Witnesses at a Congressional hearing raised concerns about the complexity, costs, legality, and feasibility of the 3,900 final rules published by the Environmental Protection Agency (EPA) during the Obama administration.<\/p>\n
A large portion of those rules affect the power sector, but none are more contentious than the Clean Power Plan, regulatory and citizen interest experts agreed at the July 6 hearing held by the House Subcommittee on Energy and Power titled: \u201cA Review of EPA\u2019s Regulatory Activity During the Obama Administration: Energy and Industrial Sectors.\u201d<\/p>\n
For Travis Kavulla, President of the National Association of Regulatory Utility Commissioners (NARUC), even if stayed by the Supreme Court, the Clean Power Plan has had the wider impact of changing how, and by whom, utilities should be regulated.<\/p>\n
The EPA\u2019s rule can be \u201cseen as a de facto fuel-type or renewable-energy standard,\u201d Kavulla declared, adding that its design will likely promote \u201cuneconomic\u201d pathways to complying with it both in states that are regulated by state commissions and in competitive markets.<\/p>\n
The head of the quasi-governmental, nonprofit group whose membership includes public utility commissioners serving all U.S. states and territories also revealed that NARUC\u2019s members are \u201cdivided\u201d on how to address carbon dioxide and other greenhouse gas emissions. However, NARUC \u201cunambiguously\u201d advocates that state traditional regulatory oversight should not be compromised.<\/p>\n
\u201cThe EPA\u2019s regulation creates a carbon planning function vested in the EPA together with the state environmental regulators and governors,\u201d Kavulla told lawmakers. \u201cThis supplants the traditional oversight of utility resource planning by state utility commissions. This step change in the regulation of utilities will have many consequences, some of which are readily apparent and some of which are as yet unforeseen.\u201d<\/p>\n
For one, instead of focusing on an emitting facility, as other Clean Air Act rules do, the Clean Power Plan focuses on \u201c \u2018the complex machine\u2019 that is \u2018the North American power system,\u2019 \u201d he said. \u201cThis novel approach means that EPA has interpreted the Clean Air Act to give that agency the power, essentially, to plan the resource mix of the U.S. power sector.\u201d<\/p>\n
State utility commissions \u201cpossess and deploy\u201d substantial technical resources in analyzing integrated resource plans (IRPs) filed by regulated utilities and take seriously their mandate to serve customers who do not have another choice in provider, Kavulla said.<\/p>\n
\u201cWere the environmental obligation in question here\u2014the reduction of carbon-dioxide emissions\u2014to be expressed as a facility-specific technology or even simply as an explicit carbon price, then those inputs could be modeled transparently within the IRP process that is used to identify the least-cost portfolio within the bounds of other restrictions, such as reliability or environmental impact.\u201d<\/p>\n
But when the EPA adopted a system that encompassed the entirety of the state\u2019s electric power production, \u201cwhat it really did was usurp the IRP function of a utility commission and replace it with a carbon-resource planning process undertaken by the state environmental regulator and governor\u2019s office under the Clean Air Act\u2019s \u00a7111(d),\u201d he said.<\/p>\n
This transfer of authority will have high consequences, Kavulla predicted. Not only will it give a less experienced regulator control over a resource planning process, it makes the resulting plan enforceable as a matter of federal law, \u201csapping the ability of the industry and the regulator to respond nimbly to changing market conditions,\u201d he said. It also \u201cintroduces a new level of potentially self-seeking politics into the planning process,\u201d he added.<\/p>\n
Another high-profile witness at the hearing, Acting Assistant Administrator for the EPA\u2019s Office of Air and Radiation Janet McCabe, argued that the Clean Power Plan rests on \u201cstrong scientific and legal foundations,\u201d adding that the EPA is \u201cconfident it will be upheld\u201d by the courts.<\/p>\n
She also noted that not all states have rejected the Clean Power Plan. \u201cSince the stay was issued, many states have been moving forward voluntarily to cut carbon pollution from power plants,\u201d she said. \u201cThey have also asked EPA to continue our outreach and development of supporting information and tools that will help guide states when the Clean Power Plan becomes effective, which we are doing while ensuring that we fully comply with the stay.\u201d<\/p>\n
McCabe also defended the administration\u2019s updated ozone National Ambient Air Quality Standards released last October that cuts the current limit of 75 parts per billion to 70 parts per billion. Industry has decried costs associated with the revised standards, warning that they could require billions of dollars in compliance costs and accelerate coal plant retirements.<\/p>\n
