1 TABLE OF CONTENTS

3.3 Cleaner Generation Sources (Building Block 3) .

................................................... .............. 2 3.3.1 Renewable generating capacity ...............

................................................... ........................ 2 3.3.2 Current level of performance ................

................................................... ...................... 128 3.3.3 Target level of performance .................

................................................... ........................ 139 3.3.4 Start year for state efforts ................

................................................... ............................ 242 3.3.5 Pace at which states improve from start year to target level ................................... .... 247 3.3.6 RE targets for interim and final state goals.

................................................... ............... 271
3.3.7 Cost effectiveness of RE.....................

................................................... ........................... 334 3.3.8 Nuclear energy ..............................

................................................... ................................ 372 3.3.9 CHP/cogeneration ............................

................................................... ............................. 631 3.3.10 Hydropower .................................

................................................... ................................ 634
3.3.11 Other ......................................

................................................... ...................................... 6802

3.3 CLEANER GENERATION SOURCES (BUILDING BLOCK 3)

This section addresses comments on Cleaner Generati on Sources (Building Block 3). We have organized the comments in this section under 11 sub sections, 3.3.1 to 3.3.11. Responses to the comment topics of these subsections are discussed b elow along with summaries of the specific public comments.

3.3.1 Renewable generating capacity

This section discusses specifics regarding renewabl e generating capacity as it applies to building block 3 goals. The EPA considers construction and o peration of expanded RE generating capacity to be proven, well-established practices w ithin the industry consistent with recent industry trends. The comments in this section addre ss the EPA’s methodology for determining states’ potential renewable generating capacity.

Commenters have raised a number of issues related t o this subsection which are organized by topics (comments) below. Responses are provided for these topics.

Comment 1: Commenters asserted that the EPA overestimates the impact of renewables.

Response 1: Cost-effective RE under building block 3 is assume d to replace both coal- and natural gas-fired generation from affected sources. This replacement, as described in preamble sections V of the final rule preamble of the CPP, i s assumed to occur at the interconnect-level, be in proportion to the historical affected source gen eration mix, and result from both system- (e.g., grid operator) and source-level actions.

The following are summaries of the specific public comments under this comment:

Commenters stated that renewable generation displac es both coal and natural gas generation; thus, the CPP overestimates the impact of renewable s.

Commenters stated that, because the EPA's modeling assumed that renewable energy generation would offset CO2 emissions from coal generation, th e CPP over predicted the impact of renewables to reduce CO2 emissions and artificiallylowered the interim and final state CO2 rates in the proposed rule. Commenters stated renew able generation displaces both coal and natural gas generation. Commenters stated this assu mption also over predicts the impact new renewables will have to meet targets in state plans

.
Commenters stated the EPA has over predicted the CO 2 reductions from wind generation and should evaluate and model each state's wind generat ion portfolio to determine the amount of coal generation and natural gas generation displaced by renewable sources. Commenters stated that, as more renewable energy is added to the system to meet interim and final goals, the percentage of natural gas generation displaced by the renewabl es will be increased. Commenters stated that, in 2012 wind generation on the Associated system re duced CO2 emissions by 870,261 tons of which 748,308 tons (86%) was displaced from coal ge neration and 121,954 (14%) from natural3

gas generation. Commenters stated that, as Associat ed installed additional wind generation the percentage of CO2 displaced from coal decreased eac h year: in 2013 wind generation displaced CO2 from coal generation by 994,340 tons (69%) and from natural gas 461,537 tons (31%) and in 2014 that trend continued and as of June 1, 2014 the 838,513 CO2 tons displaced by wind generation 67% is from coal generation and 33% from natural gas. Commenters stated that, based on this data the CPP has over predicted the C O2 reductions from wind generation by at
least 15%.

Comment 2: Some commenters did not support the EPA's RE metho dology.

Response 2: The rationale, assumptions and methodology used to incorporate incremental RE into the BSER are well supported by historical data and the most recent information on the cost and performance of RE technologies. The adjustment s made to the final building block methodology are the result of elements of the propo sed approach, commenter feedback, and additional EPA analysis. Additionally, the methodo logy, based on historical RE capacity deployment and validated by detailed power sector m odeling that demonstrates both the technical feasibility and cost-effectiveness of the building block 3 generation levels, is consistent with the application of the other building blocks, in which historical data serves as the basis for a level of performance that is validated by EPA analy sis. State RPS requirements are not a factor in quantifying the amount of cost-effective RE thatis part of the BSER in the final rule. The methodology that produces the building block 3 gene ration levels is described in detail in section V.E of the final rule preamble of the CPP and in ch apter 4 of the GHG Mitigation Measures TSD supporting the final CPP. For a detailed explanati on for the inclusion of incremental RE in the BSER, refer to section V of the preamble. For lega l issues related to building block 3, refer to Chapter 1 of the Response to Comment document.

The following are summaries of the specific public comments under this comment:

Commenters stated the EPA's assumptions regarding i ncreased renewable energy generation are arbitrary and capricious. Commenters listed the fol lowing issues:

• EPA does not justify its assumptions regarding the feasibility of increased renewable energy generation in the administrative r ecord.

• EPA's assumptions regarding increased renewable ene rgy generation are arbitrary, capricious, and unreasonable.

• The limited implementation under Section 110 SIPs d oes not mean RE is demonstrated under the restrictive federal requirem ents to be quantifiable, nonduplicative, permanent, verif.iable, and enforceabl e

• EPA's regional approach fails to adequately address differences in renewable energy potential between similarly located States.4 • EPA's reliance on existing state RPS goals fails to address the fact that many States permit out-of-state generation to meet RPS o bligations. In other words, state RPS goals are not a good proxy for each state 's renewable energy generation potential.

• EPA's reliance on existing state RPS goals fails to account for the fact that many States have built in mechanisms to suspend or scale back RPS goals if certain price caps are exceeded. In other words, the RPS go als do not necessarily reflect a state's belief that the RPS goals can actually be a chieved.

• EPA fails to address the fact that state RPS progra ms may exclude municipal power suppliers from RPS obligations. As a result, state RPS goals may exceed the actual percentage of a state's total electricit y generation that will be met by
renewable sources.

• EPA fails to fully appreciate the costs and impleme ntation challenges faced by large-scale renewable energy projects. For example, the CREZ project in Texas, which was designed to transmit 18 MW of wind genera tion to population centers, took eight years to construct. Even if started toda y, such a project could not be completed until mid-way through the interim complia nce period.

• EPA fails to distinguish between renewable supply a nd renewable generation in assessing state RPS programs. For example, EPA incl udes Washington D.C.'s RPS program, even though Washington D.C. has no ele ctricity generation at all and depends entirely on renewable generation from n eighboring States.

• Rather than treating each state equally, EPA should consider an electricitygeneration weighted approach so that small States w ith lower generation levels can't cause such dramatic shifts in a region's rene wable energy goal under block 3.

Comment 3: Commenters asserted that the EPA should use a leve lized generation approach to
RE.

Response 3: The EPA believes the flexibility for affected sour ces to demonstrate compliance on a multi-year compliance period provides sufficient predictability to affected sources pursuing a compliance strategies that involves the procurementof RE. Refer to section VIII.B of the final rule preamble of the CPP for further detail on stat e plan performance periods.

The following are summaries of the specific public comments under this comment:

Commenters stated the CPP should allow states and u tilities to claim a levelized generation number from RE to make measuring compliance with th e rule more predictable and practicable. Commenters noted that generation from RE will vary from year to year and make compliance
with the CPP difficult as a result of different wea ther. Commenters stated the levelized generation approach will also encourage investment in RE. Commenters proposed an alternative concept of using a rolling 3 year historical averag e. Commenters stated this would protect the5

utility against compliance failures from bad weathe r in a particular year, while muting criticism that a levelized number may be gamed.

Commenters stated the D.C. Circuit has explained th at "it is the system which must be adequately demonstrated and the standard which mustbe achievable." (45 45 National Asphalt Pavement Association v. Train, 539 F.2d 775, 785 (D .C. Cir. 1976) (quoting Essex Chem. Corp. v. Ruckelshaus, 486 F.2d 427, 433 (D.C. Cir. 1973)) .) Commenters said an "adequately demonstrated system is one which has been shown to be reasonably reliable, reasonably efficient, and which can reasonably be expected to serve the interests of pollution control without becoming exorbitantly costly in an economic or envi ronmental way." (46 46 Essex Chem. Corp., 486 F.2d at 433-34.) Commenters asserted that EPA's proposed treatment of states with nuclear units under construction, in short, exceeds the age ncy's authority under section 111(d).

Commenters stated Section 111 mandates that cost b e considered as part of BSER, yet, EPA completely ignores this factor in its incorporation of under-construction nuclear into BSER. Commenters said EPA simply asserts in the proposed guidelines that "since the decisions to construct these units were made prior to this propo sal, it is reasonable to view the incremental

cost associated with the CO2 emission reductions av ailable from completion of these units as zero for purposes of setting states' CO2 reduction goals..." 79 Fed. Reg. 34,870.

Commenters stated in building block 3, EPA's propo sed guidelines include under construction nuclear sources in determining what constitutes BSE R for Tennessee and two other states. Commenters said EPA's rationale for including these under construction nuclear sources is that they represent zero incremental costs for purposes of setting the proposed standards because the
decision to construct the units was made before the proposal. Commenters said EPA fails to look at any other under construction low or zero carbon sources in other states and included them in setting a state's goal. Commenters said TDEC is aware of low carbon sources that were under construction either in 2012 or at time of EPA's pro posal that were not built into determining BSER and the standard of performance for those othe r states. Commenters said EPA offers no explanation or other rationale on why Tennessee (as well as South Carolina and Georgia) have
under construction nuclear sources included in buil ding block 3 while no other under
construction low carbon units are included in calcu lating the respective state goal. Commenters said Tennessee is unfairly treated in that its unde r construction nuclear is used to define the state goal while for others states, other under construct ion low or zero carbon sources are not factored in and simply create compliance margin. Commenters said EPA's legal rationale fails to address the inherent inconsistency in its approach to Tenne ssee's nuclear units versus other types of low or zero carbon sources. Commenters said EPA's appro ach is therefore, arbitrary and capricious. Commenters said notwithstanding or waiving the issu es of legal uncertainty described in this section, the remaining sections of the comments foc us on TDEC's concerns around EPA's methodologies, approach, application and technical support. Commenters said it is necessary to provide EPA with substantive comments on the propos ed guidelines, while, at the same time, recognizing overarching legal issues that would cau se the entire approach under Section Ill (d) to fail legal challenge.6

Commenters stated as noted previously, EPA simply a sserted in the proposed rule that "since the decisions to construct these units were made prior to this proposal, it is reasonable to view the
incremental cost associated with the CO2 emission r eductions available from completion of these units as zero for purposes of setting states' CO2 r eduction goals." Commenters stated that this assertion by EPA is unprecedented in the 111(d) con text. Commenters said it is also unsupported in the record. Commenters said, for example, EPA's 376-page Regulatory Impact Analysis (RIA) accompanying the proposed rule barely mentions EPA' s treatment of "under construction" nuclear and lacks any additional supporting analysi s or explanation. Commenters noted, where
the RIA does reference "under construction" nuclear , EPA simply adds a footnote (p. 3-10, at n. 38) referencing the 224-page Greenhouse Gas Abateme nt Measures Technical Support Document (GGAMTSD), (53 RIA, at 3-10.) which in tur n contains just one paragraph purportedly discussing EPA's approach to "under con struction" nuclear - a paragraph merely reciting EPA's assertion in the proposed rule aboutthe "incremental cost" of completing these projects. Commenters stated that this is circular r easoning and is not a legitimate explanation for why EPA believes, as a legal and technical matter, completion of nuclear units under construction constitutes BSER. Commenters noted, in the GGAMTSD, like the RIA, EPA provides no additional analysis or supporting infor mation for its treatment of states where nuclear units are currently under construction. (54 EPA's explanation and analysis for its approach to "under construction" nuclear falls woef ully short of the applicable requirements for RIAs. See Office of Management & Budget, Regulatory Impact Analysis: A Primer, available at http://www.whitehouse.gov/sites/default/files/omb/i nforeg/regpol/circular-a-4_regulatoryimpact-analysis-a-primer.pdf. ) Commenters said equ ally unsatisfactory is EPA's legal memorandum accompanying the proposed rule, which si mply asserts that Watts Bar 2, Vogtle 3- 4, and Summer 2-3 have "long been known to grid ope rators for planning purposes." (55 EPA Legal Memorandum for Proposed Carbon Pollution Emis sion Guidelines for Existing Electric Utility Generating Units, at p. 69, available at ht tp://www2.epa.gov/sites/production/files/2014- 06/documents/20140602-legal-memorandum.pdf.) Commen ters noted that this lone reference does not justify EPA's legal assertion that complet ion of nuclear units under construction constitutes BSER. Moreover, commenters noted that E PA has not explained its determination that, for purposes of the section 111(d) analysis, these units are adequately demonstrated. (56 As EPA notes in the proposed rule, section 402(i) of t he EPAct of 2005 states: "No technology, or level of emission reduction, solely by reason of th e use of the technology, or the achievement of the emission reduction, by 1 or more facilities rec eiving assistance under this Act, shall be considered to be (1) adequately demonstrated for pu rposes of Section 111 of the Clean Air Act " 42 U.S.C. 15962(i). Importantly, Congress crafted t his limitation broadly; namely, with respect to "facilities receiving assistance under this Act [i.e., the EPAct]." The EPAct provided various forms of assistance for new nuclear reactors, inclu ding tax credits and loan guarantees. The operators of Vogtle 3-4 and Summer 2-3 have receive d, or will receive, assistance provided through that legislation, and as such, these units should not, as a legal matter in this context, be deemed "adequately demonstrated." See Congressional Research Service Report, Nuclear Energy Policy, at p. i (Sept. 19, 2013) ("Significant ince ntives for new commercial reactors were included in the Energy Policy Act of 2005 (EPACT05, P.L. 109-58), such as tax credits and loan guarantees.").)7

Comment 4: Commenters urged the EPA to consider more energy s ources in compliance
determination.

Response 4: The EPA addresses the role of BSER RE technologies in section V of the final rule preamble of the CPP and non-BSER measures to achiev e standards of performance in section
VIII.

The following are summaries of the specific public comments under this comment:

Commenters encouraged the EPA to allow states to co nsider forms of energy production, other than wind and solar, that emit CO2 but are benefici al to the environment at a rate that would be beneficial to compliance. Commenters supported a fl exible process that will allow existing, new and/or as yet unproven energy technologies to be in cluded in Kentucky's qualified technologies under the CPP in future. Commenters encouraged the EPA to allow states to employ technologies that provide environmental benefits be yond the CPP to be included in CPP compliance measures. Commenters stated a broad coll ection of technologies under Building Block 3 should be allowed, such as: landfill gas to energy facilities; alternative energy resources for co-firing with coal or stand-alone power produc tion; waste coal (gob); tire-derived-fuel; municipal solid waste; shingles; biomass; waste woo d; rail road ties; forest slash; energy crops; methane recovery from anaerobic digestion of animal wastes; and hydro.

Comment 5: Commenters asserted the EPA should model the expans ion of RE, including upper limits on deployment.

Response 5: The EPA does model the final building block 3 gene ration levels to assess their technical feasibility and cost-effectiveness. That modeling includes upper limits on the penetration of variable, non-dispatchable RE for ea ch of the model’s 64 U.S. sub-regions. The limits are 20% of net energy for load by technology type and 30% of net energy for load for all variable, non-dispatchable RE technologies. These l evels are well supported by existing deployment levels as well as a host of studies and analysis that are detailed in chapter 4 of the GHG Mitigation Measures TSD supporting the final CP P. The methodology that produces target generation levels under building block 3 is describ ed in detail in section V.E of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenters said there is enough scientific evidence to quantify an upper limit on renewable energy penetration. The issue with increasing penet rations is the intermittency of renewable energy and the cost of significant amounts of low c arbon capacity (or resource adequacy) is not yet known as this has always been a service provide d by dispatchable, fossil fuel generators, the
commenters added. The EPA assumed technical limits based on averaging the existing RPS's of EPA determined regions, the commenters said. Commen ters stated this method appears arbitrary as the existence of policies with alternative compl iant mechanisms that have yet to come to fruition do not prove feasibility, particularly for neighboring states that have different markets, transmission constraints, and natural resources. At the least, the commenters argued that the EPA should model the expansion of renewable energy and include cost estimates for variability,8

transmission, curtailment, and capacity costs that would result, just as the commenters have done when estimating the costs of policies.

Comment 6: Commenters asserted all states should equally bear RE investment costs.

Response 6: In the final rule, the EPA has reduced state-level disparities in RE by quantifying building block 3 target generation as incremental R E and applying that generation at the interconnect-level. For more detail on the building block 3 target generation methodology, refer to section V.E of the final rule preamble of the CP P and chapter 4 of the GHG Abatement Measures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that creating a plan where all st ates share equally the cost of investing in appropriate RE, from both a technical and economic perspective is crucial. Commenters stated the EPA's approach for BSER for Washington's fossil fuel plants requires that Washington generate an additional 9.8 million MWh from RE, mor e than their 2012 fossil fuel generation. Commenters stated this BSER approach is clearly notfair considering that the seven states with the least 2012 investment in RE generation (MD, TN, CT, KY, DE, RI, AK ) have a 2029 combined RE target that is less than Washington's t arget in 2029 of 17 million MWh.

Comment 7: Commenters expressed concerns regarding the variab ility of RPS standards.

Response 7: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in section V.E of the final rule preamble and in chapter 4 pf the GHG Mitigation Measures TSD sup porting the final CPP .

The following are summaries of the specific public comments under this comment:

Commenters expressed concern that RPS standards var y greatly and can include: hydroelectric generation, municipal solid waste, combined heat an d power, clean coal, carbon capture and sequestration, and energy efficiency measures. Comm enters stated the EPA would not define any of these technologies as RE and using its historica l contributions to develop RE targets will inflate the goals. Furthermore, the commenters obse rved, the CPP does not respect the rate increase caps included in some of the state RPS or the fact some of the RPS are purely voluntary goals. In addition, the commenters concluded, RE re quires significant transmission investment and only a small percentage of the nameplate capaci ty of wind RE generation can contribute toward meeting utility Planning Reserve Margin requ irements.

Commenters stated the EPA's assumptions ignore stat es' economically reasonable resource limitations and the cost effectiveness of each type of renewable source.9

Commenters stated that EPA's assumptions for achiev able levels of renewable energy in each state are based on a regional analysis of existing state laws - Renewable Portfolio Standards (RPS) - that requires a certain percentage of all g eneration be "renewable" in nature and is inappropriate. The commenters stated EPA's proposa l fails to recognize that each state RPS is far more complex than merely a single percentage va lue; whereas, EPA assumes that all RPS are created equal, and simplistically require a set per centage of generation to come from renewable resources, each RPS is unique. The commenters gave the examples of "safety valves" to ensure the requirement for a certain percentage of renewab le energy does not result in exorbitant energy costs and each RPS contains its own applicability r ules, defining what is and what is not "renewable," some of which may conflict from state to state. The commenters stated the EPA has failed to provide a clear definition of "renewable" energy in its own proposal, given that EPA largely ignores hydropower in its analysis and admi ts that its effort to address biomass remains incomplete (even though most state RPS laws would c ount both resources as "renewable"). The commenter stated EPA's building block 3 assumptions actually increase the stringency of the state RPS laws upon which it is built by eliminatin g any "safety valves" and state-specific applicability rules that would otherwise apply and used New Mexico's "Renewable Energy Act"-
to illustrate.

Commenters also stated the EPA proposal overrides t he policy choices made by the New Mexico legislature in favor of policy choices made by othe r state legislatures that EPA prefers, and the commenters questioned whether the Clean Air Act pro vides EPA that level of legal authority. The commenters stated the imposition of one state's policy choices on another also fails to take into account the significant intra-region differenc es that exist.

Comment 8: Commenters expressed concern that the EPA's relian ce on existing state RPS goals fails to account for the fact that many states have built in mechanisms to suspend or scale back RPS goals if certain price caps are exceeded.

Response 8: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Meas ures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated the EPA's reliance on existing st ate RPS goals fails to account for the fact that many States have built in mechanisms to suspen d or scale back RPS goals if certain price caps are exceeded; as a result, the RPS goals do no t necessarily reflect a state's belief that the RPS goals can actually be achieved.

Commenters stated the EPA misrepresents the standar ds that states have adopted because most state standards contain "off-ramps," where the stat e could acquire a lower amount of renewable
resources than the numerical levels set forth in th e standards depending on impacts on cost or grid reliability.10

Commenters stated these "off-ramps" also represent legislative choices that the EPA ignores given its view that it should be the arbiter of "be st practices" for renewable resource development. Commenters provided the following exam ples:

• 7 states have annual cost caps on utilities' annual revenue requirement for
renewable resource development;

• 4 states have a retail rate impact limitation;

• 3 states cap the monthly surcharge on a customer's bill at a set amount;

• 13 states provide for payment into a fund as an alt ernative compliance mechanism;

• 3 states subject renewable resources to review unde r a just-and-reasonable standard;

• Virtually every state with a portfolio standard has some other form of off-ramp, such as a waiver or a freeze, depending on complian ce impacts.

• EPA fails to account for the fact that municipal an d cooperative utilities typically

are exempt from portfolio standards.

Comment 9: For some states, RE targets under the proposed app roach are less than the states reported RE generation amounts for 2012.

Response 9: In the final rule, the EPA applies building block 3 generation at the interconnectlevel. For more detail on the building block 3 targ et generation methodology, refer to section V.E of the final rule preamble of the CPP and chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that for some states the renewabl e energy generation targets developed using this proposed approach are less than those states' reported renewable energy generation amounts for 2012. Commenters stated that, to address this i ssue, NextEra Energy recommends that the approach for quantifying the renewable energy gener ation component of each state's goal be modified to include a floor based on reported 2012 renewable energy generation in that state.

Comment 10: Commenters expressed concern regarding the cost an d implementation challenges of building block 3, including transmission infrast ructure.11

Response 10: The EPA addresses considerations related to the te chnical feasibility and associated grid integration costs of significant RE penetration in both section V.E of the final rule preamble of the CPP and in chapter 4 of the GH G Mitigation Measures TSD supporting the
final CPP.

The following are summaries of the specific public comments under this comment:

Commenters expressed concern regarding the cost of implementing building block 3 and
transmission infrastructure related to additional r enewable energy.

Commenters stated the EPA overestimated the potenti al availability of renewable capacity and,
because these resources will not be available to th e extent that EPA has projected, States likely will have to implement other measures to achieve th eir emissions reduction targets, at greater cost and greater impact on electricity reliability (for a more detailed discussion of these points, see Industry Coalition Comments at Sec. VII.E.4).

Commenters stated the EPA fails to account for the significant cost and numerous implementation challenges that would result from na tionwide implementation of a large volume of renewable capacity. Commenters stated these impl ications result primarily from the intermittent nature of many renewable energy source s, such as wind and solar, and the
substantial new transmission infrastructure that wo uld be needed to bring renewable generation from the resource location to population centers an d industrial areas. Commenters stated that, particularly for States with large generating capac ities, EPA's projection that annual growth factors of renewable capacity in the double digits are achievable may prove difficult to sustain in practice.

Commenters requested the EPA to encourage states to work with transmission owners and providers and RTOs and ISOs, where they exist. Comm enters stated that, because transmission siting is largely subject to the jurisdiction and v arying requirements of individual states, states have the ability to work with each other and with t ransmission planners and agencies having responsibility to protect land and other resources, to make the permitting process, including environmental reviews, less duplicative and ineffic ient. Commenters stated the EPA should reject the urge to discount the importance of trans mission to fulfilling its goals and the EPA should not assume that the industry will always fin d it easy to avoid or diminish congestion, build new infrastructure to compensate for a lack o f market access, or address reliability challenges. Commenters stated that, if the need fortransmission is not articulated in the state plans, a coordinated approach to addressing these c hallenges becomes all the more difficult. Commenters stated the EPA must help ensure that tra nsmission is part of its strategic approach as it facilitates the very fundamental changes in t he way electric generation is planned, fueled, and dispatched.

Commenters stated that, as renewable energy technol ogies have become more cost competitive and efficient, the primary obstacle to its further deployment in areas having the highest quality wind and solar resources remains the lack of adequa te transmission capable of moving green energy to distant markets. Commenters stated this f actor is fundamental to the feasibility of Building Block 3 of the EPA's proposed rule. Commen ters stated that, to ensure the role of transmission is considered, transmission owners and providers, as well as RTOs and ISOs,12

should be afforded the opportunity to furnish techn ical information in support of transmission solutions capable of increasing the efficiency of t he system as a whole, while also achieving emissions reduction goals. Commenters stated that, as FERC recognized in establishing its Order No. 1000 planning processes, transmission is a regi onal and even interregional phenomenon that requires a broad planning perspective and a determi nation to coordinate state law and regulation
as never before. Commenters stated that transmissio n planning and development is growing more complex and often more difficult (e.g., differ ing state and federal facilities siting regimes, conflicting cost allocation theories and proposals, and multiple layers of environmental reviews under both state and federal law), as evidenced by lengthy regulatory approval processes and construction periods, even when important reliabili ty needs or the requirements of public policy like lower carbon generation are at stake. Commente rs stated that, if the need for transmission is not articulated in the state plans, a coordinated approach to addressing these challenges becomes
all the more difficult.

Commenters said that natural gas use currently is l argely tied to providing peaking power and providing voltage support and inertia to the system to compensate for the variability of wind and solar resources. The commenters said the expansion of RE will be highly dependent not only on transmission, but also on the continued robustness of the grid (see generally NERC Report). The commenters added robustness of the grid as it relat es to integrating renewable energy is currently provided by natural gas generation facilities (and, in the future possibly, pumped storage). Commenters stated the expansion of RE will therefor e require the expansion of natural gas power to follow the load and to compensate for the variability of renewables at a higher level. Commenters noted this increase in natural gas will require build-out of natural gas infrastructure and the build-out of transmission, the construction of natural gas pipelines and transmission require lengthy permitting processes, environmental impact assessments, and additional costs to consumers. Commenters stated the proposed rule and related TSDs do not assess the related impacts to natural gas and transmission the comment ers said and therefore should be revised and re-analyzed to reflect the actual constraints and d elays this will cause in RE development and the resulting costs to ratepayers.

Commenters encouraged the EPA to look into regional transmission planning and specifically at FERC's Order 1000 as a way to foster states' adopti on of the CPP and of renewable energy. Commenters stated that in 2011, FERC establ ished a series of rulings (Order 1000) to improve the U.S. power grid and reduce its balkaniz ation. Essentially, Order 1000 requires public transmission utilities to: (1) engage in reg ional and interregional transmission planning, while accounting for public policy considerations a nd (2) develop cost allocation methods to allocate the costs of new transmission projects amo ng beneficiaries of the transmission line. Commenters stated Order 1000 supports renewable ene rgy by ensuring that state policies, such as Renewable Portfolio Standards, are taken into ac count by utilities, and by allowing states to share their renewable energy with other states with in the same Integrated System Operator (ISO) network. Commenters stated it lays the groundwork f or the large-scale development of renewable energy by facilitating a build out of ele ctric transmission lines connecting renewable energy resources and load centers.

Commenters said that an example of such sharing, wh ich facilitates the flow of renewable energy from where it is produced to the load centers where it is consumed, is the Competitive Renewable Energy Zones (CREZ) in western and centra l Texas. Commenters stated this network13

of more than 3,000 miles of transmission lines deli vers thousands of megawatts of clean and cheap wind energy produced in the Panhandle to the population centers of Dallas/Fort Worth, Austin, and San Antonio. Commenters stated this sam e template for renewable energy
transmission can be achieved in other ISOs. Comment ers stated that for example, utilities and states forming part of the Midcontinent Integrated System Operator (MISO) could collaborate with each other to bring wind energy generated in N orth and South Dakota to states like Wisconsin and Missouri, thereby fostering greater a doption of renewable energies and allowing these states to meet their RPS and 111(d) targets.

Commenters said that by encouraging utilities acros s states to collaborate in transmission planning, and by setting up new ISOs where there ar e none currently (in the Southeast and West), cost-effective actions can be achieved. Comm enters pointed out that there are other cobenefits of renewable energy projects are job creat ion, local economic development, supply chain development, enhanced domestic manufacturing, reduced U.S. energy dependence on foreign oil, and decreased health impacts resulting from fossil fuel emissions and climate change.

Commenters said that in both of the proposed approa ches, the RE goals are based, in part, on prior RE development trends, yet the prior growth o f RE resources is not necessarily an indication of future growth. Commenters added that often the most rapid and cost-effective gains are achieved in the early years of development and in those areas with the greatest resource potential and the greatest potential to deliver and integrate these RE resources (i.e., available transmission). In addition, commenters stated many of the prime areas for RE development are located far from load centers and will require tran smission to be built to deliver the power to load centers. Commenters said that a typical transmissio n line requires five years or more to site, permit and construct. Commenters stated large-scale transmission projects, such as high-voltage overlays and those needed for RE integration can in volve even longer lead times. The commenters anticipated incremental RE additions to the grid (especially if geographically far from load) potentially will come at an increasingly higher cost.

Commenters observed that the EPA's approaches are p redicated on the assumption that large quantities of new RE generation can be integrated i nto the grid. Commenters stated the EPA has not accounted for the technical challenges related to integrating and managing large quantities of RE into the existing transmission and distribution system. These challenges grow as the level of RE penetration increases, the commenters said. This effect has already been observed in Hawaii and Germany, where these technical challenges have slowed the pace of growth of RE and have limited their cost-effectiveness as additional grid upgrades are needed to accommodate increasing amounts of RE, the commenters explained. In order to set realistic RE generation goals, the commenters asserted the EPA must take in to account the challenges associated with increased penetration of RE when setting RE generat ion targets under section 111(d). This may entail moderating the growth of state RE goals in t he later years of the interim compliance period, the commenters concluded.

Commenters said that as a result of infrastructure barriers, in a state like Wyoming where the renewable generation for Basin Electric does not ex ist and the bulk of existing wind power was constructed by other companies to meet their out-of -state renewable portfolio standards, the
construction of new renewable wind resources would have to be supported with new simple cycle generators, and it might be necessary to buil d and maintain a new combined cycle14

generating facility to manage the variability in th ese new loads, the commenters said. None of this infrastructure exists, according to the commen ters. The infrastructure to replace coal-based generation within Wyoming does not exist, has not b een developed, is not planned, and cannot be constructed by 2020, the commenters asserted.

Commenters stated concern about the impact of addit ional intermittent resources on service reliability requirements. The commenters noted Flor ida requires a robust, diverse, and dispatchable baseload generating fleet; however, ma ny of the low- or zero-carbon technologies EPA assumes in its Building Block 3 allocation to F lorida are intermittent, non-dispatchable, non-baseload technologies. Commenters provided the example that in 2013 the monthly capacity factor for solar photovoltaics in the U.S. ranged f rom 13 to 22 percent, which showed there is no demonstrated baseload solar option. The commenters said the low capacity factors of many lowor zero-carbon technologies (excluding nuclear and possibly co-firing with biomass) combined with Florida's need for dispatchable baseload gener ation means that Florida would likely need to build additional natural gas-fired facilities and r elated infrastructure for use as stand-by units for reliability purposes simply because of EPA's assume d requirement. The commenters referred to a recent report from Brattle.com entitled "SolarEnergy Support in Germany-A Closer Look" that assesses Germany's efforts to increase renewab le generation resources noted an expected cost increase associated with redispatch, curtailme nt, and other remediation actions necessary to maintain reliability. Commenters said EPA errs in f ailing to account for these additional expenditures or the implementation time needed to e nsure electric reliability.

Commenters stated EPA should encourage more flexibl e market-based approaches to supplying renewable power to reduce the emission reduction bu rden on fossil fuel power plants.
Commenters said the increased use of renewable ener gy also can play a large role in reducing electric power sector GHG emissions. Commenters sai d to the extent legally permissible, therefore, using renewable energy as a means of ach ieving performance standards, to facilitate market-based emission reductions, makes good sense. Commenters said at a minimum, power plant operators should have the option of being abl e voluntarily to take advantage of increased renewable energy use through a crediting mechanism to meet BSER obligations. Commenters said EPA should also consider additional means to p romote the use of renewable electricity, including the direct purchase of renewable energy t hrough flexible contract options, shared or community renewable tariff programs and other progr ams involving the physical delivery of clean electricity. Commenters said these options, w hich are aimed in large part at making it practical for corporations and other large electric ity users to buy RE (and not just Renewable Energy Certificates (RECs)), could play a significa nt role in attracting additional RE supply in many states. Moreover, commenters added, the EPA's express support for such supply-inducing regulatory incentives, would align the agency with the President's recent December 2013 guidance to federal agencies on best practice procu rement policy for renewable generation. Commenters said a robust voluntary RE option under the Proposed Rule would leverage the augmented role of gas-fired generation under the Ru le. Commenters said flexible gas-fired facilities play a key role in providing load-suppor t to variable renewable energy when the wind is not blowing and the sun is not shining.15

Comment 12: Commenters took issue with the assumption that RPS s are a reasonable proxy for quantifying renewable generation potential.

Response 12: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Meas ures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that, although South Carolina doe s not have a renewable portfolio standard (RPS) in place, and is not currently a member of a GHG trading program, the state has taken just as many other significant steps resulting in a meas urable reduction of CO2 emissions. Commenters stated South Carolina is ranked high amo ng states for clean energy use (5th) and Leadership in Energy and Environmental Design (LEED ) for building space per capita (top 10). Commenters stated the state legislature updated, by Act 143, the South Carolina Energy Standard to the 2009 International Energy Conservation Code (IECC) for all commercial and residential building with an effective date of January 1, 2013. Commenters stated South Carolina also ranks highly among states regarding its use of nuclear po wer generation as a component of a diverse fuel portfolio.

Commenters stated that calculating renewable energytargets by region is not representative of actual planned renewable energy generation levels i n those regions. Commenters expressed concern that states with no published RPS are not i ncluded in the averaging calculation, even if those states have voluntary renewable energy progra ms or RE generation facilities that were developed outside of a formal RPS requirement. Comm enters stated the effect on the final regional RE targets is that they are skewed toward certain states that may represent unusual or unique technical potential for RE development.

Commenters stated that, because not all states have or will have an RPS or other state renewable energy policies, they urged the EPA to carefully co nsider the impact of all types of renewable energy procurement on state compliance plans, and n ot just renewable energy generated in response to a state RPS or similar state policies. Commenters stated consumers and businesses are making significant commitments to renewable ene rgy generation for reasons other than RPS compliance and such customer-driven renewable energ y demand may be a particularly important driver for renewable energy development in the futu re. Commenters stated that the actions of non-utility parties are largely unaccounted for in the Clean Power Plan. Commenters encouraged the EPA to consider the impact of allowing states t o adopt policies that empower non-utility parties to contribute to state compliance under the Clean Power Plan. Commenters stated they support the approaches that will drive the most low -carbon energy onto the grid.

Commenters stated EPA errs by establishing an overl y restrictive definition of renewable technologies to be used to meet Building Block 3 go als. Commenters stated the EPA allows technology that is fueled by sun, wind, water, orga nic matter, and other resources regularly replenished by physical or biological cycles (GHG A batement Measures TSD at 4-1). Commenters stated the excessively narrow scope of E PA's definition is highlighted by reviewing the broad definition in North Carolina's REPS, whic h classifies renewable technologies as: Solar electric, solar thermal, wind, hydropower, geotherm al, or ocean current or wave energy resource;16

a biomass resource, including agricultural waste, a nimal waste, wood waste, spent pulping liquors, combustible residues, combustible liquids, combustible gases, energy crops, or landfill methane; waste heat derived from a renewable energy resource and used to produce electricity or useful, measurable thermal energy at a retail elect ric customer's facility; or hydrogen derived from a renewable energy resource.

Commenters stated EPA should acknowledge each state 's definition for renewable energy is unique to them based on the resources available to them within their borders and include these generation sources for compliance.

