Seattle City Light Supports Carbon Reductions as EPA Considers Replacing Clean Power Plan Rules

Seattle City Light is one of eight electric utilities that are urging the Environmental Protection Agency to maintain cost-effective carbon-reduction opportunities as the agency considers a replacement for the Obama Administration’s Clean Power Plan.

Seattle City Light is one of eight electric utilities that are urging the Environmental Protection Agency to maintain cost-effective carbon-reduction opportunities as the agency considers a replacement for the Obama Administration’s Clean Power Plan.

City Light and the other utilities support the Clean Power Plan. However, in formal comments submitted as part of the EPA’s rulemaking process, the utilities urged the agency to:

• Maintain rules that achieve meaningful emission reductions and are based on measures that reflect the interconnected nature of the electric grid.
• And provide guidance on state plans to ensure meaningful emission reductions while creating flexible compliance opportunities for utilities.

One key consideration is whether utilities will be allowed to shift generation sources or reduce the use of high-emission plants to achieve carbon emission reduction goals.

City Light and the other utilities believe generation shifting is one of the most cost-effective means to deliver reliable electricity and reduce emissions.

The other utilities supporting this approach are Austin Energy, Exelon, Los Angeles Department of Water and Power, National Grid, New York Power Authority, Pacific Gas and Electric and the Sacramento Municipal Utility District.

Here is the text of the full comments submitted by the utilities:

February 26, 2018

Docket ID No. EPA-HQ-2017-0545 Environmental Protection Agency EPA Docket Center (EPA/DC) EPA WJC West Building, Room 3334 1301 Constitution Ave. NW Washington, DC 20460 (submitted via regulations.gov)

Re: State Guidelines for Greenhouse Gas Emissions from Existing Electric Utility Generating Units Advance Notice of Proposed Rulemaking
To Whom it May Concern:

On December 28, 2017, the U.S. Environmental Protection Agency (EPA) published in the Federal Register an Advance Notice of Proposed Rulemaking (ANPRM) regarding “State Guidelines for Greenhouse Gas Emissions from Existing Electric Utility Generating Units”.1 This action seeks comment on the regulatory structure for a potential replacement rule to the previous administration’s Clean Power Plan, which was finalized on October 23, 2015.2 On behalf of Austin Energy, Exelon, Los Angeles Department of Water and Power (LADWP); National Grid; New York Power Authority (NYPA); Pacific Gas and Electric, Seattle City Light; and Sacramento Municipal Utility District (SMUD), we submit the following comments on the ANPRM.3
1 State Guidelines for Greenhouse Gas Emissions from Existing Electric Utility Generating Units, 82 Fed. Reg. 61,507 (Dec. 28, 2017).
2 Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, 80 Fed. Reg. 64,661 (Oct. 23, 2015).
3 The signatory companies may offer additional comments on the ANPRM in separate comments.
4 EPA identified four main areas in which it solicited comment (while also noting that it did not intend to limit comment to those identified areas) and requested that commenters include the corresponding numeric identifiers when providing comments (see 82 Fed. Reg. 61,510). Accordingly, we note in each section below to which questions we are responding. As a whole, these comments address areas 1a, 1b, 2, 3a, 3b, 3c, and 3e.

These comments are focused on ensuring that any definition of the best system of emission reduction (BSER) and program to replace the Clean Power Plan achieves meaningful emission reductions and reflects best practices utilized across the industry, consistent with the statutory language of the Clean Air Act (CAA).4 We supported the Clean Power Plan’s approach, which was based upon a determination of BSER that reflects the system of emission reduction opportunities that the electric industry is already implementing to reduce emissions while maintaining a reliable electric grid, including the use of generation shifting. Pursuant to this ANPRM, if EPA elects to repeal the Clean Power Plan, we urge EPA to:
• • replace the rule with one that achieves meaningful emission reductions and that is based on measures that reflect the interconnected nature of the electric grid; and
• • provide guidance on state plans to ensure meaningful emission reductions while creating flexible compliance opportunities for covered entities.

