Mass-Based Goals.....................................................25

A) The proposed rule requires a state electing to use mass-based goals to commit to a projection of future electrical needs too far in advance.........................................25

B) The proposed rate-to-mass conversion formula does not accurately translate a state’s rate-based emissions goal to an equally-stringent mass-based emissions goal. .......................................................................................................................25

C) EPA should provide presumptive mass-based goals. ............................................26

XI. Compliance Options ...........................................................................................................26

A) EPA should clarify that the rule allows for full flexibility for compliance. ..........26

B) Out-of-sector offsets should be permitted to be used for compliance...................27

C) State plans should be able to provide a three-year compliance period under either a mass-based plan or a rate-based plan..................................................................27

XII. Conclusion..........................................................................................................................28


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WPPI Energy (“WPPI”) appreciates the opportunity to provide input to the United States

Environmental Protection Agency (“EPA”) on its proposed rule, Carbon Pollution Emission

Guidelines for Existing Stationary Sources: Electric Utility Generating Units (“the proposed

rule” or “Clean Power Plan”).1

I. INTRODUCTION

WPPI is a regional, not-for-profit power company headquartered near Madison,

Wisconsin. WPPI serves 51 locally-owned electric utilities in Wisconsin, Michigan, and Iowa.

Through WPPI, these public power utilities own generation facilities and share resources to

provide reliable and affordable electricity to 200,000 homes and businesses in the three states. In

2013, WPPI’s peak load was 1,025 megawatts (“MW”) and annual energy sales to members

totaled 5,381 gigawatt-hours (“GWh”). WPPI is located in the Midcontinent Independent

System Operator, Inc. (“MISO”), a regional transmission organization (“RTO”). MISO is

regulated by the Federal Energy Regulatory Commission (“FERC”) and defined by the MISO

Tariff and contractual agreements. Among other things, MISO balances generation and load on

an instantaneous basis and plans for transmission expansion.2 WPPI utilizes a diversified power

supply portfolio to serve the needs of its member utilities. This includes “slice of system” power

purchases from Midwest investor-owned utilities (“IOUs”), where WPPI pays a fixed percentage

of the IOU’s costs in exchange for a fixed percentage of generation, as well as ownership in and

purchases from nuclear, coal, natural gas, and renewable generation sources. Figure 1 shows

WPPI’s power supply mix in 2013.

WPPI and its 51 member utilities, like most Midwestern utilities, have historically relied

on coal generation to meet a large portion of baseload energy needs, and for its 34-year history,

coal has been WPPI’s dominant fuel source to economically meet members’ needs. Coal has

kept the lights on and allowed members’ communities to grow and local industries to flourish.

1 Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, 79 Fed. Reg. 34,830 (proposed June 18, 2014) (to be codified at 40 C.F.R. pt. 60) (“Clean Power Plan”).

2 Mack Thompson, Iowa Utilities Board, Understanding MISO 6, National Association of Regulatory Utility Commissioners 4th Armenia/Iowa Exch., http://www.naruc.org/international/Documents/MISO.pdf.


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Figure 1. WPPI’s overall power supply mix in 2013.

WPPI has not ignored the environmental impacts of the coal in its generation portfolio.

WPPI member utilities are not just in the energy business. They are integral parts of their

communities. This community focus includes a strong sense of environmental responsibility to

the cities and villages that they serve. Greenhouse gas (“GHG”) emissions monitoring and

reduction is not a new concept for WPPI; since 2005, WPPI has quantified and tracked GHG

emissions levels and factored the goal of emissions reduction into its power supply planning.

For over ten years, WPPI members have recognized the value of maximizing the lowest

cost and lowest impact power supply resource: energy efficiency. WPPI’s aggressive energy

efficiency program has resulted in a total savings of approximately 350,000 megawatt-hours

(“MWh”) from 2005 through 2012. In addition to WPPI members’ full participation in

Wisconsin’s Focus on Energy program,3 WPPI has worked with its members to manage

complementary energy efficiency programs. Over the last seven years alone, these efforts have

resulted in a cumulative reduction in system demand of more than 50 MW.

As a system, WPPI has also embraced renewable energy and other carbon-free power

supply resources. As shown in Figure 1, renewables accounted for 13 percent of WPPI’s power

supply portfolio in 2013. Further, in 2011, WPPI entered into a long-term power purchase

agreement for approximately 160 MW of nuclear capacity.

These examples demonstrate the commitment of WPPI and its 51 members to proactively

reducing their GHG emissions. Some of these actions have been accompanied by an increase in 3 Focus on Energy, https://focusonenergy.com/ (last visited Nov. 26, 2014).

Coal, 54%Nuclear, 23%

Natural Gas, 10%

Renewables, 13%


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the near-term cost to WPPI member ratepayers in the form of higher wholesale prices. Yet

members endorsed these actions, recognizing the long-term value to their communities, their

states, and the country, and the need to invest in responsible environmental measures.

II. EXECUTIVE SUMMARY

WPPI has reviewed and analyzed the proposed rule and has a variety of concerns

regarding its potential impacts on WPPI’s operations. While WPPI supports—and has, in fact,

demonstrated through its actions its commitment to—the goal of reducing GHG emissions,

WPPI has some concerns with the proposed rule. WPPI aims to provide EPA with information

about the practical effects of the proposed rule on WPPI and similarly-situated entities, as well as

constructive feedback on the proposed rule. Wherever possible, WPPI has provided proposed

fixes to these identified problems in order to keep moving forward to address the ultimate goals

of the proposed rule.

WPPI has several overarching concerns:

Early Action. EPA’s use of 2012 as a baseline ignores the efforts and actions of

states and utilities, including WPPI, to reduce emissions since 2005 or earlier.

Reliability. WPPI is concerned that the proposed rule does not fully evaluate

reliability impacts and asks EPA to carefully consider the range of reliability

impacts that new regulations will have on communities.

State Equity. WPPI urges EPA to recognize that the impacts of regulation are

likely to disproportionately fall on some states and regions. In some states,

economics and geography (i.e., no natural gas deposits, no meaningful hydro,

historical transmission limitations) have driven significant investment in coal-

fired generation. However, it is often the states that have intentionally diversified

their generation portfolios that are hit the hardest, because they have significant

natural gas combined cycle (“NGCC”) capacity in their portfolios.

Cross-Jurisdictional Impacts. As a utility with electrical load and generation in

different states, WPPI would have significant problems complying with a state


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plan that imposed emissions limits directly on affected electric generating units

(“EGUs”).