Commenters stated the EPA assumption that existing RPS targets are feasible across all states within a defined region does not adequately conside r the varying definitions of renewable across
the states. Commenters also stated that renewable r esources physically located in one state are often used to satisfy RPS requirements in other sta tes. Commenters took issue with the assumption that RPSs are a reasonable proxy for qua ntifying renewable generation potential, and cited literature showing that motivations for RPS i mplementation and stringency are multifaceted and include many state-specific factors tha t cannot be generalized to other contexts or assumed to be indicative of best practices over a m ulti-decadal horizon.

Commenters suggested tribal lands should not be inc luded in assessing a state's RE potential at all, considering that tribes are not subject to the Proposed Rule; these drawbacks must be addressed before considering any option related to technical potential.

Commenters stated the EPA should be aware that stat es such as New Mexico with a large rural population and many rural electric cooperatives oft en have secondary and even tertiary standards which are necessarily lower than those for the inve stor owned utilities (IOUs), due to the demographics of the rural population as well as tra nsmission constraints of rural areas. Commenters stated a focus only on primary standards in setting a regional "average" RPS ignores the demographics and constraints unique to rural electric cooperatives.

Comment 13: Commenters suggested that RPS policies need to be increased and broadened.

Response 13: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Meas ures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters suggested elements from state RPS design and grid control area policy be synthesized to present best practices that facilita te renewable energy development, with a particular emphasis on leveraging private sector fi nancing. Commenters suggested that, for states with existing RPS policies, the states can make the ir RPS targets more robust by aligning with the timeline of the CPP through 2030 and raise over all annual RPS targets.17

Commenters stated that state RPS policies have prov ided investors and developers with important long-term, market demand targets and have been a successful, low-cost tool with more than 68% of renewable energy generation in the U.S. (~51 GW) occurring in states with RPS policies at a cost of less than 2% of electric rate s in states with RPS policies. Commenters stated that, to achieve CPP targets through greater use of cost-competitive renewable energy, RPS policies need to be increased and broadened, possib ly to more states and to more utility segments. Commenters noted thirteen states presentl y do not have RPS policies, and in some states not all utilities are covered by existing po licies. Commenters said that all future requirements under existing RPS policies only amoun t in the range of 3.5 GW of new renewable energy power each year through 2030 (ACORE-US PREF) , well below what the US renewable energy industry can deploy. Commenters stated renew able energy additions have averaged approximately 10 GW per year since 2008, including more than 16 GW in 2012 (FERC) or 49% of all new capacity that year. Commenters stated th e ability of the industry to ramp up generation is virtually unlimited.

Commenters indicated that a number of states on a b ipartisan basis have already taken action to increase or strengthen their RPS policies. The comm enters said, in 2009, California's Governor issued an executive order increasing the state's RP S target from 20% by 2010 to 33% by 2020. Commenters added that in Colorado, the state legisl ature in 2007 modified the state's RPS program (from a 2004 ballot initiative) to include a higher target; the 2007 modifications also added separate renewable energy requirements for el ectric cooperatives, which previously had
been omitted from the state's RPS mandate. The comm enters said in 2010, the Colorado legislature again increased the state's RPS target, to its present level of 30% by 2020. Commenters added, in 2012, the Maryland legislature enacted a bill accelerating compliance deadlines for the state's solar carve-out (includin g changing the ultimate 2% target date from 2022 to 2020). Lastly, the commenters indicated tha t in 2013, Minnesota increased its RPS to 40% and New Jersey in 2010 converted its significan t RPS target to a capacity requirement (versus a percent of generation).

Comment 14: Commenters asserted that the EPA should adopt the UCS Demonstrated Growth Approach.

Response 14: The resources and data provided in this comment wer e valuable in finalizing the building block 3 methodology. The final methodolog y to establish building block 3 generation
levels is consistent with several of the recommenda tions provided in the UCS Demonstrated Growth Approach – the final methodology relies on t he capacity deployment of select RE technologies over the most recent five-year period, takes into account current law and RPS policies, and assumes continued growth in RE at lev els equal to the EPA IPM Base Case through 2021. The final methodology for building block 3 i s described in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mit igation Measures TSD supporting the final
CPP.

The following are summaries of the specific public comments under this comment:

Commenters recommended strengthening the renewable energy building block by adopting the UCS Demonstrated Growth Approach (UCS Approach).18

Commenters stated the UCS Approach is a logical out growth of the EPA's approaches for determining the BSER for the renewable energy build ing block. Commenters recommended the EPA revise its methodology by (1) setting renewable energy growth rates that are already being achieved by many states; (2) incorporating full com pliance with current state RES laws; (3) using actual generation data from 2013 (or the mostrecent year available) and including recent and planned renewable energy development between 20 13 and 2017; and (4) committing to reviewing and strengthening state emissions reducti on targets, as well as state renewable energy targets, by 2025, to ensure that the CPP is updated to reflect the latest opportunities for cutting
CO2 emissions.

Commenters explained the UCS Approach would (1) seta national renewable energy growth rate benchmark based on demonstrated growth in the state s from 2009 to 2013; (2) assume full compliance with current state RES policies, as set by law, that require certain percentages of electricity to come from renewable sources; and (3) account for actual and expected renewable energy growth between 2013 and 2017. Commenters sta ted the UCS Approach assumes statelevel renewable energy targets begin in 2017 and ra mp up through 2030. To determine each state's 2017 baseline generation levels, commenters recommended using EIA's actual renewable generation data from 2013 (the EPA's approach uses 2012 data) and add projected generation from wind and utility-scale solar projects known to be under construction through 2016. To calculate state renewable energy targets for 2030, commenters recommended a four-step approach:

• First, we use EIA data to calculate each state's av erage renewable energy growth

rate over the five-year period from 2009 to 2013. W e find that, on average, states increased their renewable share of electricity sale s by 1 percent annually. This growth rate serves as our national benchmark. The 2 009-2013 benchmark period accounts for the recent rapid growth in wind and so lar technologies; it eases fluctuations in development due to uncertainty arou nd federal tax credit expirations and extensions; and it captures much of the historic development spurred by state RES policies-a key driver of renew ables growth. Eleven of the 15 leading states that have achieved growth rates at o r above the national benchmark from 2009 to 2013 have also achieved a 1 percent or higher average annual growth rate over a 10-year period from 2004 to 2013

.

• Second, for states below the 1 percent national ben chmark, we assume that they gradually ramp up to that rate from 2017 to 2020 in a similar way that the EPA assumes energy efficiency targets would ramp up in Building Block 4. This period serves as an opportunity for states that hav e not been as active in deploying new renewable energy sources to catch up to the nat ional benchmark. Renewable energy is assumed to grow after 2020 in these state s at an annual rate of 1 percent of total sales through 2030.

• Third, for the 15 leading states among those that h ave been deploying renewable energy at or above the national benchmark, we incre ase their respective renewable energy targets from 2017 to 2030 at each state's av erage annual growth rate during the five-year benchmark period, up to a maxi mum of 1.5 percent per year.
We view this as a reasonable limit that can be sust ained over time in states with19 strong renewable energy potential. This is supporte d by the fact that seven states have achieved annual average growth rates of 1.5 pe rcent or more over a 10-year period from 2004 to 2013 based on EIA data. Moreove r, a 1.5 percent growth rate is consistent with renewable energy targets set by leading RES states.

• Fourth, to account for full compliance with mandato ry state RES laws, we assume that states achieve the greater of two measures: th e generation projected by our growth rate approach; or the level needed to meet s tates' respective RES targets for each year from 2017 to 2030, as projected by th e Department of Energy's Lawrence Berkeley National Laboratory. To ensure re asonably achievable renewable energy penetration rates during the compl iance period, we also cap the total share of renewable generation for any state a t 40 percent of total state electricity sales, a level that several studies by grid operators, utilities, and government agencies have shown can be achieved at t he state and regional level in this timeframe while maintaining reliability. On ly seven states hit this cap prior
to 2030.

Commenters stated that key constraints included in the UCS Approach, such as the 1.5 percent annual growth rate cap and the 40 percent cap on th e overall target, are reflective of current
conditions and thus should be flexible over time. C ommenters stated that, as the EPA undertakes regular reviews of the CPP, which should occur at l east every eight years as allowed by the Clean Air Act, these constraints could be adjusted upward or eliminated to reflect improvements in renewable energy technologies, grid integration techniques, and falling costs.

Commenters stated that, if all states met these tar gets, the nation's electricity coming from renewable energy in 2020 would double compared with the EPA's proposal-from 7 percent of total U.S. electricity sales to 14 percent and, by 2030, it would result in a 23 percent share of renewable energy, as compared with 12 percent under the current the EPA proposal. Commenters stated that achieving higher levels of r enewable energy generation under the UCS Approach is technically feasible. Commenters stated they used the same data from NREL that the EPA relied on for its alternative approach, and , in every CPP-region, the UCS Approach requires only a small fraction of the vast renewabl e energy resources that are technically available. Commenters stated the technical potentia l based on the EPA's methodology includes utility and distributed solar photovoltaics, onshor e wind, geothermal, and bioenergy.
Commenters noted their estimates do not include the tremendous offshore wind potential in the U.S., which the EPA excluded because they claimed t hat the technology has not been adequately demonstrated to qualify for the BSER. Commenters re ferenced a recent DOE report showing that 14 offshore wind projects totaling 4.9 GW are in ad vanced stages of development in nine states and the Virgin Islands and stated that, given the s tatus of these projects, and the likelihood that states will include them in their state compliance plans, the EPA should consider including a contribution from offshore wind as a potential BSER option over time.

Commenters stated that the UCS Approach is affordab le. Commenters stated that, using the National Renewable Energy Laboratory's Regional Ene rgy Deployment System (ReEDS) model, they analyzed the impacts on CO2 emissions, electri city and natural gas prices, and the electricity generation mix of achieving the state r enewable energy targets under the UCS Approach compared with business as usual. Commenter s stated their analysis is a reasonable20

approximation of the incremental costs and impacts of increasing renewables under the Clean Power Plan; however, they did not analyze the full impacts of implementing the entire draft rule. Commenters stated their analysis included updates t o technology cost and performance assumptions that reflected data from recent projectinstallations and mid-range projections from
several recent studies as discussed in more detail below and a separate technical appendix. Under the UCS approach, commenters stated total CO2 reduc tions achieved by the Clean Power Plan could increase from 30 percent below 2005 levels to nearly 40 percent. Commenters stated the ReEDs modeling showed that the additional renewable energy generation would displace mostly natural gas. Commenters stated that diversifying th e electricity mix with renewable energy would help reduce the economic risks associated wit h an overreliance on natural gas and reducing the demand for natural gas would also lead to lower and more stable natural gas and electricity prices. Commenters added they analyzed sensitivities related to key parameters in the UCS Approach and found that it is robust to these c hanges.

Commenters stated that, under the UCS proposed appr oach, national average consumer electricity prices were a maximum of 0.3 percent hi gher per year than business as usual through 2030. Commenters stated that, as a result, a typica l household (using 600 kWh per month) would see a maximum increase of 18 cents on their monthly electricity bill on average at the national level. Commenters stated that, under the UCS Approa ch, the national average price of natural gas delivered to the electricity sector would be 9 percent lower than business as usual by 2030. Commenters stated that, at the regional level, aver age consumer electricity prices would range from a 3.7 percent reduction to a 3.4 percent incre ase, while power sector natural gas price reductions would range from 8 percent to 17 percentby 2030. Commenters stated that previous studies have shown that reducing natural gas use in the electricity sector with renewables and energy efficiency can also help reduce consumer nat ural gas prices and bills for heating, manufacturing, and other uses. Commenters stated, f or example, a 2007 EIA analysis found that implementing a national RES of 25 percent by 2025 w ould lower cumulative (from 2009 through 2030) consumer natural gas bills by $17 billion (or 1 percent), more than offsetting the cumulative $15 billion (0.4 percent) increase in co nsumer electricity bills. Commenters stated these benefits are not captured in the UCS Approach , which uses an energy model that focuses only on the power sector. Commenters stated they fo und that the incremental cost of increasing renewables under the UCS proposal was at or below $ 30/MWh, the range that the EPA identifies as meeting the BSER cost criteria under the Clean P ower Plan. Commenters stated these results assume national trading of renewable energy credits (RECs). Commenters stated that, if there are any limits placed on trading between regions, exper ience with renewable energy markets suggests that REC prices would likely be higher in some regions and lower in other regions of the country.

Comment 15: Commenters stated the NREL technical potential rep ort was inaccurate in its
estimates.

Response 15: The final methodology for building block 3 does no t rely on a benchmark development rate quantified through NREL technical potential estimates, as proposed under the Alternative RE approach. The EPA believes the RE re source estimates and cost steps that underlie IPM projections appropriately represent re levant land use restrictions. Further, building21

block 3 target generation levels are quantified at the interconnect-level, providing significant development flexibility. Refer to chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP for additional analysis on the assumed re newable resource potential.

The following are summaries of the specific public comments under this comment:

Commenters referred to a NREL report estimating ren ewable energy potential and stated the environmental exclusions NREL relied upon underesti mate restrictions on renewable energy deployment and, as a result, significantly overesti mate Oklahoma's renewable energy potential.

Commenters stated renewable energy potential was an alyzed by NREL based both on the potential for development of a particular renewable energy type in a particular location and on whether a given location could permit development o f that renewable energy resource. Commenters added the reports excluded areas that NR EL determined would not permit the development of a certain renewable energy type, bec ause of either topographic or environmental land restrictions. Commenters stated that having fa iled to account for the ESA and recent land use restrictions, NREL suggests that 58 percent of Oklahoma's land area is available for wind generation and 56 percent is available for rural so lar photovoltaic ("PV") generation. Commenters stated that, when the habitats of the ES A-listed lesser prairie chicken are removed from consideration, the technical potential of avai lable wind and solar development is reduced significantly. Commenters stated Oklahoma's hydropo wer potential must also be significantly reduced, as NREL failed to consider exclusions for the habitats of six listed aquatic species which reside in Oklahoma, rivers that NREL determin ed have hydropower potential.

Commenters said that the NREL report admittedly ove restimated renewable energy by permitting double counting. Commenters said that, s pecifically, the report notes that "the same land area may be the basis for estimates of multipl e technologies." Commenters stated this approach double counts renewable energy potential i n Oklahoma by assuming that mutually exclusive renewable energy development could occur in the same location when in reality it could not. Commenters stated that, for example, Okl ahoma's wind and rural solar PV potential likely overlap given Oklahoma's topography and popu lation density. Commenters stated that, by assuming these technologies can be built on top of each other, the alternative approach significantly overstates Oklahoma's potential for b oth technologies.

Commenters stated that the NREL report does not pro vide an accurate representation of hydropower potential in Oklahoma. Commenters said t hat NREL estimated hydropower potential based on a decade-old study that in turn relies on even older median data. The commenters said that according to the EPA and numer ous hydrologists, climate change is and will continue to significantly affect streamflow dy namics. In light of these dynamics,
commenters stated that the EPA should utilize a mor e recent, and thus more accurate, hydrologic dataset. Commenters stated that in the alternative, the EPA should justify its reliance on this
older data.

Comment 16: Commenters recommended using NREL estimates of tec hnical potential for specific RE generation technologies.22

Response 16: NREL technical potential data is used in the EPA’s power sector modeling analysis to support the building block 3 generation levels. For additional information, refer to the Chapter 4 of the GHG Mitigation Measures TSD su pporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters recommended that EPA should utilize a de termination of technically potential
renewables in a similar manner to the National Rene wable Energy Laboratory (NREL) estimates of the technical potential of specific renewable el ectricity generation technologies.

Comment 17: Commenters stated EPA overestimated the amount of additional renewable energy potential.

Response 17: The EPA addresses considerations related to the te chnical feasibility and associated grid integration costs of significant RE penetration in both section V.E of the final rule preamble of the CPP and chapter 4 of the GHG M itigation Measures TSD supporting the
final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that, while the EPA's compliance building block number three assumes that about 10 percent of Florida's generation could come from renewable energy by 2030, additional renewable energy is not a viable option for us sinc e GRU already has roughly 34 percent of its energy coming from renewable energy.

Commenters stated that a recent MISO study suggests that the EPA's assumptions regarding increase in renewable energy are unrealistic, and t hreaten both grid reliability and an affordable energy supply for this country. Commenters stated t he MISO study of the impact of the GHG Rule found through modeling that renewable energy c ould not be expected to replace the fossilfuel retirements already planned due to MATS, nor t hose expected to retire due to the GHG
Rule.

Comment 18: Commenters noted factors limiting the inclusion of new RE in Alaska.

Response 18: No building block 3 requirement has been expressed for Alaska in the final methodology.

The following are summaries of the specific public comments under this comment:

Commenters stated there are significant limits to i ncluding new renewable energy resources in the generation mix in Alaska. Commenters stated geo graphic and economic constraints limit the availability of utility grade renewable energy reso urces. Commenters stated utility grade wind and geothermal generation resources are generally l ocated in southwest and western Alaska, hundreds of miles away from transmission facilities connected to affected EGUs. Commenters stated that, given the current state of technology and the low angle of sunlight during much of the23

year, our solar resources are not utility grade. Co mmenters stated Alaska is actively investigating biomass, hydrokinetic, and hydroelectric resources, and developing those that appear viable; however, many of these resources are also not locat ed within economic reach of load served by
an affected EGU.

Commenters stated that transmission and economic co nstraints dictate that only smaller renewable energy projects can be integrated. Commen ters stated the relevant transmission lines are already operated substantially at capacity to t ransfer hydroelectric and natural gas generation to load. Commenters stated the cost of making subst antial upgrades to the existing transmission infrastructure would make most renewable energy pro jects uneconomic; therefore, most new renewable energy projects will have to be sized to interconnect with their local distribution system. Commenters stated that only projects produc ing 2 MW or less can be interconnected with local distribution systems and this lack of sc ale substantially affects project economics. Commenters stated that, without economies of scale, Alaska does not have the same opportunities to develop projects as the interconne cted continental states.

Commenters stated the affected utilities in Alaska have limited capacity to accommodate additional non-firm energy, particularly intermitte nt generation sources such as wind and solar. Commenters stated that, to ensure reliability of th e system, firm generation resources must be available to follow intermittent generation resourc es. Commenters stated firm generation resource capacity that is sufficiently nimble to co ntinuously follow load in addition to intermittent generation resources such as wind and solar must be continuously online. Commenters stated the availability of this type of firm generation capacity is limited in Alaska. Commenters stated that increased cycling of fossil units occasioned by following intermittent generation will decreases the unit's efficiency, le ading to an increase in CO2 emissions. Commenters stated that measures to regulate wind an d solar generated energy could include installation of large batteries and flywheels at co st of about $2,000 per kW. Commenters stated the integration of significant amounts of non-firm power may also significantly de-optimize dispatch and result in higher fuel and generation o peration and maintenance costs.

Commenters stated that their ability to incorporate new renewable energy, particularly on the timeline required by this rule, is infused with sub stantial uncertainty. Commenters stated that, in many cases, federal environmental studies and permi tting requirements and policy create significant barriers to developing even reliable fi rm renewable energy resources that could be safely absorbed into Alaska's electric utility syst ems, such as storage or lake tap hydroelectric generation. Commenters stated that declining prices for Alaska oil is reducing the State's ability to provide financing for new renewable energy proje cts. Commenters stated that, while their utilities are actively examining options for new re newable energy resources, many renewable energy projects are simply uneconomic. Commenters s tated at least one utility notes that the projects typically cost two to three times the avoi ded cost of gas-fired generation.

Comment 19: Commenters stated that additional increases in ren ewable capacity in Montana are
limited.24

Response 19: The final methodology for building block 3 has bee n modified to quantify and apply target generation levels at the interconnect- level, with a two-year phase-in period that provides additional time to accommodate additional investments or planning that may be necessary in deploying and/or procuring incremental RE. For more detail on the building block 3 target generation methodology, refer to section V .E of the final rule preamble of the CPP and chapter 4 of the GHG Mitigation Measures TSD suppor ting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters indicated that the MDEQ "White Paper" su ggested Montana could significantly increase its renewable electricity generation capac ity as part of its strategy to comply with the proposed Federal rule. Commenters said Montana gene rated 1661 GWh of renewable electricity in 2013. Commenters said MDEQ's analysis suggested the state may need to increase renewable capacity by 342 MW to 2,859 GWh by 2030 to help rea ch Montana's CO2 reduction target. Commenters added that Montana has significantly inc reased its renewable capacity in recent years as evidenced by construction of a number of w ind farms. Commenters stated that additional increases in renewable capacity in Monta na are limited by several factors:

• Montana's high voltage transmission lines are alrea dy at or near full capacity and additional renewable generation would require new t ransmission lines or upgrades at existing facilities.

• Securing rights-of-way for construction of renewabl e facilities and their required transmission capacity is no easy task in Montana-as evidenced by the difficulties faced by NorthWestern Energy's attempts to construc t the Mountain States
Transmission Intertie line from Montana Idaho that was planned to increase renewable capacity. The proposed line ran into sign ificant opposition related to eminent domain issues, landowner concerns about vis ual and environmental impacts, and market considerations.

• Without the necessary increases in transmission cap acity to handle increases renewable generation, increased renewable generatio n would require a decrease in coal-fired generation. Decreased coal-fired utiliza tion would likely lead to decreased efficiency at these units and thereby sub stantially offset any benefit realized from additional renewable generation. Coal plants are not designed cycle to integrate renewables, but are designed to be bas eload generating unitsachieving their efficiency by running at constant l evels over long periods of time,
the commenters noted.

• The high voltage transmission line that runs from C olstrip west depends on the inertia provided by the steady generation of the Co lstrip coal-fired power plant. Reduced capacity at the plant will compromise reliability of the transmissions system, the commenters asserted.

Comment 20: In comments on the tribal and territories SNPR, co mmenters stated that the Proposed Rule's approach to Block 3 yields no new R E in these jurisdictions.25

Response 20: In the final rule, the EPA applies building block 3 generation at the interconnectlevel. This methodology does not distinguish betwee n affected EGUs within an interconnection. However, there are no requirements related to build ing block 3 for Alaska, Hawaii, and the U.S. territories. For more detail on the building block 3 target generation methodology and where it is applied, refer to section V of the final rule pream ble of the CPP and chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated this result is based on the EPA's assessment that there is currently no utilityscale, grid-connected, non-hydropower renewable ele ctricity being generated on these tribal
lands or in Guam or Puerto Rico - an assessment tha t overlooks a number of recent and ongoing RE projects in those areas. Commenters stated that, since each jurisdiction has a 2012 baseline of 0 MWh from RE, any percentage increase will similar ly yield 0 additional MWh. Commenters stated that, for the territories, the EPA co-propos es an alternative approach that would establish an expected RE percentage of 0.37 percent of total generation starting in 2017 and would apply a 9 percent annual growth factor over the course of t he compliance period. Commenters stated that, by 2029, this co-proposal would result in an RE penetration of 1 percent in the territories. Commenters stated the Agency did not propose a simi lar alternative for the tribal nations, reasoning that the co-proposal is based not on dome stic electricity consumption but on total generation within that jurisdiction. Commenters sta ted that, since domestic consumption of electricity on the tribal lands is only a small fra ction of the total generation produced, this coproposal would expect the tribes to develop renewab le resource capacities that greatly exceed their demand for electricity.

Commenters stated that the Proposed Rule dramatical ly underestimated the renewable potential of the three tribal nation lands, Guam, and Puerto Rico. Commenters stated the region in which the tribal nation lands are situated has among the best solar and wind resources in the United States and, indeed, the world. Commenters stated, f or example, in 2012, the National Renewable Energy Laboratory ('NREL') estimated that the Navaj o Nation has approximately 1,200,000 MW of utility-scale solar capability, and nearly 1,800 MW of wind resource potential, 500 MW of which is of high quality, meaning that its capacity factor would be 35 percent or greater. Commenters stated Puerto Rico has excellent solar p otential, similar to the U.S. Southwest's resource, and a ridgeline wind resource that is on par with that of Texas, one of the leading states for wind development. Commenters stated Guam and th e U.S. Virgin islands have similarly strong renewable potential. Commenters stated that, to expect 0 or 1 percent renewable generation in these regions does not reflect the be st system of emission reduction and would sacrifice an important opportunity for reducing emi ssions in these areas.

Commenters stated a large percentage of residents o n tribal nation lands currently lack electricity, despite the fact that large, centraliz ed fossil fuel plants have operated in those jurisdictions for decades. Commenters stated that d istributed renewable generation combined with energy storage and/or microgrids is an ideal o ption to provide electricity in these
communities to residents that still lack this vital resource and would help develop green jobs in the process. Commenters stated many tribes have alr eady started to develop renewable energy within their borders, recognizing the economic deve lopment and energy independence benefits of such projects.26

Commenters described several planned wind and solar tribal projects. Commenters stated tribal renewable energy development has been hampered in r ecent years by federal restrictions on tribes' ability to enter into long-term surface lea ses; thus, the relative paucity of renewable energy projects in tribal areas with excellent reso urces should not be taken as a sign of their infeasibility or lack of interest from the tribal n ations. Commenters stated that, in 2012, Congress enacted a law to promote greater tribal self-determ ination and economic development by allowing tribes to enter into long-term leases with out the historical need for prior approval from the Secretary of the Interior. Commenters stated th e 'Helping Expedite and Advance Responsible Tribal Home Ownership Act of 2012 (the 'HEARTH' Act ) requires tribal nations to establish their own regulations governing surface leasing, an d it is those regulations - rather than the caseby-case leasing decisions - that must approved by I nterior. Commenters stated the EPA should consult with tribal nations and the Department of t he Interior to ensure that the nations have the guidance they need to develop these regulations, to ensure that review by Interior proceeds in a timely manner, and to ensure that tribes have the r equisite authority to negotiate wind and solar development leases to achieve compliance with EPA's rule.

Commenters stated Puerto Rico has taken significantsteps toward reducing its reliance on imported fossil fuel power, including the establish ment of an RPS requiring 12 percent RE by 2015, 15 percent by 2020, and 20 percent by 2035. C ommenters stated the EPA's approach in the supplemental proposal ignores the island's RPS targ ets, even while the Clean Power Plan establishes Block 3 targets based on states' RPS go als. Commenters stated that PREPA, the island's utility, has signed long-term power purcha se agreements with renewable energy developers for about 1,000 MW of renewable capacity , which would satisfy the 2015 portfolio standard. Commenters stated an existing utility-sca le RE project - a 24-megawatt solar photovoltaic ('PV') plant at Guayama - is managed b y the same company that owns Puerto Rico's coal plant. Commenters stated the territory has als o become a leader in distributed solar, both solar PV and solar hot water heaters: over 11,000 s olar hot water heaters installed using weatherization assistance program funds, net meteri ng revenue, and tax benefits for small-scale PV electricity projects have together reduced elect ric load on the island by more than 40 MW. Commenters stated that, given the high electricity prices in the Caribbean (and, for that matter, among the Pacific islands) due to the need for impo rted oil, renewable energy is a particular attractive option for Puerto Rico, and it is reason able to expect more renewable development
there.

Commenters stated the island of Guam has ambitious (though non-binding) renewable energy goals. Commenters stated utilities must supply 8 pe rcent of net electricity sales using renewable energy by 2020 and 25 percent by 2035, with other i nterim goals established. Commenters stated that, in 2011, the Guam Power Authority ('GPA') iss ued its first renewables solicitation, leading to the approval of the 20 MW Quantum Guam Power sol ar facility, which was still under
construction as of 2013 and that GPA has also been negotiating a second project: a 15-MW
combined solar PV and wind installation. Commenters stated the Department of the Interior Office of Insular Affairs and NREL published in 201 1 an Initial Technical Energy Assessment Report for Guam as part of an ongoing collaborative project to develop a comprehensive energy strategy for the territory, to decrease the island' s reliance on imported fossil fuels, and to increas e the resiliency of its grid in the face of future po pulation growth. Commenters stated NREL's technical assistance with respect to Guam's renewab le energy potential will be extremely helpful in developing those resources.27

Comment 21: Commenters suggested there will be increased inter est in tribal opportunities in meeting targets.

Response 21: In the final rule, the EPA applies building block 3 generation at the interconnectlevel. This methodology does not distinguish betwee n affected EGUs or opportunities for RE development within an interconnection. For more det ail on the building block 3 target generation methodology, refer to section V.E of the final rule preamble of the CPP and chapter 4 of the GHG Mitigation Measures TSD supporting the final CP P.

Refer to section V.E.6 of the preamble and the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated that by instituting a larger role for renewable energy in the CPP tribes may benefit from the additional wrap up and renewable e nergy and investor owned utilities cooperative utilities, public power agencies and in dependent power producers would now look at native lands serious for additional opportunities t o meet these updated targets. Commenters stated that since the federal government is a part owner of Navajo Generating Station, it would be a good place to start and the federal governmentcan send a message that is serious about emissions by transitioning their ownership share of NGS before 2025 to a mix of either building
block 2 and 3.

Commenters stated that the Navajo Reservation will look deeper into renewable energy and start investing in it, as now the Navajo Nation is invest ing more into fossil fuel energy while everyone else is looking to solar and wind and other avenues

.

Comment 22: Commenters suggested the EPA could achieve more re ductions from renewable

energy.

Response 22: The resources and data provided in this comment wer e valuable in finalizing the building block 3 methodology, which is described in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated the EPA's proposed targets can an d should be strengthened. Commenters suggested the goal of the plan should be to reduce emissions 35 to 40 percent below 2005 emissions by 2020. Commenters stated the formula us ed by EPA to establish the emissions target in each state needs to be adjusted to reflect that additional available clean, renewable generation and energy-efficiency resources would replace gener ation from the dirtiest fossil fuel sources and at a faster pace, yielding greater emissions reduct ions than EPA assumed. Commenters stated the EPA has rightly recognized that energy efficiency i s the most cost-effective resource to reduce emissions and that many successful state programs d emonstrate potential for efficiency across the country. Commenters stated that more cost-effec tive efficiency is available more quickly and28

at lower cost than was assumed in the proposal as s tate programs have demonstrated the ability to ramp up more quickly than the proposal would req uire and to use a wider variety of efficiency tools than was considered. Commenters stated that, by setting assumptions about the availability and quantity of renewable energy opportunities far too low, they left substantial, achievable
reductions off the table. Commenters stated the EPA should analyze resource availability and costs on the state and regional basis rather than l imiting the assessment of potential development to mandated renewables and state renewable portfoli o standard.

Commenters suggested using renewable wind and solar energy to cut GHG emissions by 70%, not 30% since renewable energy is now very cost eff ective and reliable.

Commenters stated the rule should be strengthened t o require the percentage of renewable energy to be increased to 20 percent by 2020 and 30 percent by 2030.

Commenters stated that, with improvements Sierra Cl ub recommends, the Clean Power Plan could reduce power plant emissions by 35 to 40 perc ent from 2005 levels by 2020. Commenters stated this is necessary to meet the President's go al of a 17 percent reduction in U.S. carbon emissions from 2005 levels by 2020 and promote ener gy efficiency and renewable energy without incentivizing natural gas, nuclear energy, and other climate disrupting energy sources. Commenters stated the EPA rightly includes these re sources in setting the state targets, but the availability and quantity of renewable energy oppor tunities assumed in the plan is too low. Commenters stated that, with a current account of r etirements of dirty power plants and a more accurate estimate of growth in the renewable energy and energy efficiency sectors the Clean Power Plan could produce deeper reductions in carbo n pollution.

Commenters referred to a report from the Union of C oncerned Scientists and stated the EPA could nearly double the amount of cost-effective re newable energy from 12 percent of total 2030 U.S. electric sales to 23 percent. Commenters state d that most significant is the fact that shifting the emphasis to existing renewable technologies wou ld result in greenhouse reductions from the current proposed rule benchmark of 30 percent below the 2005 levels by 2030 to a 40 percent
below the 2005 level.

Commenters stated renewable energy generation can p lay a much more significant role in the U.S. electrical system than previous projections wo uld indicate. Commenters stated the U.S. Department of Energy's Office of Energy Efficiency and Renewable Energy has formed a
collaborative with more than 110 researchers from 3 5 organizations including national laboratories such as NREL, industry, universities a nd non-governmental organizations under the umbrella called, RE Futures. Commenters stated this group issues a study, titled RE Futures, which analyzed the possibility and feasibility of u sing several variable energy technologies at various degrees of market penetration (30%, 50%, an d 80%) finding that renewable electricity generation from technologies that are commercially available today are more than adequate to supply 80% of total U.S. electricity generation in 2050 in every region of the country.

Commenters stated that evidence is mounting that a much stronger focus on renewable energy generation is needed to make the EPA's Clean Power Plan effective. Commenters stated that a report from the Union of Concerned Scientists says the EPA could nearly double the amount of cost-effective renewable energy from 12 percent of total 2030 U.S. electric sales to 23 percent.29

Commenters stated that shifting the emphasis to exi sting renewable technologies would result in greenhouse reductions from the current proposed rul e benchmark of 30 percent below the 2005 levels by 2030 to a 40 percent below the 2005 level . Commenters stated the costs of renewable energy generation continues to go down and this inc rease state emphasis under the rule should not in any way dramatically increase costs to energ y ratepayers, under the models used for the study the maximum increase is 18 cents on the month ly electrical bill and lower in some states. Commenters stated the report supports research by o thers that increasing the renewable energy
mix reduces the economic risk from volatile natural gas prices and overreliance on deploying large-scale natural gas plants under the existing rule language. Commenters stated the paper suggested (1) setting a national renewable energy g rowth rate benchmark based on demonstrated growth in the states from 2009 to 2013; assuming fu ll compliance with current state RES policies that require certain percentages of electricity to come from renewable sources and (2) accounting for actual and expected renewable energy growth bet ween 2013 and 2017. Commenters stated the study looked at existing Energy Information Age ncy (EIA) data on state's deployment of renewable energy and found that on average states i ncreased their renewable share of electricity sales by 1 percent annually during the period of 20 09 to 2013. Commenters stated that, using this growth rate as a national benchmark provides a help ful measure for public policy to help states comply with the EPA Clean Power Plan. Commenters st ated the suggestion for increased renewable energy is part of several building block measures to comply with the Clean Air Act and states could, as recommended in this paper, use a policy such as performance-based rates to comply with the achievable increases of 1% annually in renewable energy generation.

Commenters stated that, by choosing the regional av erage renewable energy standard approach, the EPA severely underestimates the potential deplo yment of clean energy into the grid. Commenters stated the "best practices" approa ch simply averages the political environment for renewable energy several years ago. Commenters stated high achieving states like Maine, Minnesota, South Dakota and Iowa were already excee ding what EPA expects the state to achieve by 2030. Commenters stated clean energy is competing economically with fossil generation, and it is holding down overall electric ity prices. Commenters stated other states will likely increase their renewable energy standards in the next several years. Commenters stated that, if EPA wants to use renewable energy standard s as a proxy for renewable energy potential, it would be better to use the highest renewable ene rgy standard for the region. Commenters stated that method would give a closer approximatio n of the medium term potential carbon pollution reductions through renewable energy for t hat region. Commenters stated this is not a perfect method of estimating the potential, but is closer to what actually would be best practices for that region.

Commenters stated renewable energy is a well-establ ished carbon pollution reduction strategy with 29 states having renewable energy standards. C ommenters stated that both the low cost and the widespread adoption of renewable energy mean th e EPA was right to include renewable energy as part of the Best System of Emissions Redu ctions (BSER). Commenters stated that, even with an unstable policy environment, installed wind energy capacity has grown by 140% in the last 5 years, and wind energy production is eve n higher. Commenters stated that, while installations stalled in 2013, the wind industry is on a path that could lead to 20% of United States electricity coming from wind by 2030, and th at figure includes the uncertainty around the
future of the PTC. Commenters stated that installed solar capacity grew 473 percent from 2009 to 2013, and the first half of 2014 saw the install ation of 2463 MW of new solar generating30

capacity. Commenters stated that, during roughly th e same time period, the price of solar dropped 65%, the expansion of solar is expected to continue as the price continues to drop, and the final rule should recognize the dramatic expans ion of solar.