I I. Any Definition of BSER And Program to Replace the Clean Power Plan Must Reflect Industry Practice, Including Generation Shifting5

5 This section of the comments is responsive to EPA area 2.
6 John Larsen et al., Assessing the Final Clean Power Plan Energy Market Impacts (May 2016), http://rhg.com/wp-content/uploads/sites/17/2016/05/AssessingCleanPowerPlan_EMI.pdf.
7 Comments of Los Angeles Department of Water and Power, Docket ID No. EPA-HQ-OAR-2013-0602 (Dec. 1, 2014).
a. Generation shifting is how the grid and companies operate

The definition of BSER and any program to replace the Clean Power Plan must reflect actual operation of electric grid and the strategies the electric sector has deployed to reduce emissions. These strategies include generation shifting, or operating lower- or non-emitting resources more and operating higher emitting resources less in response to market signals, regulatory constraints, or demand. This should also include operating and maintaining existing zero-carbon resources or building new zero-carbon generation.
The electric grid operates as an interconnected system, shifting generation among affected units and to zero-emitting sources for a variety of reasons, including environmental requirements. In fact, generation shifting is the ordinary means by which supply and demand are instantaneously matched throughout the interconnected electricity grid, and as balancing authorities and utilities make dispatch decisions to deliver power to consumers at least-cost, subject to reliability and other constraints.
Generation shifting is consistent with industry practice and is evident in the transition from a system heavily dependent on coal (55 percent of all generation in 1990) to one that in 2016 was more evenly balanced across natural gas (33 percent), coal (31 percent), nuclear (21 percent), and hydroelectric and other renewable resources (14 percent). Combined with the expanding role of energy efficiency in meeting consumer demand, the shift in generating resources has led to a decrease in emissions of criteria air pollutants and greenhouse gases. Our companies’ successes at reducing emissions while continuing to deliver electricity reliably demonstrates that this approach is consistent with the nature of the electric grid and the emission reduction opportunities generation shifting provides.

Modeling of the emission guidelines established by the Clean Power Plan suggested the most cost-effective compliance would be through generation shifting.6 Our companies construct, generate, sell, and purchase renewable and zero-carbon electricity in response to customer demands, state policies, and market opportunities, and we do so cost-effectively. For example, many of our companies have assets that are covered by or are within the footprint of the Regional Greenhouse Gas Initiative or the California Cap-and-Trade Program. We comply and facilitate cost-effective compliance with those programs through a combination of measures including the use of lower- and zero-emitting resources and deployment of energy efficiency.

There are numerous examples of companies using generation shifting as a cost-effective, efficient, and low-emitting best practice across the country. Many companies also invest in energy efficiency projects to reduce emissions. For example, Los Angeles Department of Water and Power is making investments across its system to lower emissions, including “replacement of coal resources, renewable energy, modernizing power plants…[and] energy efficiency.”7 This approach, focused on shifting generation to cleaner resources, has reduced its total CO2 emissions by 42 percent from 1990 to 2016. Similarly, Austin Energy has pursued a strategy of generation shifting in order to reduce emissions, including “replac[ing] older fossil-fueled generation with efficient natural gas combined cycle and simple cycle turbine units,” adding 1,005 MW of renewable capacity resulting in over 20 percent of generation to come from renewables in 2013 (with additional contracts to reach a 35 percent renewable portfolio in 2017), and setting “future resource priorities to allow for the reduced utilization or retirement of [its] coal and gas steam units within the next decade.” 8 Pacific Gas and Electric delivered nearly 70 percent greenhouse gas-free electricity to its customers in 2016 from a combination of nuclear, large hydro and renewable sources of energy.9 Exelon Corporation also has long provided a zero-carbon nuclear fleet that underpins regional air quality and grid reliability. For example, in 2016, Exelon completed an uprate at Peach Bottom Atomic Power Station in Pennsylvania, which added another 276 MW of zero-carbon generation, displacing over two million short tons of CO2 annually. Additionally, Seattle City Light has been “operating an aggressive conservation program for more than thirty years,” and has reached net CO2 emissions neutrality by serving residents and businesses primarily though “low cost, reliable, non-emitting hydropower.”10 National Grid has been, and continues to be, a national leader in the deployment of energy efficiency programs, and “believes strongly that energy efficiency strategies and technologies are an achievable and cost-effective means to reducing carbon emissions nationwide.”11
8 Comments of Austin Energy, Docket ID No. EPA-HQ-OAR-2013-0602 (Dec.1, 2014).
9 Denny Boyles, Nearly 70 Percent of PG&E’s Electric Power Mix Free of Greenhouse Gases (Mar.16, 2017) http://www.pgecurrents.com/2017/03/16/nearly-70-percent-of-pge%E2%80%99s-electric-power-mix-free-of-greenhouse-gases/.
10 Comments of Seattle City Light, Docket ID No. EPA-HQ-OAR-2013-0602 (Dec. 1, 2014).
11 Comments of National Grid, Docket ID No. EPA-HQ-OAR-2013-0602 (Dec. 1, 2014).
12 Repeal of Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, 82 Fed. Reg. 48,039 (Oct. 16, 2017).
b. Generation shifting satisfies the criteria for BSER