WPPI comments on the overall operation of the building blocks as a system and critiques

each building block individually. WPPI also addresses the conversion of rate-based goals to

mass-based goals and the proposed rule’s compliance options. WPPI believes that there are

changes EPA can make to the proposed rule to better balance GHG emission reductions with the

needs of communities and the past emission reduction efforts of states and utilities like WPPI.

Additionally, WPPI acknowledges that there is significant interest in the proposed rule,

and EPA will receive a plethora of comments from every perspective. WPPI is well-aware that

there are other commenters that advance legal arguments challenging the legal basis for the

proposed rule. In its comments, WPPI is not addressing these legal arguments, and this silence

should be construed as neither agreement nor disagreement with any such challenges.

III. OVERALL IMPACTS OF THE PROPOSED RULE

In this section, WPPI highlights some significant concerns with the proposed rule overall.

WPPI has also analyzed and is providing comments on the building blocks and other specific

issues in subsequent sections.

A) The 2012 baseline does not recognize proactive measures taken to reduce emissions before 2012.

EPA’s proposed rule purports that it would achieve an overall 30 percent reduction of

electric sector CO2 emissions from 2005 levels.4 EPA’s goal-setting mechanism and use of 2012

as a baseline for the purpose of setting state goals generally fails to recognize emission-reducing

actions taken by states prior to 2012. In many cases, these early acting states found those actions

built into their baseline assumptions, which resulted in more stringent goals for those states,

essentially penalizing them and their utilities for their proactive programs.

4 Clean Power Plan, 79 Fed. Reg. at 34,832.


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WPPI and its members have taken actions to reduce GHG emissions by over 23 percent

since 2005. Unfortunately, these actions simply made the relevant state goals more stringent, as

discussed below:

Action Effect on State GoalAggressive energy efficiency efforts by WPPI and other Wisconsin utilities, resulting in a high level of baseline energy efficiency in 2012.

Makes Wisconsin’s interim emission goal more stringent.

WPPI’s 2010 steam turbine upgrade project at Boswell Energy Center Unit 4 lowered Minnesota’s baseline emission rate for 2012.

Makes Minnesota’s interim and final emissions goals more stringent.

Extended power uprate at Point Beach Nuclear Plant, supported by a power purchase agreement with WPPI, increased Wisconsin’s “at-risk” nuclear capacity.

Makes Wisconsin’s interim and final emissions goals more stringent.

States and utilities have undertaken GHG emission reduction measures on their own initiative.

However, the proposed rule not only fails to give credit for these actions, but also penalizes

states by setting a baseline that ignores these pre-2012 efforts.

Another consequence of this failure to give credit for early action is the creation of

inequity between states. That is, the proposed rule often requires deeper cuts by states that took

early action to reduce GHG emissions than states that took little or no such action,

disproportionately distributing responsibility for what should be a shared goal. For example, the

proposed rule would require Wisconsin to reduce its CO2 emission rate by more than 34 percent

by 2020, and Minnesota by more than 40 percent. By contrast, North Dakota, a state with a

much higher reliance on coal generation than either Wisconsin or Minnesota, would be required

to make a reduction of less than 11 percent. This inequity demonstrates the impacts of the

proposed rule’s failure to give credit for pre-2012 actions to reduce CO2.

To give credit for these pre-2012 measures, EPA should change the baseline used to

calculate state goals. WPPI believes that a baseline using 2005 data is the best approach.

However, WPPI could also support EPA’s proposal to use a blend of multiple years as described

in EPA’s Notice of Data Availability (“NODA”),5 although WPPI continues to prefer the

5 Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, Notice of Data Availability, 79 Fed. Reg. 64,543, 64,548 (Oct. 30, 2014) (“NODA”).


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incorporation of earlier years into the baseline. The use of a three-year average for the baseline

would be consistent with the final goal calculation, which is measured on a three-year rolling

average basis (i.e., 2030-2032, 2031-2033, 2032-2034).

B) The proposed rule has the potential to severely impact utilities with load and generating resources in different states.

The proposed rule would allow, among other things, a state plan to impose emissions

limitations directly on affected EGUs. Such an approach would be extremely problematic for a

utility, such as WPPI, that has load and generating resources in different states. EPA should

require states to accommodate utilities that do not have in-state “outside the fence” options.

As shown in Figure 2, WPPI has load, affected EGUs, renewables, and other generating

resources across five states.

State Electric Load

GenerationCoal Natural Gas Renewable Nuclear

Illinois XIowa X XMichigan XMinnesota X XWisconsin X X X X X

Figure 2. WPPI load and generation resources by state.

The prospect of having to comply with multiple state plans that impose emissions limitations on

affected EGUs―without accounting for the load WPPI and its members serve because the load

is not in the same state―presents a serious problem for WPPI and many other utilities in a

similar position. Because WPPI does not have mechanisms to reduce emissions—e.g., NGCC

units (which can be redispatched) or electrical load (to which energy efficiency measures can be

applied)—in all states where it has generation, WPPI would have additional issues complying

with a state plan imposing emissions limitations on affected EGUs.

Ultimately, any state plan that imposes limits on affected EGUs must have some way for

utilities, such as WPPI, to comply without the possibility of energy efficiency or demand

reduction measures in that state to offset generation. WPPI suggests that a trading mechanism

could make compliance with such a plan possible in these cases. Additionally, this problem

highlights the importance of a multi-state approach as the primary means by which WPPI and


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other utilities with load and generation in multiple, and different, states could most likely be

accommodated.6

C) The proposed rule does not promote a realistic multi-state approach.

WPPI believes that a properly constructed multi-state compliance scheme could be the

most cost effective approach, and as noted above, could accommodate utilities such as WPPI

with load and generation in different states. While the proposed rule contemplates such multi-

state solutions, EPA’s concept of a multi-state approach—under which participating states

average their emissions rate goals to create a single multi-state goal—is unrealistic. There is

little reason to expect that a state with an emission rate goal that is less stringent than that of a

potential multi-state group would be willing to join such a group, since doing so would require

them to meet a more stringent goal.

EPA should permit and promote a more realistic multi-state approach that allows states to

retain their individual goals, while providing for trading of credits (representing tons of CO2

emissions or MWh of generation) between states. EPA or a third party entity could provide a

credit-tracking system to be used by states that decide to participate. For example, EPA

administers a trading program for NOx and SO2 allowances. A similar approach could be

appropriate for CO2.

D) The proposed rule’s emission reduction goals are improperly front-loaded.

The proposed rule sets an overly strenuous pace to achieve emission reduction goals.

