![](media/image1.png){width="1.3104166666666666in" height="0.46875in"}
American Public Power Association

2301 M Street, N.W.

Washington, D.C. 20037

202-467-2900; fax: 202-467-2910

www.APPAnet.org

February 17, 2004

Mark Friedrichs, Esq.

P1-40

Office of Policy and International Affairs

U.S. Department of Energy

Room 1E190

1000 Independence Avenue, S.W.

Washington, D.C. 20585

Dear Mr. Friedrichs:

On behalf of the American Public Power Association, I respectfully
submit these comments on the Department of Energy's revised general
guidelines for the Voluntary Reporting of Greenhouse Gases Program. 68
[Fed. Reg]{.underline}. 68204 (December 5, 2003).

Sincerely,

![](media/image2.png){width="1.6194444444444445in"
height="0.4361111111111111in"}

Rebecca K. Blood

Senior Government Relations Representative

cc:

Robert G. Card, Under Secretary for Energy, Science and Environment, DOE

Margot Anderson, Deputy Assistant Secretary for Policy, DOE

Larisa Dobriansky, Deputy Assistant Secretary for National Energy
Policy, DOE

**COMMENTS OF THE**

**AMERICAN PUBLIC POWER ASSOCIATION**

**U.S. DEPARTMENT OF ENERGY**

**PROPOSED REVISED EPACT SECTION §1605(b)**

**GENERAL GUIDELINES FOR VOLUNTARY GHG REPORTING**

**FEDERAL REGISTER**

**VOL. 68, NO. 234**

**PAGES: 68204 -- 68231**

**U.S. DEPARTMENT OF ENERGY**

**10 CFR PART 300**

**RIN 1901 -- AB11**

**Submitted by:**

**Rebecca K. Blood**

**Senior Government Relations Representative**

**American Public Power Association**

**2301 M Street, NW**

**Washington, D.C. 20037**

**(202) 467-2929**

**February 17, 2004**

**Introduction**

APPA supports the President's program for addressing climate change,
including the goal to reduce the emissions intensity of the U.S. 18
percent by 2012 through the Climate VISION program and the efforts to
improve the Energy Policy Act §1605(b) greenhouse gas registry and
guidelines. In our view, the two programs are intricately linked -- that
participation in the President's Climate VISION program will be enhanced
by a reporting program that encourages entities to report and gain
credit for real reductions.

APPA views an improved §1605(b) reporting system as a vital component of
our overall climate activities. Public power members are very interested
in ensuring that the reporting mechanism offers a credible but
user-friendly system to record results. We are interested in ensuring
that the reporting program provides ease of use for current and future
reporters, a goal we share with DOE.

Towards that goal, APPA respectively submits these comments to express
our concerns with the proposed General Guidelines, and to describe the
difficulties most of our member systems would have in reporting and
registering GHG emission reduction activities under the proposals. We
believe that several provisions in the General Guidelines, as currently
proposed, would discourage a majority of our member systems from
participating.

Our particular concerns focus on the cost burden that the guidelines
would place upon smaller reporters such as most of APPA's public power
members, and how these costs would have a chilling effect on their
§1605(b) participation. Most of our comments below relate to this
problem of high reporting costs creating barriers for small entities to
participate in the reporting program. We offer comments regarding
reporting alternatives and solutions to help reduce the cost and
complexity of reporting, in particular for small and medium-sized public
power systems lacking financial and staff resources to follow rigorous
requirements.

Importantly, APPA's concern over potentially high reporting costs is not
tied to just one single provision of the proposed general guidelines.
Instead, it is often the case that two or more provisions act in concert
-- even though each may seem relatively innocuous on its own -- to
magnify the concerns, costs, and overall attractiveness of the voluntary
reporting system. 

APPA also has concerns with other areas of the proposed guidelines that
are not reflected in these comments. Since these other concerns are
broadly shared by other organizations in the Electric Power Industry
Climate Initiative (an umbrella group comprised of APPA and other
organizations spanning the electric power sector) and in comments by the
Large Public Power Council, an organization representing some of public
power's largest members, we need not be redundant here with the comments
being submitted by these groups.