Commenters stated the growth of wind and solar shou ld be enough for the EPA to reevaluate how it measures clean energy potential. Commenters stated that expanding renewable energy past the minimal amount suggested in Building Block 3 would enhance reliability. Commenters stated that, on several occasions in recent years, wind energy has kept the lights on and electricity prices in check. Commenters stated that , in January 2014, during a cold snap, natural gas prices skyrocketed, but wind production was hig h, which saved PJM upwards of $2 million/hour. Commenters stated that, as the Depart ment of Energy pointed out, grid operators are finding ways to economically and reliably integ rate wind power. Commenters stated grid operators are able to ramp up and ramp downwind gen eration quickly because of improved wind forecasting and creating a 5-minute dispatch interv al allows wind plants to stay within tolerances that all power plants are subject. Commenters state d the forecasting of wind continues to improve, and this should increase the amount of win d power that grid operators are able to integrate. Commenters stated smart deployment of so lar and combined heat and power (CHP), hopefully biogas powered, can even be targeted down to the block to allow utilities to address congestion issues.

Commenters stated that, based on their experience, states could get far more carbon pollution reductions through renewable energy than the EPA su ggests in Building Block 3. Commenters stated the EPA should increase the carbon pollution reduction goal of the Clean Power Plan, which can be achieved by finalizing a rule that 1) recognizes the growth of wind and solar energy, 2) takes full advantage of the energy effic iency resource, and 3) a planned review and update in 2025 to take advantage of advances in tec hnology and clean energy finance to maximize cost effective carbon pollution reductions . Commenters stated the EPA should also encourage strong state implementation plans that in clude significant renewable energy and efficiency measures and include the interests of wo rkers and under-represented communities in the planning process.

Commenters asserted the RPS- based approach to calc ulating BSER (RPS Approach) to be an underestimation of the full potential that RE can c ontribute toward reducing carbon emissions for the following reasons:

• The RPS Approach estimates the contribution of rene wables in a given state
toward that state's BSER based on the existence of and historical performance toward compliance with a state RPS, which are by th eir nature political market drivers and therefore may not accurately reflect th e potential renewable energy resource that is technically and commercially viabl e in a state or region,
commenters asserted.

• The RPS Approach estimates the contribution of rene wables in a given state based on a regional average of state RPS policies, which in some cases results in renewables targets that are below a state's currentRPS requirements commenters said. At the very least, a state's RPS target for a ny given year should serve as a31 floor for the estimated contribution of renewables toward that state's BSER, in the commenters' opinion.

• The RPS Approach makes assumptions about renewable energy growth that are overly conservative, in commenters view. For exampl e, it assumes that there will be no growth in renewable energy deployment between 2012 and 2017, which the commenters indicated is contrary to actual circumst ances and current market projections from a multitude of credible sources.

• Additionally, the commenters noted that in some cas es the RPS Approach incorrectly extrapolates pre-2030 state RPS require ments to calculate 2030 CPP targets. In other words, if a state's RPS requireme nts do not continue through 2030, the RPS Approach should determine a reasonabl e growth rate beyond the last year of the state's RPS requirement, based on historical and projected market trends, to calculate renewables' contribution towar d the state's 2030 CPP target, rather than assuming no further deployment of renew able energy between the last year of the RPS requirement and 2030, the commenter s concluded.

Commenters asserted the rule does not do enough to encourage renewables. Commenters said that the EPA's plan includes only a 2 percent growt h in renewable energy over the scope of the plan. Shifting more coal fired power plants to rene wable energy sources, not natural gas or nuclear, is the only way to effectively curtail cli mate change, in the commenters' opinion. Commenters pointed out that the proposed rule still has coal and natural gas as the leading sources of electricity production in the US by 2030 . In the commenters' opinion, the CPP does not adequately capture current and potential renewable energy generation levels; and its expectations for results from 2030 are only slightl y higher than the Energy Information Administration's. In seven states, actual renewable energy generation levels already exceed the EPA's targets for 2030, according to the commenters . Commenters urged the CPP to set a national renewable energy growth rate benchmark bas ed on demonstrated growth in the states
from 2009-2013.

Commenters asserted that more aggressive reductions are necessary to protect the climate and that more significant reductions are economically v iable and advantageous. Commenters said
that NREL has demonstrated that the United States c ould utilize 80% renewable energy by 2050 with off-the-shelf technology. The commenters point ed out this is the level of reduction that has been deemed necessary by the Intergovernmental Pane l on Climate Change to avoid the most serious consequences of rapid climate change. Comme nters stated the Proposed Rule will in essence raise performance of all utilities to that of the primary utilities in each region that are already leading the clean energy effort nationally. The commenters additionally expressed, this approach is based on what has been accomplished to date, not on what a sufficient level of greenhouse reduction would be and can be nationally . Further, the commenters also said making the renewable energy and energy efficiency requirem ents more demanding can be economically advantageous. Commenters indicated that the Denver Metro Area has demonstrated that diversity in energy sources and a pursuit of energy efficienc y is a positive economic engine, with the fossil fuel and clean tech sectors composing their 4th and 6th largest employment concentrations, respectively (http://www.metrodenver.org/industries /energy/).32

Commenters stated that the BSER methodology for ren ewable energy underestimated what is feasible, cost-effective, and adequately demonstrat ed, and as a result, the state goals in the proposed rule reflect a feasible system of emission reduction, but not necessarily the "best" system of emission reduction. Commenters stated tha t particular features of the BSER methodology have resulted in estimated contribution s from various technologies, including renewable energy, that underestimate what is feasib le, cost-effective, and adequately demonstrated, and as a result, the state goals in t he proposed rule reflect a feasible system of emission reduction, but not necessarily the "best" system of emission reduction. Commenters said the proposed RPS approach significantly undere stimates the amount of electricity that can be cost-effectively generated by renewables over th e 2020-2030 compliance period. Commenters provided details on two power system modeling studi es, by UCS and NRDC, which confirm that larger quantities of renewable energy than assumed by EPA are technically feasible, demonstrated, and cost-effective. Commenters also p rovided additional information from DOE, regarding the potential for growth of wind energy, referencing DOE's upcoming Wind Vision report which confirms that greater amounts of wind energy can be deployed at little to no cost to consumers. Commenters said the proposal does not ad equately account for recent progress in decreasing wind energy costs and improved technolog y for renewable generation.

Commenters stated that there is a huge potential fo r renewables in the country, and the EPA used an overly conservative approach in determining rene wable energy potential across different regions. While expressing appreciation for the EPA' s framework of utilizing renewable energy as part of a state's compliance strategy, Commenters r ecommended that the EPA refine its analysis to better reflect the vast potential of renewable e nergy across the country. Commenters noted that the calculations assume increasing renewables from 2017, but fail to capture any of the recent or projected growth in renewables from 2012 to 2017. C ommenters also pointed out that in 17 of the 29 states with renewable electricity standards (RES), the targets under the EPA's proposed
CPP are lower than the level of renewables that the y actually would have developed under their existing laws.

Commenters indicated that while it supported the ru le, as stated below the commenters asserted the greenhouse gas reduction targets must be more a mbitious - and that the means to achieve greater GHG reductions currently exist and can be i mplemented without economic disruption. To do so, the commenters recommended the EPA more real istically examine the true reductions that can be achieved through more robust energy efficien cy and renewable energy goals (Building Blocks 3 and 4) - both of which will help achieve g reater reductions as well as reduce the overall costs of state compliance with the rule. Commenters said that this is particularly important in light of the Natural Resources Defense Council's "U pdated Costs and Performance" analysis by ICF International to run the Integrated Planning Mo del (IPM) with updated data that in some cases dramatically alters the data inputs and resul ting conclusions of EPA - which also uses the IPM. That analysis, the commenters added, with upda ted data not reflected in this draft rule, indicates that far greater emissions reductions are possible than envisioned in this draft rule. It also indicates a huge difference in the costs and s avings resulting from implementation of this rule. Commenters stated that for meaningful emissio n reductions to occur, the EPA's proposed "outside the fence line" approach to identifying po ssible reductions must remain intact. Failure to do so would render Building Blocks 3 and 4 meaningl ess, and in the commenters' view those Building Blocks are where true reductions will be a chieved. Were the CPP to be restricted to33

activities inside the fence line at the plant level , the GHG reductions would likely be limited to 4 percent or less - far below the goals identified in the CPP, the commenters asserted.

Commenters said that the EPA appropriately consider ed the potential to reduce emissions from coal and gas fired power plants by deploying renewable energy. But, the commenters asserted that the EPA has significantly underestimated the a mount of renewable energy that can be deployed at reasonable cost. Commenters stated thatthe EPA should use current cost and technical potential data when evaluating the quanti ty of renewable energy that can be deployed at
reasonable cost in each state. Commenters stated t he rate of renewable energy deployment assumed in the EPA's analysis should be at least as fast as the historical rates of deployment. In its proposal, the commenters said that the EPA incl uded two frameworks for analyzing the potential for emission reductions via renewable ene rgy deployment - the use of regional averages of renewable energy policies and a technical-econom ic potential analysis. Commenters stated that both significantly underestimate the actual po tential by failing to reflect the dramatic cost reductions that have occurred in recent years. The commenters argued that in order to properly assess the potential from renewable energy, the EPA must use up-to-date data. Commenters
stated these data should include: the renewables de ployment rates already underway in many states the actual generation data from 2013 recent and planned renewable energy development
between 2013 and 2017. Commenters said current data show that wind and solar costs are each approximately 45 percent less costly than the EPA a ssumed in its analysis.

Commenters stated that the EPA draft rule significa ntly underestimates the potential role of renewable energy in setting state targets as part o f the BSER. Commenters stated the CPP (1) does not adequately capture renewable energy deploy ment rates that states are already achieving; (2) fails to reflect the continued growth and falli ng costs of renewable energy projected by market experts; and (3) falls short of the national renewable energy generation levels that the U.S. Energy Information Administration (EIA) projec ts would occur in 2020 under a businessas-usual approach without the CPP, and is only marg inally higher than the EIA's projections by 2030. Commenters stated the renewable energy target s under the EPA's Proposed and Alternative Approaches significantly underestimate the potential of these resources, and result in barely any additional renewable energy beyond what would have occurred under business as usual (i.e., without the proposed rule).

Commenters stated the EPA's proposed approach for s etting state renewable energy targets based on the regional average of state renewable electric ity standards in 2020 does not represent the CAA-required "best" system of emission reduction, b ut more of a "average" or even "belowaverage" system for many states. Commenters stated he EPA's proposed approach results in the following anomalies:

• In seven states, actual renewable energy generation levels in 2013 exceed the EPA's renewable energy targets in 2030.

• Seventeen of the 29 states with RES policies have l ower targets under the EPA approach than what is required under their respecti ve state laws, which is due both to the EPA's averaging of state RES targets in give n region and not including RES targets that continue to ramp-up after 2020 in many states.34 • The national level of renewable energy generation i ncluded in the EPA's state targets is lower than the EIA's business-as-usual p rojections in 2020, and only marginally greater in 2030 (Figure 6-1).

• The average annual national renewable energy growth rate under the EPA proposal is 0.65 percent of total sales between 201 7 and 2030. By contrast, 15 states have already been achieving average annual g rowth rates of more than 1 percent over the last five years.

• Although the EPA's methodology aims to have states ramp up their renewable energy level toward reaching their respective regio nal targets, as many as 25 states do not actually reach the EPA's targets by 2 030 because of the low annual growth rates assumed under the agency's proposed ap proach.

• The EPA does not assume any growth in renewable gen eration between 2012 and
2017.

Commenters stated the EPA's alternative approach fo r the renewable energy building block, which is based on technical and economic potential, also underestimates the potential for renewable energy to cut carbon emissions. Commenter s stated that, nationally, it results in virtually the same renewable energy target as the E PA's proposed approach, though the distribution of renewable energy differs at the sta te and regional level. Commenters stated most states have the technological and economic potentia l to raise their renewable energy use to much higher levels than what the EPA is proposing in the Clean Power Plan. Commenters stated that, by specifying a larger role for renewable energy in setting state targets, the EPA could ensure that the Clean Power Plan achieves greater overall carbon emissions reductions. By contrast, commenters stated, if the EPA adopted a modified Un ion of Concerned Scientists proposal for setting state targets - the UCS Demonstrated Growth Approach - grounded in states' actual experience in deploying renewable energy, the renew able energy targets within the plan would nearly double at the national level. Commenters pro vided Figure 6-1 (titled: "The EPA's renewable energy targets under its proposed clean p ower plan are modest"), which shows 2020 and 2030 projections of the Percent of Electricity Sales under EIA business as usual, EPA proposed approach, EPA alternative approach, and UC S "Demonstrated Growth Approach."

Commenters stated, a third component of the BSER in cludes a determination by the EPA that a certain amount of generation at the affected EGUs c an be replaced by using an expanded amount of lower-carbon generating capacity. Commenters sai d, the RGGI states affirm through their demonstrated experience that the cultivation of les s carbon-intensive, renewable generation can be a cost-effective prong of a wide-ranging emissio n reduction strategy. Commenters said, between 2005 and 2012, the RGGI states increased in -region, non-hydroelectric renewable generation by 47 percent. Commenters said, solar an d wind generation increased by 4043 percent. Commenters said, this impressive growth in renewable generation promises to continue in the RGGI region, due to a combination of aggress ive state policies such as renewable energy portfolio standards ("RPS"), net metering tariffs, long-term contracting, the establishment of "Green Banks," innovative green financing mechanism s, and renewable energy technology grant

programs.35

Commenters stated, EPA proposes that the best syste m for reducing carbon emissions from existing power plants is a system-wide approach bas ed on the application of four building blocks
that include on-site measures and measures taken to shift generation away from carbon intensive units. Commenters agreed with EPA's approach for de termining the BSER. [The EPA proposes two alternatives to the four building blocks of the BSER. SEIA does not take a position on those two different approaches, but rather supports the u se of measures taken at the plant as well as measures taken on the system to reduce carbon emiss ions from existing sources.] Commenters specifically agreed with the EPA that renewable ene rgy measures, and solar measures especially, are necessarily part of the BSER. Commenters were c oncerned, however, that building block 3 (renewable energy measures) as it is currently calc ulated is incomplete because it does not
contain current solar market data and it does not i nclude distributed solar. Commenters said, therefore, as it is currently written, EPA's propos al does not accurately reflect the emissions reductions achievable through application of the BS ER.

Comment 23: Commenters stated that the EPA's CPP also underest imates the emissions reductions that can be achieved in Kentucky through distributed renewable energy.

Response 23: As non-BSER measures, the technologies described i n this comment are an important flexibility for affected sources to achie ve the standards of performance; however, the EPA has maintained utility-scale RE as the basis fo r building block 3. For a full discussion of non-BSER RE technologies, refer to section VIII of the preamble supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters pointed to a 2012 study by Downstream St rategies, a West Virginia based research organization, which found that Kentucky could gener ate 34% of their electrical demand from distributed renewable energy by 2025. Commenters sa id that for the purpose of that report, distributed energy was defined as "the generation o f electricity and heat, or the capture and reuse of waste heat, at or near the point of consumption. " Commenters stated the EPA should not limit its view of what is possible in terms of Kentucky's renewable energy resources to merely what is possible in terms of utility-scale developments.

Comment 24: Commenters generally supported the Proposal, but s aid more reductions are possible in North Carolina.

Response 24: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Meas ures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters generally supported the Proposal, but st ated the EPA's assessment of the potential for cost-effective renewable energy opportunities i s, if anything, conservative. Commenters36

stated the RPS-based approach assumes that a state with a relatively aggressive existing RPS commitment or significant existing renewable genera tion will only meet the regional average commitment, and not its own higher commitment or ev en 2012 generation levels, in some instances. Commenters stated that, for example, Iow a generated 25 percent of its electricity from renewable sources in 2012, but under the renewable goal in the proposed rule, would only be required to generate 15 percent by 2030. Commenters stated that a 2020 regional average RPS benchmark is applied to states in 2030, rather than using a 2030 regional RPS average for that purpose. Commenters stated that, for example, North Carolina has committed to procuring 13 percent of its electricity from renewable sources b y 2021, but is only required by the Clean Power Plan to procure 10 percent by 2030. Commenter s stated that the renewable targets assume that no increase in renewable generation will occur between 2012 to 2017; in fact renewable generation continues to grow by rule in most states with an RPS.

Commenters stated North Carolina is already on trac k to meet and exceed the level of renewable energy generation assumed in the Plan. Commenters s tated that, in 2007, the North Carolina General Assembly enacted the State's Renewable Ener gy and Efficiency Portfolio Standard ("REPS") and, by 2021, North Carolina's REPS requir es electric utilities to achieve combined renewable and energy efficiency levels of 12.5% of 2020 retail sales (municipal utilities and electric membership corporations must meet a lower target of 10%). Commenters stated that, for the state's largest utilities, Duke Energy Carolina s ("DEC") and Duke Energy Progress ("DEP"), this amounts to 21,969,750 MWh, almost double the 1 1,668,176 MWh targeted under the Clean Power Plan. Commenters stated that, to the extent t hat the utilities elect to meet part of their REPS requirement with energy efficiency, these redu ctions will also count toward compliance with the Clean Power Plan target. Commenters stated that the utilities would still need to meet at least 13,181,850 MWh of the REPS requirements with renewable energy. Commenters stated the Clean Power Plan renewable target for North Carolin a is not only achievable, it must be achieved (and greatly surpassed) under existing North Caroli na law.

Commenters stated the EPA should strengthen North C arolina's renewables building block to reflect expected and required increases in renewabl e energy. Commenters stated the EPA's target significantly underestimates the potential for rene wable energy in North Carolina in four ways: (1) the EPA assumed that states will not even startincreasing their use of renewable energy until 2017, an assumption at odds with the reality of rap id renewable energy ("RE") deployment in North Carolina; (2) the EPA's goal of 10% of 2012 g eneration does not even reflect North Carolina's REPS, which require almost twice what EP A assumes; (3) the EPA's target is highly conservative because it is based on existing state policy, not on the cost-effective renewable potential in the state (or region); and (4) the EPA assumes that new renewable energy will not displace any existing generation.

Commenters stated that, to correct its assumptions, the EPA should (1) account for actual and expected renewables growth between 2013 and 2017, r ather than assuming that North Carolina will not experience any renewable growth until 2017 ; (2) assume full compliance with current REPS requirements that are set by state law; (3) en sure that the growth rate of renewables deployment is at least as aggressive as historical rates; (4) update its formula to account correctly for emission reductions from renewable energy; and (5) clarify that out of state renewable energy certificates ("RECs") can be used towards complianc e to ensure the most cost effective use of renewable energy.37

Commenters said that the EPA's development of the r enewable component of Block 3 significantly underestimates the potential for rene wable energy in North Carolina.

Comment 25: Commenters supported renewable generation.

Response 25: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated there are several studies that ha ve shown that states can handle up to 35 percent of annual power from renewable sources with minimal cost. Commenters stated, for example, PJM (a regional transmission organization covering the Mid-Atlantic, Virginia, and parts of the Midwest), the National Renewable Energ y Laboratory for the Western United States, and the state of Michigan have all found that 30-35 percent of electricity could be generated using variable renewable resources with minimal int egration cost. Commenters stated a recent study found that Minnesota's grid could handle up t o 40 percent generation from wind and solar sources. Commenters stated electricity generation f rom renewable resources grew by almost 6 percent per year on average over the past five year s (2009-13) and new wind energy is cheaper than new coal generation in most markets.

Commenters provided the following renewable energy cost information:

• A recent state survey of renewable and fossil contr acts submitted to the Michigan
Public Service Commission found that the most recen t new utility-scale wind power contracts cost about half the price of new co al generation. The same study found that a combination of renewable energy and en ergy efficiency is cheaper than any other new fossil fuel generator, including combined-cycle natural gas units. DTE Energy in Michigan recently announced th at it is lowering customers' electricity rates by 6.5 percent in 2014, citing lo w-cost wind energy (aided by technology improvements and tax credits) as a major factor.

• Austin Energy in Texas finalized a power purchase a greement that will bring it 150 megawatts of solar energy at less than 5 cents per kilowatt hour. By comparison, the company estimates that new natural- gas-fired generation would cost 7 cents per kilowatt hour, coal 10 cents and n uclear 13 cents. After subtracting federal tax incentives (according to co mpany officials, the project is not receiving any local incentives), the rate for s olar energy compares favorably to natural gas, at just over 7 cents per kilowatt h our.

• In early 2014, the Minnesota Public Utility Commiss ion chose a 100-megawatt distributed solar project over natural gas projects because the solar project will
deliver a number of economic and environmental bene fits, including the
elimination of transmission costs and a reduction i n transmission line loss. Specifically, it was found that, when one accounts for avoided energy costs,38 avoided capacity costs, avoided transmission costs, the impact of emissions, and the cost to Xcel Energy [the utility] from transmis sion line losses, the benefits of [the solar] proposal amounts to a savings of $46 mi llion of net present value of
societal costs.

• In late 2013, Xcel Energy submitted a proposal to C olorado regulators that identifies solar and wind power as the most cost-ef fective options for new generation in the state. This was the first time th e utility, which serves customers in eight western and Midwestern states, opted to de velop new renewable resources on a purely economic basis.

Commenters provided the following renewable electri city cost and jobs information:

• In Iowa, MidAmerican Energy just announced it will invest $1.9 billion in new wind power, bringing wind capacity up to 39 percentof its generation portfolio. The company estimates that when all the turbines ar e completed, rates will go down by $10 million annually, while creating 460 co nstruction jobs, 48 permanent jobs, and generating more than $360 milli on in new property tax

revenue.

• The Illinois Power Agency found that the state's re newable energy standard enabled significant job creation and economic devel opment opportunities; moreover, in 2011, the growth of wind energy reduce d electricity rates by about 4 percent per megawatt hour of electricity generation , for total statewide savings of over $175 million.

• Oregon's second largest utility, PacifiCorp, report ed that the required investments in renewable energy actually helped lower their tot al costs by $6.6 million in
2011.

• Studies by the New York Independent System Operator (NY ISO), Synapse Energy Economics, and the National Renewable Energy Laboratory (NREL) suggest that increased renewable energy generation has the potential to save American ratepayers tens of billions of dollars a y ear over the current mix of electric power options.

Commenters provided the following information regar ding wind energy in Texas:

Texas just completed a $6.8 billion transmission pr oject that is expected to lead to 7.5 gigawatts of new wind generation over the next three years, a nd eventually up to 16 gigawatts of new wind generation (in addition to the 12 gigawatts of wind capacity installed by the end of 2012). In total, the state's grid balancing authority (ERCOT) is studying 25 gigawatts of new wind projects. While many of these projects are in the p lanning process and may ultimately not be built, these figures are significant when one consi ders that Texas' record peak summer generating capacity was about 68 gigawatts in August 2011. Not ably, Texas already generates more than twice as much electricity from wind as the next lar gest wind producing state (California), and has more installed wind capacity than all but five coun tries.39

Commenters provided the following information regar ding renewable technology developments:

• Wind development costs have fallen in recent years because of improved turbine technology and more favorable terms for turbine tec hnology purchasers. Many states are generating more of their electricity usi ng wind resources, and are finding numerous economic benefits by doing so. Thi s is partly because of the 64 percent decline in levelized power purchase agreeme nts for wind generation between 2009 and the end of 2013, to about $24 per megawatt hour on average across the country (with incentives). New wind ener gy is now routinely cheaper than new coal generation, and is cheaper than new g as in many parts of the country. If gas prices continue to rise or wind pri ces continue to fall, wind will become increasingly competitive with natural-gas-fi red generation in more regions of the country.

• Location is much less of a barrier for wind due to the continued increase in turbine height -- from a hub height of 30 meters in 1990-95 to about 140 meters in 2011. Turbine technology improvements, including th e ability to install larger turbines on taller towers (which can have a hub hei ght of 140 meters and a rotor diameter of 160 meters), have expanded the areas su itable for onshore wind energy development. Nearly 1,000 gigawatts of addit ional wind capacity could be possible throughout the country if these new, talle r turbines are installed (which is about as much as the total amount of wind capacity current installed). The majority of this new potential is in the eastern Un ited States, which was previously thought to have lower onshore wind poten tial than other parts of the country. Capitalizing on low-speed wind resources ( 6 meters per second) these
state-of-the-art turbines could result in levelized costs of $35-$55 per megawatt hour (this includes the federal production tax cred it), according to a National Renewable Energy Laboratory analysis. Without addit ional financial support, the price range would be $58-$78 per megawatt hour (ass uming the full level of the production tax credit can be realized by the develo per, which is usually not the case). This price is well below the levelized cost of electricity from coal technologies ($79-$118 per megawatt hour) and is si milar to the levelized cost of new natural gas generation ($63-$78 per megawatt ho ur).

• Prices for solar photovoltaic modules have declined 80 percent since 2008. When combined with the federal investment tax credit, th is rapid decline has helped make power purchase agreements for electricity gene rated from utility-scale projects competitive with conventional sources in s ome regions. Power purchase agreements for utility-scale photovoltaic projects have reported prices below $50 per megawatt hour. However, prices for residential systems are typically higher because of their smaller size and larger non-module (soft) costs, such as mounting hardware, labor, permitting and fees.

• Concentrating solar power (CSP) is also on the rise in the United States. One major benefit of CSP is its ability to be deployed with thermal energy storage so it can produce electricity on demand. CSP is a relativ ely new technology, with only 1.4 gigawatts deployed as of early 2014. While its costs are currently high, the40 DOE SunShot Initiative aims to reduce the cost of g eneration to $60 per megawatt hour by 2020.

Commenters provided the following information regar ding increasing demand for renewable

energy:

• Sixty percent of the Fortune 100 companies and 43 p ercent of the Fortune 500

companies have public climate and/or renewable ener gy goals. Fifty three Fortune 100 companies report total savings of $1.1 billion annually through energy efficiency and renewable energy, indicating a long- term commitment to these goals, which serve in the business interest.

• To date, 19 large companies - 3M, Adobe, Bloomberg, Cisco, eBay, EMC, Facebook, General Motors, Hewlett-Packard, Intel, J ohnson & Johnson, Mars, Novelis, Novo Nordisk, Procter and Gamble, Recreati onal Equipment Inc. (REI), Sprint, Walmart, and Volvo - have come together to publicly ask for access to more renewable energy through the Corporate Renewab le Energy Buyers' Principles (http://www.wri.org/publication/corporat e-renewable-energy-buyersprinciples). These companies currently have a combi ned renewable energy demand of nearly 10.5 million megawatt-hours (MWh) per year in the U.S. alone - a figure that is expected to more than triple bey ond 2020 - and the list of signatories to the Corporate Renewable Energy Buyer s' Principles continues to expand.

• Many companies are shifting from purchasing short-t erm, temporary Renewable Energy Credits (RECs) to longer-term investment str ategies, such as Power Purchase Agreements (PPAs) and on-site generation. However, companies such Walmart, with 100 percent renewable energy goals, n eed access to more gridconnected, renewable energy options to meet those g oals (http://www.wri.org/sites/default/files/on_the_grid _infographic.png).

Comment 26: Commenters expressed general support for renewable energy.

Response 26: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters expressed support for renewable energy. Commenters stated the District's Renewable Portfolio Standard requires electric supp liers to obtain 20% of their power from renewable sources by 2020, and the District Governm ent is aggressively pursuing renewable energy to power its own operations. Commenters stat ed they will soon sign power purchase agreements for dedicated supplies of more than 40 m egawatts (MW) of new wind power generation and more than 10 MW of solar on public b uilding rooftops. Commenters stated these projects will cut more than 135,000 tons of CO 2 each year 2 or more than half of the emissions41

from District Government buildings, while reducing energy costs in the long-run. Commenters stated the District Government is not alone in purs uing renewable energy. Commenters stated DC Water, the metropolitan region's water and waste water utility, is seeking to install more than 10 MW of solar at its wastewater treatment facility . Commenters stated American University, George Washington University, and Georg e Washington University Hospital recently partnered to sign the nation's largest non -utility solar purchase agreement for 52 MW.

Commenters stated that wind can grow to provide perhaps 20 percent of electric power before issues arising from land use are likely to restrictfurther wind plants. Commenters stated solar may grow greatly from its present 0.2 percent, one- five hundredth of all electric power, to perhaps five percent. Commenters stated that, while it is simply not in the cards to generate enough power without using America's abundant coal and gas resources, the issue with coal and natural gas is this: long before we run out of foss il fuels, we'll run out of atmosphere in which to dump their combustion products like carbon dioxide.

Commenters stated that renewable energy actions in Texas and California provide proof that clean energy can make the emission cuts we need. Co mmenters stated California already gets 20 percent of their electricity from wind, solar, and geothermal power sources. Commenters supported the EPA Clean Power Plan because all 50 s tates need to take a minimum action to cut carbon pollution and to fight climate change. CO2 p ollution doesn't stop at the state border, but it
crosses all borders.

Commenters stated that northwestern PA has regional assets that could be leveraged as part of
this effort. Commenters stated there is sufficient hardwood forest acreage within 75 miles of Erie to support at least a million tons of pelletized wo od annually for biomass energy, sustainably managed from waste cuttings and pulpwood. Commenter s stated the southern shores of Lake Erie have a commercially viable wind resource, esti mated offshore at 18 miles per hour at 90 meters and onshore at 15 miles per hour at 80 meter s high, but developers await signals that state policy will support wind power demand and a workabl e regulatory framework.

Commenters stated the renewable energy labs conduct ed a technical feasibility study of solar potential and found that Pennsylvania has the techn ical capability to produce more than 600,000 gigawatt hours of electricity through solar every y ear, which is almost four-and-a-half times their current retail sales of electricity in their state.

Commenters supported expanding cleaner resources by building additional renewable power to
meet customer demand.

Commenters supported renewable energy programs and stated that added incentives that can be
made available for the water and wastewater industr ies' continued adoption of renewable energy will go a long way in meeting the EPA's goals given the size and scale of operations in these industries. Commenters stated that, with regard to harnessing renewable energy sources, there are many emerging examples of how these efforts mig ht operate in practice. Commenters stated they maintain a portfolio of alternative energy sup plies that includes solar, wind, and biomass facilities and this portfolio saves an estimated 2, 500 metric tons of CO2 annually. Commenters stated the company has installed over 3.1 MW of sol ar generating capacity at 11 facilities across three states (New Jersey, Illinois, and Missouri), with plans for additional facilities. Commenters42

stated they are particularly interested in alternat ive, renewable energy generation due to its clean energy benefits, as well as its enabling of electri c power diversification that affords greater resiliency during regional emergencies. Commenters stated that reducing energy usage by 585,000 kilowatt-hours a year prevents 1,577 pounds of nitrogen oxide, 4,875 pounds of sulfur dioxide and 699,856 pounds of carbon dioxide from b eing emitted into the air.

Commenters supported the EPA's inclusion of renewab le energy, based on an average of regional renewable portfolio standards, in its BSER determination. Commenters stated their experience as a leader in renewable energy developm ent demonstrates that renewable energy may be a cost-effective and meaningful way to help achieve compliance with state 111(d)
targets.

Commenters expressed support for renewable energy. Commenters stated the United States has some of the richest solar resources in the world; n ationally, the U.S. solar industry grew by 76% from 2011 to 2012. Commenters stated that, in Color ado, beneficial solar policies have led to dramatic growth: in 2008, solar installations in th e state jumped from 11.6 MW to 22.3 MW; three years later, Coloradoans installed more than four times as much solar, ultimately reaching nearly 250 MW of cumulative installed solar photovo ltaic (PV) capacity by the first quarter of 2013; and by late 2014, installed capacity is estim ated at 380 MW.

Commenters stated renewable electricity generating technologies are a well-established part of the U.S. power sector. Commenters stated more than half the states have established renewable portfolio standards (RPS) that require minimum prop ortions of electricity sales to be supplied with generation from renewable generating resources . Commenters stated production of renewable generation replaces predominantly fossil fuel-fired generation and thereby avoids the CO2 emissions from that replaced generation. Commen ters stated renewable electricity generation is a proven way to assure reductions of CO2 emissions from the electric sector with the potential to do so at a reasonable cost and/ or electric rate impact.

Commenters supported the expanded use of renewable electricity (RE) generating capacity as a means of reducing the carbon intensity of the natio n's electricity system. Commenters stated increased reliance on RE generation is a proven way to achieve reductions of CO2 emissions at
affected EGU at reasonable costs. Commenters stated RE generating technologies are wellestablished elements of the power system. Commenter s stated that, according to EIA, approximately 75 GW of non-hydropower RE generating capacity were installed in the United States as of the end of 2013; according to the US D epartment of Energy (DOE), wind power represents 33% of all new generating capacity insta lled since 2007; and, according to Solar Energy Industry Association (SEIA), solar PV instal lations were 4.8 GW in 2013 and are expected to exceed 6.5 GW in 2014.

Commenters stated the EPA underestimates the potent ial deployment of clean energy into the grid and the final Clean Power Plan should drive cl ean energy innovation and adoption of wind and solar. Commenters stated wind, solar, and other renewable energy are already helping the United States reduce its carbon pollution, and clea n energy is helping create American jobs.

Commenters agreed with the approach of allowing sta tes to meet the proposed required reductions through the use of system-wide programs and policies that will allow states to build43

on existing programs, including renewable energy me asures, to serve as compliance tools in state plans. Commenters stated that adoption of renewable energy is already well advanced in many states, which could, if incorporated into state pla ns, provide an advantage as strategies are developed to comply with Section 111(d) targets. Co mmenters stated that increasing the amount of renewable energy resources like wind and solar p ower is an effective, affordable, scalable, reliable, and readily available way to reduce carbo n emissions. Commenters stated that, as many states try to balance compliance with the Clean Pow er Plan with other energy objectives, we expect renewables to be among the most important to ols available.

Commenters supported the approach put forth by the EPA regarding crediting states under building block 3. Commenters stated that in order t o aid state compliance with 111(d) obligations, it would be most efficient and equitab le for the EPA to model its approach after the best practices of existing state RPSs. The commente rs asserted relying upon existing best practices and infrastructure will aid states in eff iciently meeting their obligations, while making double-counting structurally impossible, thereby ma intaining the integrity of the emissions
reductions which will be achieved.

Commenters indicated that the National Climatic Dat a Center reports that in 2013 the United States experienced seven climate disasters that eac h caused more than $1 billion dollars of damage, including the devastating Colorado floods t hat so heavily impacted Boulder County. , The commenters said these are precisely the types o f impacts projected to affect American communities with increasing frequency and severity as climate-destabilizing emissions continue to accumulate in the atmosphere. Commenters urged a ction now to reduce carbon pollution and mitigate these impacts. The commenters added fossil fuel-fired power plants are the largest source of greenhouse gases in our nation, and the s olutions are at hand to reduce carbon pollution from the power sector. According to the commenters, states and companies have long been relying on the interconnected nature of the electri c grid to reduce harmful pollution from power plants, and noted that adding renewable energy gene ration backs down the use of fossil fuel-fired plants - and reduces emissions accordingly.

Commenters indicated that it produces significant q uantities of clean, renewable energy, and recently completed the process to qualify its compa ny for GHG credits under the Voluntary Carbon Standard, similar to other WTE facilities in the U.S. Commenters supported the provisions of the proposed regulations that allow s tates to incorporate into their CAA section 111(d) compliance plans the GHG reduction benefits of generating renewable energy from
facilities such as the commenters'.

Commenters strongly opposed the option of setting t he BSER as only the first two building blocks (79 FR 34836), because it would exclude the potential for renewables and efficiency to deliver significantly greater emissions reductions at reasonable cost.