In EPA’s Proposed Clean Power Plan Repeal published prior to this ANPRM, EPA proposed to define BSER “as being limited to emission reduction measures that can be applied to or at an individual stationary source,” and are, therefore, “based on a physical or operational change to a building, structure, facility, or installation at that source.”12 While EPA has now proposed that the Clean Power Plan did not fit this statutory interpretation, we disagree.

BSER should not be limited only to measures applied to an individual facility nor should it be interpreted to preclude the system that most cost-effectively reduces emissions and that is broadly used by companies and states to reduce emissions. BSER should reflect the best that a facility can do to reduce emissions. This can include the application of a technology or operational change at a facility, such as the reduced utilization of a higher emitting facility due to generation shifting. Each of these actions reduces emissions.

Generation shifting involves a reduction in utilization of higher-emitting methods of generating electricity, which can lead to an increase in utilization of lower-emitting methods of generation. Including generation shifting in BSER and any program to replace the Clean Power Plan is consistent with the Clean Air Act. BSER that reflects generation shifting reduces emissions, is of reasonable cost, encourages technology development, and is adequately demonstrated to reduce emissions from affected sources. Thus, it fulfills the statutory criteria—it achieves meaningful emission reductions considering cost and is adequately demonstrated.13
13 42 U.S.C. §7411 (1)(a).
14 This section of the comments is responsive to EPA area 2.
15 This section of the comments is responsive to EPA area 1a, 1b, 3a, 3b, 3c, and 3e.
I II. Limiting Measures to those EPA Describes as “Inside the Fence-line” Could Increase Costs and Potentially Emissions14

Generation shifting reflects the most cost-effective and flexible strategy for lowering emissions at affected units. This has been demonstrated and implemented by our companies and companies across the sector throughout the U.S. Defining BSER or establishing any program to replace the Clean Power Plan in a way that precludes and does not reflect generation shifting would ignore this long-standing industry best practice and fail to encourage the industry to pursue the lowest cost emission reductions. Such an approach could increase costs of compliance with BSER, as compared to a definition that reflects industry realities and current operating practices.

Furthermore, focusing on heat rate improvements as a system of emission reduction could increase emissions, particularly over the long-term, by potentially creating incentives to invest in and increase the operation of higher emitting resources—the potential “rebound effect”. Because heat rate improvements reduce variable operating costs, their implementation at affected units could increase the cost-competitiveness of those units compared to lower-emitting fossil sources. This effect could lead to greater total CO2 emissions, despite the units’ reduced emission rate. We would oppose any legal interpretation of BSER that does not achieve meaningful emission reductions. Thus, we urge EPA to establish emission standards that achieve meaningful emission reductions and are based on measures the industry is already cost-effectively implementing, including generation shifting.

III. EPA Should Finalize Binding Emission Guidelines to Ensure a Level of Consistency Across States and Provide Guidance on Flexible Trading Programs15 a. EPA should ensure consistent implementation of emission standards under section 111

EPA requests comment in the ANPRM on its role in developing emission guidelines and the role of states. We urge EPA to set binding emission guidelines to ensure states develop plans that are approvable and consistent with statutory requirements. While it is important that states have the flexibility to design plans that reflect their power plants’ and states’ unique characteristics, EPA must establish a clear set of criteria for evaluating state plans and determining whether state standards are sufficient for environmental and public health protection. Thus, the emission guidelines should set forth what all states must at a minimum achieve, recognizing that the Clean Air Act allows states to require additional reductions, if appropriate and desired.