**APPA and Current Participation in §1605(b) Reporting**

APPA represents the interests of approximately 2,000 municipal and other
state and local community-owned utilities throughout the United States.
Of the 2,000 public power utilities, over 600 own generating capacity,
and the rest are distribution-only utilities. APPA member utilities
include state public power agencies, and serve many of the

nation's largest cities, but the majority of our members are located in
small and medium-sized communities in 49 states, all but Hawaii.

APPA's high proportion of small entities is a key factor underlying our
concerns with the proposed General Guidelines. In fact 70 percent of our
members are located in cities with populations of 10,000 people or less.
APPA members serve over 16 percent of all kilowatt-hour sales to
ultimate consumers throughout the United States and account for nearly
ten percent of total generation, compared to 45 percent for the
investor-owned electric utilities, 34 percent for non-utility
generators, and 4.5 percent for cooperative utilities. In its overall
mix, public power systems own more generating capacity based on
sustainable resources, including hydropower and other renewable fuels,
than any other electric power sector, except for the federal sector.

Public power members strongly support voluntary efforts to reduce GHG
emissions and have come to rely on the existing §1605(b) reporting
program to register activities. According to EIA's annual reports on
*Voluntary Reporting of Greenhouse Gases* public power systems comprise
about 30 percent of the electric power sector's reports, and the
electric power sector is by far the major industry group reporting under
the §1605(b) program. Public power's share of reporting in the §1605(b)
program far exceeds that of the rest of the electric power sector and
industry in general.

Importantly, over 10 of these public power member reports were made
using EIA's Form 1605EZ, the short form designed for simplified
reported. Of the smaller public power systems reporting -- those under
1,000,000 tons of CO~2~ -- at least half of the entity reports were made
using Form 1605EZ. This high usage level of the Short Form demonstrates
our members' sensitivity to reporting costs and the importance of
keeping voluntary reporting efficient and affordable.

**Reporting Costs are Important in Shaping Participation in Voluntary
Programs**

Costs matter. This is a simple concept that APPA believes should be a
bedrock principle underlying the design of the §1605(b) reporting
system. It is key to obtaining broader participation in a voluntary
reporting system.

For any reporting entity, funds and management resources for
discretionary activities -- even those of exceptional worthiness -- are
limited and must necessarily compete with other worthy uses of those
resources. As reporting costs mount up, they increasingly become a
deterrent to participation in a voluntary system. In general, when the
costs of reporting are high relative to the perceived value of
reporting, the reporting costs themselves become a barrier to entry, and
restrict the breadth of participation in the program.

Other areas of government recognize the need to mitigate against adverse
economic burdens to local governments. For example, in the case of the
Regulatory Flexibility Act as Amended by the Small Business Regulatory
Enforcement Act of 1996 (SBREFA), the U.S. Environmental Protection
Agency is required to determine whether or not a proposed rule will have
a significant economic impact on a substantial number of small entities.
If it is determined that an EPA ruling will impose a significant
economic impact, the agency must undertake further analysis and provide
for additional public comment. For purposes of defining "Small Business"
for electric utilities, SBREFA applies to all cities, counties, towns,
and school districts that have populations of 50,000 (household) or

less where the utility sells 4 million megawatt-hours of production or
less annually. For purposes of these comments, we found that 95% of our
public power utilities emitting less than 10,000 tons of CO~2~ annually
and 87% of our public power utilities emitting between 10,000 and
100,000 tons of CO~2~ are below the 50,000 population and MWh sales
threshold.

In public fora, DOE has expressed its view that a key purpose of the
§1605(b) program is to foster a broader corporate responsibility and
involvement in GHG reporting. APPA applauds that goal, and is
encouraging its members to participate more broadly. But just as our
members will carefully weigh the costs of participation, DOE should also
be mindful of the cost implications of various requirements. Ideally,
for key decisions in formulating the reporting guidelines, DOE would
want to weigh the incremental value of more stringency against its
incremental costs and the potential reduction in voluntary reporting.