Although states have until 2030 to comply with the rule’s final emission goals, Wisconsin’s

interim goal would effectively require the state to be over 87 percent of the way toward its final

goal in the decade beginning in 2020. While compliance with the interim goal would be

measured on a ten-year average basis between 2020 and 2029,7 any under-compliance in the

early years of this period would have to be compensated for by over-compliance in the later

years. Since any given state plan may not be approved by EPA until as late as the middle of

2019, requiring such a significant emission reduction beginning only half a year later in 2020 is

6 While a multi-state approach is the first step in accommodating a utility with load and generation in different states, it is not a guaranteed fix, because it is possible that WPPI’s states would be in different multi-state groupings.



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not realistic. Even if it is possible to comply with the interim goal, this timeline may present

technical challenges that will prevent the use of the most cost effective strategies.8

E) The proposed rule will challenge the ability of utilities to maintain electric system reliability.

Significant changes to the composition and operation of the nation’s electric system

would be necessary to comply with the requirements in the proposed rule. Making these changes

in the relatively short time period provided for in the proposed rule has the potential to adversely

impact system reliability, as noted by the North American Electric Reliability Corporation

(“NERC”).9 Changing the operating characteristics of units—e.g., operating coal units as load-

following resources (discussed in Section VI.A)—will likely affect reliability. Many of the

reliability enhancements that would be necessary to promote system reliability given EPA’s

proposal take time, including the need to plan, site, permit, construct, and begin to operate new

infrastructure.10

NERC has recommended a set of reliability provisions to maintain system reliability.11

WPPI agrees and suggests that EPA include a “reliability safety valve” mechanism to provide

additional compliance and/or enforcement flexibility to ensure electric system reliability. This

might include exception periods or off ramps for local reliability events. WPPI recognizes that

multiple entities may need to be involved with a reliability safety valve or the implementation of

other tools to ensure reliability because of the scope of the issue, and WPPI does not take a

position on the appropriate entitie(s) for this role.

IV. BUILDING BLOCKS AS A SYSTEM

WPPI finds the use of 2012 as the sole source of baseline data problematic in the overall

operation of the building blocks. Further, EPA’s suggestion that renewables and energy

8 NODA, 79 Fed. Reg. at 64,545-46.

9 North American Electric Reliability Corporation, Potential Reliability Impacts of EPA’s Proposed Clean Power Plan 17 (Nov. 2014), http://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/Potential_Reliability_Impacts_of_EPA_Proposed_CPP_Final.pdf (“NERC CPP Report”).

10 NERC CPP Report at 10.



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efficiency might displace fossil fuel-fired generation is not realistic. WPPI is also concerned that

the four building blocks proposed by EPA do not work together as a concerted system and are, in

fact, sometimes in tension with one another.

A) The goal-setting formula’s use of 2012 as a baseline is problematic.

EPA used 2012 emissions and generation data as a baseline to set the emission rate goals

in the proposed rule. However, this use of 2012 data fails to recognize emission-reducing

actions taken by states and utilities before 2012, such as WPPI’s actions discussed in Section

III.A). Additionally, 2012 was not a representative year for Wisconsin and thus presents an

inaccurate picture of the baseline for Wisconsin.

2012 was a remarkable year in several respects. During the period between 2005 and

2013, 2012 had the lowest natural gas prices and the greatest percentage of electric generation

from natural gas, as shown in Figure 3.

Figure 3. Wisconsin electric sector natural gas price12 and percent of electric generation in Wisconsin from natural gas13 from 2005 to 2013.

12 Graph derived from U.S. Energy Information Administration, Wisconsin Natural Gas Price Sold to Electric Power Consumers (Oct. 31, 2014), available at http://www.eia.gov/dnav/ng/hist/n3045wi3a.htm.

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

$10.00

2005 2006 2007 2008 2009 2010 2011 2012 2013

Year

NG Price ($/thousand cubic feet)

Percent of Electric Generation from NG


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The year 2012 also saw the highest level of renewable generation over this time period,

as shown in Figure 4. As suggested above in Section III.A, these issues would be addressed by

the use of 2005 as the source for baseline data, or alternatively (but less preferably), an average

of 2010-2012 data.

Year Generation (MWh)2005 1,181,6532006 1,265,6232007 1,329,5182008 1,753,9352009 2,340,2952010 2,473,9562011 2,765,0112012 3,223,178

Figure 4. Renewable generation in Wisconsin (wind and biomass only).14

B) It is unlikely that Building Blocks 3 and 4 will meaningfully displace existing fossil fuel-fired generation.

EPA’s NODA provides another approach to the goal setting calculation that would

further include accounting for displacement of fossil generation by renewable energy (“RE”)

generation (Building Block 3) and energy efficiency (“EE”) (Building Block 4).15 The NODA

seeks comment on alternative approaches whereby incremental renewables and energy efficiency

would (1) be assumed to displace 2012 fossil steam generation and NGCC generation levels on a

pro-rata basis (i.e., in proportion to each generation type’s historical generation) or (2) be

assumed to displace fossil steam generation below 2012 levels first and then utilize any

remaining RE and EE to displace NGCC generation.16

13 Graph derived from U.S. Energy Information Administration, Net Generation by State by Type of Producer by Energy Source (Nov. 12, 2013), available at http://www.eia.gov/electricity/data/state/; Graph derived from U.S. Energy Information Administration, Form EIA-923 Detailed Data (Oct. 27, 2014), available athttp://www.eia.gov/electricity/data/eia923/.

14 Table derived from U.S. Energy Information Administration, Table 5. Electric Power Industry Generation by Primary Energy Source, 1990-2012, Wisconsin (May 1, 2014), available athttp://www.eia.gov/electricity/state/wisconsin/ (follow link to Table 5).