McCabe said that the U.S. is mostly on track to meet the standards. \u201cWe expect that the vast majority of counties outside of California will meet the 2015 ozone NAAQS by 2025 without having to take additional action beyond federal measures.\u201d<\/p>\n
Charles D. McConnell, who is Executive Director for the Houston-based Rice University\u2019s Energy and Environment Initiative, made clear that he believes climate is changing, and that it \u201crequires an energy strategy in this country and globally to address long-term implications.\u201d But, \u201cThat does not, however, give the federal government through this agency, license to do whatever it wants,\u201d he said.<\/p>\n
McConnell lambasted the EPA\u2019s rules in recent years, saying they do not serve their stated purposes. \u201cThe mercury rule provided very little benefit from mercury reduction, as EPA itself acknowledged. Similarly, it is clear both scientifically and technically, that the EPA\u2019s [Clean Power Plan] is not a plan that will significantly impact global CO2<\/sub> emissions.\u201d<\/p>\n The plan does not give nuclear generators credit for their zero-emitting energy, which will force markets to replace their rapid retirements with natural gas. It also mandates that new coal plants meet emission standards based on partial carbon capture and store (CCS)\u2014capturing about 25% of the CO2<\/sub> emissions of a supercritical coal-fired power plant and sequestering those emissions underground.<\/p>\n \u201cThis may sound like progress, but mandating a technology that hasn\u2019t yet been proven and burdening it up with draconian regulatory consequences should it not perform, will simply discourage people from choosing this option,\u201d McConnell said.<\/p>\n \u201cI don\u2019t know of anyone who would consider implementing transformative technology in a coal plant with CCS at the same time the government would impose penalties on them if the technology didn\u2019t work.\u201d<\/p>\n David Porter, who chairs the Railroad Commission of Texas, echoed concerns with the EPA\u2019s power grab outlined by Kavulla: \u201cIf upheld, the Clean Power Plan would lead to a formidable, unprecedented, and unlawful expansion of EPA\u2019s authority. The resulting restructuring of nearly every state\u2019s electric grid would exceed even the authority that Congress gave to the Federal Energy Regulatory Commission, the federal agency responsible for electricity regulation,\u201d he said.<\/p>\n But he also pointed to exorbitant costs associated with Clean Power Plan compliance. Citing a study released by Energy Ventures Analysis, Porter claimed that the plan, along with other rules, would increase the cost of electricity and natural gas by nearly $300 billion in 2020 compared with 2012.<\/p>\n On the other hand, the environmental rules adopted during the Obama administration\u2014as with rules adopted during the Bush administration\u2014offered immeasurable benefits to the public, argued Robert Weissman, president of Public Citizen, a national public interest organization with more than 400,000 members and supporters.<\/p>\n \u201cAlthough most regulations do not have economic objectives as their primary purpose, in fact, regulation is overwhelmingly positive for the economy. It is worth underscoring this point, because concerns about particular rules or that the rulemaking process is unfair to regulated industry are usually rooted in economic arguments,\u201d he said.<\/p>\n \u201cVery few major rules are adopted where projected costs exceed projected benefits, and those very few cases typically involve direct Congressional mandates.\u201d<\/p>\n Weissman said that industry overestimates cost matters \u201cboth for political reasons and because regulated industry typically has an undue influence over cost estimates, in large part because it controls access to internal corporate information, as well as because of its ability to commission studies that tend to support the interest of their funders.\u201d But this \u201cinformation asymmetry\u201d is a problem in the cost-benefit analysis, including because businesses do not always disclose assumptions in their submitted cost estimates.<\/p>\n Among the rules offering \u201cimmense net benefits on society\u201d adopted by the Obama administration\u2014even if the government has been \u201cachingly slow to act on major rules\u201d\u2014are the ones regulating mercury, ozone, and carbon pollution, he said.<\/p>\n Major rules from the EPA are accompanied by \u201ca staggering\u2014nearly paralyzing\u2014amount of justifying technical information,\u201d Weissman said. He also claimed that \u201cenvironmental rulemaking in the energy and industrial sectors trails available science\u2014including the EPA\u2019s science\u2014by years or decades.<\/p>\n \u201cThe stingy regulatory approach of the EPA means that America is not afforded the degree of health and environmental protection it should be.\u201d<\/p>\n <\/p>\n <\/p>\nOn Costs and Benefits of the Rules<\/h2>\n