**Reporting Costs Can Disproportionately Penalize Smaller Entities**

In many industries, the level of GHG emissions is a rough proxy for the
entity's relative size. Entities with larger emissions are apt to be
larger companies than others in that industry having smaller emission
levels. Since larger entities will typically have more resources to
devote to activities, the total cost of preparing a GHG inventory may
not be particularly relevant. Instead, it is the *per-ton* cost of GHG
reporting that reflects a relative burden. The per-ton cost has a
numerator defined as the total cost of reporting, and a denominator
equal to the number of tons reported.

Reporting costs are especially magnified for the smaller reporters. In
general, reporting costs tend to show substantial economies of scale
with respect to emission tonnages. For most types of activities (e.g.,
electric power production, the effort required to report emissions from
one small plant are often only slightly less than for several large
ones. With fewer tons of GHG emissions over which to amortize reporting
costs, the reporting cost per ton is far higher for the small entity. As
a hypothetical example, assume that a 20,000 ton emitter faces \$20,000
worth of reporting costs, while a 2,000,000 ton emitter sees a \$40,000
cost. Here, the smaller emitter would see a \$1.00 per ton cost for
reporting, far higher than the \$0.02 per ton cost for the large
emitter. With these types of scale economies present, the largest
emitters -- such as power generators with over 10 million tons CO~2~ --
reporting costs could be less than \$0.01 per ton. But for the smaller
emitters, the far higher per-ton reporting cost could force them out of
the reporting system. 

Many aspects of GHG reporting show substantial economies of scale. For a
given source of GHG emissions, the time and resource cost of reporting
will vary only slightly over a large range of emissions. For example, in
reporting direct fossil fuel emissions, a first step is to identify the
personnel cognizant with the fuel consumption data and the associated
generation data.[^1] Once the appropriate personnel have been
identified, the reporter must explain the purpose of reporting, describe
the data needed, ascertain that the units are consistently measured
(e.g., calendar year vs. fiscal year, or tons of coal delivered vs. tons
of coal consumed), record the data values, and document the process and
sources used.

This set of activities will likely vary only slightly whether the
reporter is inventorying a single small generating unit or a portfolio
of large multi-unit plants. But while the reporting cost shows little
change over a broad range of emissions, the per-ton cost of reporting
can easily be an order of magnitude more costly for the small reporter.

Experience has also shown that while there are substantial economies of
scale in reporting a single GHG emissions source within an entity, there
are relatively few economies of scale associated with increasing the
number of different types of GHG emissions reported within the entity.
This lack of scale economies arises because the necessary data to report
additional emissions sources is likely to reside among different
individuals. For example, if the utility goes beyond simple reporting of
powerplant emissions and decides to include data on service vehicle
gasoline and diesel emissions, then the reporter would likely need to
meet with the head of the motor pool, identify the individual
responsible for the fuels data, and -- similar to the powerplant fuels
data -- explain the purpose of reporting, describe the data needed,
ascertain that the units are consistently measured, record the data
values, and document the process and sources used. The reporting effort
involved is usually commensurate with that of reporting the entity's
primary activity, and often even higher since these ancillary activities
are less likely to be run by people familiar with GHG reporting.

Now, consider what happens when this multiplication of effort associated
with additional sources is coupled with the likelihood that the GHG
tonnage is likely to be far less than for the primary activity. The
probable result is that the reporting costs go up by some multiple while
the GHG tonnage rises only modestly. For most electric power generators,
the marginal cost per ton for reporting additional sources can easily be
10 to 100 times the cost for reporting emissions from power generation.
For example, one APPA member relates that in their inventory of about
five million tons CO~2~-equivalent, it took approximately 2 hours to
obtain emissions data for the first 80 percent of their emissions (from
power generation), and an additional 80 hours to gather data for the
last 20 percent comprised of indirect power and other sources. For this
reporter, the marginal reporting cost was 160 times as great, since 40
times the effort was needed to document one-fourth as many emissions. As
a result of these diminishing marginal returns, the average reporting
cost per ton is likely to rise quickly as additional minor emission
sources are added to the overall reported inventory.