15 NODA, 79 Fed. Reg. at 64,552.

16 NODA, 79 Fed. Reg. at 64,552-53.


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WPPI believes it would be inappropriate to adjust the EPA’s proposed goal calculation to

assume the displacement of fossil fuel generation with energy provided by Building Blocks 3 and

4. Little, if any, of the Building Block 3 and 4 energy would be available to displace fossil fuel

generation, as most or all of the energy would likely be required to meet the growth in electrical

load after 2012. This can be demonstrated using EPA’s goal calculation spreadsheet and the data

file provided with EPA’s Technical Support Document “Translation of the Clean Power Plan

Emission Rate-Based CO2 Goals to Mass-Based Equivalents,” released on November 6, 2014.17

As of 2029, the EPA’s goal calculation spreadsheet shows a nationwide total of approximately

313.6 million MWh of incremental RE generation and 380.6 million MWh of EE avoided

generation, for a total of 694.2 million MWh of energy from Building Blocks 3 and 4. The

analysis in the EPA’s rate-to-mass translation data file shows an increase in the need for annual

generation of approximately 577.1 million MWh between 2012 and 2029. This is equivalent to

over 83 percent of the energy assumed to be provided by Building Blocks 3 and 4. However,

this comparison understates the amount of additional generation that would actually be required,

since the Annual Energy Outlook (“AEO”) forecast on which it is based is net of the effect of

energy efficiency measures. Since the Building Block 4 calculation determines the total, rather

than incremental, potential for energy efficiency, existing energy efficiency measures must be

removed from the AEO forecast, resulting in higher load growth than assumed by EPA. As a

result, it is likely that most or all of the energy from Building Blocks 3 and 4 will be required to

serve new load, leaving little or no energy available to displace existing fossil fuel generation.

C) The four building blocks will likely operate together to decrease the efficiency of coal units.

EPA considered the effects of each building block strictly on a stand-alone basis, rather

than examining how the building blocks would integrate and operate together as a system. In

fact, several aspects of the proposed rule’s building blocks will lead to decreased efficiency for

coal units.

17 U.S. E.P.A. Office of Air & Radiation, Technical Support Document, Translation of the Clean Power Plan Emission Rate-Based CO2 Goals to Mass-Based Equivalents, Docket No. EPA-HQ-OAR-2013-0602 (Nov. 6, 2014), available at www2.epa.gov/sites/production/files/2014-11/documents/20141106tsd-rate-to-mass.pdf (“Rate-to-Mass TSD”).


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Specifically, the redispatch of NGCC units described in Building Block 218 and the

increase in the use of renewable energy described in Building Block 319 will likely increase the

cycling of coal units, thus pushing coal units to operate more often at less efficient points on their

load curves, increasing their average heat rates. The efficiency difference between low load and

optimum efficiency (usually near full load) can be significant. EPA did not consider these issues

when determining the level of heat rate improvement achievable by coal units in Building

Block 1.

Unless EPA evaluates the effects of the building blocks in an integrated manner, it cannot

conclude that its evaluation of the Best System of Emission Reduction (“BSER”) is adequate. In

particular, EPA should consider the impacts of the operating assumptions prescribed by Building

Blocks 2 and 3 on coal unit operating heat rate improvements. EPA should then use its corrected

analysis to review the appropriate heat rate improvement assumption in Building Block 1.

V. BUILDING BLOCK 1 (HEAT RATE IMPROVEMENTS)

EPA’s first proposed strategy for reducing CO2 emissions from EGUs consists of changes

to individual EGUs.20 In particular, Building Block 1 assesses improving the efficiency with

which EGUs convert fuel heat input to electricity output, or heat rate improvements. WPPI has

identified several issues with Building Block 1:

The assumed 6 percent heat rate improvement capability,

The effects of other environmental regulations on heat rate, and

The time period needed to implement heat rate improvements.

WPPI discusses these concerns and some proposed solutions herein.

18 Clean Power Plan, 79 Fed. Reg. at 34,862-63.




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A) The proposed rule does not account for heat rate improvements already undertaken.

The proposed rule uses a standard assumption of a 6 percent heat rate improvement and

applies this assumption to all coal units.21 This results in more stringent goals for states whose

coal units have already undergone heat rate improvement projects in comparison to states whose

coal units are unimproved. Further, many utilities have already implemented ongoing heat rate

improvement programs to capture the efficiency gains that EPA is assuming would be possible in

the “best practices” portion of the Building Block 1 assumption,22 making a further 4 percent

improvement unlikely to be achievable. The ability to achieve a 2 percent improvement through

equipment upgrades will vary from plant to plant. New coal units and coal units that have

already implemented heat rate improvement projects will have more difficulty achieving further

heat rate reductions than older units that have not previously undertaken these projects or

programs.

WPPI proposes that instead of assuming across-the-board heat rate improvements for all

coal units, EPA should allow states to evaluate the potential for, and cost effectiveness of, heat

rate improvement projects at individual EGUs on a case-by-case basis. This would allow states

with units where such projects have already been undertaken to not be penalized for the

proactive investment in emissions-reducing technology. At a minimum, EPA should exclude

from the goal-setting calculation heat rate improvements at new units as well as at units that have

previously undertaken significant heat rate improvement projects.

B) The proposed rule does not account for heat rate increases from compliance with other environmental regulations.

As EPA is well aware, other environmental regulations, such as the Mercury and Air

Toxics Standards and the Cross-State Air Pollution Rule, required many existing coal plants to

implement emissions reduction projects. These projects frequently result in a decrease in the

unit’s gross output and/or an increase in the unit’s auxiliary load: both of which increase the

unit’s net heat rate.




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EPA failed to consider heat rate increases from these emission reduction projects when

determining the heat rate improvement that can be achieved by the implementing coal units.

EPA should revise its assumptions about heat rate improvement potential to account for the

effects on heat rate of compliance with other environmental regulations.

C) Heat rate improvements likely require longer time periods.

In setting interim goals, EPA assumes that heat rate improvement projects can be

implemented by 2020.23 However, it is unlikely that that a state’s utilities would begin to

implement heat rate improvement projects prior to EPA’s approval of their state’s plan.24 Given

that a state plan may not be approved until 2018, and a multi-state plan may not be approved

until 2019, it is unlikely that heat rate improvement projects could be planned and completed by

2020.

Longer time periods for compliance would provide more flexibility in project

management and cost control. The projects that offer the greatest potential to improve heat rate

are often long lead-time projects. Further, the logistics of many coal units implementing similar

projects in the same, short time period may lead to cost increases and scheduling issues due to

supply chain bottlenecks in obtaining equipment. A recent project at the Boswell Energy Center

Unit 4, of which WPPI is a part owner, illustrates the time required to implement a significant

heat rate improvement project. At this unit, a steam turbine retrofit project, initiated in 2007,

required approximately three years for design, procurement, permitting and scheduling of a

lengthy plant outage for installation, and was completed in 2010.

To address these issues, EPA should not finalize any interim goal and should allow states

to determine and set their own reasonable schedules for implementing heat rate improvement

projects. In the event that EPA includes a mandatory interim goal, then at the very least, EPA

should assume a ramp-up period for the implementation of these projects (as suggested in the

NODA) similar to what EPA has proposed for renewables and energy efficiency.25


24 If a heat rate improvement project were economical in the absence of a regulatory requirement like the Clean Power Plan, the project would likely have already been completed.

