Presentation Transcript

1. Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units

   Northwest & Intermountain Power Producers Coalition Board Presented to: Alan Davis June 2014 Tom Stoops
2. Rule Documents The draft rule runs 636 pages and additionally includes: Seven Technical Support Documents Two memorandum, one legal and one on benefits One summary of power sector modeling Four technical support spreadsheets, each with multiple tabs Numerous EPA fact sheets and explanations
3. Regional Energy Profiles
4. Rule Basics National Goal To reduce US CO2 emissions from existing power plants by 30 percent from their 2005 levels by 2030 EPA proposes to partner with each state It’s unclear with whom in each state The rule has two major components Component 1—Statewide goals The EPA will give (or has provided) each state an individual emissions target for power plants that it must achieve by 2030 Each state must meet a specific interim target The state targets are expressed in terms of overall CO2 emissions divided by total generation in each state (CO2/MW) EPA’s target is to reduce the “pollution/power ratio”
5. Issue 1—State Carbon-intensity targets
6. Rule Basics Component 2—State guidelines for developing, submitting, and implementing state plans The Carrot EPA sets the targets and requires each state to develop an individual plan for the state to achieve that target The rule identifies 5 key elements or “building blocks” of a plan that EPA would support The Stick EPA’s targets are stringent and cannot be adjusted by a state Each state must file a compliance plan with EPA EPA will review and approve a state’s plan If a state’s plan doesn’t comply or if a state doesn’t file a plan, EPA will step in and develop a plan for that state
7. Building Blocks Make existing fleet more efficient Substitute or redispatch lower carbon intense sources Replace coal plants with new plants that have little or no carbon emissions Increasing state energy efficiency programs States can band together into regional approaches EPA Assumptions: 6% improvement in heat rates NGCC utilization is increased to 70% All nuclear plants under construction are completed, no retirements occur, and renewable generation equals to current RPS goals States will increase efficiency to 1.5% annually
8. EPA’s criteria for approving state plans State plans are flexible, but they must include: Enforceable measures to reduce CO2 emissions from generators Projected achievement of EPA-determined state goals within timeframes Quantifiable and verifiable emissions reductions Biennial plan for reporting on implementation, progress, and corrective actions State plans can utilize two approaches A “portfolio” approach that contains measure that apply directly to the specific C02 sources or substitute other measures that limit output from these sources and reduce emissions (the building blocks) Emission limitations that apply solely to the affected CO2 sources
9. EPA’s criteria for approving state plans State plans must include 12 components Identification of affected entities Description of plan approach and geographic scope Identification of state emission performance level Demonstration that plan is projected to achieve emission performance level Identification of emissions standards Demonstration that each emissions standard is quantifiable, non-duplicative, permanent, verifiable, and enforceable Identification of monitoring, reporting, and recordkeeping requirements Description of state reporting Identification of milestones Identification of backstop measures Certification of hearing on state plan Supporting material
10. Draft Milestones Draft rule published – June 2, 2014 Comments due September 30th, 2014 Final rule released June 30th, 2015 State plans due June 30th, 2016 States can seek 1 year extension Multi-state plans due June 30th, 2018 EPA gave itself one year to approve state plans
