over EPA’s interim compliance goals. The changes to individual plants, transmission and pipeline infrastructure, and the function of state and regional power markets will all necessitate much more time than EPA allocates by imposing 2020 as the interim compliance goal.
For example, the Southwest Power Pool (SPP) has met with NRECA and other stakeholder groups, and it has provided comments to EPA stating that the interim compliance goals cannot be met. On October 9, 2014, the SPP submitted comments to EPA stating that the Agency is 1) not providing sufficient time to make the changes that will be required by EPA’s rule, 2) that reliability will be adversely impacted, and 3) the rule will have material impacts on market-based dispatch of EGUs within the SPP.294 Among other
293 See Attachment L. 294 Supra note 286.
recommendations, SPP says that more time is needed to meet the compliance goals. SPP further states that without the added time to make the transmission and generation capacity changes, grid reliability could be overloaded in portions of six States and may well be severely overloaded in portions of three of those States.295
Yet EPA claims to provide significant flexibility for States in choosing when and how to achieve BSER through its four building blocks. As EPA states:
We also note that a state is not required to achieve the same level of emission reductions with respect to any one building block as assumed in the EPA’s BSER analysis. If a state prefers not to attempt to achieve the level of performance estimated by the EPA for a particular building block, it can compensate through over-achievement in another one, or employ other compliance approaches not factored into the state-specific goal at all. EPA has estimated reasonable rather than maximum possible implementation levels for each building block in order to establish overall state goals that are achievable/while allowing states to take advantage of the flexibility to pursue some building blocks more aggressively, and others less aggressively, than is reflected in the goal computations, according to each state’s needs and preferences.296
However, by imposing interim goals to be met by 2020, States, and the regulated entities under the Guidelines, will be required to achieve at least two-thirds of the reductions within at most two to three years after State plans are approved.297 EPA claims states and the regulated community will have sufficient time to understand the requirements and begin implementing them, which apparently assumes they would take action prior to the state plans being finalized and approved. To justify this approach, EPA states that affected sources “will have knowledge of state requirements as they are adopted” and will therefore have more time to act.298
Regardless, the requirement for States to develop and implement interim goals, including “achievement demonstrations,” imposes substantial cost and timing burdens on both the States and the regulated community.299 Further, the tight timeframe for meeting the interim goals largely negates the opportunity for States to develop any reasonable alternatives to EPA’s approach, thereby eliminating any 295 Id. p. 6. 296 79 Fed. Reg. at 34,904. 297 Id. at 34,905. 298 Id. 299 Id. at 34904.
flexibility for States and affected facilities. This will force shutdowns of many coal-fired power plants as the only means of achieving interim goals in such a short time frame. These plants will often have a useful life that extends well beyond the 2030 compliance deadline, and EPA’s guidance must be revised in a way that assures the States and utilities have the ability to keep these plants economically viable.
For example, the Arizona Department of Environmental Quality (ADEQ) has already notified EPA of the significant challenges it faces. On August 22, 2014, ADEQ documented that EPA’s interim goals remove any flexibility for the State to comply with EPA’s guidelines.300 Arizona’s emission reduction of almost 52% is already one of the most stringent under EPA’s proposal. EPA compounds the challenge faced by Arizona and its coal-fired utilities by requiring over 95% of their reductions by the interim compliance goal of 2020. This leaves the State with little choice but to shut down coal-fired capacity and dispatch natural gas (Building Block 2), as the expected ramp up and utilization of either Building Blocks 3 or 4 would occur too late to meet the 2020 goal. Compounding this, the ability of Arizona to meet the 2020 interim goal rests solely on Building Block 2, as improvements to heat rate efficiency would be of no consequence if the units are shut down. Furthermore, the utilities would have no business case to install expensive upgrades if they are to be shut down anyway.
While EPA suggests States should begin to ramp up energy efficiency requirements by 2017, which would likely precede the time when many States receive EPA approval of their plans -- as described above -- States will be unlikely to have legislative authority in place for several of the building blocks and, at most, only have authority over building block 1. That leaves most States with only the option of forcing fuel switching from coal over to natural gas for baseload power plant – assuming they even have the natural gas available and infrastructure in place to make such a sudden and dramatic change. As described by the State of Arizona, this would create complications of needing an uninterruptable supply of natural gas, pipelines and storage and enough sufficient available NGCC units to make up the difference in electric generating capacity.
300
Most of the merchant plant generators have current contracts with in-state and out-of-state entities, and Arizona has no control on how the units would be dispatched. ADEQ explains that building new NGCC units imposes siting and permitting requirements that average 10 years, or more time if federal lands are involved. Thus, no short-term solution is available and certainly would not be available in time to meet EPA’s interim goals.
With these limitations or inability of these types of generation and infrastructure to meet the timeline in the proposal, EPA should remove the interim compliance goals. The focus of any final 111(d) Guidelines should be primarily on meeting the final compliance deadline.
As described in these comments, many coal-fired units will have useful lives that extend beyond the 2030 deadline. While the 2030 deadline for compliance is less unrealistic than the 2020 interim deadline, it still may not allow States with higher reduction goals to achieve them without significant coal-fired power plant shutdowns. Even then, with all of the statutory, regulatory, and practical changes needed to implement a set of requirements as sweeping as the proposal, all involved – States, public utility companies, and other entities subject to proposal requirements – face substantial challenges in meeting the ambitious goals of the Proposal.
E. EPA should identify in this rulemaking both the nature and the scope of the federal