State Policy Network Groups’ Comments on Clean Power Plan

The following State Policy Network think tanks, the Buckeye Institute in Ohio, the Independence Institute in Colorado, the Rio Grande Foundation in New Mexico, and the Sutherland Institute in Utah, joined CEI as co-petitioners in a lawsuit challenging the EPA's so-called Clean Power Plan in December 2015. Below are the summaries of the organizations' regulatory comments outlining their opposition to the EPA's plan.

To read more about this court challenge click here.

Buckeye Institute: Summary of regulatory comments below or read the full comments in PDF form here.

EPA’s proposed rule imposes harmful economic costs on Ohioans, raises the risk of electric unreliability during times of stress to the energy grid, and suffers from multiple legal flaws. For these reasons, the EPA should withdraw the Section 111(d) proposal.

For more than a century, Ohio has exercised exclusive jurisdiction over the State’s retail electricity markets. With the Federal Power Act in 1935, Congress codified Ohio’s—and all States’—prerogative to oversee its retail electricity markets, unencumbered by federal intrusion. EPA’s Clean Power Plan, by its very terms, would erase this jurisdictional “bright line” between federal and State governments.

If finalized in its current form, the proposed rule would constitute an unprecedented expansion of federal authority into Ohio’s rightful affairs, such that State officials could regulate electricity within its borders only with EPA’s approval. As the current Federal Energy Regulatory Commission Commissioner Tony Clark observed, “[States] will have entered a comprehensive ‘mother may I?’ relationship with the EPA that has never before existed.”

In addition to usurping the State’s rightful regulatory authority and violating the Federal Power Act, the Clean Power Plan suffers from multiple legal problems, including a violation of the Clean Air Act’s Section 111(d) bar on regulating emission sources also regulated under Section 112 of the Act. EPA’s proposal also lacks a lawful New-Source Standard predicate whereby the EPA must first have established lawful standards under Section 111(b) for new sources in a particular industrial category.

Beyond the legal problems association with the Clean Power Plan, the proposed rule adds insult to injury by imposing unreasonable costs on Ohio. For example, according to a study conducted by the economic consulting firm NERA, EPA’s proposed Clean Power Plan would be the most expensive regulation ever imposed on the power sector, costing between $41 and $73 billion per year. NERA’s analysis projects that the rule would cause retail electricity rates in Ohio to rise by 12 percent.

Another analysis, by Energy Ventures Analysis, Inc., estimates that EPA’s suite of energy regulations, including the Clean Power Plan, cumulatively would increase the cost of electricity and natural gas by nearly $300 billion in 2020 compared with 2012. The same study projects that gas bills would increase in Ohio by 51 percent and industrial electricity rates would increase 74 percent in nominal terms.

Finally, EPA’s proposed rule poses a distinct threat to electric reliability. The retirement of coalfired electric generating capacity due to EPA regulations, and the inadequacy of existing natural gas pipeline capacity in the northeast, creates the distinct possibility that the Clean Power Plan would stress Ohio’s power grids beyond their capacity, especially during unusually cold and hot temperatures.

Independence Institute: Summary of regulatory comments below or read the full comments in PDF form here.

The Independence Institute, founded in 1985, is one of the nation’s original state-based think tanks, and is Colorado’s oldest and most respected free market, public policy, non-profit institution. For nearly three decades we have educated Coloradans on how public policy at the national, state, and local levels impacts them, their families, and their livelihoods. Few policy areas have more of an impact on the lives of every single person in our state like energy. Electricity generation touches everyone and everything.

The newly proposed Environmental Protection Agency (EPA) regulations on CO2 emissions, titled the Clean Power Plan (CPP), have us, and many others including lawmakers, citizens, and stakeholder groups, extremely concerned. Because of the enormous scope, any change to current policy should be considered only after a thorough vetting process including comprehensive analysis, which these new regulations have not enjoyed.

