State regulators prepare to send EPA final comments on president’s Clean Power Plan

State regulators on Tuesday (Jan. 5) hosted the fifth and final “stakeholder” meeting in Little Rock before a draft plan and comments are submitted to federal environmental officials on Jan. 21 to move Arkansas closer to complying with President Obama’s sweeping Clean Power Plan.

The all-day meeting, held at the Little Rock headquarters of the Midcontinent Independent System Operator, is the latest in a series of meetings hosted by the Arkansas Department of Environmental Quality and the state Public Service Commission. The meetings, initiated by the Beebe administration in the summer of 2014, were reconvened in October by Gov. Asa Hutchinson to develop a state plan to meet the federal Environmental Protection Agency’s requirement to reduce carbon emissions at 19 power plants across the state.

The EPA first released its final rules on President Obama’s far-reaching and controversial Clean Power Plan in early August, taking into account the more than 4.3 million comments received from states and stakeholders across the country following the first draft on June 2, 2014.

At the request of Gov. Hutchinson, ADEQ Director Becky Keogh and PSC Chair Ted Thomas began the stakeholders’ group first meeting in the fall to get input on a new “emissions standard” roadmap for putting Arkansas on track to cut carbon pollution from the power sector 36% below 2005 levels by 2030. On Tuesday, Keogh reiterated the governor’s charge to research and develop “the least cost option for compliance” for the state.

“This (meeting) is all about Arkansas, and finding the right answer for us,” the ADEQ director said at the beginning of the six-hour meeting.

MASS OR RATE-BASE PLAN
Much of the discussion at Tuesday’s summit largely centered on whether Arkansas regulators should choose a mass- or rate-based state plan for complying with the EPA’s greenhouse gas rules.

The EPA’s so-called 111 (d) regulations, which for the first time puts national limits on carbon pollution, establishes final emission guidelines for states to follow in developing plans to reduce greenhouse gas emissions from existing fossil fuel-fired electric generating units. Final rules for the plan were published in the Federal Register on Oct. 23, triggering a 90-day comment period that will end in nearly two weeks on Jan. 21.

If the state chooses a rate-based plan compliance plan, utilities and independent power producers in Arkansas would be required to meet an emission rate goal either individually or on average. Under a mass-based plan, those same utilities and IPPs will have to meet a “mass-based” or statewide goal by holding an allowance for every ton of CO2 emitted.

During the first two hours of Tuesday’s meetings, Duke University’s Sarah Adair provided an intricate presentation detailing the pro and cons of both approaches. Adair said the EPA proposal includes mass- and rate-based versions of a federal plan as well as mass- and rate-based model rules, which will allow Arkansas and other states to either adopt the EPA federal plan, or to adapt by substituting their own provisions subject to EPA approval. The proposed model rules are similar to but more flexible than the federal plan proposals, said Adair, who is senior policy associate at Duke University’s Nicholas Institute for Environmental Policy Solutions.

Adair said it is her understanding that the EPA is now seeking public comments from stakeholders in all 50 states on both the model rules and federal plan ahead of the Jan. 21 deadline. She explained to the Arkansas panel that the information on the requirements are extensive and complex.

“If you read the document, you know there is a lot of issues that the EPA is seeking comment on,” Adair said of the 1,500-page plan filed with the Federal Register. “I am not going to attempt to touch on all of them this morning, but someone … created an Excel spreadsheet with the specific things that the EPA is asking for comment on – and there is at least a list of 300 items or more.”

Adair then spent the next hour or so explaining many of the technical details of both mass- and rate-base plan, taking time to answer questions and discuss some of the concerns about the federal environmental mandate.

In the afternoon session, much of the discussion focused on how ADEQ and PSC officials will move forward in drafting a plan containing all of the comments and questions from state regulators and stakeholder groups. Several members of the panel, including representatives of Entergy Corp., the Arkansas Advanced Energy Association, and the Electric Cooperatives of Arkansas, also provided detailed comments on parts of an Arkansas strategy they preferred or disliked.

NEXT STEPS
ADEQ Associate Director Stuart Spencer, who spearheaded Tuesday’s meeting, said the state officials will accept additional comments from stakeholders on the Clean Power Plan until Jan. 12. Those comments will then be drafted in a final proposal, reviewed by Keogh and Thomas, and vetted by the governor’s office.

Once those comments are submitted to the EPA, Arkansas regulators will have until Sept. 6, 2016, to submit a final implementation plan to comply with the president’s plan. Arkansas and other states can also choose to submit an initial plan with a two-year extension request, regardless of whether Arkansas chooses to go it alone or join a multi-state plan.

If the EPA does not respond within 90 days, then the extension is automatically approved. However, states must explain efforts they have made to evaluate various approaches to comply with the federal emission rules, demonstrate engagement with the public, and lay out steps and processes necessary to submit a final plan by Sept. 6, 2018. States that choose to request an extension also must submit a process report by Sept. 6, 2017. Stakeholder input will be a key part of the plan, Thomas and Keogh said. If states fail to submit an approvable plan, then the EPA will step in and implement the proposed federal plan.

Spencer said the state plan will also address requirements of Act 382, which was passed by the Legislature during the recent 90th General Assembly. Under the legislation, any final plan submitted to the EPA must be reviewed through a “transparent public process” to assess the full impact of the federal rules on cost to Arkansas ratepayers, reliability, economic development, and greenhouse gas emissions.

Spencer also reiterated that Arkansas is continuing on a dual track strategy of seeking compliance options while pursuing legal challenges through the office of Arkansas Attorney General Leslie Rutledge.

In other highlights of Tuesday’s meeting, MISO officials said they plan to have an updated analysis in late February on efforts to reduce carbon emission from existing power plan’s in the grid operator’s 15-state region. David Boyd, MISO’s vice president of government and regulatory affairs, told the panel that preliminary finding from that study will show that Arkansas can be compliant with the EPA carbon emission rules “with relatively very little effort” by 2025.

PSC Administrative Judge Eddy Moore agreed with Boyd’s assessment. He told the panel that the commission’s internal study confirms similar statistics, based on the state’s declining natural gas prices.