25 NODA, 79 Fed. Reg. at 64,548.


15

VI. BUILDING BLOCK 2 (REDISPATCH)

In the proposed rule, EPA assumes that NGCC units will be redispatched to a capacity

factor of 70 percent.26 Building Block 2 raises several issues that WPPI addresses:

Operation of NGCC units as baseload units,

Timeline for achievement of NGCC redispatch at the assumed level,

The capacity rating used by EPA, and

Changes in NGCC operations at higher capacity factors.

A) Under the proposed rule, NGCC units would become baseload resources.

NGCC units that operate as load-following, intermediate resources would become, in

essence, baseload resources under the proposed rule’s redispatch assumption. This assumption

has multiple ramifications, particularly when considered in conjunction with the other building

blocks. First, the need for load-following resources will increase because of the increase in

renewable penetration that is assumed in Building Block 3. Intermittent renewable resources

such as wind and solar place different kinds of stresses on the grid, due to the variability of their

fuel supply and their tendency to all come online or go offline together. This intermittency

causes very fast ramps on the system and the need for other, very flexible generators to

counterbalance them. Second, if NGCCs become baseload resources, coal units operating at

reduced loads and simple cycle peaking units operating at increased capacity factors will likely

replace NGCCs as intermediate, load-following units in many parts of the country. This type of

operation reduces coal unit efficiency and would tend to worsen their emissions rates. This

replacement could result in higher emissions than was assumed by EPA as a result of the

redispatch step.

In analyzing the proposed rule, EPA failed to consider the effect of increased coal unit

ramping and simple cycle peaking unit utilization when determining the level of emission

reduction achievable by NGCC redispatch. EPA should also analyze the need for increased

load-following generation that will likely occur as renewable generation increases.



16

B) The proposed rule assumes a level of NGCC redispatch that is unlikely to be feasible by 2020.

In setting interim goals, EPA assumes that NGCC redispatch can be accomplished by

2020. However, there are obstacles to increased NGCC operation that will make this unlikely, if

not impossible.27 For example, increased NGCC operation at individual units may require

upgrades to natural gas pipelines for increased fuel supplies to NGCC units and electric

transmission facilities or air permit amendments, as well as changes to the operation of the

electrical grid. NERC has recommended that regions, states, and RTOs consider the time

required to plan and build infrastructure as it relates to the potential of the proposed rule to

impact reliability.28

WPPI is concerned that neither EPA nor regulated entities fully understand the extent of

new construction and upgrades that will be necessary to comply with the proposed rule, and

encourages relevant parties to undertake studies to ascertain what may be required, the associated

costs, and the timeline to properly comply. WPPI believes that an industry group and/or NERC

are the appropriate entities to conduct such a study, and EPA’s role should be to set a timeline

that will accommodate it.

To address these issues, EPA should not finalize any interim goal and should allow states

to determine and set reasonable schedules for implementing NGCC redispatch. At a minimum,

in the event that EPA includes a mandatory interim goal, then, as suggested in the NODA, EPA

should assume a ramp-up period for redispatch implementation, similar to EPA’s treatment of

renewables and energy efficiency.29

C) EPA used the wrong rating for NGCC units to determine assumed output.

In calculating the energy that would be produced by the operation of NGCCs at a

capacity factor of 70 percent, EPA used the nameplate rating of the NGCCs, rather than the net

capacity at which the units can actually operate.

As Figure 5 shows for Wisconsin NGCC units, the nameplate capacity can vary

significantly from a unit’s actual net capacity. The total average net capacity of Wisconsin’s

27 NODA, 79 Fed. Reg. at 64,548.


29 NODA, 79 Fed. Reg. at 64,548.


17

NGCC units is approximately 9 percent lower than the total nameplate rating used by EPA in its

calculation.

Utility Name Plant NameGenerator

ID

Nameplate Capacity

(MW)

Summer Capacity

(MW)

Winter Capacity

(MW)

Madison Gas & Electric CoWest Campus Cogeneration Facility 1 54.0 29.9 29.9

Madison Gas & Electric CoWest Campus Cogeneration Facility CT2 54.0 32.5 32.5

Madison Gas & Electric CoWest Campus Cogeneration Facility STG1 61.3 63.9 63.9

Rock River Energy LLC Riverside Energy Center CTG1 198.0 167.0 185.0

Rock River Energy LLC Riverside Energy Center CTG2 198.0 167.0 185.0

Rock River Energy LLC Riverside Energy Center STG1 299.7 261.0 279.0

Wisconsin Electric Power CoPort Washington Generating Station 1CT1 167.9 165.0 165.0




Wisconsin Electric Power CoPort Washington Generating Station ST1 268.6 215.0 245.0

Wisconsin Electric Power CoPort Washington Generating Station ST2 268.6 215.0 245.0

GE Energy Services Fox Energy Center CTG1 185.0 160.8 211.0

GE Energy Services Fox Energy Center CTG2 185.0 151.7 211.0

GE Energy Services Fox Energy Center STG 250.0 233.4 213.0Whitewater Operating Services LLC LSP-Whitewater LP CTG1 177.3 162.0 175.0Whitewater Operating Services LLC LSP-Whitewater LP STG1 106.2 99.0 97.0

2977.3 2618.2 2832.3

Average Net Capacity 2725.25

Figure 5. Wisconsin NGCC capacity—shows nameplate capacity, summer capacity, and winter capacity.30 The total nameplate capacity and the average of the total summer and winter capacities are shaded.

EPA should use an average of the summer and winter net capacity ratings rather than the

nameplate capacity to obtain a more reasonable estimate of average annual net capacity of an

NGCC unit. The same EIA-860 database that EPA used to find nameplate capacities also

30 Table derived from U.S. Energy Information Administration, Form EIA-860 Detailed Data (Dec. 4, 2013), available at www.eia.gov/electricity/data/eia860.


18

provides summer and winter net capacity ratings, as reflected in EPA’s NGCC Capacity by Age

spreadsheet.31 For Wisconsin, making this switch and using the average of the summer and

winter net capacity ratings in the goal-setting calculation makes the state’s interim and final

goals approximately 3 percent less stringent.

D) The proposed rule does not account for increased duct firing as NGCC operations increase.