11. Those are the basics What does it all mean to IPPs ?
12. Key State Observations on EPA Assumptions Washington, Oregon and Idaho have very low carbon emission rates and must achieve some of the of the largest percentage reductions EPA removed hydropower from baseline calculations to avoid distortions In Washington, EPA assumes at risk Columbia Generation, sufficient NGCC capacity to redispatch Centralia, 7% renewables and 0.88% energy efficiency in 2012 In Oregon, EPA assumes all Boardman output is shifted to NGCC, high levels of renewables (12%) and efficiency (1.4%) in 2012 In Idaho, EPA assumes it had no coal to redispatch, high levels of renewables due to QFs (16%) and efficiency (0.76%)
13. Key State Observations on EPA Assumptions EPA assumed MT had no NCGG to redispatch, low baseline renewables and efficiency—it will end up with 2nd highest target intensity level California must make a 23% reduction and EPA assumes a high level of energy efficiency and CA’s high penetration of renewables Arizona has a 52% reduction, but the EPA rule doesn’t address the 2550 MW Navajo Generation Station or the 1490 MW Four Corners plant because they are on tribal land EPA’s rule gives the tribes have the “opportunity” to join EPA’s plan, but they have no obligation to do so
14. What’s different about the rule? Traditionally EPA looks directly at pollution sources and regulates those sources at the individual plant This rule requires that states look at the entire power sector Energy efficiency, renewables, and redispatch are outside state air quality agency expertise and decision making The regulations are state-by-state, rather than plant-by-plant EPA sets a state standard and leaves it to the states as to how best to meet it The action or where the rubber will meet the road will be at the state level—not the federal level More state actors and decision makers will be involved in these air quality decisions, including state regulatory commissions and state energy agencies
15. What states are likely on board already? California Intends to be a leader in implementing it, particularly getting states to join its cap and trade program Oregon and Washington The Governors joined CA and British Columbia in agreeing to cooperate to reduce carbon emissions by signing the Pacific Coast Action Plan on Climate and Energy Washington Governor Inslee signed executive Order 14-04 in April outlining steps to reduce carbon, including directing utilities to reduce or eliminate the use of electricity from coal plants Nevada NV passed legislation that requires NV Energy to eliminate 800 MW of power from coal sources by 2019
16. What states are likely not on board? Arizona Considering fighting the rule because of its costs In response to the Western Climate Initiative and federal climate initiatives, the Arizona Legislature passed a bill that prohibits state agencies from adopting or enforcing state or regional regulations on greenhouse gas emissions without legislative authorization—the state may not be able to adopt such rules at all Wyoming Governor Mead has indicated Wyoming is going to fight the rule
17. Our Early Concerns
18. Why NIPPC should be concerned All NIPPC members will be impacted Coal and natural gas Renewable generation These rules will also impact The transmission system Natural gas infrastructure Coal infrastructure These rules will have a pronounced impact on future power markets in the West and in the rest of the US
19. Why NIPPC should be concerned EPA only references the IPP industry once in the rule “Independent power producers (IPPs) may also face unique challenges but nevertheless have options. Companies with coal- fired EGUs can implement efficiency improvements as well as other unit-level compliance options such as co-firing or fuel switching. While these types of companies do not use the integrated resource planning process that many vertically integrated utilities use, they still undertake long-term business planning and as a result are in a position to consider different long-term strategies related to their generating assets. Many IPPs are actively developing renewable generating capacity and natural gas-fired generating capacity. IPP owners could also fund demand-side energy efficiency programs and document the resulting electricity savings.”
20. Why NIPPC should be concerned EPA’s rules don’t reflect western power markets The draft rules appear to assume an organized market and don’t appear to recognize the bilateral market in the West The draft rules aren’t reflective on how power flows and the transmission system works in the West The rules don’t recognize the interstate nature of power markets in the West The draft rules haven’t analyzed reliability implications of discretely closing several coal plants
21. Why NIPPC should be concerned Individual state programs could distort power markets in the West Similarly situated power plants in the West most likely will be operating under different state carbon regulations, which could disadvantage certain plants or otherwise distort power markets There will be far more actors that could impact power markets State regulatory commissions, energy offices and air quality agencies will be the key players and increase the complexity of compliance Does state-level regulation and individual state flexibility advantage or disadvantage IPPs? Does the addition of state regulatory commission to the decision making help or hurt IPPs? Would regional regulation or carbon markets provide a better solution?
22. Possible Near-Term NIPPC Actions Prepare and file comments during the initial 120-day federal rulemaking process Formulate and develop NIPPC positions NIPPC could take positions on regional approaches that individual companies may not be able to take Should they be joint NIPPC comments or individual company comments or both? Engage and educate state agencies These agencies would include the environmental protection, energy offices and state utility commissions They need to understand the role of the independent power provider and how it could be part of the solution This should begin immediately and before states file their comments Participate in the regional dialog Need make sure actions taken don’t disadvantage IPPS
23. Alan Davis (406) 442-3003 alan.davis@tetratech.com Tom Stoops (505) 247-4933 ext 203 tom.stoops@tetratech.com Contacts