Consistent with past practice and legal obligation, EPA should provide clear guidelines for emissions standards and components of a satisfactory state plan that achieve the emission guidelines established by EPA. This will help avoid states spending time and resources on approaches and plans that may not ultimately be approvable or legally defensible. Section 111 requires EPA to ensure state plans contain “satisfactory” “standards of performance,” which necessarily requires EPA to set criteria for evaluating the standards of performance proposed in state plans for their effectiveness in reducing emissions consistent with the emission guidelines.16
16 42 U.S.C. § 7411(d)(1), (2)(A).
b. EPA’s emission guidelines should be technology forcing consistent with section 111 c. EPA must consider the implications of varied emission reduction opportunities across affected sources

EPA and courts have historically interpreted and implemented Section 111 as technology-forcing. Thus, EPA has the authority and obligation to establish a regulation that is based on the use of a technology even if that technology has not been routinely deployed by all existing units. EPA has successfully promulgated several technology-forcing standards. For example, under the 1971 new source performance standard under section 111(b) for certain new, modified, and/or reconstructed coal-fired electric generating units, EPA established a SO2 emissions standard informed by emission reductions that could be achieved with the application of a flue gas desulfurization device (or scrubber). When EPA established this standard, only three scrubbers in the U.S. were in operation. By 1984, EPA reported that there were 114 scrubbers in operation, with more than 100 more systems planned or under construction, and today these units are widespread. While clearly not all units had implemented the technology at the time EPA applied its regulatory standard, such a standard was still considered achievable. The D.C. Circuit has also recognized EPA’s authority to set such a standard.

To facilitate the design of approvable state plans, EPA should also finalize presumptive standards and provide sample state plan text. However, both must ensure the achievement of meaningful emission reductions.

Emission reduction opportunities will vary due to multiple factors, including geographic location, access to fuel and technology types, operational and ownership characteristics, already-undertaken efficiency and emission reduction improvements at specific sources, and market dynamics. Thus, facilities will have differing levels of reduction opportunities at differing costs. For example, a generator that has not undergone any significant facility upgrades in the past decade may be able to implement more cost-effective incremental emission reductions than a generator that implemented efficiency improvements in the previous year. Other facilities, such as the W. A. Parish Plant in Texas, may find it cost-effective and competitive to install carbon capture and sequestration or co-firing technologies. And, other facilities may elect to reduce their utilization as a means to reduce emissions. Thus, emission guidelines should reflect such opportunities across the electric sector and allow for trading across facilities that can help capture these cost-effective emission reductions.
Additionally, while subcategories can be a means to recognize these varying reduction opportunities, we urge EPA not to divide affected sources in a way that effectively allows for the establishment of standards that do not achieve meaningful emission reductions. The result of subcategories should not be to create exceptions for certain facilities that would otherwise be held to an achievable and cost-effective standard.

d. EPA should provide guidance on the use of trading systems and ensure that guidelines for state standards are conducive for trading programs with environmental integrity

Because the most cost-effective means to achieve reductions will vary, the final rule should ensure that states have the authority to allow facilities to trade in order to capture lower cost opportunities while still achieving meaningful reductions.

Additionally, EPA’s emission guidelines should ensure that states and companies can build upon the successful use of flexible compliance measures, including trading programs. These measures can be critical for achieving efficient, cost-effective emission reductions. They are also important opportunities for power producers and utilities that own and operate facilities across multiple states to reduce emissions most efficiently across their fleets and the electric grid, which rarely follow state boundaries. EPA can help facilitate cost-effective compliance with regulatory obligations for these multi-state companies by finalizing binding emission guidelines that provide a level of consistent stringency among states.
We look forward to continuing to constructively engage with EPA on this rulemaking and urge EPA to implement a regulation under section 111 that achieves meaningful reductions, considers the electric system as a whole, and allows cost-effective approaches, including generation shifting. If you have any questions, please do not hesitate to contact me at mbradley@mjbradley.com.

Sincerely,

Michael Bradley
President
M.J. Bradley & Associates