Overall, then, a reporter is likely to see significant economies of
scale in reporting a single GHG emissions source; large quantities will
tend to see a lower cost per ton reported than small quantities.
However, reporting on multiple GHG sources will tend to multiply the
total reporting effort and cost. Since additional GHG sources are likely
to be smaller in size than the primary source, adding additional GHG
sources to the reporting will tend to drive up the cost per ton
reported.

The effects of these economies of scale -- specifically the diseconomies
of small scale -- are reflected in two primary areas: setting size
thresholds for defining "small emitters" and defining *de minimus*
thresholds for excluding small emissions sources in entity-wide
inventories. Each of these areas of concern is discussed below.

**Size Thresholds for Defining "Small Emitters" are Too Low**

The proposed General Guidelines would allow entities emitting less than
10,000 tons of CO~2~ to report and register emission reductions without
submitting the results of an entity-

wide emissions inventory or assessment of annual changes in their
emissions, avoided emissions, and sequestration. Instead these small
entities could report using a simpler process. DOE requests comments on
whether 10,000 tons is the appropriate threshold.

A reasonable framework for thinking about the "appropriate" size
threshold would be to consider the reporting cost burdens associated
with different sized entities. As we have stated, costs matter in a
voluntary reporting system. High reporting costs can be a barrier to
entry into the voluntary reporting system, frustrating DOE's objective
of fostering broader corporate involvement in GHG reporting.

What would it cost for the entity to prepare an inventory and report? As
noted above, it depends upon many factors. For a company with one simple
emission source, it may be possible to prepare an emissions inventory
for less than \$2,500 of internal staff and management time.

But when multiple sources have to be measured and documented -- perhaps
driven by *de minimus* requirements, discussed below -- costs will tend
to increase as the number of sources rises. If upper-management
certification is required, and/or if third-party verification is used
(either explicitly required or necessitated by signatory requirements
and strict accounting standards), then costs will be higher still as
additional management resources and budgets are consumed.

As an illustration of the approximate costs to develop and report GHG
emissions inventories, we can examine some estimates prepared by the
California Climate Action Registry.[^2] For three scenarios describing
medium to large-size entities having about 4-10 emissions sources, the
estimated level of effort for certifying an annual GHG emission report
ranged from 25 to 110 hours under "best-case" assumptions. The
certifiers' typical hourly rate was estimated to range from \$100 to
\$250 an hour, suggesting a total annual certification cost of about
\$2,500 to \$27,500. If "best case" assumptions were not met (e.g.,
operations change from year to year, record-keeping is not centralized,
or travel expenses are significant), certification costs would be higher
still. Further, the costs for certification are likely to be less than
the entity's own internal costs for identifying, measuring, and
documenting emissions.

For these reporters with multi-source emissions, particularly where
senior management approval and/or outside support are involved, a
reporting burden costing tens of thousands of dollars each year would
not be unusual. For smaller reporting entities with fewer GHG emissions
over which to amortize these costs, these costs become a strong
disincentive to voluntary GHG reporting.

Even under the current §1605(b) reporting system, this bias against
small reporters can be observed. Using data provided by EIA on 2001
total entity-level emissions (in tons CO~2~) by reporter, we have
examined the distribution of entity-level reporters by size. For data
year 2001, there were 108 entity-level reporters. Of this group, 53
reporters showed at least one million tons of emissions. There were 21
entities under 10,000 tons CO~2~ equivalent, and another 19 with
emissions between 10,000 and 100,000 tons.

Closer examination of this dataset indicated that within the subset of
smaller emitters (under 100,000 tons), at least 14 of the reports were
representing individual facilities of three parent companies (Commscope,
National Spinning Co., and M.J. Soffe Company). Closer examination of
these 14 reports indicate that they were prepared by common staff of
each parent company, and hence for our purposes can be considered as
three filings by the larger parent companies. By aggregating those
reports to reflect this, we show that only 16 entities reported under
10,000 tons, and another 15 entities reported emissions between 10,000
and 100,000 tons. Two-thirds of the entity reporters reported over
100,000 tons, and these large reporters accounted for over 99.9 percent
of all reported entity emissions.