Commenters supported the EPA's decision to include renewable energy as an eligible compliance option for states to reduce power plant carbon emissions and stated it meets the criteria for the BSER. Commenters stated technologi es such as wind and solar already deliver safe, reliable, and affordable power to millions of U.S. consumers, emit no carbon in their operation, and are an economically viable alternati ve to fossil fuels. Commenters stated all states have significant and diverse renewable energy resou rces that can be developed and, as a result of44

falling costs, advances in technology, and strong s tate policies, renewable energy technologies are in an excellent position to compete with the ot her emissions-reduction strategies allowed
under the Clean Power Plan. Commenters stated the U .S. power sector has experienced a tremendous growth in renewable energy, driven large ly by advances in technology, decreases in costs, and state and federal policies and provided the following additional information:

• Wind capacity increased by 75 percent and solar cap acity by 473 percent from
2009 to 2013.

• The national average cost of wind power has dropped more than 60 percent since 2009, making it competitive with new fossil fuel pl ants in many regions.

• Solar photovoltaic systems costs fell by about 40 p ercent from 2008 to 2012, and by another 15 percent in 2013.

• Several studies project these two trends of improve d technologies and reduced
costs to continue.

• Growth in renewable energy has helped most utilitie s comply with their state RES requirements at little or no cost to consumers, and in some cases even providing them with net savings.

• Between 2010 and 2012 the cost of complying with RE Ss in 25 states ranged from a net savings of 0.2 percent of retail rates t o a net cost of 3.8 percent, with a weighted average cost of 0.9 percent.

• The EPA also includes several other credible studie s in the TSD that demonstrate the cost-effectiveness of increasing renewable ener gy at the state and regional level and highlight the recent cost reductions for wind and solar.

Comment 27: Commenters identified some renewable projects thathelp make the state target
achievable.

Response 27: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP..

The following are summaries of the specific public comments under this comment:

Commenters stated the addition of renewable energy can have a significant impact on Utah's emission rate. Commenters stated that Energy Strate gies has identified approximately 811 MW (21 projects) of renewable energy projects with sig ned PPAs in Utah. Commenters stated that, based on their assessment, for every 100 MW of new renewable energy generating capacity Utah's emission rate decreases by approximately 10 lbs/MWH.45

Commenters stated Alabama's target is both modest a nd achievable. Commenters identified some recent and planned renewable projects associat ed with Alabama Power and with Redstone
Arsenal in Alabama: “Alabama Power has entered two agreements to import cost-effective wind generation, along with associated renewable energy credits (RECs), from Oklahoma and Kansas. The projects total 404 MW. The utility received app roval for the first project, known as Chisholm View, from the Alabama Public Service Comm ission ("PSC") in September 2011. Under terms of the agreement, Alabama Power receive s 202 MW of generation from a wind farm in north-central Oklahoma, as well as the asso ciated RECs, over a twenty-year term. The project came online in December 2012. Alabama Power received approval for the second project, known as Buffalo Dunes, from the PSC in Se ptember 2012. The project is functionally
similar to Chisholm View: Alabama Power will receiv e 202 MW of generation from a wind farm in southwestern Kansas, as well as the associated R ECs, over a twenty-year term. The project
came online in December 2013. Although the precise capacity factors associated wi th these projects are not publicly available, reasonable app roximations can be inferred from the utility's statements. Alabama Power has stated that the proje cts amount to 3 percent of the electricity consumed by its customers. In 2012, Alabama Power h ad retail sales totaling 53,946,766 MWh. Three percent of that figure is 1,618,403 MWh. Divi ding that figure by 8,784 hours and by 404 MW produces a capacity factor of 45.6 percent. Simi larly, Alabama Power has stated that the two projects are sufficient to power the equivalentof 115,000 homes. The average Alabama home consumes 14,241 kWh per year. The amount of el ectricity consumed by 115,000 such homes equates to 1,637,715 MWh. Dividing that figur e by 8,874 hours and by 404 MW yields a capacity factor of 46.1 percent. Assuming a 46 perc ent capacity factor, these deals will result in 1,632,419 MWh of carbon-free generation that goes i nto the denominator of EPA's emission rate equation. This in turn lowers Alabama's 2012 emissi on rate by 22 lbs/MWh or more than 4 percent of the target reduction. Another recently a nnounced renewable project is the planned Redstone Arsenal solar array. Redstone Arsenal is a U.S. Army post and garrison located near Huntsville, Alabama within TVA territory. It will s oon be home to the largest solar power array in Alabama. As part of its goal to have 25 percent of its energy produced from renewable sources by 2025, the Army has solicited proposals for an array that will provide up to 18,000 MWh of solar-generated electricity for the arsenal. The pr oject is estimated to be 10 to 14 megawatts in size, with as many as 50,000 solar panels. The Army has cited the energy security benefit the array will provide and noted that sharp declines in the installed price of solar power have made the project financially attractive.”

Commenters stated that, through its Advanced Solar Initiative and related programs, Georgia Power is on pace to add more than 900 MW of utility scale and distributed generation solar to its supply portfolio by 2016. Commenters stated that, e arlier this year, Georgia Power entered its first-ever wind deals, under which it will import 2 50 MW of cost-effective wind generation, along with associated renewable energy credits (REC s), from facilities in Oklahoma for a 20- year term, commencing in 2016. Commenters stated th e PSC has or is in the process of approving these programs as in the best interests o f Georgia Power customers because they will provide benefits in the form of cost savings and fu el diversity. Commenters stated that, although the precise capacity factors associated with these projects are not publicly available, it is reasonable to assume a 20 percent capacity factor f or the solar installations and a capacity factor of 30 percent for wind. Commenters stated that, if applied to the existing level of renewable generation in Georgia's 2012 baseline, the result i s a reduction of 68 lbs/MWh, or almost 9 percent of the target reduction.46

Commenters stated that advanced energy technologies make achieving compliance with EPA's guidelines easy, and the EPA is giving Ohio suffici ent flexibility to utilize this aspect of the BSER to achieve compliance by offsetting the emissi on reductions in other buckets which may
be more difficult to achieve. The commenters believ ed Ohio could actually go beyond the renewable generation and energy efficiency gains re quired to meet its emission reduction targets the way they are laid out in the BSER.

Commenters stated RPS and EERS have been implemente d in most U.S. states and have been successful in encouraging the deployment of renewab le and energy efficiency resources, and they offer a framework for enforcing, monitoring an d verifying renewable and energy efficiency gains. The commenters said they are the most cost-e ffective ways to achieve and demonstrate compliance with this part of the BSER, and other po licy tools may be more expensive, less effective, and more difficult to verify than an RPS or EERS.

Commenters listed 17 policies and with descriptions that have been demonstrated to promote renewable and energy efficiency resources, most of which are also used in conjunction with an RPS and/or an EERS. A few examples from the comment ers’ list include but are not limited to: IRPs, Net Entergy Metering, Value of Solar Tariff, On-bill Financing, and Decoupling.

Comment 28: Commenters stated that renewable energy and energy efficiency provide states with reasonable options for reaching its target.

Response 28: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that, while West Virginia generat ed approximately 4% of total electricity produced in the state from wind and hydropower in 2 012, the state has significant potential for new wind, solar, biomass and hydropower development . Commenters stated that developing West Virginia's RE resources will contribute to the state's ability to comply with the CPP, diversify the state's energy portfolio, grow the st ate economy, and create new jobs.

Commenters stated Georgia can achieve the remaining 40 percent of its target mainly, if not exclusively, through sensible, cost-effective inves tments in renewable generation and energy efficiency. Commenters stated that, whether Georgia need increase its reliance on natural gas generation is purely a function of the levels of re newable generation and energy efficiency it elects to pursue. Commenters stated Georgia's poten tial in both areas is far greater than EPA assumes. Commenters stated Georgia's pursuit of ren ewable and energy efficiency resource
additions will result in substantial carbon reducti ons, especially if those measures are allowed to displace fossil generation on a pro-rata basis.

Commenters provided an analysis in the two spreadsh eets included as Attachments 1 and 2 to their comments. Commenters stated that, in both spr eadsheets, they make an assumption that EPD did not make--that incremental (i.e., new) rene wable and energy efficiency resources have47

the effect of displacing fossil generation. Comment ers stated that, as EPA appears to recognize in its recent Notice of Data Availability, to assume o therwise is inconsistent with EPA's application of BSER for Building Block 2 and nonsensical as a p ractical matter: utilities will dispatch resources having no fuel costs in lieu of those tha t do. Commenters stated that, for the purposes of this analysis, they ignored the potential reduct ions from the heat rate improvements of Building Block 1, which some utilities have cited a s unfeasible or impractical. Commenters stated that, because of the displacing effects of r enewables and energy efficiency on fossil units, exact reliance on the four building blocks as used by EPA in the target setting would result in over-compliance; i.e., Georgia would achieve a targ et rate lower than its 2030 goal. Commenters stated this is an important reason to view applicat ion of the building blocks for target setting as distinct from their use for compliance.

Commenters stated they analyzed two scenarios: the EPA case and what they termed the
"Enhanced Renewable Generation" case. Commenters st ated the EPA's assumptions regarding those resources are reasonable; if anything, they a re overly conservative. Commenters stated that, unlike the EPA, they allow those resource add itions to displace fossil generation on a pro rata basis. Commenters stated that by allowing for such displacement, Georgia can meet its target with natural gas re-dispatch of up to just 57 perce nt, an increase of just 6 percentage points from the current level of 51 percent, rather than all th e way to 70 percent. Commenters stated that, in their second spreadsheet, included as Attachment 2, is the Enhanced Renewable Generation case, which includes a more robust assessment of Georgia' s renewables potential, as developed by the Union of Concerned Scientists (UCS) in a recent rep ort. Commenters stated this assessment is more in line with Georgia's recent experience with renewable generation and better reflects its potential going forward. Commenters stated that, as Attachment 2 shows, if Georgia were to achieve by 2030 the levels of renewables penetratio n that UCS shows is achievable (approximately 22.7 million MWh), and those increme ntal resource additions serve to displace fossil generation on a pro rata basis, Georgia can meet its target without any natural gas redispatch.

Comment 29: Commenters expressed support for including Buildin g Block 3, including that renewable energy is feasible, cost-effective, and h as been demonstrated to achieve significant carbon pollution reductions.

Response 29: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters agreed renewable energy should be consid ered a part of BSER. Commenters noted North Carolina's RPS, which has been in effect sinc e 2007, requires all investor-owned utilities in the state to supply 12.5% of 2020 retail electri city sales from eligible energy resources by
2021. Commenters stated North Carolina's RPS has le d to no appreciable rate impact on North Carolina ratepayers, rather, the North Carolina RPS contributed $1.4 billion in investment in clean energy projects between 2007 and 2012 (a 13-f old increase) while creating or saving more than 20,000 jobs and holding electricity rates stea dy for North Carolina's electric customers.48

Commenters stated that our state programs and exper iences support and affirm the Administrator's determination that such system and its constituent elements have been adequately demonstrated, are technologically feasib le, and work in practice to cost-effectively reduce carbon pollution from power plants while mai ntaining the reliability of the electric system. Commenters stated that in most of our state s, emissions from fossil fuel-fired EGUs have decreased while renewable energy generation has inc reased, in large part due to our states' renewable energy policies. Commenters stated the ex perience of our states, confirmed by independent analyses, indicates that sufficiently a mbitious renewable energy policies can achieve significant carbon pollution reductions or avoid po llution increases by replacing generation from fossil fuel-fired sources or avoiding increased gen eration. In addition, commenters stated, these policies can spur renewable energy innovation and d eployment and promote long-term change toward a cleaner electricity system. Commenters pro vided detailed information on the California RPS, including targets, progress, and economic bene fits. Commenters also provided information on the success of the New York, Minnesota and Calif ornia RPS programs.

Commenters stated zero-emission, renewable energy t echnologies are currently reducing overall emissions from a state's generation fleet, and expa nding renewable energy should be included in the Best System of Emissions Reduction. Commenters stated electricity generation from renewable resources - such as wind, solar, or geoth ermal - has been demonstrated to be a costeffective means of displacing emissions from fossil fuel generation. Commenters stated, given the nature of the electricity grid, the addition of renewable energy will directly result in reduction in other generation, and there is ample evidence th at it is fossil-fuel fired generation that is reduced as additional renewables are brought on-lin e. Commenters stated that for instance, the New York State Department of Public Service conduct ed extensive modeling of the economic
and environmental effects of that state's renewable portfolio standard and concluded that increased renewable energy generation would displac e generation from higher-emitting sources, primarily natural gas-, coal-, and oil-fired units. Commenters stated, likewise, a recent white paper concluded that in the RGGI region the additio n of renewable energy sources have almost entirely displaced coal-fired generation.

Commenters stated renewable energy also meets EPA's cost criteria. Commenters referenced a recent analysis by Lazard that suggests that the co sts of carbon abatement from building a new wind or solar project, relative to building a new c oal or gas plant, are within EPA's range of $10- $40/ton and, particularly in areas with strong wind resources, can result in net savings to electricity customers. Commenters also stated a rec ent LBNL survey of state renewable generation cost assessments found that most states that assessed benefits of RPS policies determined that the policy resulted in net benefits due to, among other things, pollution reductions, economic development, and natural gas p rice suppression

Commenters stated EPA should include renewable ener gy (building block three). Commenters stated twenty-nine states have renewable portfolio standards (RPS), and nine others have RE goals. Commenters stated many states have already m ade great strides towards their RE standards and goals; for example, Texas exceeded it s RPS requirements well ahead of schedule. Commenters stated that in 2005, the State establish ed a RPS requirement of 10,000 MW of RE capacity by 2025. Commenters stated in part due to the increasingly favorable economics of renewable energy technologies, Texas reached this r equirement 15 years ahead of schedule, developing 10,000 MW of renewable generation capaci ty by 2010. Commenters stated since49

then, Texas has continued deploying renewables, wit h over 12,750 MW of wind capacity to date, and last year, wind power provided nearly 10 percen t of generation in ERCOT, the electricity system that serves most of Texas. Commenters also s tated Massachusetts has used financial incentives, such as renewable energy credits, net m etering, and long-term contracts, to quickly ramp up RE production. Commenters stated Massachuse tts solar capacity has grown from 1.64 MW in 2007 to 687 MW in 2014, and installed wind capacity has grown from 1.64 MW to 107 MW in these same years.

Commenters stated that as demonstrated by the many successful RPS and other renewable energy programs established by numerous states acro ss the country, increased zero-emission energy development is feasible. Commenters stated t hat more than half of the states have RPSs in place and have collectively deployed approximate ly 46,000 MW of new renewable energy capacity through year-end 2012.

Comment 30: Commenters expressed support for RPS programs.

Response 30: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology. State RPS requirement s are not a factor in quantifying the amount of cost-effective RE that is part of the BSER in th e final rule. The methodology that produces target generation levels under building block 3 is described in detail in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GH G Mitigation Measures TSD supporting the
final CPP.

The following are summaries of the specific public comments under this comment:

Commenters supported the EPA's proposed approach fo r quantifying renewable energy potential and agrees with EPA that existing state RPS require ments may serve as a reasonable foundation upon which to develop such a scenario for two princ ipal reasons. Commenters stated that, in establishing the requirements, states have already had the opportunity to assess those requirements against a range of policy objectives i ncluding both feasibility and cost/electric rate impacts; these prior state assessments therefore su pport the feasibility and economic aspects of the best practices scenario as well. Commenters sta ted that renewable resource development potential varies by region, and the RPS requirement s developed by the states necessarily reflect consideration of the states' own respective regiona l contexts.

Commenters stated that using these RPS policies as the foundation for EPA's primary approach is logical and consistent with the deference given throughout the proposal to state-based policy
solutions.

Commenters stated that, to fully recognize the end results of these complicated technical, administrative, and political processes, the fully realized RPS policies put in place and implemented by the states should be the foundation for this RPS-based approach. By contrast, the commenters stated, the "simple target" versions of these policies used by EPA ignore the complexity of the policies in terms of the real wor ld targets put in place after the full effect of th e RPS policies are included. Commenters noted that th e "simple target" approach used by EPA uses only the starting "base" target as identified in law or regulation and ignores any secondary50

targets or other factors in the law or rule that ad just the target for specific conditions. Commenters stated that, in short, for the primary p roposed approach, EPA should amplify the commitment to the RPS policy approach, rather than diminish it.

Commenters urged the Agency to encourage the adopti on of pro-growth clean energy policies at the state level. Commenters suggested that States t hat have not done so should join the increasing number embracing RPS which mandate an amount of ele ctricity that must be generated from renewable sources. Furthermore, according to the co mmenters, commercial and residential adoption of distributed solar can be facilitated by implementing and strengthening net metering policies, including compensating customers at retai l rates and increasing the size of eligible
systems.

Commenters stated that for states that do not yet h ave an RPS program, EPA's proposed approach of building on existing RPS targets and lo oking at the feasibility of a given level of renewable energy on a regional basis is well suppor ted. Commenters stated EPA's alternative approach to quantifying renewable generation throug h a state-by-state assessment of technical and market potential is also well supported. Commen ters also stated that other methodologies for determining potential renewable generation on a sta te-by-state basis, such as that proposed by the Union of Concerned Scientists, have confirmed that increased renewable generation is feasible and cost effective at even higher rates of adoption than projected by EPA. Commenters stated heavily coal-reliant utilities, such as Southern Co mpany and its subsidiaries, have also begun incorporating increased renewable energy into their generation mix, further demonstrating the feasibility of renewable energy and the role that p ower plant owners can play in reducing the carbon content of their generation.

Commenters supported the approach put forth by the EPA regarding crediting states under building block 3. Commenters stated that, in order to aid state compliance with 111(d) obligations, it would be most efficient and equitab le for the EPA to model its approach after the best practices of existing state RPSs. Commenters s tated that relying upon existing best practices and infrastructure will aid states in efficiently m eeting their obligations, while making doublecounting structurally impossible, thereby maintaini ng the integrity of the emissions reductions
which will be achieved.

Commenters expressed support for RPS programs. Comm enters stated that RPS programs in the
U.S. have contributed to build robust markets for t he supply of renewable generation technologies. Commenters stated that States with ma ndatory RPS programs "have collectively deployed approximately 46,000 MW of new renewable e nergy capacity through year-end 2012."
Commenters stated thirteen states installed a total of 1,087 MW of new wind energy capacity in 2013, and a total of 61,110 MW was operational at t he end of that year in thirty-nine states and Puerto Rico. Commenters stated that, in that same y ear, solar PV reached 4,751 MW, nearly fifteen times the capacity installed in 2008. 410 M W of CSP capacity were also installed in 2013. According to SEIA, more solar capacity was installe d in 2012 and 2013 than in the thirty years prior, and these trends are expected to continue. C ommenters stated Bloomberg New Energy Finance estimates that by 2030, the global power mi x will evolve from today's system, in which two-thirds of our electricity comes from fossil fue l combustion, to one in which over half of all generation is produced by renewable resources. Comm enters stated NREL has estimated that given today's commercially available technologies, "[r]enewable energy resources . . . could51

adequately supply 80% of total U.S. electricity gen eration in 2050 while balancing supply and demand at the hourly level."

Commenters stated that, of the three methodologies under consideration by EPA, the regional RPS approach provides the most realistic basis for advancing further deployment of renewable
resources. Commenters stated the State RPS' were de veloped in large part by state legislatures and/or regulators in a manner that considered the p otential costs to customers based on the state's policy objectives. Commenters stated that two of EP A's proposed renewable potential
alternatives result in circumstances where more tha n 100% of some states' load is met by renewable generation. Commenters stated this sugges ts that either cost considerations have not been adequately weighed or that practical implement ation issues including challenges associated with development on federal or tribal lands, or are as with habitat conservation corridors and threatened or endangered species, as well as the ne ed for additional transmission infrastructure.

Comment 31: Commenters stated there must be a method in place to re-evaluate the goals when a state's RPS policy is reduced or eliminated.

Response 31: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Meas ures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters expressed concern regarding the EPA's re liance on Ohio's RPS policy as a demonstrated technology for determining best practi ces and stated Ohio's RPS policy was not accurately represented in this proposal. Commenters stated the RPS policy used in this analysis has been replaced and Ohio's current RPS policy inc ludes reductions in long term targets and
freezes the annual benchmarks for RE and solar ener gy resource development for two years.
Commenters stated the "Renewables Portfolio Standar ds in the United States: A Status Update, November 2013" [GHG Abatement Measures TSD, Page 4- 3] document also acknowledges that legislation in roughly ten (of 29) states was intro duced in 2011-2012 to repeal or roll-back RPS policies. Commenters questioned how the EPA can rel y on such volatile programs to determine a demonstrated technology.

Commenters stated most existing RPS have been revis ed several times in order revise expected targets, alter the design of the program or extend the compliance schedule based a number of factors, including more realistic expectations on t he cost-effective development of new resources. Commenters stated that, in some instance s such as Ohio, the state has reduced the stringency of the RPS and increased compliance flex ibility. Commenters stated that, in 2014, Ohio did both by freezing the ramp-up schedule of i ts RPS program and by expanding the program to allow of out-of-state resources to be us ed to fully meet the Ohio RPS, if necessary. Commenters stated that, if renewable energy program s remain a part of the final guidelines, the EPA must recognize the need for flexibility as an approved part of state plans, and allow for midcourse revisions, banking of excess credits, and ot her mechanisms that already exist as part of many of the standards EPA used as the basis for its proposal. Commenters stated that, in the52

absence of such mechanisms, there is no basis for E PA's assertion that these programs represent a level of performance that has been "adequately de monstrated" as required by the CAA. Commenters stated that 23 of the 27 programs examin ed by EPA have been revised, 19 of them multiple times, over the course of their implementa tion.

Comment 32: Commenters did not support an RPS approach.

Response 32: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Meas ures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated the EPA's formula for calculating a state's RE percentage of generation: (1) relies on the mistaken proposition that states near the same power grid have a similar capacity for RE; and (2) incorrectly assumes that state RPS regu lations are an accurate representation of any given state's ability to expand use of RE. Commente rs stated the EPA provides no evidence that the regional groupings have anything to do with any given state's RE capacity. Commenters suggested the EPA should look into relationships be tween current RE capacity and other as of yet undetermined factors in grouping states. Commen ters stated that, while the proposed rule uses current state RPS requirements as a proxy for a given state's capacity for RE generation, the EPA does not support this proposition with causal e vidence. Commenters stated there may be other factors such as cultural, cost, and industria l policy reasons for a state not to adapt strong RE requirements even if the state theoretically cou ld support such requirements. Commenters stated the effect of this measure is to penalize st ates that have adopted strong RPS goals while minimizing obligations for states without such goal s. Commenters stated this could have the perverse effect of incentivizing states to go furth er than EPA's requirements in the future for fear that the agency will use such goals against them.

Commenters stated the EPA's key assumption is that State RPS targets are an accurate reflection of the renewable energy potential for the State and , by extension, for each State in the region. Commenters stated the EPA's assumption that a State 's RPS target accurately reflect renewable energy potential within that State is misguided. Co mmenters asserted State RPS targets may be aspirational and not necessarily supported by an an alysis of renewable energy potential within
the State. Commenters stated that States sometimes incorporate safeguards that suspend or scale back the RPS programs if cost thresholds are exceed ed the levels cannot be achieved and, in other cases, States create incentives for certain t ypes of renewable energy by offering additional credits for preferred energy sources, meaning that the credits produced for compliance with the RPS will exceed the actual level of generation. Com menters stated some States also exclude certain classes of power generators, such as munici pally-owned power plants or cooperatives, from the RPS obligations, meaning that the States' actual percentage of renewable energy generation on a State-wide level will be less than the amount required by the RPS target.53

Commenters stated the EPA's reliance on State RPS t argets fails to address the fact that many State RPS programs allow out-of-State renewable ene rgy generation to satisfy the State's RPS goal. Commenters stated that, to the extent that a State permits such out-of-State compliance, its RPS standard may not be a good indicator of the Sta te's assessment of renewable energy potential within the State. Commenters stated that further complicating matters is the fact that neighboring States with the potential to export ren ewable energy under RPS programs may elect to enact more modest RPS programs, or forego them e ntirely, because it is more profitable for its utilities to sell renewable energy credits to other States.

Commenters stated that Louisiana Public Service Com mission (LPSC) examined, in significant detail, the opportunities for Louisiana RE generati on in 2004 and 2009 and concluded both times that a mandatory RPS is not warranted. Commenters s tated the data provided by the utilities
indicated that the levelized cost of renewable tech nologies exceeds the costs of conventional resources. Commenters stated, for example, the leve lized cost of a combined cycle gas turbine is below the cost of any of the major renewable techno logies. Commenters stated current prices for natural gas have put renewable technologies at a co st disadvantage and interest at the federal level for a mandatory renewable energy policy curre ntly appears to be limited (LPSC General Order dated September 20, 2013, Docket R-28271 Subd ocket B).

Commenters objected to the EPA's RPS methodology. C ommenters stated that, while the EPA
contends that the RPS in the states that have them are the results of expert assessments by those states, the EPA then ignores those expert assessmen ts by simply averaging the RPS requirements to set a regional goal. Commenters stated that, for ten states with RPS derived from expert assessments, the EPA assumes a renewable energy goa l that is greater than the state RPS. Commenters stated that, for five other states with RPS, the EPA renewable goal is less than the state RPS. Commenters stated that, if a state has d one an expert assessment, it should stand as the RE goal for the state unless the EPA can challenge it on a sound technical basis. Commenters stated the expert assessment done by one state (Del aware in the East Central region, for example) cannot be assumed to have any validity for another state (Ohio, also in the East Central Region) simply because they were grouped together by the EP A. Commenters stated that, if a state has concluded that no RPS is appropriate for the circum stances existing in that state, the EPA should respect that finding and not impose RE requirements on that state.

Commenters stated the EPA has not sufficiently asse ssed the technical challenges associated with increased penetration of renewables. Commenter s stated that adequately accounting for the spatial and temporal distributions of renewable res ources and their associated costs is an essential consideration in regulatory design. Comme nters stated the primary approach in the Proposal for calculating state-specific renewable e nergy targets assumes state equivalency for regional calculations of resource potential. Commen ters stated this assumption is problematic when regions are large and encompass states with dr astically different renewable resources. Commenters stated that, given the sizeable areas sp anned by the six EPA regions, there is evidence of differing levels of renewable energy re source adequacy and availability across these proposed regions. Commenters stated the EPA assumpt ion that existing RPS targets are feasible across all states within a defined region does not adequately consider the varying definitions of
'renewable' across the states.54

Commenters stated the renewable resources physicall y located in one state are often used to satisfy RPS requirements in other states. Commenter s stated that, since these benefits are not allocated to the buyer's state, this raises questio ns regarding treatment of the environmental
attributes of the renewable resource.

Commenters stated the primary approach in the Propo sal assumes that RPSs are a reasonable proxy for quantifying renewable generation potentia l because: (i) states with RPSs ' ... have already had the opportunity to assess those require ments against a range of policy objectives including both feasibility and costs;" and (ii) "RP S requirements developed by the states necessarily reflect consideration of the states' ow n respective regional contexts.' Commenters stated that, as shown in recent literature, however , motivations for RPS implementation and stringency are multi-faceted and include many state -specific factors that cannot be generalized to
other contexts or assumed to be indicative of best practices over a multidecadal horizon."

Commenters stated the use of state renewable portfo lio standard (RPS) targets to determine goals is inappropriate. Commenters stated RPS are set lar gely based on policy goals rather than technical potential, and most states meet these goa ls partly through purchase of RE from other states, rather than just from in-state generation. Commenters asserted that states with high RPS goals are states that have chosen to invest in rene wable energy (and reduce CO2 emissions) and not necessarily those states that have naturally hi gh capacity for renewables development. Commenters stated the EPA should not set higher goa ls for states that have already made a policy decision to invest in RE than for states tha t have not done so. Commenters stated that most states' RPS goals assume the use of considerab le existing hydroelectric generation and, thus, EPA's exclusion of this generation from compl iance is inconsistent with state RPS goals and with the way EPA set the renewables part of the goal.

Commenters stated that, as NERC points out in its i nitial review of the potential reliability impacts of the Proposed Rule, the methods that the EPA uses for quantifying the level of RE development that states can achieve is flawed for a number of additional reasons including: many RPS programs provide extra credit for certain types of resources (which implies a lower expected level of RE deployment than EPA's methods assume); that several RPS programs include small hydropower, combined heat and power, clean coal, an d municipal solid waste resources as eligible resources (in contrast to the EPA's propos al that most of these resources would be ineligible for use as compliance options); and that the EPA's method of assigning states to RE deployment regions is "questionable."

Commenters stated that, as a result, the proposed R PS-based approach is incurably arbitrary and capricious (especially as applied to South Carolina ). Commenters stated that, however, if EPA persists in using the RPS-based approach in the fin al rule, it should, at the very least, include in its regional average the RPS levels of all states i n the Southeast Region, including those that have set their state RE goals at 0%.

Comment 33: Commenters indicated the EPA ignored the variabili ty in states' RPS programs and therefore overestimated the national potential for RE growth in Building Block 3.55

Response 33: State RPS requirements are not a factor in quantify ing the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Meas ures TSD supporting the final CPP.

Biomass is not considered part of the best system o f emission reduction in this rule and therefore it is not included in goal-setting or compliance ev aluations. However, similar to other technologies outside of BSER, biomass may be consid ered as a part of a state’s plan to meet the emission guidelines.

A discussion regarding the use of some biomass feed stocks for compliance purposes, and associated biogenic CO 2 assessment, can be found in sections VIII.I and VI II.K of the final rule preamble of the CPP.

For more information regarding Building Block 3, re fer to section V.E of the final rule preamble
of the CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated the EPA's calculation of regional renewable energy goals is flawed because State RPS statutes contain a number of off-ramps re lated to cost, reliability, and crediting provisions that can result in a lower standard. Com menters stated the EPA gives no consideration to these off-ramp provisions in estimating the effe ctive 2020 rate.

Commenters asserted that each state's RPS includes consideration of the individual and cumulative impact of unique, state-specific provisi ons which, in effect, reduces the "effective"
amount of renewable resources that the EPA can reas onably rely on as equivalent to its renewable energy goals.

Commenters identified issues related to hydro units , biomass emissions, unique resources, credit multipliers, out-of-state renewable energy credits, alternative compliance payment programs, cost mitigation measures, retail sales vs. capacity based standards, reliability mitigation measures, RPS based on state sales, state RPS imple mentation schedules, and revisions to State RPS programs. Commenters stated the EPA ignored the se factors in the proposed rule, but must fully consider and correct for the impact of these nuances if building block 3 remains a component of the final guidelines. Commenters provi ded a summary of each of these factors as
described below.

Commenters asserted that state RPS targets designed to include existing hydro units are unfairly used to establish regional renewable energy goals i n building block 3 that exclude existing hydro generation units. Commenters stated most states' RP S include existing and/or new hydroelectric generating units as eligible resources for demonstr ating compliance and the contribution of existing hydroelectric units is included in the "ef fective" 2020 RPS rates that EPA used to calculate the renewable energy goals for each regio n. Commenters stated that, in using these regional targets to develop regional growth rates a nd individual state renewable goals in building block three, EPA relies on baseline renewable gener ation from 2012 that excludes hydroelectric generation. Commenters stated that, for the purpose of calculating a baseline level of RE generation in each state, the EPA adopted a broad i nterpretation of RE generation to include any56

non-fossil renewable type, with the exception of ge neration from existing hydroelectric power facilities.Commenters stated some RPS apply to rene wable resources that are unique in that state, and which may have limited or no applicability to o ther states in the regions defined by EPA in building block 3. Commenters stated that including the potential contribution from these uniquely defined and limited resources in the calcu lation of the renewable energy average for the regions creates an unrealistic expectation that oth er states without such resources can achieve a comparable level of renewable development. Commente rs stated some of these uniquely eligible resources contained in existing RPS include:

• ocean tidal and ocean thermal resources (i.e. Delaw are)

• offshore wind energy (i.e. Maryland)

• energy efficiency (i.e. North Caronia, where up to 40% of RPS can met with EE)

• energy recovery from swine and poultry waste (i.e. North Carolina, ~10% of RPS must be met from these resources)

• coal mine methane (i.e. Pennsylvania) "clean coal" (i.e. Ohio)

• municipal solid waste (i.e. Michigan) "

• advanced nuclear" (i.e. Ohio)

• "densified fuel pellets" (i.e. Wisconsin)

• pyrolysis of municipal solid waste (i.e. Colorado)

• solar light pipes (i.e. Wisconsin)

• compressed air, fly wheel, and battery storage (i. e. Montana)

• solar pool heating (i.e. Nevada)

Commenters stated credit multipliers are designed t o incentivize specific technologies or programs to be developed. Commenters stated that, i f a specific renewable resource is constructed within a state, then each MWh produced by that resource would be counted as 2 MWh. As a result of the multiplier, the actual stat e RPS targets are less stringent that the absolute percentage target would indicate. A variet y of such provisions were identified in the review of existing RPS programs, including renewabl e resources that are:

• located within state boundaries;

• using equipment manufactured within the state;

• constructed by state residents or by an "approved apprenticeship program;"

• constructed by a specific date;57 • using specific technologies;

• operated during peak demand periods; or

• qualified as "community-based" projects.

Commenters stated most state RPS programs accept ou t-of-state renewable energy credits (RECs) as part of the compliance demonstration prog ram. Commenters stated, for instance, the state of North Carolina allows for up to 25% of its RPS requirements to be met by out-of-state resources, while Ohio now allows up to 100% of the renewable energy used to satisfy its requirements to come from outside the state. Commen ters stated the EPA acknowledges the dependence state RPS compliance on out-of-state res ources by noting that: [EPA's] approach applies the...growth factors and regional RE target s to state-level generation, whereas the statelevel RPS requirement upon which they are based are not necessarily applied in practice to generation that is produced within the relevant sta te (GHG Abatement Measures TSD at 4-19).

Commenters stated many existing state RPS contain p rovisions that establish alternative compliance payment (ACP) programs if the regulated entity is unable to secure or develop the renewable resources required by the program. Commen ters stated these programs were created largely to protect consumers if renewable energy su pplies become uneconomic or unavailable. Commenters stated such ACP programs are designed so that entities pay a $/MWh amount for any shortfall of renewable energy obligations. Comm enters stated the use of ACP programs to demonstrate compliance is indicative of the difficu lty that some states envisioned for meeting RPS even with the subsidies provided in the form of federal production tax credits (PTC) and investment tax credits (ITC). Commenters stated the EPA should adjust state targets where ACP has historically or can reasonably be predicted to reduce the amount of renewable energy that is actually deployed under the RPS in the future.

Commenters noted several state RPS programs contain cost mitigation measures whereby the state has established caps on the impact to retail rates associated with the cost of renewable resources. Commenters stated that, if retail rates increase by a certain amount (i.e. 1 or 2%), then the RPS is effectively lowered for that compliance year to avoid excessive consumer cost impacts. Commenters stated that, absent additional governmental subsidies which expired at the end of 2013 (PTC) and will expire at the end of 201 6 (ITC), it is more likely that these existing RPS caps will be triggered as additional resources are added to achieve future RPS requirements.
Commenters stated the EPA should not include renewable goals for any state that can reasonably be predicted to exceed the retain rate caps already in effect in those states.

Commenters stated some states have included exit ra mps from RPS to address potential reliability concerns regarding the impacts of incre ased capacity from intermittent resources. Commenters stated the EPA should consider including such a provision to allow state to issue variances if reliability impacts would otherwise oc cur.

Commenters stated the targets for most state RPS ar e based on the percentage of retail sales in the state; however, some RPS programs, such as in K ansas, are designed as a generating capacity-based standard. Commenters stated the EPA failed to account for these differences in the design of state standards in terms of the perce ntage reduction targets for individual states.58

Commenters stated that, although EPA recognized the se differences, it incorrectly noted that it "did not include targets that were capacity-based" in the building block 3 calculation of regional goals. Commenters stated the Kansas RPS was the sol e basis for developing the goal for the South Central region.