In its goal-setting calculation, EPA assumes that the CO2 emission rate of the

redispatched NGCC units will be equal to their 2012 emission rate.32 However, this is unlikely

to be a reasonable assumption, because EPA failed to consider the implications of its building

blocks on unit operations. All Wisconsin NGCC units have duct-fired peaking capacity that

generally comprises at least 10-20 percent of the total capacity of the units. The duct-fired

capacity has a significantly higher incremental heat rate—and emission rate—than the unfired

capacity, so the duct-fired capacity has historically been operated fairly infrequently. However,

in order to achieve a capacity factor of 70 percent, additional duct firing will likely be required at

some units.

When determining the appropriate emission rate to use for redispatched NGCCs in

calculating state goals, EPA must consider the fact that redispatched NGCCs operating under the

assumptions in Building Block 2 will likely operate with increased duct firing—thus at a higher

emission rate—than they did in 2012.

VII. BUILDING BLOCK 3a (RENEWABLES)

The proposed rule’s Building Block 3a encompasses the increased use of renewable

generation. WPPI sees several issues with this building block, including calculation of the

baseline and the need for credits for renewables before 2020.

31 U.S. E.P.A., NGCC Capacity by Age in Supporting & Related Material, Docket No. EPA-HQ-OAR-2013-0602 (June 18, 2014), Regulations.gov ID No. EPA-HQ-OAR-2013-0602-0252.

32 Clean Power Plan, 79 Fed. Reg. at 34,857-58; U.S. E.P.A., State Goal Data and Computation in Supporting & Related Material, Docket No. EPA-HQ-OAR-2013-0602 (June 18, 2014), Regulations.gov ID No. EPA-HQ-OAR-2013-0602-0255.


19

A) EPA incorrectly accounts for baseline renewables in its goal-setting calculation.

WPPI has identified multiple problems with the baseline renewables used by EPA in its

goal-setting calculation.

1. Out-of-State Renewables

The proposed rule creates a disconnect in the accounting of renewable energy between

goal-setting and compliance. For the purpose of determining state goals, EPA assigned existing

renewables to the state in which they are physically located, rather than the state whose utilities

own or purchase the output from these facilities. However, for compliance purposes, EPA

proposes that “consistent with existing state RPS policies, a state could take into account all of

the CO2 emission reductions from renewable energy measures implemented by the state, whether

they occur in the state or in other states.”33 As a result, some existing renewable facilities will be

applied to one state for goal-setting purposes, but to another state for compliance purposes.

2. Behind-the-Meter Facilities

It is not clear whether Wisconsin utilities will be able to take credit for behind-the-meter

facilities. A significant portion of the renewable energy in Wisconsin’s baseline is from behind-

the-meter facilities owned by industrial customers—primarily black liquor recovery and wood-

waste-fired boilers owned by paper mills. Wisconsin utilities typically do not purchase

renewable energy credits (“RECs”) from these facilities. If those RECs are sold to entities in

other states, those states, rather than Wisconsin, would be able to take credit for these behind-

the-meter facilities for compliance purposes, although the RECs are counted against Wisconsin

in setting the baseline.

3. Biomass Facilities

WPPI is concerned about how EPA will treat biomass facilities. Over half of the

renewable energy in Wisconsin’s baseline is from biomass facilities. While EPA considered

these facilities to be carbon-free for the purpose of setting the state’s goal, EPA has not yet

determined in the proposed rule how to treat these facilities for compliance purposes.34 EPA’s

November 19, 2014 guidance memorandum on biogenic CO2 emissions appears to support the




20

treatment of certain biomass feedstocks as being carbon neutral, implying that CO2 emissions

may be assigned to biomass facilities utilizing other feedstocks, contrary to the assumption in the

goal-setting calculation.35 In addition, the revised Framework for Assessing Biogenic CO2

Emissions from Stationary Sources,36 on which the guidance memorandum is based, remains a

draft document subject to revision.

4. Green Pricing Programs

WPPI notes that there are currently, and will continue to be, certain percentages of

renewable generation purchased under green pricing programs. In these programs, customers

choose to pay a premium above their retail rate for electricity from renewable resources. WPPI

does not believe that this renewable generation should be included in the baseline as existing

renewables or assumed to be available for compliance, since it is being purchased by customers

with the intent that it be in excess of what is required to meet regulatory requirements

5. Summary and Suggested Approach

WPPI realizes that it will be difficult for EPA to resolve all of these issues with existing

renewables as part of its calculation of state goals for the final rule. A better approach that EPA

should adopt is to exclude existing renewables from the goal-setting calculation and recalculate

state goals based on the appropriate level of incremental renewables to be added by each state.

Thus, while state goals would be higher (and seemingly less stringent) than under the method in

the proposed rule due to the exclusion of existing renewables from the goal-setting formula,

existing renewables would not be eligible to be used for compliance purposes. As a result, the

stringency of the target would not actually be affected. In effect, existing non-hydro renewables

would be treated the same way as existing hydro and the non-at-risk portion of existing nuclear

facilities. While these existing facilities would be expected to continue operating and providing

carbon-free generation, only new renewable and nuclear facilities could be credited for

compliance purposes.

35 Memorandum from Janet G. McCabe, Acting Assistant Administrator, U.S. E.P.A. Office of Air & Radiation to Air Div. Dirs. Regions 1-10 re: Addressing Biogenic Carbon Dioxide Emissions from Stationary Sources (Nov. 19, 2014), available at http://www.epa.gov/climatechange/downloads/Biogenic-CO2-Emissions-Memo-111914.pdf.

36 U.S. E.P.A. Office of Air & Radiation, Framework for Assessing Biogenic CO2 Emissions from Stationary Sources (Nov. 2014), http://www.epa.gov/climatechange/downloads/Framework-for-Assessing-Biogenic-CO2-Emissions.pdf.


21

In conjunction with the exclusion of existing renewables from the goal setting

calculation, a method to provide states with partial credit for early action would be to allow

states to take credit for a portion of their existing renewables for compliance purposes in

achieving the state’s goal. For example, states could be allowed to take credit for generation

from renewable facilities that are in excess of the state’s renewable portfolio standard

requirements.

B) States should get credit for additional renewables that come on-line before 2020.

Many states and utilities, such as WPPI, have already taken steps to incorporate

renewables and would do so irrespective of the proposed rule. This behavior should be

encouraged. However, the proposed rule provides no incentive for states to add renewables prior

to 2020, because the energy produced by these facilities before 2020 will not provide any

compliance benefit. Further, the rule provides no incentive for adding renewables or taking other

measures that go beyond what is required to meet a state’s goal during a specific compliance

period.