This low level of participation for small-size entity-level reporting
reflects self-selection, where the reporting costs for small emission
quantities represents a high per-ton cost of reporting. Considering that
this low level is seen under the *present* §1605(b) guidelines, which
embody substantial flexibility, it is reasonable to expect that small
reporters would be even less inclined to participate under the more
stringent proposals before us.

**DOE should consider a higher threshold for requiring entity-wide
emission inventories. A threshold of 100,000 tons, for example, would
seem to reflect the self-selection already seen in reporting, and also
allow for a more reasonable tonnage base over which to amortize
inventory costs.**

How might this higher reporting threshold affect the coverage for
§1605(b) reporters? For the electric power sector, an examination of the
distribution of electric generating companies by their total emissions
of CO~2~ shows that the 10,000 ton cutoff could be increased
substantially with little effect on total coverage within the industry.

Table 1 shows electric generating companies' CO~2~ emissions in 2000
(the latest year for which complete data are available.) All generating
companies produced a total of 2.65 billion tons of CO~2~ emissions. The
very largest emitters -- those emitting more than 1 million tons in
2000, accounted for almost 95 percent of the emissions, and those
emitting between 100,000 and 1 million tons accounted for most of the
remaining 5 percent of emissions. The 306 generating companies emitting
between 10,000 and 100,000 tons CO~2~ in 2000 collectively amounted to a
mere 0.4 percent of the total sector's emissions. Thus, increasing the
proposed 10,000 threshold to 100,000 tons would remove the more
difficult and costly reporting requirements from an additional 300
utilities that collectively account for less than a half percent of
total emissions.

![](media/image3.wmf){width="5.999305555555556in"
height="2.7472222222222222in"}

We also wish to point out another problem with the threshold for
defining "small emitters." If the threshold is set at 10,000 tons CO~2~
(or any other level), how can a small emitter know with confidence that
it is below that threshold unless and until a complete inventory has
been made? Assume a public power system has direct CO~2~ emissions of
9,500 tons from power operations. Would they be under the threshold, or
might they have 500 tons of emissions from other sources and activities?
In order to safely conclude that they didn't have to provide an
entity-wide emissions inventory, they would first have to prepare this
same inventory!

We urge DOE to include language that makes the size threshold a "good
faith" estimate rather than a rigid cutoff that implicitly demands
unnecessary and costly additional measurements. Specifically, **DOE
could require that small emitters state that they reasonably believe
that their emissions are below the threshold based upon the annual
emissions and sequestration associated with the type of activities being
reported.** This would enable the small emitters to focus upon what they
are reporting, rather than what they need not report.

***De Minimus* Thresholds are Unnecessarily Stringent and Costly**

DOE's Guidelines would permit entities above the 10,000 ton threshold
(i.e. those required to submit an entity-wide emissions inventory) to
exclude emissions that are comparatively small. An entity could exclude
emissions as long as the exclusions did not exceed three percent of the
entity's total emission inventory or 10,000 tons of CO~2~, whichever is
lesser. DOE's purpose for the exclusion is to eliminate reporting for
emissions that would have little effect on the total emissions or
emission reductions reported.

DOE notes that a major drawback of this proposed exclusion is that large
generators would have to account for almost all of their emissions,
which could be burdensome and have little effect on the totals reported.
Thus, DOE suggests other options, such as (A) a uniform percentage
exclusion of 3 percent; (B) adding a 1 percent minimum exclusion; or (C)
the *greater* of 10,000 tons or 3 percent.