Commenters stated that nearly all the state RPS pro grams are designed around targets related to a percentage of state retail sales. Commenters stated the EPA calculated regional renewable energy goals based on these retail sales-based RPS, but th en applied that calculated rate to 2012 total generation, not retail sales, for that state. Comme nters stated this creates an "apples and oranges" comparison that may translate into unrealistic expe ctations for what a specific region or state may or may not be able to achieve. Commenters state d that, in particular for energy-exporting states, retail sales may be a better estimation of in-state usage, while wholesale sales often represent energy exports. Commenters asserted the s tate is unable to influence customer behavior, or require addition of renewable resource s to meet customer demand for the portion of generation that is exported to other states. Commen ters stated the EPA should examine this
"disconnect" between the state-established RPS stan dards and its proposed imposition of a goal based on a wholly different base. Commenters stated this kind of adjustment would also allow EPA to take into account in setting goals the owner ship of generating facilities by multi-state utilities, or by multiple partners, some of whom ma y be located in adjacent states.

Commenters stated the implementation schedule for s tate RPS programs is generally less aggressive than the proposed schedule for implement ing the Clean Power Plan. Commenters asserted States structured their programs in this fashion in part to allow for a more gradual, costeffective, and practically achievable ramp rate for increasing renewable resources. Commenters stated that, based on the review of the RPS conside red by EPA, the implementation period was commonly 15 to 18 years for most states, but up to 20 years in Montana, versus the 10-12 year period envisioned by EPA, depending on the approval date for state plans. Commenters stated the EPA has assumed that states would ramp up renew able generation in advance of final state plans being approved, but has not clarified if and how such activities would receive credit under the final guidelines. Commenters stated that, while the EPA has requested comment on how early actions could be taken into account in determ ining compliance, its proposal appears to give credit only for renewable generation that is provid ed to the grid in a specific year, and does not allow for flexible systems like banking renewable c redits for use in future years.

Commenters stated most existing RPS have been revis ed several times in order revise expected targets, alter the design of the program or extend the compliance schedule based a number of factors, including more realistic expectations on t he cost-effective development of new resources. Commenters stated that, in some instance s such as Ohio, the state has reduced the stringency of the RPS and increased compliance flex ibility. Commenters stated that, in 2014, Ohio did both by freezing the ramp-up schedule of i ts RPS program and by expanding the program to allow of out-of-state resources to be us ed to fully meet the Ohio RPS, if necessary. Commenters stated that, if renewable energy program s remain a part of the final guidelines, the EPA must recognize the need for flexibility as an approved part of state plans, and allow for midcourse revisions, banking of excess credits, and ot her mechanisms that already exist as part of many of the standards EPA used as the basis for its proposal. Commenters stated that, in the absence of such mechanisms, there is no basis for E PA's assertion that these programs represent a level of performance that has been "adequately de monstrated" as required by the CAA.59

Commenters stated that 23 of the 27 programs examin ed by EPA have been revised, 19 of them multiple times, over the course of their implementa tion.

Commenters stated the EPA ignored the variability i n state RPS and therefore overestimated the national potential for RE growth in Building Block 3. Commenters asserted State legislatures have allowed different types of generation to contr ibute to meeting state RPS. Commenters stated, for example, hydroelectricity contributes m ore than 18 percent of New York's 29 percent RPS. Commenters stated that many states preferentia lly allow for certain types of in-state RE to
receive credit for more than the amount of electric ity actually generated, up to 3.5 times. 175
Commenters stated that, in some states, like North Carolina, EE programs are allowed to count toward the state RPS. Commenters stated many states also allow out-of-state RE to be counted toward RPS compliance. Commenters stated that all o f these factors would limit the actual amount of RE in an individual state, which is what EPA attempts to measure in Building Block 3. Commenters stated that by failing to appropriate ly adjust its regional targets downward for these different elements of state RPS, the EPA over estimates the potential for increases in RE to contribute to CO2 emissions rate targets.

Comment 34: Commenters addressed concerns regarding the process to estimate renewable energy baseline and goals and if and how renewable energy sources not recognized by the proposed rule are accounted for.

Response 34: The final methodology for quantifying target genera tion levels under building block 3 does not rely on the establishment of basel ine generation. Instead, the final methodology
establishes a level of RE incremental from 2012 tha t is both feasible and cost-effective. There are no RE resources used in setting the target generati on that are not fully creditable under compliance.

Biomass is not considered part of the best system o f emission reduction in this rule and therefore it is not included in goal-setting or compliance ev aluations. However, similar to other technologies outside of BSER, biomass may be consid ered as a part of a state’s plan to meet the emission guidelines.

For more information regarding Building Block 3, re fer to section V.E of the of the final rule preamble of the CPP.

A discussion regarding the use of some biomass feed stocks for compliance purposes can be
found in sections VIII.I and VIII.K.1 of the final rule preamble of the CPP.

State RPS requirements are not a factor in quantify ing the amount of cost-effective RE that is part of the BSER in the final rule. The methodolog y that produces target generation levels under building block 3 is described in detail in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD suppor ting the final CPP.

The following are summaries of the specific public comments under this comment:60

Commenters said that the EPA misinterprets 2012 RE data for Mississippi as well as for the entire Southeast region. Commenters said that all o f Mississippi's RE came from biomass in 2012, but the EPA does not presently allow biomass to be a part of the state compliance plan for RE. Commenters said that the majority of the RE for the southeastern states came from hydro and biomass; yet the EPA does not factor existing h ydro power when calculating state CO2 goals and has still yet to render a decision on biomass. According to commenters, both factors have resulted in the EPA using inflated RE percentages f or 2012 which in turn serve as the basis of setting the EPA's future target for Mississippi.

Commenters said that the EPA's process for setting the future RE target for Mississippi is flawed
because it does not reflect the realities of state meteorology. Commenters stated that solar and wind have not been proven as viable options in the southeast for significant RE sources because of weather patterns for the southeast. Commenters p ointed to two maps from the National Renewable Energy Laboratory that provide informatio n on solar and wind speeds for the United States. Commenters said that the Concentrating Solar Resource map shows that almost all of Mississippi has insolation values less than 4 kWh/m 2/day, but Concentrating Solar Power technologies require a minimum insolation value of 7 kWh/m2/day. Commenters said photovoltaic technologies continue to advance and t he associated capital cost continue to improve and small scale solar projects may have a place in the state's future generation resource mix, but certainly not to the scale contemplated by the EPA's RE target. Finally, commenters said, the United States Average Wind Speed Map dem onstrates that all of Mississippi is located in a Class 1 wind region, which is not currently vi ewed as a feasible area to develop wind farms as an RE generation resource. Commenters concluded that wind is not option in Mississippi for meeting the EPA RE target.

Because Mississippi is nearly solely dependent on b iomass or obtaining RE from across numerous state lines, commenters asked the EPA to i dentify whether biomass will be allowed to be a part of state compliance plans for RE and eval uate whether states which are dependent on biomass for meeting compliance have the wood/woodwa ste resources to support the extremely high RE generation targets set by the EPA. Commente rs also asked that the EPA evaluate the economic impact that competition for wood/woodwaste resources would have on other industries in states that are dependent on these wood/woodwast e resources. In summary, commenters said, the EPA should consider removing RE from the CO2 go al calculation but allow RE to count towards compliance with the overall goal. Commenter s noted that in the GHG Abatement Measures TSD, the EPA states that Florida's renewab le energy generation for 2012 was 4,523,798 MWh [GHG Abatement Measures TSD, pp. 4-6] . Commenters stated that after reviewing the U.S. EIA Detailed 1990-2012 Annual Ge neration State Historical Tables, which are included as appendices to the proposal, it appe ars that the EPA arrived at Florida's 2012 renewable energy generation total by adding the meg awatt hours produced by "Other Biomass," "Solar Thermal and Photovoltaic," and "Wood and Woo d Derived Fuels" [U.S. EIA Detailed
1990-2012 Annual Generation State Historical Tables (specifying that in 2012, Florida generated 2,272,621 MWh from "Other Biomass," 193,616 MWh fro m "Solar Thermal and Photovoltaic," and 2,057,561 MWh from "Wood and Wood Derived Fuels ")]. Commenters noted that the EPA
has stated that it will formalize the CO2 accountin g framework for biogenic CO2 emissions at a
later date. Commenters asked if the EPA has conside red the effects of the accounting framework on the calculation of state goals and compliance de monstrations. Commenters asked if the EPA61

will revisit the calculation of state goals if it d etermines that biomass cannot be treated as a zero
carbon source.

Commenters said that the EPA's assumed growth proje ctions under Building Block #3 for the increase in renewable energy generation within Flor ida may not be technically feasible and noted that renewable energy accounts for only 2% of the s tate's total generation mix. While the EPA appropriately excluded hydroelectric generation fro m the BSER, commenters stated that the EPA has relied heavily in building block 3 on large exp ansion of biomass power. Commenters stated that in 2012, 96% of Florida's renewable generation was from biomass (the other 4% was from solar). Although biomass continues to be an importa nt component of a diversified energy portfolio, commenters requested that the EPA remove biomass from the BSER calculation, similar to hydroelectric, because biomass has alrea dy peaked. Commenters noted that a review of the EIA data the EPA relied upon in building block 3 demonstrates that biomass consumption for electricity generation has been relatively flat for the last 22 years and that it peaked in the late 1990's and has since declined. While this leveling off may be due to biomass cost rather than feedstock availability, commenters said that this d oes not support a year-over-year growth of 13%, as the proposed rule requires.

Commenters added that biomass is not limited to its usefulness as a fuel and that many of the opportunities to use biomass as a fuel depend on th e region. For example, commenters stated, in North Florida, softwoods and hardwoods are prevalen t, as well as other energy crops. In assessing the contribution of biomass to the BSER i n building block 3, commenters said that the EPA should provide a more detailed analysis of the types of sustainable biomass available by region and the competition for use of this natural resource by other industries. For example, commenters noted, the entire wood products industry relies upon biomass as a raw material. Should EPA write a rule that forces electric genera tion of the limited biomass resources, commenters said that power generators will compete for fuel resources from the manufacturing industries this country relies upon for a wide vari ety of products. Commenters said that this industry is already highly competitive in securing raw materials in the limited "wood basket" of each location. According to commenters, the firm fu el commitments was one large component of several previous biomass-to-energy projects never g etting off the ground, e.g., in Florida alone, approximately a dozen bioenergy permits were sought , with only a couple moving forward with
construction. Commenters said that the EPA should f ully consider the harm to manufacturing by issuing a rule that relies on biomass consumption i nstead by power generation.

Commenters noted that biomass energy is the only re newable fuel source in Florida that is not intermittent and is dispatchable, but a determinati on on whether biomass can be considered carbon-neutral renewable energy remains pending. Atthis time, commenters stated that renewable energy is therefore prohibitively expensi ve to be deployed in Florida. Commenters added that only biomass that is carefully chosen, g rown responsibly, and efficiently converted into energy can reduce carbon pollution and minimiz e harmful impacts to our land, water and soil. In other words, commenters said, biomass ener gy should do the job better than the fossil fuels it replaces.

Without clearly defining what types of biomass are/ are not considered carbon neutral, commenters said that new biomass generation will li kely not be built in time for this rule. As well, without this clear roadmap, commenters said t hat it is not possible to fully review and62

comment on an unfinished building block and assessi ng whether a building block 3 that relies on biomass-to-energy is adequately demonstrated and re presents an achievable BSER depends on the type and criteria of biomass that is included. Commenters also described Florida's proposed goals and stated that it is imperative that the fin al rule incorporate and account for the biogenic nature of biomass fuels. If the commenters' cogener ation boilers are brought under the proposed emission guidelines, the CO2 emissions from them wi ll be well above the Florida goals. For example, commenters explained, in 2012 and 2013, NH PC's total CO2 emissions were approximately 2,570 lb/MWh (net), but the non-bioge nic CO2 emissions from NHPC's boilers were only about 160 lb/MWh (net).

Commenters said that the EPA's treatment of biogeni c CO2 emissions from biomass-firing units will have a large impact on states that are trying to achieve the EPA's CO2 reduction goals. Commenters encouraged the EPA to promote the use of renewable energy (such as biomass, wind and solar) in lieu of any type of fossil fuel. Although natural gas has lower CO2 emissions compared to coal or oil, commenters said that the u se of natural gas still results in a net increase in CO2 emissions and impacts upon the environment. To this end, commenters added, the EPA should provide and promote incentives for the use o f renewable energy, including but not limited to tax credits, subsidies, and higher electric rate s. Commenters noted that future RE projections for the states where electric generation from bioma ss is included show that projected RE targets will not be attainable within the specified time fr ames if electric generation from biomass is not
included as RE. Commenters stated the EPA includes existing or historical biomass electric generation to determine state RE targets, and simul taneously questions the continued categorization of biomass or certain type of biomas s as RE. Commenters urged the EPA to provide states with guidance concerning electricity generated from biomass in an expeditious manner and adjust state goal calculations as warran ted.

Commenters raised similar concerns for Louisiana's probable need to increase biomass use to meet RE targets, but noted that while burning bioma ss may be technically renewable, it is not necessarily clean. Commenters said that the EPA's d ata shows that solid biomass fuels such as wood waste and agricultural byproducts can emit as much, if not more CO2 than coal, and significantly higher quantities of NOx. And, commen ters added that in July 2013, the U.S. Court of Appeals vacated the EPA's "biogenic carbon deferral" in which the EPA had exempted CO2 emissions from biomass plants for purposes of CAA p ermitting for a period of 3 years pending further study. Commenters concluded that it is uncl ear how increased biomass generation will be subjected to, or impacted by other EPA rules such a s the Cross State Air Pollution Rule (CSAPR).

Commenters described Georgia's limited RE capacity (CHP) and stated that for Georgia to achieve its state RE target, other RE sources must increase by more than 44% per year, which is unreasonable and impossible. Commenters asserted th at the EPA's logic for not including existing hydro in calculating state goals, but allo wing states to include new hydro in their compliance calculations also applies to industrial CHP. Commenters stated the EPA does not include existing hydro because it believes that wou ld distort the goal calculation due to the low expected growth rate for large hydro projects in th e future. Commenters stated that the same situation exists for industrial CHP sources burning wood or wood derived projects, i.e., very low future growth potential, so that these sources shou ld not be included in a state's goal calculation.63

Commenters added that, as is the EPA's approach for new hydro, states should be allowed to include new CHP facilities in their compliance calc ulation.

Commenters said that the EPA developed regional ren ewable energy generation targets based on state-level RPS and that the EPA's methodology assu mes all states in each region can achieve by 2029 the average of the 2020 requirements of state- level RPS in that region. Commenters said that the EPA's methodology is fatally flawed, produ cing state-level renewable energy generation targets that are neither feasible nor adequately de monstrated. Commenters explained that historical renewable energy generation in Southern Company's retail footprint, excluding existing hydroelectric power, is almost exclusively95.7%) from biomass (see Table 9 depicting historical biomass generation from Alabama, Florida , Georgia, and Mississippi and its share of the state's total renewable energy generation.) Com menters added that only a small portion of each state's 2012 biomass generation comes from fac ilities whose primary purpose is electricity generation (see Table 10); the majority of biomass generation is produced from wood productrelated facilities (e.g., wood product manufacturin g, pulp and paper mills, paper manufacturing, and paperboard mills). Commenters stated the genera tion from these facilities has fluctuated on an annual basis likely due to constantly changing d emand for wood products (e.g., dimensional lumber and paper products). For example, in 2010, c ommenters said that Alabama's biomass generation decreased 22 percent but it experienced a year-to-year increase of 18.5 percent in its 2011 biomass generation. Commenters concluded that the EPA has thus erred in including this highly variable, primarily non-electricity sector g eneration in a state's baseline and annually escalating renewable energy targets from it.

Commenters noted that the EPA's proposed approaches for determining the appropriate RE goal for each state consider biomass-based generation to be carbon neutral, but recent EPA guidance indicates that only a limited subset of the biomass currently used to satisfy state RES requirements will be considered carbon neutral for purposes of state 111(d) compliance plans (citing Biomass Memorandum from Janet G. McCabe, Ac ting Assistant Administrator, OAR, to Air Division Directors, Regions 1-10, Nov. 19, 2014 ). As with hydropower, commenters said,
the EPA should treat biomass in a manner consistentwith state RES rules and enable all RESeligible generation to count towards a state's comp liance determination. Commenters added that the EPA should to evaluate the potential for carbon sequestration in forests to play a role in meeting state targets and to provide guidance on ho w this tool could be deployed. Commenters added that the EPA averaged state RES requirements to create regional RE goals without regard to the proportion of compliance that states expect to come from biomass generation. Commenters noted that both the proposed and alternate approach es include biomass when determining the stringency of state RE goals and biomass is treated as a zero-carbon emitting resource. Commenters said the EPA should modify any final rul e to ensure that any biomass included as part of Building Block 3 impacts the calculation of state goals in a manner that is consistent with how the Agency ultimately requires states to accoun t for that generation as part of compliance. Commenters concluded that, to the extent that bioma ss is treated as zero-emitting generation for purposes of calculating state RE goals in the final guidelines, the EPA must provide consistent treatment of biomass for compliance purposes.

Commenters said that requiring Idaho to acquire inc remental RE based on other states' RPS rules ignores Idaho's existing zero-emission renewable hy droelectric generation. For example, commenters stated, during the 2012 baseline year, I daho had 15,499 GWh of total generation; of64

that, only 2,044 GWh was from carbon emitting sourc es (1,640 GWh from affected units) while Idaho generated 13,454 GWh from non-carbon emitting sources. According to commenters, this means that Idaho has already offset more than 6.5 t imes the amount of its in-state carbonemitting generation with existing non-carbon emitti ng generation within its borders. On this basis, commenters stated that Idaho meets an RPS of 87% zero-carbon emitting energy.

Commenters said that the EPA appears to recognize t hat some approaches to biomass-based power production can yield minimal reductions in GH G generation due to release of CO2 from soils during land clearing associated with the prod uction of biomass. Commenters said that this
raises two issues:

• The EPA should limit eligibility of certain types o f biomass-based generation, based on recognition that life-cycle GHG benefits are minimal or negative.

• The EPA should evaluate the impact of such biomass- based generation systems on the state RPSs used as a basis for building bloc k 3 assessments, and adjust its analysis to reflect the reduced GHG benefit of some biomass-based generation
systems.

Comment 35: Commenters stated actual RPS in NV does not match the rate the EPA used.

Response 35: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Meas ures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated the actual effective rate of Neva da's RPS is not reflective of the RPS rate the EPA used in its regional RE averaging due to differ ences between the Nevada program and the EPA's proposal in the types of allowable renewable energy sources and compliance mechanisms. Commenters stated that, if other states with RPS pr ograms are similarly situated, then the regional RE averages may be too high in the western and other regions. Commenters stated the planned RE generation in states with high RPS perce ntages may represent not so much a "best system of emission reduction," but instead the degr ee of favorability in that state's political environment for adoption of ambitious renewable ene rgy mandates along with adequate resources for doing so.

Commenters referred to comments made by Nevada DEP "Agencies." Commenters stated the Agencies pointed out that Nevada's RPS currently do es not apply to all utilities, so that 12% of the load is not covered at all. Commenters agreed t hat Nevada's existing RPS does not actually deliver renewable energy at the level it would appe ar because of multipliers and other factors
that dilute its effectiveness. Commenters stated th at Nevada could easily include the other utilities in the RPS and close some of the program' s loopholes to better comply with the CPP. Commenters stated many states have a stronger RPS t han Nevada's and neighboring California is already on a trajectory to achieve 33% renewables b y 2020. Commenters stated Nevada's65

renewable resources are among the best in the count ry. Commenters stated Nevada is better positioned than almost any other state to enjoy hig h levels of renewable energy penetration; and complying with the CPP would not require a huge cha nge. Commenters supported higher targets for Nevada and stated a more robust RPS would provi de thousands of jobs and a more diversified, stronger economy. Commenters stated th e calculation of renewable energy potential must take into account the rapid changes in the lev elized cost of energy for renewable resources. Commenters stated we are not only approaching but i n many locations have already reached grid parity, meaning that renewable resources such as wi nd and solar are competitive with or beating fossil fuels in the marketplace.

Comment 36: A number of commenters asserted that state-specifi c analyses are needed.

Response 36: State RPS requirements are not a factor in quantify ing the amount of cost-effective RE that is part of the BSER in the final rule.

The methodology that produces target generation lev els under building block 3 is described in detail in section V.E. of the final rule preamble o f the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that a more systematic analysis, which takes into account each state's unique opportunities and challenges in developing renewabl es, is needed before setting regional goals. Commenters stated that, of the six states grouped w ith Arkansas in the South Central region, only Kansas has a state-established renewable portf olio standard (RPS) in place, yet the proposed Rule assumes that every state in the South Central Region can meet RE targets based on that single state's RPS. Commenters stated the use of a single state's policy to set regional goals is legally unsupportable and arbitrary, especially in regions with only one existing RPS policy out of six total states. Commenters stated that, while the proposed Rule's stated intent was to create regions that group states with similar renewable pr ofiles, in the South Central Region, of which Arkansas is a part, four of the other five states h ave significantly greater renewable energy (RE) potential than Arkansas, primarily wind.

Commenters stated the EPA failed to take into accou nt Indiana's unique potential for renewable energy use when they employed a regional average to calculate Indiana's growth rate. Commenters stated that, just because Indiana's regi on might be able to achieve a 6 percent yearover-year growth rate in renewable generation does not mean that is an appropriate figure for Indiana. Commenters stated the proposed rule fails to make allowances for the substantial degree of political uncertainty that belies present-day gr owth in renewable energy generation. Commenters stated this oversight by EPA is a signif icant one: Independent experts have argued that uncertainty in the future of tax law and subsi dies has a substantial impact on investment decisions in the solar industry, for instance. Comm enters cited a study and stated Indiana has limited solar resources because it is in a region o f the country that has the lowest annual average
solar radiation

. Commenters stated that, while Indiana has added si gnificant wind power assets to its generation portfolio since 2008 and EPA assumes new capacity can continue to be added66

without difficulty, there is a risk that the best s iting locations are being used up and the price of producing an additional megawatt of wind power will ramp upward as more capacity is added.

Commenters urged the EPA to adhere to a consistent policy of using actual state data and future growth for renewable also based on specific state i nformation. Commenters stated the preferred approach in this Building Block calculated using re newable potential from political policies in neighboring states is not based on any practical in formation that a renewable policy in one state can be repeated in another. Commenters stated the E PA does not provide any reasonable justification for the groupings of states in Buildi ng Block 3. Commenters requested that the renewable provisions in Building Block 3 be revised to devise state-specific renewable potential
based on the NREL alternative that is further modif ied to include data from all states instead of just 16 states.

Commenters recommended the EPA reconsider BSER with in building block 3 and perform further analysis regarding to what extent generatio n at affected EGUs can be replaced by expanded amounts of lower-carbon generating capacit y given the realities of these technologies
and historic and current investment choices.

Commenters expressed concern that the renewable res ource targets proposed by the CPP do not align with New Hampshire's existing Renewable Portf olio Standards (RPS). Commenters stated the development of new renewable energy sources rel ies heavily on geographical factors and permitting requirements within each state and it is not realistic to require states to achieve renewable goals that are impacted by the RPS requir ements of neighboring states as proposed in the CPP, especially if state RPS requirements are n ot currently being met, as evidenced by the use of alternative compliance payments (ACPs).

Commenters stated the consideration of both renewab le energy and energy waste reduction should be considered on a state-specific basis cons idering technical and economic opportunities and limitations. Commenters stated some RPS apply t o renewable resources that are unique in that state, and which may have limited or no applic ability to other states in the regions defined by EPA in building block 3. Commenters stated that inc luding the potential contribution from these uniquely defined and limited resources in the calcu lation of the renewable energy average for the regions creates an unrealistic expectation that oth er states without such resources can achieve a comparable level of renewable development. Commente rs stated some of these uniquely eligible resources contained in existing RPS include: ocean tidal and ocean thermal resources (i.e. Delaware); offshore wind energy (i.e. Maryland) ; e nergy efficiency (i.e. North Caronia, where up to 40% of RPS can met with EE); energy recovery from swine and poultry waste (i.e. North Carolina, ~10% of RPS must be met from these resourc es); coal mine methane (i.e. Pennsylvania); "clean coal" (i.e. Ohio); municipal solid waste (i.e. Michigan); "advanced nuclear" (i.e. Ohio) "densified fuel pellets" (i.e. Wisconsin); pyrolysis of municipal solid waste (i.e. Colorado); solar light pipes (i.e. Wisconsin) ; compressed air, fly wheel, and battery storage (i.e. Montana); and solar pool heating (i.e. Nevada ).

Commenters stated the EPA must develop a renewable energy goal that is founded on statespecific analysis, availability, costs, and energy use. Commenters started it is unlikely that North Carolina is representative of the other seven in te rms of renewable energy potential since such potential is highly dependent on geographical and c limate particulars. Commenters stated Florida67

has much more shoreline than North Carolina, is fla tter and contains none of the Appalachian Mountains, and is southernmost of all the states in the region. Commenters stated all of these features will have a great impact on Florida's rene wable energy potential and the rule must
account for that. Commenters stated the EPA must de monstrate that renewable energy projects are both adequately demonstrated and technically fe asible in Florida, are of a reasonable cost and have the implementation potential upon which the fi nal budgets are based; otherwise, the rule does not support that renewable energy projects are BSER and therefore can be relied upon for budget goals.

Commenters said that renewable energy is not evenlydisbursed and available within the United States as a fuel source. States and utility compani es utilize clean energy resources that are technically and economically viable in their geographic area in order to cost-effectively provide electricity to their customers, the commenters adde d. Commenters stated regional averaging in the proposed rule ignores the fact that renewable e nergy potential is state-specific and depends on the state's natural resources, existing transmis sion system, and current renewable energy development. The southeast United States is particu larly short of these resources, the commenters said, and added that according to the DO E's NREL, the southeast United States is devoid of any wind resources.

Likewise, commenters said that the NREL's Photovolt aic Solar Resource map, which reflects nominal solar resources in Kentucky. Commenters exp ressed that energy from regions that have
rich resources of renewables will have to be develo ped to meet their own region's goals set out in the plan, but also for other region's goals as well . Yet, the commenters speculated, renewable resource-rich states which plan on developing signi ficant amounts of renewable energy within their SIP may be reluctant to share those resources with states that are not rich in those resources. In addition, the commenters said, without construct ion of significant amounts of long-distance high-voltage transmission lines, states in the sout heast will be unable to meet goals assumed and set out in the proposed rule.

Commenters indicated that the proposed CPP establis hes regional groupings to set common RE goals for individual states. Commenters added Michi gan is included in the North Central region. Commenters stated it is inappropriate to base any e valuation of Michigan's renewable potential on the successful installation of RE resources, or the RE resource potential, of other states. Commenters stated Michigan is uniquely impacted by the presence of the Great Lakes and such proof is readily available in the form of the NREL' s individual maps on a state's potential for renewable energy resources. Commenters attached the NREL wind speed profile for the United States to demonstrate this point. Commenters provid ed Figure 2 (titled: "US Annual Average Wind Speed at 80 m"), which shows the U.S.'s wind p rofile, in meters/sec, at a height of 80

meters.

As clearly depicted in Figure 2, the commenters sai d that Michigan lacks the renewable wind generation potential as other states in the North C entral Region. As further proof of the stark differences in the region, the commenters noted tha t with the October 10th, 2014 announcement by MidAmerican Energy, the state of Iowa is on trac k to provide approximately 50% of their residential demand by wind generation resources. Co mmenters stated that clearly, Iowa, along with the other Great Plains states, is a grossly im proper comparison to Michigan's renewable energy potential. Thus, commenters requested that t he individual states be allowed to set their68

own renewable energy goals, as they know their rene wable energy resources potential best. Commenters argued states should also be allowed to form their own regions as geographically appropriate (e.g. a Great Lakes states region).

Commenters disagreed with EPA's method of basing in dividual state RE generation levels on conditions and standards adopted in other states . As an initial matter, commenters asserted the EPA fails to properly account for the differences t hat exist between states within the same region, especially in a region like the Southeast t hat consists of eight states that span from Kentucky to Florida (north-south) and North Carolin a to Mississippi (east-west).

Commenters disagreed with the EPA's plan to base th e RE generation levels of Georgia and six other states on a single RPS that was deemed financ ially and environmentally appropriate for one state. Commenters expressed that this is especially true where (as here) the EPA simply assumes - without attempting to demonstrate as true - that all states within the Southeast region can meet the targets in North Carolina's RPS. Commenters sta ted the EPA's own IPM modeling results indicate that for Georgia, RE growth will be virtua lly nonexistent. As a more appropriate alternative measure, the commenters encouraged the EPA to perform a systematic analysis of each state within a region and develop a scenario t hat accounts for the distinct challenges and
resources of each state.

Comment 37: Commenters stated the EPA must account for state-s pecific factors in Georgia.

Response 37: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. Furt her, building block 3 is both quantified and applied at the level of the interconnection, rather than at the state-level. The methodology that produces target generation levels under building bl ock 3 is described in detail in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

Biomass is not considered part of the best system o f emission reduction in this rule and therefore it is not included in goal-setting or compliance ev aluations. However, similar to other technologies outside of BSER, biomass may be consid ered as a part of a state’s plan to meet the emission guidelines.

For more information regarding Building Block 3, re fer to section V.E of the final rule preamble
of the CPP.

A discussion regarding the use of some biomass feed stocks for compliance purposes can be
found in sections VIII.I and VIII.K of the final ru le preamble of the CPP.

A discussion regarding the current status of the de velopment of the revised Framework and how
information from the revised Framework and the related peer review processes could be use d to inform how states and EPA assess biogenic CO 2 can be found in sections VIII.I and VIII.K of the final rule preamble of the CPP. For more inform ation regarding the Framework, see: http://epa.gov/climatechange/ghgemissions/biogenic- emissions.html.69

The following are summaries of the specific public comments under this comment:

Commenters suggested that, instead of proposing a C O2 emissions compliance rate for Georgia that is based, in part, on one state's RPS, the EPA should include that amount of RE that is based on the development of reasonably achievable RE gene ration that balances ratepayer costs and reliability with readily available RE technologies. Commenters stated that certain forms of RE are appropriate to consider when determining state RE levels for compliance. As a general matter, the commenters agreed with the EPA's approa ch regarding hydroelectric power. Specifically, EPA was correct not to include 2012 h ydropower generation - including pumped storage hydropower generation - in determining a st ate's RE for goal calculation purposes. Commenters stated the large degree of variation tha t occurs in hydropower generation may cause distorted state targets, and thus hydropower genera tion should only be considered in calculating compliance with a state goal and not when deriving the state goal itself. Commenters said that given the limited availability of geothermal and wi nd power in Georgia, remaining possible RE sources that may be used to meet the proposed perfo rmance standards rate in the Proposal are
biomass and solar.

Commenters agreed that biomass co-firing at coal fa cilities and biomass electric generating facilities should be counted as RE, but stated the EPA must determine how biomass will be treated in state 111(d) plans now, if states and ut ility stakeholders are to have that option for meeting CO2 goals. Commenters urged the EPA to expe ditiously finalize the Biogenic Framework, so that states can use those findings in the development and submittal of section 111(d) plans. Commenters stated that, up to this po int, the EPA has provided confusing and inconsistent treatment of biomass in the Proposal. Commenters stated biomass is given consideration as a source of RE in the preamble (79 FR 34,923/2, 34,924/3 & 34,925/1) and the continued hope is that the EPA will provide a clear path forward for the use of biomass as a RE fuel in state 111(d) plans. Commenters stated plann ing for the use of biomass in the future has long lead times associated with the planning, desig n, acquisition, permitting and construction of a power plant facility. Additionally, the commenter s said that such hurdles are substantially raised by the uncertainties regarding the permittin g requirements for such facilities and the role they might play in complying with state performance goals. Commenters stated that biomass is a viable option in Georgia for generating power, both as a sole source and co-firing with other fuels, but not if delays in making critical determi nations regarding its role in the reduction of carbon emissions continue. Commenters strongly enco uraged the EPA to diligently move forward with finalizing its Biogenic Framework, and to take any other steps needed to fix the status and role of biomass combustion for power pla nts within the context of the emission guidelines.

Commenters stated that unlike in some of the southw estern States, Concentrated Solar is not an attractive option in Georgia for the generation of electricity, given the current state of the technology. Commenters said solar PV is currently t he only technology theoretically useful in Georgia to generate electricity from sunlight. Com menters noted about 7,000 MWac solar capacity would be required to fulfill the State's R E goals (ignoring 2012 RE levels). Commenters stated the availability of the technology; however, must be balanced with considerations of cost and reliability. The commenters explained the syste m was not designed to respond to large variations in both load and generation. The comment ers added intermittent resources like solar PV can change significantly from minute-to-minute. Also, the commenters explained that system70

operators must keep the system in balance with chan ging customer demand by controlling available generation resources. Commenters stated t hat adding a significant amount of intermittent generation resources further complicat es the system operator's balancing responsibilities. The commenters said system operat ors utilize conventional, controlled generation technology to balance the required load, and to maintain a constant system frequency and voltage. Commenters continued stating that addi ng significant amounts of intermittent generation to replace conventional, controllable ge neration could result in fewer resources for use in maintaining system frequency and voltage (an d therefore reliability). Commenters said to compensate for the added variability caused by inte rmittent generation resources, utilities will need to spend additional capital on equipment and w ill experience higher operating expenses on existing conventional generating facilities. Commen ters stated existing conventional generating facilities will be required to provide more balanci ng services, resulting in more frequent cycling operations and higher operating and maintenance cos ts. Commenters stated their summer peak period typically runs from 3 to 8 p.m., while solar PV typically peaks from noon to 1 p.m., with steep declines in production past that point. Comm enters said from 3 to 4 p.m., for example, solar PV typically produces 30% (at best) of peak p roduction. Commenters stated that adding 7000 MWac would require the addition of almost thatmuch other generation to meet peak demand and to satisfy spinning reserve requirements , so as to maintain suitable margins for frequency and voltage control. Thus, the commenters expected, while costs of solar PV have declined considerably in the past few years, applyi ng the technology at the levels proposed will cause significant cost increases for end-use custom ers in Georgia.

Commenters stated that, as an electric cooperative, they have the responsibility to provide safe, reliable and cost effective electric power and, as such, they have a duty to ensure that new generation added provides the least-cost solution f or meeting energy needs. At this time, the
commenters asserted that considerations of cost and reliability - if properly accounted for by the EPA - would reduce the increase in RE that the Agen cy concludes can reasonably be achieved between now and 2030. In determining state RE goals , the commenters asserted that the EPA must account for state-specific factors; had it don e so the commenters asserted that the EPA would have concluded that solar is not a viable opt ion in Georgia for generating substantial amounts of electricity. The commenters asserted fai lure to consider these costs and impairments to system reliability is arbitrary and capricious.

Comment 38: Commenters stated the EPA's reliance on IPM leads to an overestimate of the
amount of RE that can be achieved.

Response 38: The final methodology is based on observed histori cal patterns of deployment and expected levels of future performance. IPM projecti ons are used to validate the technical feasibility and cost-effectiveness of the final met hodology. The EPA updated IPM from proposal to reflect the latest data on the cost and performa nce of RE technologies, as well as limits to reflect the increasing grid integration costs that may accompany high levels of RE penetration. The methodology that produces target generation lev els under building block 3 is described in detail in section V.E. of the final rule preamble o f the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.71

The following are summaries of the specific public comments under this comment:

Commenters stated the CPP overestimated the capacit y factor of renewable generation in their
model and in the establishment of state emission ra tes.

Commenters stated the EPA's reliance on an inaccura te model leads to a large overestimate of
the amount of RE that can be achieved in Ohio and o nly reinforces the level of inaccuracies in this proposal. Commenters stated the IPM projects, under the state-only policy case, 3,001 MW of new wind capacity in Ohio by 2025 and, under the regional compliance plan, this is increased to 4,955 MW of new wind power in 2025. Commenters s tated that, while Ohio EPA recognizes the potential for wind power in the state given rec ent rapid growth in the wind sector, wind power does not, and cannot, supplement or replace t he base-load power supplied by coal and natural gas fired power plants. Commenters urged th e EPA to consider the highly-localized nature of wind-power and its ability to serve a sma ll portion of the overall grid. These results clearly indicate that location and base-load reliab ility concerns were not considered fully in the IPM projections. Commenters stated the Ohio EPA exa mined wind capacity projections from EIA's 2014 Annual Energy Outlook and, between years 2012 and 2030, the largest annual change in wind capacity for the RFCW region, of whi ch Ohio is a part, was 37 MW. Commenters stated the EPA's projection of 3001 MW o f new wind capacity in Ohio by 2025 under the state-only scenario represents the additi on of 195 MW each year starting in 2012 and concluding in 2025. Commenters stated the EPA is pr ojecting a growth rate in wind capacity 5.3 times greater than that projected by EIA which the Ohio EPA finds difficult to comprehend.