Also, vital to success are support and buy-in from all stakeholder groups including consumers, state lawmakers, state regulators, and power producers, which CPP does not have. For those reasons, we are compelled to submit comments in opposition to the CPP. From our perspective problems with the CPP include the following:

• CPP threatens Colorado’s jurisdictional authority over retail electricity, which it has exercised for more than a century.

• CPP will be cost prohibitive especially for those at the lowest end of the socio-economic spectrum.

• CPP threatens Colorado’s electric grid reliability.

• CPP forces reorganization of Colorado state agencies that will be illegal without enabling legislation.

• CPP has serious legal flaws including its own legality with no enabling congressional legislation.

• CPP’s complexity makes its timeline unrealistic.

• CPP 2012 baseline gives no credit for the aggressive action Colorado already has taken to reducecarbon emissions.

• Lack of transparency and vetting process prevents all Colorado stakeholders the ability to analyze the impacts of the CPP on their respective constituencies and make recommendations for improvement.

Rio Grande Foundation: Summary of regulatory comments below or read the full comments in PDF form here.

For more than 70 years, New Mexico has exercised exclusive jurisdiction over its retail electricity markets. With the passage of the Federal Power Act in 1935, the Congress codified New Mexico’s—and all States’—prerogative to oversee their retail electricity markets, unencumbered by federal intrusion.

EPA’s Clean Power Plan, by its very terms, would erase this “bright line” in jurisdiction between federal and state governments. Indeed, if finalized in its current form, the rule would effectuate an unprecedented expansion of federal authority into New Mexico’s rightful affairs, such that state officials could regulate the provision of electricity only with EPA’s approval. As aptly explained by current Federal Energy Regulatory Commission Commissioner Tony Clark, “[States] will have entered a comprehensive ‘mother may I?’ relationship with the EPA that has never before existed.”

In addition to usurping the state’s authority, the rule adds insult to injury by imposing unreasonable costs on New Mexico ratepayers. Residential rates are projected to increase by 13 percent to 14 percent, while industrial rates are projected to increase by 23 percent. Making matters worse, the rule also poses a threat to electric reliability. In response to previous EPA rules, utilities already have announced the closure of 633 megawatts of coal-fired electricity in New Mexico. EPA modeling for the Carbon Pollution Rule projects that the regulation would cause an additional 1,001 megawatts of electricity generating capacity in New Mexico to retire. According to an initial analysis performed by the

Southwest Power Pool, which serves eastern New Mexico, EPA’s rule “introduce[es] the very real possibility of rolling blackouts or cascading outages that will have significant impacts on human health, public safety and economic activity within the region.”

Sutherland Institute: Summary of regulatory comments below or read the full comments in PDF form here.

For nearly a century, Utah has exercised exclusive jurisdiction over the state’s retail electricity markets. And with the passage of the Federal Power Act in 1935, the Congress codified Utah’s—and all States’— prerogative to oversee their retail electricity markets, unencumbered by federal intrusion. EPA’s Clean Power Plan, by its very terms, would erase this “bright line” in jurisdiction between federal and state governments. Indeed, if finalized in its current form, the rule would effectuate an unprecedented expansion of federal authority into Utah’s rightful affairs, such that state officials could regulate the provision of electricity only with EPA’s approval. As aptly explained by current Federal Energy Regulatory Commission Commissioner Tony Clark, “[States] will have entered a comprehensive ‘mother may I?’ relationship with the EPA that has never before existed.”

In addition to usurping the state’s authority, the rule adds insult to injury by imposing unreasonable costs. Residential rates are projected to increase by 20 percent to 36 percent as a result of the Clean Power Plan; Industrial rates are expected to increase 22 percent. The rule also poses a threat to electric reliability. Preliminary modeling demonstrates that the rule would leave Utah’s electric reliability jurisdiction only .53 percent above the region’s 15 percent target for reserve margin, which means that adequate supply would tighten dramatically. So far, state, regional, and federal reliability watchdogs have warned that the rule threatens to cause rolling blackouts in more than half the country.