As proposed, this *de minimus* exclusion could have very different
effects on a reporter depending upon the reporter's size and GHG
footprint. This can readily be seen among APPA's member power systems,
most of whom are small, and a few of whom are quite

large. Consider Table 2 below, showing the distribution of public power
systems by their total CO~2~ emissions:

As seen in this table, over 60 percent of the public power systems (315
out of 502 utilities) have less than 10,000 tons CO~2~ emissions, and
presumably would not be subject to the entity-wide reporting
requirements. Another 116 public power systems have emissions over
100,000 tons CO~2~, and collectively account for nearly 99 percent of
all public power CO~2~ emissions. In between these two extremes is a
group of 71 public power systems with CO~2~ emissions between 10,000 and
100,000 tons; while this group collectively amounts to only about one
percent of all public power CO~2~ emissions, they are particularly
vulnerable to high per-ton reporting costs.

![](media/image4.wmf){width="5.999305555555556in"
height="2.8930555555555557in"}

For this group with emissions between 10,000 and 100,000 tons CO~2~, the
average emissions per utility is only 35 thousand tons. For them, the
exclusion for entity reporting would be roughly one thousand tons of
CO~2~-equivalent emissions (3 percent of their total). To meet this
threshold, the reporter would likely need to prepare GHG emission
estimates for most buildings, groups of cars and/or trucks, any
potential SF~6~ losses, and other sources whose totals may be measured
in hundreds of tons but that collectively could add to more than the
threshold. Because all of those activities are located at various place
around the organization, each will require its own process for data
gathering, analysis, and reporting. Even if we were to optimistically
assume that these could be accomplished with only a few of hours
expended by the reporter and by the cognizant personnel, the entity
could be facing hundreds or thousands of dollars of labor resources to
inventory only hundreds of tons of GHG emissions. If the reporting
entity is facing reporting costs of several dollars per ton for these
small emission sources, this requirement would have a chilling effect
upon the reporter's willingness to participate in this voluntary
program. We ask DOE: What public policy objective would be served by
this, and is this a wise use of the reporter's available resources?

For the larger public power systems, the *de minimus* exclusion creates
a different set of problems. In 2000, based upon EPA's EGRID data
system, the forty largest public power systems each emitted an average
of more than five million tons of CO~2~. At this level of emissions,
three percent of emissions is over 150,000 tons, and so the 10,000 ton
exclusion would be the binding constraint. But 10,000 tons is less than
0.2 percent of the average

emissions, resulting in an average requirement to report at least 99.8
percent of all emissions. Thus, while the powerplant emissions
accounting for the vast majority of public power's GHG emissions could
probably be estimated and reported very easily, the need to account for
virtually all of the emissions from all sources would require many times
this effort at many times the cost.

Indeed, because of inherent uncertainties in measuring GHG emissions,
there is some question as to whether 99.8 percent coverage is even
possible. EIA's own reports of U.S. GHG emissions discuss at length the
inherent uncertainties in estimating emissions. EIA cites the IPCC's
*Revised 1996 IPPC Guidelines for National Greenhouse Gas Inventories,*
which calls for a 95 confidence interval.

Additional support for a five percent exclusion level can be seen in the
reporting guidelines for the California Climate Action Registry. Chapter
11 of their General Reporting Protocol describes their guidelines for
handling *de minimus* emissions, defined as up to five percent of the
entity's emissions. The guidelines emphasize the connection of a
generous *de minimus* allowance with the effect on reporting burdens and
costs as follows: "The rules, methodologies and standards in this
Protocol are designed to support the reporting of an organization's GHG
emissions in a fashion that minimizes the reporting burden and maximizes
the benefit of standardized GHG emissions data such that data is
complete, consistent, comparable, transparent and accurate. These
standards \[include\] Completeness: Participants must report all
significant sources of emissions, defined as at least 95% of their
entity-wide sources."[^3]

We note that *any* specific quantitative threshold for excluding
emissions -- whether a percentage of entity emissions or a specific
tonnage value -- creates a problem and potential liability for any
reporter. Simply stated, how can a reporter state with confidence that
excluded emissions do not exceed a threshold *unless* the reporter has
first identified and measured those emissions? A reporter may reasonably
suspect that excluded emissions are *de minimus*, but cannot know this
with certainty until additional costs have been expended to measure. Can
a reporter really state with confidence that at least 97 percent of
emissions are being reported, unless the unreported three percent have
first been measured? Hence, *any* quantitative threshold for exclusions
is self-defeating, in that it cannot achieve its goal of simplifying the
burden of reporting.