Commenters also stated that EPA's proposed renewabl e energy generation goals are drastically higher than the states can achieve within EPA's pro posed timeline. Commenters stated that comparing present-day estimates of the expected bas eline renewable energy growth to the renewable energy totals EPA applies in Building Blo ck 3 reveals just how unreasonable, arbitrary, and capricious the Agency's estimates of potential renewable energy generation are. Commenters referenced and cited The Marchetti Repor t, which compares estimated renewable energy generation under Building Block 3 assumption s in the EIA's Annual Energy Outlook (AEO) 2013 baseline analysis, and in EPA's IPM runs projecting the results of state-focused implementation of the Proposed Guidelines (State Op tion 1). Based on additional information provided by the commenters, they stated that althou gh states may have some available measures at their disposal that could lead to some increment al increase in renewable energy generation from the status quo over this timeframe, expecting the nation as a whole to nearly quintuple its annual growth rate for renewables and increase its expected renewable energy generation by more than one third over projected levels is simply unreasonable. Commenters also provided information from the Marchetti Report specific to G eorgia and Alabama.

Commenters indicated that the EPA assumes renewable energy growth of 86 percent from 2020 to 2030, an assumption that far exceeds the agency' s own modeling results. The EPA's modeling of the least cost strategy shows 325 TWh of non-hyd ro renewable generation by 2030, yet EPA's set state CO2 rates assume 525 TWh, almost 33 perce nt more, the commenters said. Under the plan, renewable generation would grow at unpreceden ted rates in many states, with southeastern states presumed to increase renewable generation by 13% each year, the commenters added. Commenters stated ERCOT and other grid operators ha ve expressed concern that the CPP's proposed requirements would require grid operators to significantly modify their grid operations72

to integrate increased proportion of renewable reso urces. Commenters further believed that the
EPA has not shown that it has taken into account th e intermittent and unreliable nature of these sources. Additionally, commenters added, the transm ission infrastructure needed to capture additional renewable energy sources will take 5 to 15 years to install, and will not be available by
the 2020 deadline in the CPP. Commenters said that the WPSC points out that "EPA started its Wyoming calculation with the wrong number, applied an unrealistic growth factor and reached a wrong conclusion". The WPSC goes on to correctly ca lculate the formula for Wyoming, demonstrating that the mistake made by EPA was larg e enough to frustrate any conceivable state effort to comply with the goal for Wyoming, the com menters noted. Commenters indicated that
the WPSC demonstrates that the EPA could reach the correct Block 3 goal for Wyoming by substituting 666,212 MWh for the 4,369,107 MWh in t he EPA calculations, and 1% growth factor for the 6.095% proposed by EPA. Commenters a sserted such example demonstrates EPA's unrealistic expectation for this building block.

Commenters expressed concern that, while the EPA's modeling of the least cost strategy shows 325 TWh of non-hydro renewable generation by 2030, the EPA set state CO2 rates assuming 525 TWh--almost 33 percent more.

Commenters stated the four parsed IPM runs that are available demonstrate that the Agency's Building Block 3 targets are far too costly and do not represent realistic estimates of the potential Renewable Energy generation available to achieve th e Proposed Guidelines. Commenters stated the EPA is proposing to find that it is achievable for states to increase their overall Renewable Energy generation to 522,723 GWh by 2029, with an a nnual growth rate from 2020 to 2029 of roughly 7.1 percent. Commenters stated that, althou gh the target Renewable Energy generation levels that make up this total were used to calcula te each state's interim and final CO2 emission goals, the EPA's IPM model runs predict that actual Renewable Energy generation growth will be only a small fraction of this target under the l east-cost approach to compliance with the Proposed Guidelines. Commenters stated IPM predicts that under both the state-focused and region-focused compliance approaches, Renewable Ene rgy generation will reach only 356,063 GWh by 2029, and will grow at an annual rate of 1.1 percent from 2020 to 2029. (Marchetti Report). Commenters stated this level of generation is only 1.7 percent greater than the Renewable Energy generation that EPA predicts in 20 29 under its own Base Case analysis, and is actually 7.6 percent lower than the EIA predicts will occur in 2029 in the absence of any emission guidelines. Commenters stated the EPA's ow n analysis severely undermines the Agency's prediction of the level of increased Renew able Energy generation that is achievable, and demonstrates that the Agency has failed to accu rately consider factors such as cost and feasibility. Commenters stated the IPM results sugg est that rapid growth in Renewable Energy generation is so costly that states are able to ach ieve only negligible incremental increases in Renewable Energy generation above the status quo (a t best), and they must instead rely more heavily on other components of EPA's selected BSER in order to comply with the Proposed Guidelines. Commenters stated this, in turn, will i ncrease the cost of those other building blocks in ways that EPA has failed to analyze in the Propo sed Guidelines.

Comment 39: Commenters expressed concern regarding the interst ate nature of much renewable

energy.73

Response 39: The resources and data provided in this comment w ere valuable in finalizing the building block 3 methodology, particularly in adopt ing a regional approach to RE and quantifying target generation in terms of increment al, rather than total, RE generation. The final methodology is described in detail in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD suppor ting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters suggested the EPA recalculate building b lock 3 goals with proper data and attribute renewable resources consistently. Commenters stated Building block 3 could be improved by changing two data sets:

1. Commenters stated the hydropower on the Oregon/Wash ington and Oregon/Idaho border should be evenly split between the border states. C ommenters stated this approach would be most consistent with EPA's proposed approach of applying regional targets based on the physical location of generation.

2. Commenters stated the 2012 stack of non-hydro renew ables in each state should be adjusted to be consistent with existing RPS policie s. Commenters stated that renewable projects located in Oregon that serve California lo ad should be used to set California's target; renewable projects located in Washington to serve Oregon load should be used to set Oregon's target. Commenters stated data from th e Northwest Power and Conservation Council on the recipient of non-hydro renewable ene rgy generated in the Northwest is
available. Commenters stated FERC Form 1 and FERC's Electric Quarterly Report
contain the information needed to make most or all of the data corrections needed.

Commenters stated that, if the final rule retains t he current approach of including all renewables physically within a state in the calculation of eac h state's goal, then the EPA should issue clear guidance that any such renewables included in a sta te's baseline and goal calculation shall be available to that state for compliance purposes.

Commenters stated a key to facilitating the develop ment of RE resources to meet state CO2 targets is that RE MWh need to be recognized in the state in which the RECs are retired, not the states in which they are generated. Commenters stat ed corralling the MWh in the states where the RE is generated will encourage inefficient use of capital. Commenters asserted that, while States will likely work with stakeholders within th eir footprint initially to style SIPs that allow their stakeholders to comply with the CPP, this wil l be a difficult task because different
stakeholder will need different measures to achieve compliance, and strategies that help one entity comply will put another entity in jeopardy o f non-compliance. Commenters suggested that States are not likely to turn their attention to re gional compliance until they have crafted their SIPs and forcing RE to reside within the state as t he CPP currently proposes, ignores the fact that areas of the country vary in their ability to gener ate RE. Commenters asserted that States that do not have weather that is favorable to production of energy from RE need to be able to purchase
RE from outside their borders and be able to use th e MWh in the denominator in order to meet state CO2 targets. Commenters stated the final rule must contemplate the transfer of the RE across state borders for new renewable projects. Co mmenters stated that recalculation of the current rates would be overly complex for the exiti ng RE but new RE should be handled differently than existing. Commenters stated that l ong term contracts are typically necessary to74

obtain financing for RE projects and the financial burden for new RE projects will ultimately rest with the load that secures these projects' financin g and the benefit of the MWh produced by these
assets should accrue to the customers that shoulderthe cost burden. Commenters stated that, to style the rule any other way will stifle new RE pro jects and cause capital to be invested inefficiently when capital will already be scarce b ecause of the required duplication of assets necessary to meet reliability and environmental req uirements. Commenters stated renewables are heavily dependent on resource location and restrict ing the ability to develop renewable projects through zoning and environmental studies in the are as with high wind force or sun hours significantly limits the overall amount of availabl e RE and forces projects to areas which may
not have the same resources. Commenters stated thatplacing the same capital into areas with fewer resources raises the average cost per MWh and the overall cost of compliance with the
CPP.

Commenters supported allowing renewable energy purc hases from out-of-state, with bundled RECs, in order to assist in compliance with the CPP . As such, commenters stated, the proposed renewable energy generation levels are achievable f or all states within the SWEA region.

Commenters stated the EPA failed to account that mo st portfolio standards may be satisfied with out-of-state power. Commenters stated this evinces a legislative recognition that it may be economically preferable for a state to import some or all of the resources needed to meet the instate mandate. Commenters stated this principle, ho wever, is lost in EPA's vision of renewable energy "best practices." Commenters stated that, by assigning state X an initial renewables goal of, for instance, 10 percent based on that state's portfolio standard of that amount, the EPA is concluding that the "best" system for that state en tails in-state generation of 10 percent renewables; accordingly, the EPA's goal assumes the state will develop the necessary amount of
renewable resources in-state. Commenters stated how ever, state X's legislature, in allowing the portfolio standard to be met with out-of-state gene ration, did not conclude that generating instate renewable energy at 10 percent represents wis e public policy; to the contrary, the legislature may have assumed that most of the mandated renewabl e generation would be imported. Commenters stated the EPA is arbitrarily using stat e legislation to set an in-state renewable target that the legislation itself did not establis h.

Commenters stated the EPA's reliance on existing st ate RPS goals fails to address the fact that many States permit out-of-state generation to meet RPS obligations; as a result, state RPS goals are not a good proxy for each state's renewable ene rgy generation potential.

Commenters stated the EPA's assumptions regarding r enewable energy are unrealistic and do not recognize the fact that many utilities build renewa ble energy generation into their portfolio by purchasing energy from outside the state. Commenter s stated it is unclear in the Proposal how that impacts the targets that EPA has set for each state.

Commenters stated that it is therefore neither fair nor appropriate for the EPA to allow a state to claim full credit for RE generated in another state . Credit for renewable energy must be equitable. Commenters said that in North Dakota, ap proximately 60% of the electricity produced is exported to other states. However, the commenter s noted, the Proposed Rule requires North
Dakota to reduce emissions from 100% of the coal-fi red units that produce this electricity.
Commenters stated since North Dakota must address a ll coal-fired electrical generation, the EPA75

must formulate an equitable method for crediting re newable energy. Commenters indicated that the Proposed Rule would allow other state(s) to tak e credit for RE generated in North Dakota even though they have no responsibility for GHG emi ssions from electricity generated in North Dakota from coal that is exported to the other stat e(s). Much of the exported wind energy generated in North Dakota actually displaces coal g eneration in North Dakota; yet, North Dakota may not get credit for that renewable energy, the c ommenters pointed out. Commenters stated that there are reasons RE sources are placed in a s tate other than the state that has the RPS. These include the availability of the resource for genera ting the power (wind, water, sunshine, etc.), available land and transmission lines, and tax ince ntives, the commenters explained. States that host renewable energy that is exported do not just reap benefits, there are consequences, the
commenters said. Commenters indicated that land los t to production, visual impairment of the landscape and wildlife impacts are just a few of th e impacts on a state. Commenters asserted that it is therefore neither fair nor appropriate for th e EPA to allow a state to claim full credit for RE generated in another state.

Commenters suggested the EPA allow for the unencumb ered import and export of RE and their corresponding greenhouse gas compliance value acros s state lines. Commenters stated maintaining this approach is important in order to allow states the greatest flexibility to achieve the aggressive 111(d) goals set by the EPA. Comment ers stated that preserving this flexibility would be consistent with current state renewable pr ograms which cross state borders and allow the flow of renewable, and soon climate attributes, to meet the supply and demand of the states which have different goals and different resources. Commenters stated the reduction of carbon intensity should follow the contract path and apply to the state which is importing the 111(d) compliance attribute /REC. Commenters stated that, while the import/export should not be limited to contiguous states or ISO regions, it is not appropriate to allow international imports. In addition, for grid reliability reasons, commenters said states should be required to have a
balanced mix of both base-load and intermittent ren ewables. Commenters said that restrictions or prohibitions on imports and exports will have sever al unintended consequences: (1) rather than creating a robust, national and cost-effective rene wable market, artificial barriers and price signals will result and (2) rather than minimizing the patchwork of renewable programs with varying degrees of success, this inefficient progra m will be reinforced. Commenters concluded that states have an enormous challenge creating pro grams to maximize their resources to meet aggressive program requirements, and any limits on the interstate flow of renewable attributes-- including any requirement that those attributes be bundled with electrical generation--will skew this program in favor of a small subset of availabl e renewables, decrease cost effectiveness, and decrease flexibility to the states.

Comment 40: Commenters expressed concerns regarding offset cre diting.

Response 40: The BSER is premised, in part, on affected sources procuring incremental RE to replace their own generation. A successful demonstr ation of rate-based compliance, whether on an affected source basis or through the application of a state goal as described in section VII of the final rule preamble of the CPP, precludes the d ouble-counting of a single megawatt-hour of output. Refer to section VIII.G of the final rule p reamble of the CPP for further detail on actions taken to adjust the CO2 emission rate of an affecte d EGU.76

The following are summaries of the specific public comments under this comment:

Commenters said that allowing a transfer of green o ffset credits between States under Building Block 3 creates a double offset problem if coal gen eration has to be offset once in the State where it is generated, and again in the State where it is distributed and sold. Commenters added that the EPA has indicated that the final rule may allow wind generation MW hours to be transferred by their owner to any State rather than count them in the State where they are generated as they are under Building Block 3. This creates a double offset problem, the
commenters asserted.

Commenters indicated that Minnesota's RPS applies at the retail/distribution rather than at the wholesale generation side of the interstate sale of electricity. Under the Minnesota RPS, wholesale coal-fueled electricity generated in Nort h Dakota and sold in Minnesota is partially offset by wholesale wind power generated in North D akota and sold in Minnesota, the commenters said. This crediting occurs at the retai l customer level in Minnesota, the commenters
added. Commenters also stated that the same coal-ba sed generation will now have to be offset again in North Dakota at the generation/wholesale s ide of the transaction, because the offset
credited at the retail level in Minnesota will not be counted in North Dakota at the wholesale side of the transaction. Commenters said that it appears that the same MW of coal generation will have to be offset twice: once at the wholesale-gene ration side of the transaction in North Dakota, and again at the retail-distribution side of the tr ansaction in Minnesota. Commenters stated that if the EPA allows (either expressly or by default) the transfer of such credits under any final rule, the EPA must also address double offset problem.

Comment 41: Commenters stated that the proposal would not allo w sufficient time for the design, approval, and implementation of state and/o r regional compliance strategies needed to achieve the proposed renewable energy goals.

Response 41 : The EPA addresses considerations related to the t echnical feasibility and associated grid integration costs of significant RE penetration in both section V.E of the final rule preamble of the CPP and in chapter 4 of GHG Mi tigation Measures TSD supporting the final CPP. The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly the adop tion of a phase-in period from 2022 through 2023 that would enable appropriate time for investm ents and planning to accommodate an
increase in RE.

The following are summaries of the specific public comments under this comment:

Commenters stated the EPA fails to fully appreciate the costs and implementation challenges faced by large-scale renewable energy projects. Com menters stated that, for example, the CREZ project in Texas, which was designed to transmit 18 MW of wind generation to population centers, took eight years to construct; even if started today, such a project could not be completed until mid-way through the interim compliance period

.
Commenters stated there are a number of state-speci fic factors impact not only the amount of potential renewable resources available, but also i mpact the feasibility and rate at which such77

resources may be developed. Commenters stated that these factors include geography, topology, energy markets, seasonal differences, transmission considerations, state regulatory processes, and project siting rules associated with certain en dangered species and other environmental programs. Commenters stated that implementation, ge neration (and related transmission) planning involves input and decisions from a number of entities, such as various state regulators, regional transmission organizations, and independen t system operators. Commenters stated that the proposal would not allow sufficient time for th e design, approval, and implementation of state and/or regional compliance strategies needed to achieve the proposed renewable energy goals. Commenters stated that EPA did not evaluate the impact of regulatory processes on the timing and feasibility of developing renewable ener gy resources. Commenters stated that timing related challenges are introduced by the number of regulatory agencies that must evaluate and approve the addition of renewable resources, includ ing the necessary arrangements to connect those new generating resources to the grid, as well as by the number of agencies that evaluate and balance the impacts of multiple projects across multiple jurisdictions. Commenters stated this includes agencies whose obligations are very d iverse, including cultural and historic resource agencies, marine, fish and wildlife servic es, aviation authorities, state and federal land management agencies, and others.

Commenters stated that there are significant concer ns and uncertainties pertaining to the mechanics of implementing and managing interstate i ssues associated with how states that support the development of out-of-state renewable r esources obtain credit for such resources in their compliance plans.

Comment 42: Commenters stated the EPA failed to account for th e transmission that must be
built to accommodate the amount of renewable resour ces it projects.

Response 42: The EPA addresses considerations related to the te chnical feasibility and associated grid integration costs of significant RE penetration in both section V.E of the final rule preamble of the CPP and in chapter 4 of the GH G Mitigation Measures TSD supporting the final CPP. The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly the adop tion of a phase-in period from 2022 through 2023 that would enable appropriate time for investm ents and planning to accommodate an
increase in RE.

The following are summaries of the specific public comments under this comment:

Commenters stated it is naive to think that states can reach agreement amongst their internal stakeholders and achieve regional agreements in one year's time. Commenters stated that, due to some of the remote locations of the prime renewable resources, transmission infrastructure upgrades or additions are often necessary. Commente rs stated a significant variable is the right of way/easement process, which is highly dependent on landowners and can also be influenced by public opinion. Commenters stated that, just as the permitting of renewable facilities encounters an increasing number of permits and approvals with long study periods, so too does the construction of power lines to move energy from the renewable facilities to load centers. Commenters stated the NERC estimates a 10 to 15 year timeline for transmission construction. Commenters stated this country has never built this level of transmission and pipeline expansion78

and generation. Commenters stated the EPA's assumpt ion that East Kentucky Power Cooperative can essentially create an RE portfolio by 2020 or 2 030 is arbitrary, unreasonable and unjustified.

Commenters stated that, because the ability to send renewable power from the east side of the grid to the west side is very limited, Basin Electr ic cannot use its east side wind resources to make up for a reduction in coal-based generation in Wyoming. Commenters stated that building adequate renewable resources in Wyoming to make up for reduced coal-based generation may be impossible, and certainly could not be accomplished in time to meet the interim goals.
Commenters noted that renewable resources are builtwhere the conditions are best for them, not to serve as replacements for coal-based stations as determined by state boundaries.

Commenters stated that, even if North Dakota could site, permit and build all of this additional renewable power, the EPA fails to address the obvio us need for new transmission to support this renewable development. Commenters stated a host of experts has already warned EPA of the long lead times needed to construct transmission in order to support the very aggressive renewable resource provisions in the Proposed Rule. Commenters stated the major reason that the SPP cites as to why the EPA's proposal will lea d to "cascading outages and voltage collapse" is because it will take at least eight years to bui ld transmission necessary to support the alternative resources the rule will require. Commen ters stated the Director of FERC's Office of Electric Reliability also warned the EPA that "it i s difficult to get transmission built for [renewable] generation when it is remote from loads , e.g., wind farms." Commenters stated FERC Commissioner Tony Clark testified to Congress that "[i]n the case of large renewables like utility-scale wind and solar, transmission inv estments are likely to be needed to hook up remote generation to the existing transmission grid ." Commenters stated the EPA's failure to even consider the need for additional transmission, let alone the time and multi-billion dollar cost involved, undermines Building Block 3. Commenters s tated Building Block 3 is also based on a misunderstanding of state renewable portfolio stand ards and EPA's role as an environmental rather than an energy regulator

.

Commenters stated the EPA's assumption that large a mounts of renewable power can be developed and brought to market within the proposal 's compliance time lines fails to account for the significant cost and time needed to build the n ecessary transmission. Commenters referred to a FERC Order which stated " ... increased adoption of [renewable portfolio standard measures] has contributed to rapid growth of renewable energy resources that are frequently remote from load centers, and thus [increase the] need for tran smission to access remote resources .... " As a result, "additional, and potentially significant, i nvestment in new transmission facilities will be required in the future to meet reliability needs an d integrate new sources of generation." Commenters stated that, as the Edison Electric Inst itute has reported, "[l]engthy, complicated, and costly siting and permitting processes continue to be major barriers to installing new transmission lines and upgrading existing lines." C ommenters stated the EPA does not include any information in its proposal as to the cost or t ime needed to build transmission; the EPA simply (and arbitrarily) assumes that the needed re newable resources will become available
when needed.

Commenters stated the EPA's failure to consider the need for additional transmission, let alone the time and multibillion dollar cost involved, fat ally undermines building block three. Commenters stated a host of experts has warned EPA of the long lead times needed to construct79

transmission in order to support EPA's renewable re source targets. Commenters stated the major reason that the Southwest Power Pool (SPP) cites as to why EPA's proposal will lead to "cascading outages and voltage collapse" is because it will take at least eight years to build transmission necessary to support the alternative r esources the rule will require. Commenters
stated the Director of FERC's Office of Electric Re liability warned EPA that "it is difficult to get transmission built for [renewable] generation when it is remote from loads, e.g., wind farms." Commenters stated FERC Commissioner Tony Clark test ified to Congress that "[i]n the case of large renewables like utility-scale wind and solar, transmission investments are likely to be needed to hook up remote generation to the existing transmission grid."

Comment 43: Commenters stated the EPA should analyze potential constraints from a generation and transmission line perspective prior to determining RE capacity and the appropriate RE re-dispatch capability.

Response 43: The EPA addresses considerations related to the te chnical feasibility and associated grid integration costs of significant RE penetration in both section V.E of the final rule preamble of the CPP and in chapter 4 of GHG Mi tigation Measures TSD supporting the final CPP. The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly the adop tion of a phase-in period from 2022 through 2023 that would enable appropriate time for investm ents and planning to accommodate an
increase in RE.

The following are summaries of the specific public comments under this comment:

Commenters expressed concern that, while the growth of renewable generation is highly dependent upon permitting, financing, transmission access and technical challenges posed by integration of intermittent electricity sources int o the grid, there is no indication that EPA has
taken those factors into account. Commenters stated the EPA's failure to consider the need for additional transmission, let alone the time and mul tibillion dollar cost involved, fatally undermines building block three. Commenters stated that, while the EPA assumes that the
needed renewable resources will become available wh en needed, that assumption is arbitrary. Commenters stated a host of experts has warned EPA of the long lead times needed to construct transmission in order to support the EPA's renewabl e resource targets. Commenters stated the major reason that the SPP cites as to why EPA's pro posal will lead to "cascading outages and voltage collapse" is because it will take at least eight years to build transmission necessary to support the alternative resources the rule will req uire. Commenters stated the Director of FERC's Office of Electric Reliability warned EPA that "it is difficult to get transmission built for [renewable] generation when it is remote from loads , e.g., wind farms. Commenters stated FERC Commissioner Tony Clark testified to Congress that "[i]n the case of large renewables like utility-scale wind and solar, transmission investme nts are likely to be needed to hook up remote generation to the existing transmission grid." Comm enters stated the EPA's assumption that large amounts of renewable power can be developed and bro ught to market within the proposal's compliance time lines fails to account for the sign ificant cost and time needed to build the necessary transmission. Commenters noted that, as F ERC has stated,"...increased adoption of [renewable portfolio standard measures] has contrib uted to rapid growth of renewable energy80

resources that are frequently remote from load cent ers, and thus [increase the] need for
transmission to access remote resources... " As a r esult, "additional, and potentially significant,
investment in new transmission facilities will be r equired in the future to meet reliability needs and integrate new sources of generation."

Commenters stated the EPA assumed that Kentucky wil l achieve its generation needs by deploying up to 2% renewable generation (approximat ely 1,734 GWh by 2030). Commenters stated the IPM models only deployed 9 MW of new win d capacity by 2020 in the policy case, according to the Resource Adequacy and Reliability Analysis TSD Appendix A2 on page 14 for SERC-N region. Commenters stated data from a recentLKE capacity solicitation indicate that, to meet 1,734 GWh of renewable energy from the state o f Kentucky and nearby states, would require the equivalent of over 670 MW of wind or 1, 200 MW of solar capability. Commenters stated this amount of renewable energy resource wou ld most likely result in significant
transmission infrastructure needs for either in-sta te or out-of-state sources. Commenters stated reliance on out-of-state generation is concerning g iven the competition for energy between generating states and other importing states (as co ntemplated under Building Block 3). Commenters stated that transmission planning must b e completed across import and export seams between Transmission Planning and Balancing A uthorities to verify enough Available Transfer Capability (ATC) exists to facilitate firm transmission transaction. Commenters stated that, without sufficient firm transmission arrangem ents, congestion and reliability concerns are exacerbated and could require further transmission line construction. Commenters stated that, by the dynamics of the proposed compliance calculation , any over-estimation by the EPA in setting the reduction goals based on renewable energy devel opment and utilization in Kentucky will need to be offset by over twice the amount of reduc tion from fossil sources. Commenters stated LKE is seeking approval to construct a proposed 10 MW solar project that will require approximately 100 acres of available land at an exi sting site. Commenters stated that, with that as the expected land requirement, to install 1,200 MWs of solar energy to meet the Building Block 3 energy calculation above, it could require up to 12,000 acres for solar panel installations, which is not a practical assumption. Commenters sta ted that, to provide 670 MW of wind generation in Kentucky, over 250 wind generators wo uld be required. Commenters stated that, as the EPA's IPM model only deployed 9 MW of wind gene ration in Kentucky, the balance of wind energy would have to be imported, triggering the ne ed for fully evaluating the transmission system capability.

Comment 44: Commenters expressed concerned regarding grid reli ability due to RE increases.

Response 44: The EPA addresses considerations related to the tec hnical feasibility and associated grid integration costs of significant RE penetration in both section V.E of the final rule preamble of the CPP and in chapter 4 of GHG Mi tigation Measures TSD supporting the final CPP. The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly the adop tion of a phase-in period from 2022 through 2023 that would enable appropriate time for investm ents and planning to accommodate an
increase in RE.

The following are summaries of the specific public comments under this comment:81

Commenters stated that wind, solar, and other renew ables can make up no more than roughly 20 percent of a given grid, with the exception of larg e scale hydro power. Commenters stated wind and solar are limited because (1) they're intermitt ent, requiring expensive back-up generation in order to adequately respond to fluctuations in dema nd; (2) there does not exist at this time any way to store solar or wind energy, and there are no practical technologies on the horizon; and (3), their generators must be located where the resource s are located, as opposed to the best location to put a generator, which translates to higher tran smission costs.

Commenters stated the EPA is overestimating the abi lity of electricity storage technologies and that it cannot be counted on to address reliability issues with RE sources. Commenters stated the EPA offers that electricity storage technologies ha ve the potential to enhance emission performance and provide generation during periods w hen intermittent wind and solar generation are unavailable due to natural conditions (79 FR 34 924). Commenters stated electricity storage technology has not advanced to a degree that it can be reliably considered. Commenters stated the DOE reports that "at present, the U.S. has abou t 24.6GW of grid storage, 95% of which is pumped storage hydro." [U.S. Department of Energy, Grid Energy Storage Report, December 2013.] Commenters stated DOE acknowledges "not ever y type of storage is suitable for every type of application, motivating the need for a port folio strategy for energy storage technology" and that there are "four challenges related to the widespread deployment of energy storage: cost of competitive energy storage technologies (includi ng manufacturing and grid integration), validated reliability & safety equitable regulatory environment, and industry acceptance." Commenters cited the following from DOE: "Industria l standards for grid storage are in their infancy. Industry acceptance could also gain ground when we reduce the uncertainty surrounding how storage technology is used, and monetized, at s cale. Ultimately, it will be the experience and real-world use of storage that will provide the con fidence and desire to expand installed storage."

Commenters stated that requiring the degree of RE p roposed for implementation in such a short time will undoubtedly create reliability issues. Co mmenters stated the EPA cannot promote energy storage as a viable option or demonstrated t echnology that is technically or economically
feasible to address the intermittent nature of RE. Commenters stated that, at this time, it is only technology such as simple cycle combustion turbines that can be counted on to reliably address
the intermittent nature of RE and these sources wil l increase CO 2 emissions compared to
renewable sources. Commenters stated this is a cons ideration that U.S. EPA has evidently not accounted for under this proposal.

Commenters stated that, while a municipal utility m ust be able to provide electricity 24/7, no renewables compete with the output of a coal plant operating 24/7 and no renewable options are currently demonstrated to be available and cost-eff ective, the commenters stated. Commenters stated that Florida has no major wind energy and pr actically no new hydroelectric power available. While the use of solar energy has potent ial and usage is increasing, large-scale solar has low potential, primarily due to limited capacit y (not available when the sun is not shining) and the large amount of land that is needed for the installation of solar panels, the commenters noted. Solar energy will continue to be of limited value until it is consistently available when the energy is needed and therefore dispatchable like ot her baseload generation, the commenters said. Commenters do not believe that solar energy will re place baseload generation until sometime well into the future when battery storage improves and is available for a reasonable cost.82

Commenters said that renewable resources should con tinue to be developed even though these resources will be limited by their inherent intermi ttent availability. Commenters asserted that
these natural and renewable resources should be dev eloped where feasible without creating a
financial burden to consumers. Commenters stated wh ile these renewable sources supplement conventional resources and reduce the consumption o f certain fuel driven generation, they cannot meet the on-demand response for electricity require d by the consumer. Therefore, the commenters said, more conventional baseline generat ion resources are going to be needed in the future to meet reliability standards.

Commenters said that, while renewable sources are a lready a significant component of the commenters' energy portfolio and will become even m ore so in near the future, replacing the generation currently provided by Eckert and Erickso n exclusively with renewables is not a viable option from either an economic or reliability stand point. Commenters said that, while renewable energy has been a prominent component of their comp any's energy portfolio for many years, its intermittent generation capacity, however, means th at renewable sources of energy cannot meet Lansing's energy demands.

Commenters indicated that the EPA fails to recogniz e that renewable generation is variable and, thus, not equivalent to fossil-fuel fired generatio n. According to the commenters, variable generation cannot be dispatched at controlled loads and, therefore, is not available for both stabilizing the grid for reliability purposes and a s capacity resources. Additionally, commenters added, re-dispatch to renewable generation would fu rther jeopardize reliability and grid stability.

Comment 45: Some commenters did not support a regional approac h for renewable energy based on state RPS requirements.

Response 45: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Meas ures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated the EPA's approach to calculating region-wide renewable energy targets is flawed because Indiana, North Dakota, and South Dak ota have renewable portfolio goals rather than renewable portfolio standards.

Commenters disagreed with the EPA approach of using an average of the region's existing renewable portfolio standards to calculate the feas ible level of renewable energy that could be expected from each state in the region. Commenters stated that, because the EPA used nonIndiana benchmarks to set Indiana's goal under Buil ding Block 3, the EPA incorrectly decided that state legislatures outside Indiana were qualif ied and able to correctly assess the future potential of Indiana's renewable energy sector when they were crafting policies for their own states. Commenters stated they were unaware of any feasibility assessment the EPA employed when the agency elected to treat the benchmarks con tained in existing renewable portfolio
standards as achievable at a reasonable cost. Comme nters stated it is important to note that83

simply because state legislatures in other Midweste rn states are attempting to facilitate the installation of a certain amount of renewable energ y in their states in the coming decades, success is not guaranteed. Commenters stated it is inappropriate to hold Indiana to an unproven standard decided by those other legislatures.

Commenters stated the EPA's regional approach fails to adequately address differences in renewable energy potential between similarly locate d States.

Commenters stated that EPA's proposal to base BSER in part on regional "best practice" targets that are based on some states' political decisions to adopt renewable portfolio standards (RPS) is arbitrary because it ignores the decisions of dozen s of states that have chosen not to adopt such standards. Commenters provided the example that in two of the regional "best practice" areas, the target 2030 level of renewable energy deploymen t was set by reference to a single state's RPS target. Commenters stated EPA provides no expla nation for why it has effectively disregarded the political judgments of the nearly 5 0% of states without RPS programs, while relying on the political judgments of states that h ave elected to adopt such programs. Commenters stated EPA's proposal does not evaluate the technical or economic feasibility of achieving the targeted levels of renewable energy d eployment in each state, and evaluation of the energy and economic feasibility of implementing eac h proposed "best system of emission reduction" is a statutory requirement of Section 11 1 (42 U.S.C. 7411(a)(1)). Commenters stated
that EPA's failure to evaluate the technical and ec onomic viability of EPA's renewable energy BSER building block is therefore inconsistent with the statute. Commenters stated EPA's use of regional average renewable energy targets applied t o individual states would displace the roles traditionally performed by state legislatures and r egulatory agencies, and it also conflicts with the Integrated Resource Plan processes that many state public utility commissions utilize for longterm planning of electric supply and demand resourc es. Commenters questioned whether Congress ever intended Section 111(d) to enable suc h a far-reaching expansion of EPA's regulatory authority under the Clean Air Act.

Commenters stated the EPA applies a regional approa ch which averages existing State RPS targets in a given region and then applies that ave rage target to each State in that region, based on the assumption that renewable energy opportuniti es are uniform within a region. Commenters stated the EPA's broad-based regional approach fail s to account for differences in renewable energy potential among States. Commenters stated th e mere fact that two States are in relative geographic proximity does not mean that they have t he same potential to produce renewable

energy.

Commenters stated that, if U.S. EPA is to rely on c urrent RPS programs in the states as "best practices" then U.S. EPA must take them at face val ue and allow those programs, as implemented in each state, to fully qualify for imp lementation under this proposal.

Commenters stated the EPA did not adequately consid er generation in its regional RPS calculations. Commenters provided a table with data compiled from the EIA Net Generation by State by Type of Producer by Energy Source (EIA-906 , EIA-920, and EIA-923) which shows RE generation data for each state in Ohio's region. Co mmenters noted the data show there is significant variation in the generation amongst the states, with three of the states, Ohio, Pennsylvania, and West Virginia producing 70% of th e regional total. Commenters stated that,84

from an RE perspective, two of the states in this r egion, West Virginia and Virginia, have determined that establishment of RE portfolios are not an economically feasible action for their state, yet both have renewable generation above New Jersey, Maryland, Delaware, and Washington D.C., which have highly ambitious 2020 R E RPS goals. Commenters expressed
concern that these non-RPS states were not somehow factored into U.S. EPA's averaging in setting RPS goals, thus giving great weight to stat es in the East-Central region with highly ambitious 2020 targets, but little or no real renew able generation.

Commenters stated it is arbitrary for the EPA to as sume that each state is capable of achieving similar levels of renewable energy generation as it s neighboring states. Commenters stated the EPA acknowledges that state RPS goals reflect polic y objectives including both feasibility and costs and not merely renewable energy potential. Co mmenters stated these policy objectives vary significantly from state to state within individual regions. Commenters stated the proposed regional approach is simply based on NERC regions a nd does not reflect similarities--or the lack thereof--between states based on renewable energy p otential. Commenters stated the EPA's failure to account for factors specific to each sta te's potential renewable energy generation leads to several inequitable and unreasonable results. Co mmenters stated that, for example, the renewable energy target for the entire ten-state So utheast region is based solely on North Carolina's 2020 RPS goal of 10 percent and assumes a renewable energy growth rate of 13 percent per year for each state.