EPA should allow states to bank credits for new renewable generation added prior to

2020.37 States should be able to bank credits representing the energy generated by these facilities

and use these credits for compliance purposes beginning in 2020. Similarly, EPA should also

allow credits for renewable generation that exceeds what is required to meet a state’s goal during

a compliance period to be banked for use in a subsequent compliance period. For example,

excess credits from the 2020-2029 compliance period could be banked for the 2030-2032

compliance period.

VIII. BUILDING BLOCK 3b (NUCLEAR)

In the proposed rule, EPA recognizes nuclear generation as a zero CO2 emissions

resource and proposes to include 5.8 percent of a state’s 2014 nuclear capacity in calculating

state goals.38 WPPI requests that EPA eliminate the at-risk nuclear provision from the goal-

37 EPA discusses this option in the NODA. NODA, 79 Fed. Reg. at 64,545-46. EPA should include banked credits, particularly in the event it retains the interim goal.



22

setting calculation. In the event that EPA retains the at-risk nuclear provision, EPA should

recognize the impacts of the retirement of a nuclear unit at the end of its operational license on a

state’s goal.

A) EPA should eliminate the at-risk nuclear provision from the goal-setting calculation.

The proposed rule’s “at-risk” nuclear provision results in more stringent goals for states

with existing nuclear capacity than for states with no nuclear generation. Further, states in which

nuclear plants increased their output prior to 2012 are penalized rather than rewarded for this

investment.

EPA should eliminate the at-risk nuclear provision from the goal-setting calculation and

should instead provide an incentive for nuclear units to continue to operate and increase their

capacity factor and output, if possible. The at-risk nuclear provision in the goal does not

incentivize nuclear plants to maintain operations; once constructed, nuclear plants are relatively

cheap to operate. Excluding existing nuclear from the goal-setting calculation, but allowing

states with existing nuclear to take credit for a portion of their nuclear generation for compliance

purposes would provide this incentive. Otherwise, states are penalized for having nuclear that

shuts down, when oftentimes there may be little states can do to keep nuclear generation

operating. States have little to no input on the decisions of nuclear plant operators to continue

operations or shut down, and no input on the dispatch of nuclear units.

Additionally, EPA should recognize the early action that utilities have taken to increase

nuclear plant output, such as the 2011 extended power uprate of 160 MW at the Point Beach

Nuclear Plant, discussed in Section III.A). Yet, rather than getting any credit for this additional,

zero-CO2 generation, the additional 160 MW only serves to increase the stringency of

Wisconsin’s goal by increasing the at-risk nuclear factor in the goal-setting calculation. If EPA

retains the inclusion of at-risk nuclear capacity in setting state goals, WPPI believes that at least

the capacity from recent (post-2005) uprates should be excluded from determining the amount of

at-risk nuclear generation.

If EPA does retain a provision in the goal-setting calculation to account for at-risk

nuclear capacity, EPA should distinguish units that are truly at-risk and recalculate the

percentage of “at-risk nuclear” used in setting state goals. WPPI suggests that a non-regulated

merchant plant could be considered at-risk, whereas a utility-owned plant in a rate-regulated state


23

or a plant with a long-term power purchase agreement, such as Point Beach, would not be “at-

risk.”

B) EPA should account for the closing of nuclear units at the end of their operational lives.

Even if a nuclear unit is not shut down prematurely, it will still be required to shut down

at the expiration of its operating license, a decision under the exclusive jurisdiction of the

Nuclear Regulatory Commission. For example, the licenses for the two Point Beach units will

expire in 2030 and 2033, after being renewed in 2005. When the units begin to shut down,

Wisconsin will have to add additional CO2-free generation or implement other emission

reduction measures in order to replace the sizable loss of generation and maintain emissions

relative to the state’s goal.

If EPA does retain the at-risk nuclear provision in the final goal-setting calculation, EPA

should allow state goals to be adjusted upon the expiration of nuclear plant operating licenses to

remove the at-risk nuclear generation from the denominator of the goal-setting calculation. Any

other result would penalize a state that currently has nuclear generation over a state that has no

nuclear generation.

IX. BUILDING BLOCK 4 (ENERGY EFFICIENCY)

The proposed rule’s Building Block 4 analyzes how demand reduction and energy

efficiency can support reducing generation at affected EGUs.39 WPPI notes several concerns

with this proposal:

Inequities created by the ramping up period,

Credit for in-state measures, and

Credit for pre-2020 programs.

A) The proposed rule penalizes states with higher initial levels of energy efficiency during the interim period.

The proposed rule’s goal-setting calculation assumes that all states will ramp up from

2012 levels of energy efficiency to 1.5 percent of the 2012 level at the same rate.40 Thus, states



24

with higher initial levels of energy efficiency will have more stringent goals during the interim

period than states with lower initial levels of energy efficiency.

EPA should assume that all states begin with an initial level of energy efficiency

achievement of zero in the goal-setting calculation to avoid this inequity and penalty on states

that have already achieved higher levels of energy efficiency.

B) EPA should allow states to take full credit for in-state energy efficiency measures.

The proposed rule would require states that are net electricity importers to discount the

emission reduction impacts of energy efficiency measures so that only the in-state portion of

such emission reductions is counted.41 Under this approach, a utility would not know the value

of potential energy efficiency measures until after the fact, since the emission reduction value of

these energy efficiency measures might be discounted by a factor not known until the end of the

compliance period. Further, the utility generally has no control over this discount factor.

EPA should allow states to take credit for the full emission reduction impact of energy

efficiency measures undertaken within the state.

C) States should get credit for energy efficiency programs implemented before 2020.

The proposed rule provides no incentive for states to implement energy efficiency

programs prior to 2020, because energy efficiency savings do not provide compliance benefits

until 2020. Additionally, the proposed rule provides no incentive to implement energy efficiency

programs or take other, similar measures to go beyond what is required to meet a state goal

during a given compliance period.

Similar to WPPI’s earlier recommendation about renewables in Section VII.B, WPPI

suggests that EPA allow states to bank credits generated by pre-2020 energy efficiency savings

to use for compliance purposes beginning in 2020. States should also be allowed to bank excess

credits generated during a compliance period for use during a subsequent compliance period.




25

X. CONVERSION OF RATE-BASED GOALS TO MASS-BASED GOALS

A) The proposed rule requires a state electing to use mass-based goals to commit to a projection of future electrical needs too far in advance.