This "Catch-22" of the *de minimus* threshold can be further compounded
by other parts of the proposed Guidelines. For example, report
certification requirements may seem innocuous to some, but for many
could trigger a series of actions with escalating costs. For some
organizations, now adjusting to new Sarbanes-Oxley requirements,
certification may be viewed as a potential financial risk, and
management may choose to order additional review steps before
signing.[^4] These additional steps will often involve third-party
verification, turning that process from an option to a near-requirement.
Third-party verifiers -- themselves learning from the lessons of
now-defunct accounting firms -- will tend more towards intensive
scrutiny than a mild once-over. (An analogous situation is a

doctor, fearing malpractice suits, ordering up a battery of additional
tests "just to be sure.")

Hence, it is not difficult to envision situations where quantified *de
minimus* thresholds, combined with strict requirements for certification
and verification, lead to a raft of costly outside studies just to
measure minute quantities of GHG emissions. The enormous cost of doing
so -- both for large and small emitters -- would be a serious deterrent
to reporting and run counter to DOE's objective to foster broader
corporate involvement in GHG reporting.

We urge DOE to recognize the inherent problems in setting quantitative
*de minimus* thresholds, and instead establish a flexible standard that
can cost-effectively reflect the intent of such standards. Specifically,
**DOE can set a goal for reporters to account for at least 95 percent of
their emissions.**[^5] **Reporters would then be free to decide which
emission sources to include or exclude from their inventory estimates.
As part of each report, the entity would indicate (1) which emission
sources have been included, (2) which sources have been identified but
not measured and included in the inventory, and (3) a good-faith
estimate of the percentage of total entity emissions that have been
included in the report.** This good-faith estimate could take the form
of a range (e.g., 95-98 percent), a minimum (e.g., over 99 percent), or
other expression that the reporter determines to be a good-faith
representation of the completeness of the GHG inventory report.

If DOE concludes that it needs a more quantitative limit in its *de
minimus* test than this type of flexible standard provides, then we
would urge DOE to accommodate our small emitter concerns by adopting the
greater of 10,000 tons or 3 percent *de minimus* test. The "greater of"
test would provide some relief for all 71 public power systems in the
10,000 to 100,000 tons, where 10,000 tons of CO~2~ emissions would allow
them to focus on the more significant emission sources and not waste
management resources on relatively trivial amounts. For the larger
systems -- 333 thousand tons and above -- the three percent exclusion
would provide some relief.

**Additional Comments**

[It Will be Important to Analyze Technical Guidelines Alongside the
General Guidelines.]{.underline}

As discussed in the EPICI comments, APPA agrees that all interested
parties be allowed to comment on the full set of revised documents,
including the General Guidelines, Technical Guidelines, and Energy
Information Administration (EIA) forms and instructions. A thorough
evaluation of the General Guidelines will not be complete until we have
been given an opportunity to analyze the detailed procedures that will
be specified in the Technical Guidelines. In many cases, our review and
attempt to provide constructive comment on specific areas of the General
Guidelines is restrained by piece-meal approach of the proposed
guideline package. We are appreciative of the opportunity to review and
offer comments on the full set of documents later this year.

[An Overly-Comprehensive Two-Tier System Will Discourage
Participation]{.underline}

We are unclear about the value and purpose of creating a two-tier system
of reporting and registering GHG emissions reduction actions. If, as has
been explained, the difference means that the registering class will be
given "special recognition," we need a clearer idea of what that label
means. We are concerned that in order to qualify for the registration
class, entities will have to undergo additional and costly information
collection and analysis activities. In the case of public power members,
most of whom are small in size and operate on shoestring budgets, the
costs of reporting will be a key determinant of whether they can
participate. Further information on this important concern can be found
in the EPICI comments that, as described earlier, are supported by APPA.