Commenters stated the EPA arbitrarily grouped State s into regions based on NERC and RTOs, despite the fact that each States' renewable energy potential had no bearing on the establishment of these regions. Commenters stated the flaws in th is approach are apparent upon a review of the technical potential analysis the EPA references. Co mmenters stated that analysis shows that when comparing each States' combined solar, wind, a nd biomass potential, a 198 percent difference exists among the States in the Southeastregion. Commenters stated the flaws in Building Block 3 are further evidenced by EPA's inc onsistent choice to set differing Building Block 3 goals for States within the same region whi le claiming that those States contain similar renewable energy potential.

Commenters stated that setting state goals based on regional targets presents a number of problems as well. Commenters stated renewable energ y potential varies significantly within the regions EPA used; for example, Wisconsin has signif icantly less wind potential than does South Dakota, but both states are in the same region used by EPA to set the building block 3b goals. Commenters stated there is little logic in grouping such different states together in such an arbitrary manner. Commenters stated that grouping s tates together regionally in setting an RPSbased goal may further enhance differences among st ates and additionally "penalize" early adopting states that have high RPS goals. Commenter s asserted that States in regions that have taken early action via aggressive RPS standards wil l be required to achieve more in the future than they would have if they were in a region with less ambitious goals. Commenters stated such groupings create artificial differences among the g oals for the different states depending on the renewable policy decisions made by other states in their region.

Commenters stated by not accounting for the regiona l differences in power supplies, states are treated unfairly. Commenters stated the application of regional renewable energy in the development of the building blocks is an oversimpli fication of what is possible in different85

states. Commenters stated the consideration of both renewable energy and energy waste reduction should be considered on a state-specific basis considering technical and economic opportunities and limitations. Commenters stated Mi chigan has already done extensive work regarding the availability and practicality of expa nding in both sectors, and the commenters provided copies of those reports as appendices to t heir comments. Commenters stated substituting more generalized assumptions regarding Michigan's capability in place of carefullyexamined state data is not appropriate or wise.

Commenters did not agree with the EPA's proposed me thodology for renewable energy generation goals. Commenters stated that it is arbi trary for EPA to assume States can achieve similar RE within a region. Commenters stated renew able energy potential is state-specific and depends on the state's natural resources (e.g., sol ar insolation, wind speed, terrain, biomass resources, hydro availability, etc.), existing tran smission infrastructure, and current renewable energy development. Commenters stated that by ignor ing variances in state-by-state resource potential, EPA has taken a generalized approach to establish regional targets across the nation.

Commenters stated that averaging regional RPS targe ts is not representative for the Southeast. Commenters provided a discussion on why some states have not opted for an RPS and some states with an RPS have backed off ambitious target s due to cost and technical issues. Commenters suggested EPA should not set regional re newable targets based on renewable energy generation levels that have not yet been ach ieved but are only projected to be achieved in
the future. Commenters said that state renewable st andards are not proxies for a state's renewable generation potential, but are rather a policy choic e, just as new nuclear is a policy choice, made by each individual state with regard to the type an d amount of renewable energy they want to encourage within a specific cost range and timefram e. Commenters stated that EPA's methodology arbitrarily ties each state's goal to t he RPS goals of other nearby states, which often do not actually reflect each state's highly unique mix of renewable energy potential, and, as a result, the state renewable generation targets are overly aggressive and do not accurately represent actual growth potential in each state. Co mmenters provided a detailed discussion of the Southeast states, noting that seven of the eight st ates in the group do not have an RPS and as a
result North Carolina becomes the standard for the entire region. Commenters discussed that in Alabama, Georgia and Tennessee, industrial CHP sour ces burning wood or wood-derived products constitute over 90 percent of each state's 2012 RE generation that is used as its baseline, and these sources have little potential for growth. Commenters stated that this approach ignores whether or not states have the same ability to depl oy increased amounts of renewable generation. Commenters stated EPA's use of RPS requirements als o fails to consider key policy design elements of state RPS programs that serve to reduce the stringency of the standard. Commenters provided a discussion on the North Carolina RPS in relation to the rest of the Southeast region.
Commenters stated that if EPA moves forward with th is approach in the final rule, EPA must adjust RPS goals to reflect these policy design ele ments to acknowledge that RPS mandates usually require a lesser amount of in-state renewab le generation. Commenters noted that since it is responsible for serving all or portions of seven of the states in the Southeast, EPA's generalized approach for regional targets has a dir ect impact to its Block 3 target levels. Commenters provided additional information on the s tructure of TVA and its renewable energy goals for 2020.86

Commenters stated that the renewable energy generat ion goals that EPA has calculated for each
state are unachievable. Commenters stated EPA's met hodology for determining these goals is fatally flawed because it arbitrarily ties each sta te's goal to the RPS goals of other states, which often do not require as much renewable energy gener ation as they appear to and reflect each state's unique mix of renewable energy potential. C ommenters stated that EPA relied on state RPS goals that are based on capacity rather than ge neration, such as Kansas. Commenters stated EPA's renewable energy generation targets for some states are unreasonably aggressive and do not take into account factors affecting the actual renewable energy growth potential in each state. Commenters stated that even EPA's IPM modeling resu lts indicate that predicted renewable energy generation by the end of the compliance peri od will not come close to the renewable energy targets EPA used in its goal calculation. Ac cordingly, the commenters suggested EPA must withdraw the Proposed Guidelines and reduce it s renewable energy generation targets to
more realistic levels.

Commenters said that the EPA's approach to calculat ing states' renewable development potential also presents challenges. First, the commenters ass erted that the EPA's proposal to take a regional average of State Renewable Portfolio Stand ard ("RPS") targets and apply the average to all states in the region imposes the policies in on e State on its neighbors. It also in effect rewards states who have not adopted RPS targets, as their r egional average is lower, the commenters added. Indeed, regions of the country with the high est technical potential for developing renewable resources have some of the lowest targets for bringing those resources online, while states with relatively lower technical potential ar e faced with the highest targets in the country, the commenters noted. In New York, for example, the commenters said that the NREL study cited by EPA in its Alternate Approach finds New Yo rk has a technical potential to meet up to 5 percent of its electricity demand with renewable en ergy, while its target under EPA's proposed rule is five times that (at 25 percent), the commen ters stated.

Commenters stated the EPA's use of the state RPS re quirements in a region to calculate regional goals is illogical and flawed. Commenters said thatthe EPA does not adjust the RPS requirements which it applies to all generation in a state for the amount of load (consumption) in the state that is covered by that state's RPS. For a state that is net exporter of electricity, its RP S reflects at most the amount of in-state consumption that must be supplied by RE, and not the total generation in the state. This can have a prof ound effect in states like West Virginia or Wyoming which export more than half of their genera tion, the commenters said. Commenters stated it also means that net importing states bear less of the RE burden, which is effectively transferred to the states from which they import el ectricity. Commenters said that the EPA also does not adjust the state RPS targets to reflect th at fact that most states RPS requirements are not imposed on 100 percent of the load in the state. Co mmenters also said these values, which are
available in the "Database of State Incentives for Renewables& Efficiency," range from 10 percent to 100 percent and average approximately 80 percent. Commenters added that the EPA use of the state RPS requirements does not reflect the fact that many states have Alternative Compliance Payments or other penalty mechanisms tha t are available to the entities regulated under their RPS requirements. Commenters noted thatthe RPS programs in many states also allow importation of RE generated out of state, or the purchase of credits for actions in other states. Therefore, commenters stated the RE generat ion or consumption in a state may be significantly less than that implied by the RPS.87

Comment 46: Tribal and Territorial – Commenters opposed mandat ory regional application of RE goals.

Response 46: In the final rule, the EPA applies building block 3 generation at the interconnectlevel. This methodology does not distinguish betwe en affected sources or RE development opportunities within an interconnection, including those on tribal lands. For more detail on the building block 3 target generation methodology, ref er to section V.E of the final rule preamble of the CPP and chapter 4 of the GHG Mitigation Measure s TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

In comments on the tribal and territories SNPR, com menters stated that the Proposed Rule raises uncertainty about the ability to develop renewable projects on tribal lands that could be part of a state's renewable goal under Building Block 3 (79 F R 64551-2). Commenters stated that, although the use of regional renewable energy goals might address this (depending upon how they are applied), the Navajo Nation is opposed to mandatory regional application of RE goals. Commenters stated there is a simpler solution to th e problem: RE developed in one jurisdiction should be permitted to count toward another jurisdi ction's goals provided that they are not double-counted. Commenters stated that, in practice , jurisdictions could enter into agreements in what would effectively be optional regional RE prog rams. Commenters stated it would not be necessary for EPA to establish regional RE goals.

Comment 47: Commenters suggested use of a weighted average in the regional calculation based on state RPS requirements.

Response 47: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Meas ures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that, rather than treating each s tate equally, EPA should consider an electricity-generation weighted approach so that sm all States with lower generation levels can't cause such dramatic shifts in a region's renewable energy goal under block 3.

Commenters stated it is inappropriate that the ambi tious 2020 RPS targets of Maryland, Delaware, and Washington D.C were given equal weigh t in the averaging calculation, despite the
fact that these states contributed far less than 1% of the region's RE and only 7.6% of the region's total generation. Commenters stated that Washington D.C. has a highly ambitious renewable target, yet contributed no renewable generation to the grid in 2012. Commenters stated that, despite what U.S. EPA described as similar RE poten tials amongst the state in this region, it is
clear that these states share little in common with the other states in the region in terms of electric generation capabilities. Commenters stated that, if the EPA is to pursue regional88

averaging in setting renewable goals (which Ohio EP A does not agree with), a weighted average that takes into account the total generation contri bution of each state, the renewable contribution of each state, and accounts for the fact that sever al states found the creation of a renewable portfolio to be uneconomical must be developed. Com menters stated that, absent this, the current proposed methodology places great burden on those s tates which generate far more electricity, discounts those states with no renewable portfolios , and requires very little of those states with little generation capacity.

Comment 48: Commenters objected to the EPA's method for determ ining the average RPS requirements.

Response 48: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Meas ures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated the EPA incorrectly assumes that averaging the RPS requirements of the states in a given region actually reflects the full level of RE investment that is reasonably achievable for that region. Commenters stated, for example, the North Central region covers nine states and has an average RE percentage requirementfor 2020 of 15 percent, which is driven by the RPS requirements in five of these states: Illin ois, Michigan, Minnesota, Missouri, and
Wisconsin. Commenters stated that three of the four states that do not have RPS requirements (Iowa, North Dakota, and South Dakota) are among th e nation's leading states in onshore wind development, generating approximately 25, 15, and 2 4 percent (respectively) of their total instate electricity from wind in 2012. Commenters sta ted that, because there are no RPS requirements in Iowa and the Dakotas, the RE targetfor the North Central region does not reflect the robust performance of wind-generated electricit y in those states. Commenters stated that, while there is some merit to EPA's view that RPS po licies represent the judgment of state legislatures about what level of renewable energy d evelopment is feasible, this does not hold true for states without RPS policies, since zero RE is n ot a reasonable judgment as to the state's potential for economic RE.

Commenters objected to the EPA's method for determi ning the average RPS requirements. Commenters stated that, by relying on just a single state's RPS requirements to direct the renewable investment of nine states, EPA's approach largely entrenches the status quo rather than considering whether greater renewable penetrat ion is achievable. Commenters stated that, as another example, the Southeast has the lowest avera ge RE percentage requirement of only 10 percent, which is based on the RPS requirements of just one state: North Carolina. Commenters stated that, according to NRELs technical potential analysis, states in the Southeast region could generate over 30 million GWh annually from utility- scale solar stations. Commenters stated that, in 2012, these states generated just 348 GWh from s olar plants, a tiny fraction of their technical potential and less than .04 percent of the total el ectricity generated in these states. Commenters stated there are neither technological nor economic barriers to increased penetration of renewable89

resources in the Southeast market; rather, the prob lem is one of political will and inertia based on
decades of reliance on fossil fuels.

Commenters stated that, in calculating the regional target based on state RPS programs, EPA had
to decide how to handle the facts that different st ates have targets set for different years and that not all states have 2030 targets; however, the way that EPA chose to deal with this was arbitrarily conservative. Commenters stated the age ncy derived a "2020 effective RE Level" for each state RPS, interpolating for those states with out a specific target for 2020 and then established the average 2020 effective RE level for each region as the 2030 target for that region. Commenters stated the EPA effectively ignored the m any state RPS goals for the years beyond
2020 that are more ambitious than the "effective 20 20" targets. Commenters stated that, even if one were to accept EPA's rationale that the judgmen t of state's legislature is a proper estimate of the full level of RE achievable in that state, ther e is no reason to take the states average judgment
about what level is achievable in 2020 and make tha t a 2030 target.

Comment 49: Commenters suggested the EPA apply regional renewable targets to retail electric
sales.

Response 49: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Meas ures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that, if building block 3 targets were based on state retail electric sales rather than the physical location of generating resources, the problems identified with the renewable energy assumptions would vanish. Commenters stated the EPA already used retail sales data in the application of building block 4. Commenters sta ted changing building block 3 to a loadbased calculation would not dilute national emissio n reductions and would more closely align with existing RPS policies upon which the renewable assumptions are based. Commenters recommended keeping the regional renewable energy t argets the same - 21 percent in the west, 25 percent in the northeast, etc. - but the proposa l would apply those targets to 2012 retail
electric sales data for each state. Commenters stat ed the goal-setting calculation would assume that each state would meet half of its regional tar get by January 1, 2020, 75 percent of its target by January 1, 2025 and its entire regional target b y January 1, 2030. Commenters stated such a stair-step approach aligns with many RPS policies i n the country and reflects the fact that new renewable energy typically enters the grid in sizea ble chunks as a result of utility-scale projects. Commenters stated this approach would not assign ex isting renewable resources to any particular state for purposes of goal-setting and, as a resultthere would be no disruption of the existing REC trading system if states wanted to use it for c ompliance and no concerns about data errors in determining the physical location of the generating units.90

Comment 50: Commenters stated the EPA’s approach is flawed bec ause it does not include
states with no RPS in its calculations.

Response 50: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Meas ures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated the EPA's calculation of regional renewable energy goals is flawed because the average includes only values from states with R PS programs; states with no RPS (zero values) are excluded from the calculation. Commente rs stated this approach is defective and leads to illogical and discriminatory results impos ing greatly different and unjust requirements
on the individual states

Comment 51: Commenters objected to the use of a single state's RPS for all states in a region.

Response 51: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule.

The methodology that produces target generation lev els under building block 3 is described in detail in section V.E. of the final rule preamble o f the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Kansas--South Central

Commenters stated the only state in the South Centr al region with an RPS is Kansas, which is set to achieve a mix of 20% generation from renewables by the year 2020. Commenters stated that, in the absence of an RPS in the other five states, the proposed Rule extrapolated Kansas' RPS to all six states in the region, a move that gets ahea d of state regulators, state policy and law makers without regard to the achievability of such a stand ard. Commenters stated that compounding the RPS extrapolation error is the fact that Kansas' RP S of 20% is capacity based, not energy-based. Commenters stated the proposed Rule made an error u sing the capacity-based RPS value. Commenters stated the Arkansas Electric Cooperative Corporation (AECC) estimated the energy-based standard is closer to 12%. Commenters stated that, even if the intention is to rely on a single state's RPS to set a regional target (a n error in and of itself, in AECC's estimation), the South Central region's RPS should be no greater than 12%. Commenters stated the 20% capacity-based number for Arkansas equates to a ren ewable energy target in 2029 of 4,709 GWh, but given Kansas' RPS is actually 12%, Arkansas' re newable energy target in 2029 would be, at most, 2,872 GWh, a figure that is 60% lower than th e proposed Rule mandates.

Commenters stated that an additional error in the p roposed Rule is that it states that the average RPS within the region is applied across all states in the region. Commenters stated the proposed Rule simply applied Kansas' 20% RPS to all six stat es, without taking an average. Commenters91

stated the average of 20% applied to 6 states in th e region is 3.33% capacity-based or 2.0% energy-based; as opposed to 20% capacity-based or 1 2% energy-based. Commenters stated the correct mathematical calculation, for the purpose o f extrapolating and enforcing an RPS average across a region, is the aggregate renewable energy percentage (20% capacity-based, or 12% energy-based) divided by the number of states (6) i n the region. Commenters concluded the RPS standard set for the South Central region is wrong on its face, and even with corrections, is
unachievable.

Commenters stated the Kansas RPS is an improper bas is to establish region-wide standards.
Commenters stated the EPA failed to show that Kansa s 2020 RPS has been "adequately
demonstrated" for Texas or other states in the Sout h Central region. Commenters stated that, given the unique design, and its reliance on gross generation capacity rather than sales, Kansas'
RPS should not have been considered as a basis for other states. Commenters stated Kansas' RPS enacting legislation provides for clear reasons tha t its RPS should not be used as a model for other RPS. Commenters stated that the Kansas Corpor ation Commission has identified its RPS standards as a unique example; one that should not serve as a model for other states: "Kansas' standard differs from other state's renewable portf olio standards in that it is based on gross generation capacity rather than total retail sales. In general, the gross generation capacity is the amount owned or leased by a utility minus the auxil iary power used to operate the facility. The auxiliary power is determined by performing a test of each facility. If it is not practical to perform the test on any particular facility, the na meplate net capacity of the facility will be used."

Commenters stated Kansas' RPS provides numerous exc eptions and provisions not contemplated in the Rule Proposal that mitigate the ultimate imp act and burden of the RPS, including that an operator may purchase renewable energy credits ("RE C") and still comply with the RPS.

Commenters stated Kansas' RPS also excuses generato rs from paying a penalty under the law if the RPS would cause the "affected utility's total r evenue requirement to increase one percent or greater." Commenters stated this is a critical limi tation on the ultimate burden of the RPS; though Kansas sets the RPS at a very aggressive goa l, this provision serves as a backstop that the harm cannot be too great on Kansas' electricity con sumers. Commenters stated this type of backstop is not contemplated in the Rule Proposal, and makes the aggressive Kansas RPS an inappropriate measure for other states.

Commenters stated Kansas' capacity requirements can not be used to accurately establish a region's generation requirements, but this is what EPA has done. Commenters stated that, by using Kansas' 20% capacity target, and then applyin g it as a generation target (for example, imposing a 20% generation target in Texas), it is s ignificantly, and without basis, inflating the renewable generation target for Texas.

North Carolina--Southeast

Commenters stated the EPA wrongly assumes that the state of Alabama can increase its in-state renewable energy generation to a level that would s atisfy North Carolina's renewable energy and energy efficiency portfolio standard. Commenters st ated the EPA plainly ignores the compliance options of North Carolina's program, which are not limited to in-state renewable energy generation but include energy efficiency, demand re duction, and the utilization of out-of-state renewable energy credits. Commenters stated it is w rong for EPA to base its assumptions for92

Alabama's expected in-state renewable energy genera tion levels on a standard that was not limited to renewable generation alone. Commenters s tated the EPA's proposal assumes Alabama can add in-state generation from costly intermitten t renewable energy sources by over 415 percent. Commenters stated meeting such a level wou ld equate to the installation of over 5,000 megawatts of wind capacity, or 9,000 megawatts of s olar capacity. Commenters stated that renewable generation on these scales, in the state of Alabama, is not practically, technically, or economically feasible.

Commenters stated the EPA misapplied the State Rene wable Portfolio Standards (RPS) in developing regional goals. Commenters stated that, because North Carolina is the only State within the Southeast region with an RPS, EPA based its Southeast regional goal entirely on North Carolina's Renewable Energy and Energy Effici ency Portfolio Standard (REPS). Commenters stated that, in applying the North Carol ina REPS to the region as a whole, the EPA
failed to consider that the REPS allows the use of many additional resources and provides a number of off-ramps, which are not considered in de fining EPA's mandatory State emission goals. Commenters stated some of the resources allo wable under the REPS include demand-side management, energy efficiency measures, electricity demand reduction, existing hydro resources, credit multipliers for biomass, and out- of-State unbundled renewable energy credits.
Commenters stated the EPA excluded some of these re sources as methods for complying with Building Block 3, despite using the value of these methods to calculate the Building Block 3 goals. Commenters stated the EPA double counted the improvements that could be gained from other resources by including them in the goal compu tation for both Building Blocks 3 and 4. Commenters stated these errors resulted in a signif icantly more stringent goal for the Southeast region than can be achieved.

Commenters objected to the EPA's explicit exclusion of credit multipliers within a States' plan because it results in greater stringency of the Bui lding Block 3 goal. Commenters stated, for example, North Carolina's REPS allows triple creditfor the first 20 MW of biomass renewable energy generation capacity located within a certain area. Commenters stated the EPA failed to
take into account how the exclusion of credit multi pliers would affect the achievability of the State goals. Commenters stated North Carolina's REP S also permits the use of renewable energy
certificates derived from out-of-State renewable en ergy facilities to comply with REPS requirements. Commenters stated the EPA erred in no t reflecting the allowance for out-of-State energy credits in its Building Block 3 goals. Comme nters stated that, even if North Carolina's renewable potential were equivalent to Alabama's (i t is not), EPA cannot take only the numbers from the North Carolina REPS and ignore the critica l fine print.

Commenters stated that, because capacity factors fo r wind and solar vary widely across the Southeast region, the application of one state's go al to an entire region is arbitrary. Commenters objected to the application of a regional index aff ecting 8 states based on the goal established by one state's legislature, without analysis that such a number applies fairly to the other states. Commenters stated that South Carolina has, as have many southern states, some access to solar and wind, but far less than is available in other s tates, and noted that capacity factors for wind and solar vary widely across the region, thus the a pplication of one state's goal to an entire region is arbitrary.93

Commenters said that the EPA justifies the developm ent of state RE generation levels based on other states' RPS and judgments of feasibility and cost-effectiveness. Commenters stated that in their opinion this is clearly arbitrary. Regardless of the efficacy or validity of the NC RPS, it
cannot substitute for the reasoned deliberation of the proper RPS goals for a state by that state's officials, using that state's legislative, administ rative and judicial processes to derive the appropriate standards, the commenters asserted. Com menters stated that what works and may be appropriate for NC may be entirely unsuitable or ac ceptable for any other state, including any state in the southeast like Georgia.

Commenters said that North Carolina's plan does notrepresent the reasonable RE goal for the region (or perhaps even NC). Commenters explained t hat the standard is actually a Renewable Energy and Energy Efficiency Portfolio ("REEEP") St andard that, instead of being a mandate for NC utilities to generate a certain percentage of th eir electricity from renewable resources by a date certain, is a combined program for RE and EE w here regulated parties can use a combination of renewable generation, energy efficie ncy projects or reductions in electrical demand (Demand Side Management or "DSM") to meet th e standard. Commenters said that Public utilities are subject to a REEEP Standard th at increases from 3% of "retail sales" in 2012
to 12.5% of "retail sales" in 2021. Public utilitie s may use reduced energy consumption from the implementation of "Energy Efficiency Measures" (a d efined term that does not include DSM) to satisfy 25% - 40% of this requirement, and can use "Electricity Demand Reduction" to meet 100% of the requirement, the commenters added. All participants can meet 25% of their requirement with DSM, the commenters noted, and tha t amount grows to 40% for compliance after 2021. Commenters stated a utility could meet all of its requirements under this standard through electricity demand reduction or a combinati on of electricity demand reduction and energy efficiency measures, according to the commen ters. In addition, the statute authorizes the North Carolina Utilities Commission to delay or mod ify - in whole or in part - all of the substantive requirements of the NC REEEP Standards upon a showing that such action is in the "public interest," the commenters said. Commenters stated utilities need only to demonstrate they have made a reasonable effort to comply. Thus, the only mandatory RE requirements in the standards relate to minimum generation from solar p ower, swine and poultry waste, the commenters noted. The statute only requires that 0. 2% of total electrical generation come from solar power, with an additional 0.2% from swine was te, both by 2018 and that 900,000 MWh come from poultry waste by 2014, the commenters add itionally said. Commenters stated that this is hardly a hard-and-fast RPS established for NC ut ilities that the EPA can rely on to establish what it considers to be a "reasonable" RE goal for all states in the southeast - 10% of generation
from RE and an additional EE-based GHG emission red uction requirement of 10%. No southeastern state, including NC, has made a determ ination that these levels of reduction are appropriate, and NC's REEEP Standard does not suppo rt the EPA's arbitrary determinations, the
commenters asserted.

Commenters objected to the EPA's method for determi ning the average RPS requirements. Commenters stated that, by relying on just a single state's RPS requirements to direct the renewable investment of nine states, EPA's approach largely entrenches the status quo rather than considering whether greater renewable penetrat ion is achievable. Commenters stated that, as another example, the Southeast has the lowest avera ge RE percentage requirement of only 10 percent, which is based on the RPS requirements of just one state: North Carolina. Commenters stated that, according to NREL’s technical potentia l analysis, states in the Southeast region could94

generate over 30 million GWh annually from utility- scale solar stations. Commenters stated that, in 2012, these states generated just 348 GWh from s olar plants, a tiny fraction of their technical potential and less than .04 percent of the total el ectricity generated in these states. Commenters stated there are neither technological nor economic barriers to increased penetration of renewable resources in the Southeast market; rather, the prob lem is one of political will and inertia based on
decades of reliance on fossil fuels.

Commenters stated that the proposed methodology for renewables in Building Block 3 relies on the current population of renewable portfolio stand ards (RPS) by region, and that the Southeast is obviously the outlier among other regions, as on ly one of the eight states has an RPS. Commenters stated that states and utility companies utilize the clean energy resources that are technically and economically feasible in their geog raphic location in order to cost-effectively provide electricity to their customers, while meeti ng federal and state environmental requirements. Commenters stated that an understandi ng of the regional resource potential of energy sources is critical to crafting sound energy policy. Commenters stated that States and utilities have made decisions to invest in generati on assets commensurate with the technical and economic feasibility in their region, and the 2012 generation baseline included in the proposed
rule is a result of those decisions. Commenters sta ted that according to the EIA, the source of state generation by fuel source data used in the pr oposed rule, the 2012 non-hydro renewable generation in the Southeast is 98% biomass and most ly from industrial Combined Heat and Power (CHP), noting that it is uncertain what contr ibution biomass-fueled generation may be
able to have in the future. Commenters also stated that the wind and solar capacity that has been added in the Southeast comes at a higher cost than other non-emitting options because of high capital costs and reduced capacity factors and ther efore these resources are not ripe for widespread deployment in the Southeast.

Commenters stated that, while the EPA has effective ly assumed that, in the Southeast region one state's particular political decision to adopt an R PS represents a meaningful estimate of the "feasibility and cost of the best practices scenari o" (79 FR 34867), the EPA's approach is arbitrary and unreasonable for at least two reasons . Commenters stated that, first, the EPA has provided no evidence that North Carolina's decision to pass an RPS for the state was in any way informed by or predicated on an assessment of the a ctual feasibility of generating that level of
RE in the state. Commenters stated that North Carol ina's decision could have been due to a combination of factors, including the state's polit ical ideology and history, the income level of electricity consumers, the presence of RE manufactu rers in the state, and a host of other factors other than the availability of resources. Commenter s stated the EPA points to no evidence that supports its assertion that the North Carolina stat e legislature adequately considered whether the levels of RE prescribed by the state's RPS would be achievable given cost and resource
constraints.

Commenters objected to the use of a single state's RPS to set a region's RPS target. Commenters
stated that North Carolina's RPS is in fact an RE a nd EE portfolio standard that allows affected utilities to comply with the standard with many mea sures that do not qualify as RE in EPA's Proposed Rule. Commenters stated these include solar water heating, electricity demand reduction, and energy efficiency, as well as combin ed heat and power systems powered by nonrenewable fuels and existing hydropower. Commenters stated that, as NERC points out in a recent assessment of the reliability impacts of the Proposed Rule, if the EE component of North95

Carolina's RPS program is excluded (as it should be ), the state's effective renewables target would be only 7.5%. Commenters stated that addition al evidence that North Carolina's RPS is not based on an assessment of the feasibility for i n-state generation at the level of the RPS includes the ability for electricity suppliers to m eet 25% of the standard with the use of RECs imported from outside the state.

Commenters said that the South Central Region (of w hich Texas is part) is one of two regions the EPA has identified that has set RE targets base d solely on a single state's RPS

. For the South Central Region, the EPA projects onto the other sta tes in that region, including Texas, a target based only on the 2020 RPS goal of Kansas. The EPA assumes that Texas can meet targets based on this single RPS and ignores the fact that other states in that Region, including Texas, have different renewable generation potentials, the comm enters noted. Commenters stated that in their opinion, the EPA provides no explanation of why it assumes that the Kansas RPS is achievable in Texas (or other states in this region). In addit ion, the commenters asserted this model would require the application of the Kansas RPS and inves tment in RE resources within Texas no matter how inefficient and costly they could be. Co mmenters stated this application of the Kansas RPS onto Texas is irrational and arbitrary, and is not "adequately demonstrated" in
Texas.

Commenters said that the EPA grouped states togethe r into six regions for determining state renewable energy goals. However, the commenters sai d states within the same region can and do have very different solar or wind potential. For ex ample, the commenters indicated that Louisiana and Kansas have dramatically different wi nd resource potential, but are included in the same region. Specifically, data from NREL indicates that, based on 2012 values, Kansas has 7.8 times and 10.5 times more potential capacity and ge neration, respectively, than Louisiana, the commenters noted. Commenters stated the EPA's propo sal to assign Louisiana the same renewable energy goal as Kansas, given the known di fferences in their wind resource potential,
is unreasonable.

Comment 52: Commenters stated that the most troubling aspect o f applying the Kansas RPS to Texas is that Texas has an RPS that has already bee n fully implemented.

Response 52: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Meas ures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters said that the State of Texas has already determined what the best approach is for their state to increase renewable energy generation and has fully implemented both the mandated as well as voluntary increases in RE generation und er that program. Commenters stated that imposing an additional target based on another stat e's RPS the EPA unfairly penalizes - or said another way, overburdens - Texas for acting early t o develop and implement an RPS. If the rule is promulgated as proposed, the EPA will require su bstantially more RE development from Texas, over and above what has been accomplished, w hile significantly less will be required for96

other states that have not yet put the effort that Texas has into developing RE resources, the commenters said. The flaw of simply applying anothe r state's RPS across an entire region is further compounded for Texas, because EPA did not e ven consider or account for the efforts Texas has made to increase RE, the commenters concl uded.

In 1999, the Public Utility Commission of Texas (PU CT) adopted a rule, Goal for Renewable Energy, that sets the state's RPS based on a bill enacted b y the Legislature as part of restructuring in Texas, the commenters said. The Texas RPS mandat es the installation of 5,000 MW of new renewables by 2015 and set a target of 10,000 MW of renewable energy capacity by 2025, according to the commenters. According to the annua l compliance report prepared by the ERCOT, the program administrator for the Texas Rene wable Energy Credit Trading Program, Texas surpassed its 2025 target in 2009 and had 13, 359 MW of renewable energy capacity (of which more than 12,000 MW was wind) in 2013 relativ e to 1999, commenters indicated. The RPS applies to "retail entities" in Texas: investor -owned utilities that have not unbundled, retail electric providers in deregulated areas, and munici pal utilities and electric cooperatives that offer customer choice, the commenters noted. Each retail entity in Texas is allocated a share of the mandate based on that retailers pro rata share of s tatewide retail energy sales, the commenters said. Commenters explained that the program adminis trator allocates RPS requirements among retail entities by dividing each entity's total ret ail energy sales in Texas by the total retail sales in Texas of all retail entities, and multiplying that percentage by the total statewide RPS requirement for that compliance period. Commenters said that the RPS includes a voluntary target of 500 MW of renewable energy capacity from resources other than wind by 2015. The commenters explained even though the PUCT has the a uthority to establish alternative compliance payments, the PUCT has declined to do so , meaning that the 500 MW target remains voluntary. The PUCT does award a "compliance premiu m" for each non-wind Renewable Energy Credit (REC) generated after December 31, 20 07 (see below regarding the Texas REC program), the commenters noted. Compliance premiums are the functional equivalent of a REC for RPS compliance purposes and may only be awarded to non-wind facilities that were installed and certified by the PUCT after September 1, 2005, commenters added. This method effectively doubles the compliance value of electricity generat ed by renewable resources other than wind,
the commenters said. Commenters said that the PUCT also established a REC trading program that began in July 2001 and will continue through 2 019. For each megawatt-hour (MWh) of qualified renewable energy that is metered and veri fied in Texas, one (1) REC is earned, the commenters explained. A retail entity must annually retire one (1) REC for each one (1) MWh requirement it has, the commenters added. Also, the commenters indicated that an administrative penalty of $50 per MWh has been established for pro viders that do not meet the RPS requirements.

Comment 53: Commenters did not support the alternative approac hes.

Response 53: IPM projections are not the basis for building blo ck 3 target generation levels expressed in the final methodology. Specific to sev eral comments, the IPM projections supporting the technical feasibility and cost-effec tiveness of building block 3 are no longer constrained by the application of the benchmark dev elopment limiter described under the Alternative RE approach at proposal. The final met hodology is described in detail in section97

V.Eof the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that, recognizing that RPSs have historically been significant drivers for RE development, the proposed RE approach (based on a r egion's average RPS) is more appropriate than any of the alternative approaches as described in the "Alternate RE Approach" technical support document and the NODA.

Commenters stated that an adjustment to the propose d approach should also take into account the secondary (and even tertiary) standards which many states have. Commenters stated that using technical RE potential does not take into account e conomic constraints or projected needs for new capacity. Commenters stated the fact that a few states have a high development rate compared to technical potential does not mean that the same level of development is feasible in
all states. Commenters stated the conditions surrou nding the development in those leading states may be very different from the conditions in other states. Commenters stated the technical potential basis described in Option 1 of this techn ical support document creates tremendous burdens for some states, including New Mexico, whil e barely affecting other states. Commenters stated that using Option 1 would require that by 20 30 New Mexico's RE goal would represent 73% of total electricity sales. Commenters stated t his is not remotely possible for New Mexico.

Comment 54: Commenters objected to the EPA's use of capacity-b ased RPS.

Response 54 : State RPS requirements are not a factor in quanti fying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Meas ures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated the EPA's calculation of regional renewable energy goals is flawed because some state RPS are designed as capacity (MW) only s tandards, yet EPA assumes that these are energy (MWh) produced standards in their goal calcu lations.

Commenters stated that the EPA states that it uses only energy-based RPS standards in assigning targets. Commenters stated that, because Kansas has a capacity-based RPS, Kansas was assigned the South Central Region's average target of 20% of generation as a default. Commenters stated that, besides Kansas, Texas has the only other RPS target in the South Central Region and, like Kansas, Texas' RPS target is capacity-based. Commen ters stated that, because no other states in the region have RPS standards, the EPA had no energ y-based RPS targets in the region that could establish an energy-based target for the regi on. Thus, the EPA used an arbitrary energybased RPS target of 20% for Kansas and the rest of the South Central Region. Commenters stated the Kansas Corporation Commission (KCC) esti mated the amount of renewable energy that would count toward Kansas abatement using the Kansas RES standard of 20% of capacity. Commenters stated capacity is determined by taking the average peak demand from the previous98

three years and, currently, the average peak demand is about 1,750 MW and is growing slowly. Commenters stated an extremely optimistic estimate of 20% of peak demand in 2030 would be 1,900 MW. Commenters stated that, while Kansas's wi nd resources are excellent, the best generation sites have been taken for the most part, therefore, a realistic assumption is that
renewable resources that count toward the RES would have a capacity factor of 35%. Given both of these assumptions, Commenters stated the KCC's e stimate of the renewable generation that would count toward Kansas abatement would be 5,825, 400 MWhs and, with these estimates, the Kansas GHG goal is 1,950 lbs./MWh.