The proposed rule requires a state that chooses to use mass-based goals rather than rate-

based goals to produce a “reference case” forecast of generation by affected EGUs through

2030.42 The state would complete this forecast at the time it prepares its plan, and this forecast

would determine the state’s mass-based compliance goals for all compliance periods. Preparing

an accurate forecast that far in advance, however, would be extremely problematic. For

example, a future breakthrough in battery technology that markedly increases the adoption of

electric vehicles could result in significant additional electrical load that could not be anticipated

at the time the forecast is prepared.

EPA should allow states to adjust their mass-based goals based on changes that occur

after the generation projection is originally made. This would make a mass-based approach

more attractive as an alternative to a rate-based approach.

B) The proposed rate-to-mass conversion formula does not accurately translate a state’s rate-based emissions goal to an equally-stringent mass-based emissions goal.

To set a mass-based emissions goal, a state’s projection of generation by affected EGUs

under a reference case scenario would be multiplied by the state’s rate-based goal for the

applicable compliance period. This method does not accurately translate the rate-based goal to

an equally-stringent mass-based goal.

For example, a state’s existing nuclear generation will already be fully accounted for in

the reference case scenario. The nuclear plants will not be able to increase their output by 5.8

percent for compliance purposes, as would be presumed by the proposed formula. Similarly,

since existing renewables will be included in the reference case scenario, they would not be

available to offset generation by affected EGUs for compliance purposes, as would also be

presumed by the proposed calculation.

42 Clean Power Plan, 79 Fed. Reg. at 34,919, 34,922.


26

EPA’s Rate-to-Mass TSD proposes an alternative formula for converting rate-based goals

to mass-based goals.43 In the formula provided in the TSD, a state’s mass-based goal would be

determined by multiplying its rate-based goal by a quantity referred to as the “Mass Equivalent

Generation Level.” The Mass Equivalent Generation Level, as defined in the TSD, includes at-

risk nuclear generation and generation by existing renewables, as well as projected generation by

affected EGUs. The use of this formula appears to accurately translate a rate-based goal to an

equally-stringent mass-based goal. However, since the text of the proposed regulation itself

specifies the use of the incorrect formula,44 the proposed regulation must be revised to

incorporate the corrected conversion formula.45 Although WPPI appreciates the guidance

provided in the Rate-to-Mass TSD, WPPI is concerned that EPA is using this TSD to correct an

apparent error in the original proposal without a clear indication to commenters and stakeholders

that there was an error or that the TSD is substantively revising this aspect of the proposal.

C) EPA should provide presumptive mass-based goals.

As suggested in the proposed rule,46 EPA should provide “presumptive” translations of

rate-based goals to mass-based goals for each state. States should be allowed to either adopt this

presumptive translation or propose an alternative mass-based goal as part of the state plan

process.

XI. COMPLIANCE OPTIONS

A) EPA should clarify that the rule allows for full flexibility for compliance.

Although the proposed rule states that “the affected EGUs, to comply with the applicable

standards of performance in the state plan, may rely on any efficacious means of emission

reduction, regardless of whether the EPA identifies those measures as part of the BSER[,]”47

43 Rate-to-Mass TSD at 7-8.

44 Clean Power Plan, 79 Fed. Reg. at 34,953 (40 C.F.R. § 60.5770(a)(3)).

45 If EPA adopts WPPI’s recommendations to exclude from the goal-setting calculation both existing renewables (Section VII.A.5) and the at-risk nuclear component (Section VIII.A), then the conversion formula in the proposal will not require correction.




27

other sections of the proposed rule confuse the issue of how much flexibility is permitted. For

example, elsewhere in the proposed rule, EPA lists a number of measures such as partial carbon

capture and sequestration and transmission and distribution system efficiency improvements,

stating: “[t]he agency solicits comment on whether these measures are appropriate to include in a

state plan to achieve CO2 emission reductions from affected EGUs.”48

WPPI requests that EPA clarify that states and EGUs may rely on any efficacious means

of emission reduction to comply with the state’s goal.

B) Out-of-sector offsets should be permitted to be used for compliance.

The proposed rule appears to give conflicting guidance regarding the use of offsets for

compliance, initially stating that “the EPA is not proposing that out-of-sector GHG offsets could

be applied to demonstrate CO2 emission performance by affected EGUs in a state plan.”49 Then,

in the next sentence, the proposed rule states: “emission limits for affected EGUs that are

included in state plans could still include provisions that provide the ability to use GHG offsets

for compliance with the emission limits, provided those emission limits would achieve the

required level of emission performance for affected EGUs.”50 This generates confusion in

understanding the proposed rule and will likely cause problems in implementation.

WPPI requests clarification on this issue. Specifically, EPA should clarify that out-of-

sector offsets may be used for compliance. At a minimum, if unrelated out-of-sector offsets are

not allowed, EPA should allow the use of offsets that are directly related to generating units,

such as methane destruction credit for generators utilizing landfill gas or biogas from anaerobic

digesters.

C) State plans should be able to provide a three-year compliance period under either a mass-based plan or a rate-based plan.

The proposed rule provides that, beginning in 2032, states will be required to demonstrate

compliance with their final emission goal on a rolling three-year basis.51 However, EPA

proposes that the appropriate averaging time for affected EGUs or other affected entities to






28

demonstrate compliance with state plan requirements should be no more than 12 months for a

rate-based emission standard and no more than three years for a mass-based standard.52 It is not

clear why an affected entity’s compliance period should be shorter than a state’s compliance

period, or why the compliance period should be shorter under a rate-based emission standard

than under a mass-based standard. EPA should allow state plans to provide a compliance period

of up to three years regardless of whether the state selects a rate-based approach or a mass-based

approach.

XII. CONCLUSION

WPPI appreciates the opportunity to submit comments on the proposed rule. WPPI has

long seen the importance of environmental responsibility and in particular, reducing GHG

emissions from EGUs. WPPI respectfully requests that EPA consider the above comments and

implement WPPI’s suggested changes in formulating any final rule stemming from the proposed

rule. WPPI recognizes that many of the issues raised in its comments require additional study

and planning, and WPPI asks EPA to undertake this work in collaboration with other federal,

state, and regional entities with particular expertise in reliability, the operation of the electric

grid, the operation of RTO markets and other energy issues.

SUBMITTED BY:

/s/ Andy Kellen

Andy KellenVice President, Power Supply ResourcesWPPI Energy1425 Corporate Center DriveSun Prairie, WI 53590(608) [email protected]

November 28, 2014

52 Clean Power Plan, 79 Fed. Reg. at 34,956 (proposed definition of “Compliance period” at 40 C.F.R. § 60.5820).