[Inability to Register Pre-2003 Reductions Penalizes "Prior
Reporters"]{.underline}

Another concern relates to the proposal's recommendation that pre-2003
reductions cannot be registered. Chief among the areas public power
members have paid closest attention to is whether or not their early
efforts to reduce GHG emissions will count under the new program. In the
draft General Guidelines, it appears that they will not. This will serve
to disadvantage systems that reported reductions, in good faith and in
conformance with the current §1605(b) guidelines. This is of particular
concern to APPA because through a variety of activities, our members
vigorously supported and participated in the current voluntary GHG
program.

[Inventorying Terrestrial Carbon Stocks Should be Optional]{.underline}

An inventory of emissions and sequestration associated with terrestrial
carbon stock should be optional, rather than required, in the
entity-wide emission inventory. Many utilities own or lease lands for
visual enhancement, public safety, and security reasons. Calculating
sequestration on such lands can be difficult, costly and controversial.
Allowing entities to calculate sequestration on an optional basis allows
those who wish to manage their land to enhance sequestration to be
recognized.

[Guidelines to Limit Double-Counting Are Unnecessary in a Voluntary
System]{.underline}

Several times throughout the proposed rule, procedures to avoid
double-counting are discussed. The proposed rule recommends obtaining
written agreements to avoid double-counting and certifying that
double-counting did not occur. These procedures are unnecessary in a
voluntary report, particularly one in which emissions intensity
reporting is preferred. There are two situations in which
double-counting need not be discouraged: shared ownership and indirect
emissions. In the case of shared ownership, the entity boundaries define
to what extent a facility with shared ownership is included in the
inventory. As long as the boundary is consistent, the accuracy of the
§1605(b) report is not in jeopardy. Double-counting of indirect
emissions is expected. For example, a wind power supplier can account
for this reduction in direct emissions and a wind power purchaser can
account for this reduction in indirect emissions.

**Conclusion**

The ability of public power and the entire power sector to meet the
President's voluntary climate change program goals is directly linked to
the design of the reporting reforms contained in the proposed General
Guidelines for the Voluntary Greenhouse Gas Reporting program. In the
January 17, 2003 joint APPA/LPPC letter to DOE Secretary Spencer
Abraham, public power confirmed support for the President's program and

committed to help develop a workable framework including, a workable
reporting protocol.

As proposed, the general guidelines for reporting are overly complex and
will likely to pose substantial costs. These costs will fall most
heavily on smaller emitters such as most of APPA's members, where there
are fewer tons over which reporting costs can be amortized. In a
voluntary reporting system, high reporting costs will, most likely,
discourage participation. We urge DOE to consider the cost implications
of various alternatives, so that our members and others can contribute
to the §1605(b) program goal of fostering a broader corporate
responsibility and involvement in GHG reporting.

[^1]: This presumes that CO~2~ emissions are determined using fuel
    factors rather than direct emissions monitoring. Alternatively, for
    powerplant units with CEMS installed, CO~2~ emissions could be
    measured directly, but generation data would still be needed to
    measure intensity and/or changes in output.

[^2]: California Climate Action Registry, "What Will it Cost to Certify
    an Annual GHG Emission Report?", September 2003.
    [https://www.climateregistry.org/docs/HOWANDWHY/Certification%20Estimates.pdf](https://www.climateregistry.org/docs/HOWANDWHY/Certification Estimates.pdf).

[^3]: California Climate Action Registry, "General Reporting Protocol,
    Version 2.0 (for comment only)", Chapter 11: *De Minimus* Emissions
    and Significance, October 2003,
    [https://www.climateregistry.org/docs/PROTOCOLS/General%20Reporting%20Protocol%20DRAFT%20Oct03.pdf](https://www.climateregistry.org/docs/PROTOCOLS/General Reporting Protocol DRAFT Oct03.pdf).

[^4]: The Sarbanes-Oxley Act of 2002 of makes it clear that management
    and the board of directors are personally responsible for financial
    statements and for establishing, validating and monitoring effective
    internal controls to prevent fraudulent financial reporting.

[^5]: This 95 percent level is similar to the national 95 percent
    confidence interval recommended for nations in the IPCC guidelines,
    although here we are expressing it as a goal rather than a
    statistically supportable outcome.