Similarly, commenters stated that the EPA also impr operly extracts the Kansas numeric standard without applying the other determinates in the Kans as RPS statute. Commenters stated that in their opinion, the most obvious problem is that whi le the EPA RE target is based on additional

energy generation to replace fossil-fuel generation, the Kansas RPS is based on increasing

RE capacity . Capacity provides power at all times, while gener ation is only available when fuel (i.e. wind) is available to produce power, the comm enters said, and added that the two are not comparable. In addition, the commenters said that t he Kansas RPS counts renewables that the EPA does not, specifically hydropower. The Kansas R PS also allows subject utilities to satisfy the RPS by entering into contracts to purchase powe r generated from renewable sources in other states, the commenters added. Finally, those entiti es that are subject to the Kansas RPS and the Existing Unit NSPS are not the same, the commenters noted. As a separate issue, the commenters also said that there is a significant fl aw in mandating generation as opposed to capacity to attain the state targets in Building Bl ock 3. Mandating generation does not recognize the reality that wind is inherently unpredictable a nd intermittent, and ultimately entities cannot control how often the wind blows (i.e., wind genera tion), the commenters said.

Commenters said that in developing Building Block 3 , the EPA arbitrarily grouped states into six designated regions and set targets for the use of R E sources based on the assumption that each state can evolve to meet the average level of RE us e in its region. Oklahoma, Texas, Louisiana, Arkansas, Kansas, and Nebraska are grouped together in the "South Central Region," yet significant differences in energy generation strate gies exist across those states that render Building Block 3 an arbitrary, meaningless and impr actical method for reducing CO2 emissions,
the commenters said.

Commenters added that the EPA's 20 percent renewabl e-use goal that the Proposed Rule applies to all states in the region mirrors Kansas's renewa ble energy standard ("RES"). However, the EPA does not appear to recognize that Kansas' RES g oal is based on peak demand capacity (measured in MW) since Block 3 imposes state target s based on net electricity generation (measured in MWh), the commenters asserted. Capacit y (MW) and generation (MWh) are two very different values: generation-based targets wil l require higher amounts of capacity to meet a targeted generation given that wind turbines have a n operational capacity factor (annually) that is less than 100 percent, the commenters added. Wind i n Oklahoma generally operates at about a 40 percent capacity factor, which means that achiev ing a generation-based target as set in Block 3 requires two and half times the actual turbine in frastructure, the commenters further said. Consistent and predictable correlations between ren ewable capacity (MW) and renewable utilization (MWh) are challenging in developing an enforceable compliance plan among utilities,
the commenters concluded.99

Comment 55: Commenters generally supported the alternative app roach.

Response 55: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the r emoval of the technical potential limiter. The final methodology is described in section V.E of th e final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD suppor ting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters further added that the EPA also invites comment on an alternative approach to quantification of the renewable generation to suppo rt the BSER. Unlike the proposed RE scenario that relies on a regional application of s tate RPS commitments, the alternative approach relies on a state-by-state assessment of RE technic al and market potential, the commenters noted. In general, the commenters supported the EPA's prop osed alternative approach. Recognizing that states, even within a single region, have differenttechnical and market potential considerations when implementing new renewable generation resource s is an important concept for use in section 111(d) state plans, the commenters added. C ommenters asserted that this approach would be more representative of actual state conditions t han the approach formally proposed in the rule. The EPA should not mandate (or adopt any approach t hat effectively forces) states to include renewable energy development in state 111(d) plans, the commenters stated.

The commenters added that, however, using an averag e development rate based on the top third (16) states as a benchmark utilizes an unsupported analytical methodology. Commenters asserted the EPA should use appropriate state feasibility/po tential studies and apply market potential using robust modeling (such as IPM) to determine re asonably achievable RE generation targets for computing an alternative and more representativ e set of goals for each state. Commenters recommended, however, that the EPA consider using a ctual feasible potential hydropower for each state as the basis for calculating the targete d total renewable generation, as opposed to the greater of the calculated average development rate and each state's 2012 conventional hydroelectric generation. In the Alternative RE App roach TSD, the EPA states that the IPM model was not configured to recognize the estimated costs and market impact of new hydropower resources, the commenters noted. The current method, using 2012 hydropower generation levels, as a basis for potential new hyd ropower development is a significant modeling deficiency, the commenters added. Commenters stated that in their opinion, this method assumes that the cost, performance and resource ava ilability of existing resources is comparable to new small hydro and low power hydro as outlined in the U.S. Department of Energy's hydropower feasibility assessments. Commenters stat ed the EPA should consider configuring the
IPM model to utilize the estimate costs and market impact as well as feasibility for these new potential hydro resources for each state. Commenter s concluded that if such modeling enhancements are not undertaken, the EPA should inc lude the alternate approach to setting a renewable target in the final rule and compute an a lternative set of goals for each state.

Comment 56: Commenters supported a cap on in-state RE generati on.100

Response 56: The EPA has adopted a regional approach to buildin g block 3 that obviates the need for a state-level cap on RE.

The following are summaries of the specific public comments under this comment:

Commenters supported the EPA's proposal (79 FR 3486 8) to cap the amount of new renewable electricity generation assumed in in each state's b uilding block #3 target so that the new renewable electricity generation target in building block #3 does not exceed the electricity generation from the existing affected EGUs in the s tate. Commenters stated that placing a cap on new renewable energy generation in a state will hel p ensure that EPA does not set renewable energy targets for states that cannot be supported by the state's electricity grid.

Comment 57: Commenters stated it is imperative for building bl ock #3 that the EPA rely upon renewable electricity generation for reporting comp liance with the interim and final emission targets rather than renewable electricity consumpti on.

Response 57 : Building block 3 is quantified and expressed in t erms of renewable generation, not consumption.

The following are summaries of the specific public comments under this comment:

Commenters stated the EPA's 111(d) draft rule uses renewable electricity generation, not consumption (or any metric of renewable energy cred its (RECs)), for creating the 2012 baseline renewable electricity figures. Commenters stated th ese generation-based figures are then extrapolated to create each state's interim and fin al building block #3 targets. Commenters stated it is important that EPA recognize that renewable e lectricity generation and consumption are not
the same for states because of the interstate trade in renewable electricity. Commenters stated some states are net importers of renewable electric ity while others, such as Montana, are net exporters. Commenters stated the method for states to comply with the targets should reflect the method for setting the targets; i.e., states should be able to use renewable electricity generation to meet the generation-based target. Commenters stated that, if EPA intends to rely on renewable electricity consumption for compliance, consumption -based targets should be set.

Commenters stated a further reason for using renewable electricity generation rather than consumption in calculating building block #3 and in demonstrating compliance with the interim and final emission targets is that the location whe re renewable electricity is generated is easier to track than where it is consumed and will provide EP A with larger CO2 emission reduction figures than using state-specific renewable electri city consumption figures. Commenters stated the U.S. Energy Information Administration (EIA) ha s very complete and exact data on where renewable generation is located, so tracking the lo cation of renewable generation is very easy. In contrast, Commenters stated total U.S. renewable el ectricity consumption that is attributable to any one state is, in reality, significantly less th an total renewable electricity generation for several reasons. Commenters stated that, according to the National Renewable Energy Laboratory (NREL), 48.6 million MWh of renewable el ectricity were voluntarily consumed by residential, commercial, and industrial customers i n 2012, but only a portion of this voluntary renewable electricity consumption, roughly a third, was attributable to any one state.101

Commenters stated that approximately 30 million MWh of renewable electricity consumption, 15% of the total renewable electricity generation i n the country in 2012, likely was not attributable to a particular state even though it w as officially "consumed." Commenters stated much of this discrepancy is because of the unbundle d REC purchases of large corporations intended to meet a portion of their total corporate electricity consumption that span many states. Commenters stated millions of MWh of RECs generated in 2012 are likely to have gone unsold during the year as total renewable electricity gene ration exceeded 218 million MWh in 2012 but compliance and voluntary renewable electricity markets combined totaled less than 135 million MWh, leaving 83 million MWh of renewable el ectricity generation unaccounted.
Commenters stated some of this 83 million MWh likel y was purchased and "consumed" by electricity providers that are not subject to state RPS regulations but millions of MWh of RECs were also likely banked by electricity providers an d REC brokers for RPS compliance or sale in future years. Commenters stated that, as a result, neither the states, EPA, nor the US Department of Energy have an accurate accounting for how many MWh of renewable electricity were officially "consumed" in 2012, both nationally and for individual states. Commenters stated that, without knowing exactly what renewable electricity consumption in each state was in 2012, EPA lacks a firm basis for projecting what achievable l evels of renewable electricity consumption will
be for each state between 2020 and 2030. Commenters stated REC markets can be complicated as some electricity consumers buy and consume energ y bundled with RECs, others just buy the RECs while consuming other electricity, while other s buy the RECs in order to retire them without any electricity consumption (such as enviro nmental groups). Commenters stated this could lead to many difficult challenges in tracking RECs and determining which states have
claim to the avoided carbon emissions associated wi th them.

Commenters stated that, even if it is assumed that EPA could effectively quantify a baseline for renewable electricity consumption in each state, ev ery state's building block #3 target will need to be recalculated if EPA continues to rely upon re newable electricity consumption for compliance in the final rule instead of generation. Commenters stated the reason for this is to account for the discrepancy between each state's re newable electricity generation and consumption. Commenters stated the national total a mount of reported renewable electricity in
2012 will have to be revised downward to account fo r the disparity between reported 2012 renewable electricity generation and 2012 renewable electricity consumption. Commenters stated the smaller baseline 2012 renewable electricity con sumption figures for the states will result in smaller 2020-2030 renewable electricity consumption figures and a smaller reported reduction in total CO2 emissions for building block #3 (unless E PA also increases its renewable electricity growth assumptions).

Comment 58 : Commenters expressed concern regarding what RE ge neration qualifies for compliance purposes.

Response 58 : Incremental generation from each of the RE techno logies under building block 3

• utility-scale solar PV, concentrating solar power, onshore wind, geothermal, and hydropower102 • are fully creditable under compliance. Refer to se ction V.A. of the final rule preamble of the CPP for additional detail on the us e of non-BSER measures to achieve standards of performance.

The following are summaries of the specific public comments under this comment:

Commenters recommended that the EPA provide additio nal guidance to states on RE eligibility such that states may determine the extent to which existing RPS eligibility standards align with 111(d) eligibility standards and therefore prospect ive and historical eligible reductions from RPS programs. Commenters stated that, currently, states can review EPA's state goal calculations and cost expectations to get a sense of what features a nd stipulations for RPS and other REC-based compliance measures will be needed to meet EPA's co st expectations, but the EPA should consider providing baseline qualifications for RE u sed in a state plan, including banking, age of facility, resource types, sourcing, use of unbundle d RECs, etc.

Commenters stated the EPA must assure states that e xisting RPS programs and any such new programs can be fully utilized in state 111(d) plan s to meet CO2 reduction goals including waste-to-energy. Commenters stated the EPA must ass ure states that existing RPS programs and any such new programs can be fully utilized in stat e 111(d) plans to meet CO2 reduction goals including renewable energy credit qualification and accounting these programs afford.
Commenters stated this will ensure the full benefitor credit of renewable energy including waste-to-energy (WTE) can be used in state plans. C ommenters stated this will not only maintain alignment with existing state RPS programs, but als o with Federal statutes and policies that already provide WTE the full renewable energy benef it or credit including Section 45 of the federal renewable energy production tax credit legi slation. Commenters stated EPA confirmation that State RPS programs can be included in 111(d) s tate plans would ensure WTE continued ability to compete in wholesale markets against oth er renewable sources of electricity and provide needed flexibility required for states to a chieve their CO2 emission performance goals while minimizing electricity cost impacts when 111( d) plans are implemented. Commenters stated WTE facilities play a vital role in solid wa ste management but in many areas operate in extremely challenging markets for waste disposal an d electricity (dominated by inexpensive natural gas). Commenters stated inclusion of WTE in 111(d) plans and full credit for its power generation ensure WTE facilities will continue in t heir vital waste management role while playing a major role in reducing CO2 emissions in t he Power Plant sector to help states and EPA reach the performance goals. Commenters stated that , with more than 63% of the nation's waste being landfilled, there are many opportunities to d eploy new WTE facilities as landfill diversion targets increase in, industry and cities and munici palities. Inclusion of WTE in 111(d) will ensure the viability of WTE in renewable power generation and solid waste management.

Commenters stated the EPA should calculate the goal in a manner that is consistent with recognized compliance measures. Commenters stated t hat, as currently drafted, the EPA appears to have calculated the goal on the basis of statewi de renewables (in 2002 and 2012); however, these projects are not all interconnected with affe cted EGUs and therefore would not qualify as standards of performance "for" affected stationary sources. Commenters stated that, if the rule is applied to Alaska, while EPA cannot require off-gri d projects, the EPA should allow states to
count the carbon dioxide emission reductions achiev ed in rural locations (not interconnected with103

an affected EGU) towards compliance. Commenters sta ted this principle applies to both the RE and EE building blocks and is discussed below as an in-state renewable energy credit (REC).

Commenters stated Alaska should receive credit for renewable projects that came online between 2012 and June 18, 2014. Commenters noted the EPA st ates that State Plans cannot claim credit for reductions in CO2 emissions resulting from pre- existing programs, measures etc. unless the "action" leading to the reduction took place after the date of the proposal - June 18, 2014. Commenters stated the EPA takes the position that t his provision "would not apply to existing renewable energy requirements, programs and measure s because existing renewable energy generation prior to the date of the proposal of the emission guidelines was factored into the statespecific CO2 goals as a part of building block 3." Commenters stated the proposed regulatory language creates an ambiguity that would be signifi cant to the State of Alaska: Eva Creek Wind commenced generation in 2013; if the final rule is applied to Alaska, EPA should clarify that all RE projects that commenced generation between Decem ber 31, 2012 and June 18, 2014 may also count toward state compliance.

Commenters supported the position that new and incr emental hydroelectric generation may be credited to compliance. Commenters stated there is some ambiguity in the materials overall and requested an unambiguous statement regarding how hy droelectric will be treated if the proposal advances. Commenters asked the EPA to clarify that new renewable hydroelectric generation, and upgrades to existing hydroelectric generation, would be a qualifying adjustment to the state's
emission rate.

Commenters stated the EPA should also credit states with actions taken to replace hydroelectric generation capacity lost because of federal permitt ing requirements. Commenters stated that, for example, the generation capacity of Chugach's Coope r Lake Hydroelectric project will be reduced substantially, by about 50%, due to a FERC relicensing requirement to divert water for fisheries restoration; to offset this loss, Chugach and the state have invested substantial funds to divert another stream, Stetson Creek, into Cooper L ake. Commenters stated the full measure of generation capacity made possible by the Stetson Cr eek diversion should be treated as an incremental gain (even to the extent it replaces th e incremental loss).

Commenters stated the EPA should also allow complia nce credits for actions that make more renewable generation available to offset generation from "affected EGUs." Commenters stated that, for example, the amount of Bradley Lake hydro electric power that can move north to the Anchorage and Fairbanks load centers is limited by the capacity of the transmission lines; any future upgrades to the transmission system that all ow generation at "affected EGUs" to be replaced by renewable (or less carbon intensive) ge neration should be credited against emission
target.

Commenters stated the EPA should also allow complia nce credit for electric generation from landfill gas. Commenters stated that using landfill methane for electric generation captures significant efficiencies and reduces overall GHG em issions.

Commenters stated that upgraded hydroelectric gener ation which occurs after the baseline period should be included in state compliance demonstratio ns. Commenters stated the EPA failed to consider all zero carbon emitting resources availab le in Kentucky with the exclusion of new or104

upgrades hydroelectric energy. Commenters stated th at, in this case, hydroelectric energy resources operated by LKE are first to dispatch whe n available and thus would off-set fossil
emissions.

Comment 59: Commenters agreed that existing measures should be allowed to count during the compliance period.

Response 59 : In the final methodology, building block 3 is qua ntified as RE incremental to the BSER data year of 2012. The standards of performanc e reflect this adjustment to incremental RE from total RE, which is more consistent with the co ncept of replacing affected source generation.

The following are summaries of the specific public comments under this comment:

Commenters supported the EPA proposal to allow exis ting solar measures to count towards compliance, but requested that EPA provide clear gu idance on this in the final rule. Commenters interpreted the EPA's proposal regarding existing m easures to mean that state measures which exist after the June 18, 2014 proposal date can be used to drive emissions reductions during the compliance period (2020-2030). However, commenters stated that because building block 3 was factored into determination of the state goals, exi sting renewable energy measures and actions can count if implemented prior to June 18 2014. The refore, commenters stated that the MWh from renewable energy capacity installed pursuant t o an existing measure or program any time prior to 2020 can be counted towards compliance dur ing the compliance period (2020-2030) if the existing measure is included in a state's imple mentation plan. Commenters provided, for example, if 1000 MW of solar capacity was installed in 2013 pursuant to an RPS and the state includes the RPS in its compliance plan, then emiss ions displaced by MWh from the 1000 MW of solar capacity during the compliance period (202 0-2030) can count towards the state's 111(d) compliance requirements in that period.

Commenters agreed that existing measures should be allowed to count during the compliance period, and can help states meet interim compliance goals set forth in the original proposal.
Commenters stated that this is consistent with EPA' s interpretation of the BSER as including measures taken by states to reduce emissions across the electric system. Further, commenters stated that this is consistent with the cooperative model promoted by Section 111(d) and the Clean Air Act, which provides states with significa nt flexibility in determining the best method for reducing emissions. Commenters noted that allow ing states to count existing measures towards compliance recognizes the investment alread y made by states towards emission reduction, and will allow states to carry forward p rograms that are in motion without distorting
current markets.

Commenters noted that during the comment period the re has been significant confusion regarding exactly which existing renewable energy m easures can be counted towards compliance and when credit will be given. Commenters stated th at this confusion is already threatening potential emission reductions by slowing project de velopment because states and EGUs are uncertain which actions will count towards complian ce, and when these actions can count. Therefore, while commenters supported the proposal put forth by the EPA as interpreted above,105

commenters requested that in the final rule the EPA more clearly state which actions can count towards compliance and when such actions count.

Commenters stated the renewables target should cont inue to include existing renewable resources and existing renewables must continue to count for compliance with state emission goals. Commenters supported the EPA's proposed appr oach of including existing non-hydro renewable generation in its calculation of each sta te's base-year emissions and allowing states to include existing renewables for compliance purposes beginning in 2020. Commenters stated this approach appropriately recognizes states like Nevad a with a long history supporting the installation of renewable energy. Commenters stated that, regardless of the reason for development, renewable energy generation achieves m eaningful greenhouse gas emissions reductions by augmenting or displacing more carbon- intensive resources. Commenters stated excluding existing renewables would result in signi ficantly increased costs and would exacerbate many issues raised herein related to increased pene tration of renewables and the need to develop
new resources in accordance with demand. Commenters stated it is therefore critically important that EPA retain in its final rule the flexibility f or states to utilize existing renewable resources f or compliance purposes.

Comment 60: Commenters asked for guidance regarding non-ratepa yer compliance options.

Response 60: The use of non-BSER measures, such as energy effic iency and distributed generation, to achieve standards of performance is described in detail in section V.A of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that while EPA's draft rule encou rages the use of energy efficiency and renewable energy as compliance options, it provides little guidance and limited support for the inclusion of non-ratepayer compliance options opera ted outside of conventional investor-owned utility programs overseen by state public utility c ommissions.

Commenters expressed concern that in not adequately addressing these options, the EPA is making it difficult for states to recognize emissio ns reductions resulting from the billions of dollars in annual energy investments in energy effi ciency and renewable energy investments made by municipally-owned electric utilities and co operatively owned utilities. Commenters stated that in just one such example, the Austin, T exas City Council approved Austin Energy's investment to achieve 800 MW of energy efficiency a nd 200 MW of solar over the next several

years.

Comment 61: Commenters expressed concern that a state's renewable potential is calculated using widely-recognized renewable generation source s such as biomass and hydropower, but
EPA does not allow these and other sources to be us ed for compliance.106

Response 61: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, in which the only RE technologies used to set the standards of performance are eligible for compliance. The final methodology is described in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP and the use of non-BSER me asures to achieve standards of performance, such as biomass, is described in secti on V.A of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated the shortcomings in the renewable assumptions are multiplied by determining a state's renewable potential using wid ely-recognized renewable generation sources such as biomass and hydropower, but EPA does not al low these and other sources to be used for compliance. Commenters requested that the renewable provisions in Building Block 3 be revised to: (1) confirm that biomass is a renewable resourc e eligible for compliance and (2) revise state goals to exclude from the standard-setting those re newable resources that are not eligible for compliance.

Commenters stated that, while there are a wide vari ety of generation technologies that should be eligible measures for compliance in state plans, th e EPA should not include all of these technologies in BSER for the purposes of setting st ate goals. Commenters stated that each of the technologies contemplated in building block 3 has i ts own unique characteristics and potential
within each state. Commenters asserted that States and utilities within the states are not starting from scratch, they are continuing on a spectrum of investment and portfolio diversification choices that ratepayers will shoulder-this must be taken into consideration in EPA's final guidelines. Commenters stated the EPA should refrai n from advocating, even inadvertently, for one low-carbon generation choice over another.

Commenters stated the EPA's failure to reduce the g oal based on its limitation of compliance options results in an even more stringent and unach ievable goal for the Southeast region.

Commenters asserted that state RPS targets designed to include existing hydro units are unfairly used to establish regional renewable energy goals i n building block 3 that exclude existing hydro generation units. Commenters stated most states' RP S include existing and/or new hydroelectric generating units as eligible resources for demonstr ating compliance and the contribution of existing hydroelectric units is included in the "ef fective" 2020 RPS rates that EPA used to calculate the renewable energy goals for each regio n. Commenters stated that, in using these regional targets to develop regional growth rates a nd individual state renewable goals in building block three, EPA relies on baseline renewable gener ation from 2012 that excludes hydroelectric generation. Commenters stated that, for the purpose of calculating a baseline level of RE generation in each state, the EPA adopted a broad i nterpretation of RE generation to include any non-fossil renewable type, with the exception of ge neration from existing hydroelectric power
facilities.

Commenters stated the misalignment in EPA's proposa l between the renewable generation reflected in a state's goal-setting calculation and the renewable generation available for compliance with the emission goals must be correcte d.107

Comment 62: Commenters indicated that CPP should be revised to take into account that municipal utilities have limited RE options.

Response 62 : The EPA believes all affected sources have the op portunity to participate in building block 3, as described in section V.E of th e final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenters said that while many municipal utilitie s are committed to investing in renewable electricity generation resources, they have experie nced challenges because of their small size and tax exempt status. Commenters stated municipal uti lities do not receive the production tax credit for wind energy or the investment tax credit for so lar energy. Commenters added that another barrier to investing in renewable energy for munici pal utilities is their relatively small size. Commenters stated most developers are building wind farms on a scale much larger than what is needed by a single municipal utility.

Commenters said there are many barriers to renewabl e investments for municipal utilities and the rule should be revised to reflect these challenges. Commenters stated that, as a small, municipal utility, it does not have the same universe of rene wable options as other utilities in the state. Commenters indicated that it does not have a large customer base with which to spread the higher cost of renewable investments. Commenters st ated that municipal utilities cannot take advantage of Federal incentives for wind developmen t, like the production tax credit, which makes wind projects more costly for utilities like theirs.

Comment 63: Commenters supported the potential for additional wind energy.

Response 63: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of wind cost and performance assumptions. The final methodology is described in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated the draft plan should be more amb itious in terms of setting targets and dates
for reductions in carbon emissions. Commenters stat ed they see a significant missed opportunity to fully harvest the tremendous benefits available to increased deployment of wind energy. Commenters stated 35 percent wind energy by 2050 is ambitious, but achievable. Commenters stated that later this year the Department of Energ y will release an updated version of its wind vision report which provides a roadmap for getting to 35 percent wind energy by 2050 which would avoid $520 billion in damages from climate ch ange, save $16 to 103 billion in public
health and environmental costs and save consumers about 3 percent on their electricity costs. Commenters stated the EPA's final plan should take this increase in its carbon emission reduction targets for 2030 to reflect wind energy p otential contributions documented by DOE. Commenters stated wind energy is widely available, affordable, reliable, and it's already providing meaningful carbon reductions. Commenters stated the industry has shown the ability108

to install a lot of wind capacity in a short amountof time: since the end of 2005, on average, the U.S. has doubled its wind energy capacity every 36 months, including a record 13 gigawatts in 2012. Commenters stated they currently get about 4 percent of their electricity from wind energy
nationwide.

Commenters stated that, while they support the rule , the EPA's assumptions related to renewable energy are very conservative relative to the amountof timely and cost-effective reductions truly
available from renewable sources and that the final rule can and should require emissions reductions that could go further and faster than pr oposed in the draft rule. Commenters stated the wind energy industry is already producing significa nt carbon emissions reductions while lowering costs to consumers and benefitting the eco nomy. Commenters stated the current fleet of wind turbines, for example, reduced carbon emission s in 2013 by nearly 127 million tons, the equivalent of reducing power sector emissions by mo re than 5 percent when compared to 2011.

Commenters stated wind technologies evolved signifi cantly in the last 15 years. Commenters cited DOE and stated the average nameplate capacity of newly installed wind turbines in 2013 was 1.87 MW, 162 percent higher than in 1998-1999; average hub heights installed in 2013 was 80 meters, 45 percent greater than in 1998-1999; av erage rotor diameter in 2013 was 97 meters, 103 percent greater than in 1998-1999; and larger t urbines are driving higher capacity factors for wind projects and allowing for increased generation from these resources.

Commenters estimated that distributed wind (DW) can produce multi GW of electricity in roughly the same timeframe the EPA is discussing fo r emissions reductions in the proposed rule, which is on par with offshore wind power's potentia l, for example, and other technologies.

Commenters stated the EPA underestimates the potent ial of wind energy in the Southeast. Commenters suggested that the IPM model results und er EPA's Alternative Approach may underestimate the electricity from wind power in th e year 2030. Commenters stated that, while IPM shows approximately 5,671 gigawatt hours of ele ctricity from wind power in the year 2030 are attributed to Arkansas, Georgia, Kentucky, Nort h Carolina, South Carolina, Tennessee and Virginia, the wind energy already being or planned to be purchased by southern utilities from out-of-state projects results in about 8,000 GWh of wind energy (based on a 35% capacity factor).

Commenters suggested that the Southeastern states h ave out-of-state wind energy resources available. Commenters stated that newly proposed hi gh voltage direct current transmission projects could substantially increase the amount of low-cost wind energy resources available to southern states. Commenters stated two large-scale HVDC projects have been proposed to connect the Plains' strong wind resource to the Sou th's strong energy demand: the Plains & Eastern Clean Line is an HVDC project designed to c onnect up to 3.5 gigawatts (GW) of wind energy from the plains to Tennessee and the South b eyond and the Southern Cross is an HVDC project designed to connect up to 3 GW of wind ener gy from Texas to northern Mississippi, and into other parts of the Southeast. Commenters state d that, due to the higher wind speeds, the cost of wind energy resources from these HVDC projects w ill be extremely cost competitive. Commenters stated that several utilities throughoutthe Southeast have already purchased wind energy via existing transmission lines and these pu rchases are significant because most states in the south do not require utilities to purchase rene wable energy via renewable portfolio standards.109

Commenters stated some utilities have made the wind energy purchases because costs are less than utility avoided costs. Commenters stated wind power purchase agreements are typically secured for twenty years and provided a list of uti lity companies in the south purchasing wind

energy.

Commenters stated the costs associated with onshore wind deployment are overestimated by EPA. Commenters stated that, while the EPA cost ass umptions for onshore wind generation begin at $2,258 per kW in the year 2016 and decline to $1,864 per kW by the year 2050, a new Lawrence Berkeley National Laboratory report docume nts recent low wind-power prices and overall cost reduction trends for the wind industry

. Commenters stated that, in 2013, average power purchase agreement (PPA) prices reached $25 p er MWh. Commenters stated that, since many of the installed projects last year were able to qualify for the federal Production Tax Credit (PTC), or a similar incentive, the reported PPAs ma y reflect a reduction of approximately $15 per MWh when taking into consideration the PTC. Com menters stated that average PPA prices fell approximately 64% between 2009 ($70 per MWh) a nd 2013 ($25 per MWh). Commenters stated that, overall, wind energy prices are declin ing due to lower wind turbine prices and higher wind turbine performance (in terms of capacity fact or output). Commenters stated recent turbine prices have been in the $900-$1,300 range per kW of generation capacity, with total installed average costs of approximately $1,630 per kW in 201 3. Commenters stated that operations and maintenance costs associated with newly constructed wind farms dropped from $23 per MWh (or $55 per kW of installed capacity) in the 1990s to about $9 per MWh (or $23 per kW of installed capacity) for projects developed since 20 10.

Commenters stated wind turbine technology has advan ced significantly since modern turbines were first designed in the 1980s. Commenters stated multi-megawatt machines, taller turbine hub heights and longer blades have greatly contributed to increased power generation and lower costs. Commenters stated wind farm projects have no w been proposed in every state in the South. Commenters stated the particular type of tur bines likely to be deployed in the South are Class III turbines, based on International Electrot echnical Commission (IEC) Standard 61400. Commenters stated Class III turbines are designed t o operate in lower wind speed areas and could achieve capacity factors of 40-50% in areas a cross the South.

Comment 64: Commenters indicated that, while wind resources ar e better in the SPP Plains states and along the Gulf coast than in Arkansas, a significant portion of Arkansas' renewable requirement will probably be met with imports of wi nd from the west and south.

Response 64: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of wind cost and performance assumptions. The final methodology is described in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated those imports can be concentrated in off-peak hours and seasons, as needed to accommodate transmission constraints, with local Arkansas fossil generation carrying more of the load on peak. Commenters explained that Arkansa s has major transmission interconnections110

with the Gulf coast, through Entergy's transmission system, and with the wind-rich SPP. Commenters stated about 30% of Arkansas load (SWEPC o, OG&E, Empire District, and the Carroll, Ozarks, Arkansas Valley, and Southwest Ark ansas coops) is in SPP, and the state should have little difficulty sourcing Plains wind energy. Commenters said the Arkansas utilities have significant amounts of out-of-state wind capacity i n service or under contract, including about 200 MW for the Arkansas electric coops, 500 MW for SWEPCo (of which about 100 MW would be attributed to Arkansas), and 800 MW for OG&E (of which about 80 MW would be attributed to Arkansas). The Plains and Eastern Clean Line wou ld deliver 3,500 MW of power to converter stations in central Arkansas and the Memphis area o ver a high-voltage DC line from the windrich Oklahoma Panhandle and surrounding areas of th e Texas Panhandle and Kansas, commenters claimed. Completion of the project is ex pected in 2018, well before the compliance period under the Plan, the commenters noted. The ce ntral-Arkansas converter station would deliver 500 MW, the commenters noted. In addition, commenters stated Arkansas can access some of the 3,000 MW to be delivered in the Memphis area over a number of transmission ties listed by the commenters. Commenters stated the red uced utilization or retirement of the various fossil plants would free up capacity on the lines t o bring capacity and energy from Memphis to
Arkansas's load centers. Commenters stated the 500- MW converter station, delivering wind energy at a 40% capacity factor, would meet EPA's r enewable target through 2025, even without any in-state wind, solar, or hydro, or imports overthe existing alternating-current transmission system or from the Memphis-area converter.

Commenters said that some commenters vastly oversta te the costs of renewable energy in
Arkansas. Commenters cited to MISO which shows the renewables costing $237/ton of carbon reduction, implying a renewable cost of $250/MWh atEPA's estimate of the Arkansas coal emission rate after the Block 1 heat-rate improveme nt, or about $100/MWh if the wind is backing down NGCCs. Commenters stated that, since u tilities have been purchasing wind energy at $50/MWh or less, and since wind energy saves on fuel, variable O&M, and capacity costs, MISO's claimed costs of renewables are vastly overs tated. Commenters said that wind imports appear to be a low-cost resource, and provided the following examples:

• Austin purchased 300 MW of wind in February 2014 atabout 2.6 - 3.6 cents/kWh;

• SWEPCo purchased 359 MW in January 2012 that were " expected to slightly lower SWEPCo's projected overall cost to customers; "

• Public Service of Oklahoma contracted for 600 MW of wind in October 2013 and said, "Estimates show the agreements will reduce cu stomer costs by $53 million in the first year, with annual savings growing overthe 20-year length of the contracts;"

• in September 2012, Alabama Power purchased 400 MW f rom wind farms in Oklahoma and Kansas under a "20-year contract for w ind [that] locks in a price for power that's lower than it could cost the compa ny to generate it;"111 • the Annual Economic Impacts of Kansas Wind Energy 2 014 Report reported that power from the 2012 wind farms at Ironwood and PostRock cost $3.5 cents/kWh;
and

• the DOE's 2013 Wind Technologies Market Report (Aug ust 2014, Figure 46) reports wind contract prices for the Interior regio n (including Oklahoma, Kansas, and the Texas Panhandle) falling from about 3.5 cen ts/kWh for 2011 contracts to
about 3 cents/kWh in 2012 and 2 cents/kWh in 2013.

Commenters said that Arkansas is part of a vigorous multistate power market, as demonstrated by the overlap of service territories with state li nes, by the out-of-state ownership of many Arkansas power plants, and by the participation of the Arkansas utilities in the SPP and MISO energy markets. Commenters explained especially und er the mass-based compliance approach, renewables procured anywhere in the interconnected regions will contribute to Arkansas's compliance, so long as they reduce the operation of the fossil-fired power plants.

Comment 65: Commenters expressed concerns regarding technical performance of wind
turbines.

Response 65: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of wind cost and performance assumptions. The final methodology is described in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters indicated that there are technical perfo rmance issues associated with wind turbines that need to be investigated before the EPA can ass ume that environmental dispatch in favor or rapid installation of wind power is possible.

Commenters said that, there are challenges to the d eployment of distributed wind power at the State level. Commenters said, there are often permi tting barriers to distributed wind power deployment. Commenters said, permitting turbine structures can be onerous and take longer than they should because local jurisdictions are focused on the permitting and environmental impacts of much larger, utility-scale wind farm installatio ns. Commenters said, EPA should ask states to specify what they are doing to streamline permittin g for appropriately placed distributed wind turbines (and other relevant structures). Commenter s said, EPA should consult with DOE and the Federal Energy Regulatory Commission about this ong oing permitting issues as well, seek their input and assess whether there are actions they can take to support "model permitting" at the
State and local levels.

Commenters said that, another challenge is the avoi ded costs under the Public Utility Regulatory Policies Act (PURPA), because many distributed wind power projects around the country are developed as "Qualifying Facilities" under PURPA. C ommenters said, utilities sometimes artificially reduce the avoided cost calculations b y using historical costs rather than "next added
increment" costs as referenced in Section 210. Comm enters said, the effect is that distributed112

wind power installations sized above net metering l imits get paid unfairly low returns for their excess generation. Commenters said, the impacts can be significant in many distributed wind power markets because there is considerable excess generation during peak months of the year. Commenters said, low avoided costs tend to drive do wn the sizing of a distributed wind power system so as to minimize excess production, reducin g financial returns and environmental benefits. Commenters said, states, as part of their implementation plans and corresponding compliance reporting, ought to review avoided cost filings of local utilities to confirm they are truly reflective of the costs of building new powerplants.

Comment 66: Commenters expressed concern that the Proposal ove restimates the potential for
RE in WV.

Response 66: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE at an interconnection level. The
EPA addresses considerations related to the technic al feasibility and associated grid integration costs of significant RE penetration in both section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD sup porting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters estimated that the renewable energy buil ding block, representing 52% of West Virginia's reduction requirement, would translate t o the construction of approximately 2,200 new two Megawatt wind turbines across the Mountain Stat e. Commenters stated this is simply implausible given the constraints on siting wind en ergy capacity in West Virginia, as well as the need to provide transmission linkages and back-up n atural gas generation capacity.

Commenters expressed concern that, in West Virginia , the EPA's proposal overestimated the potential for additional wind farm development. Com menters stated that additional wind farm development is impractical due to mountainous terra in, contentious permitting history, private ownership of lands, and cost. Commenters also state d a considerable share of West Virginia's potential wind is already developed. Commenters sta ted there are only two wind farms in West Virginia with any near-term development potential a nd these could contribute only 6.7 percent to the state's RE goal as advanced by the proposed reg ulation. Commenters stated that, based upon the existing capacity factor (25.2 percent), West V irginia would need a wind capacity of 4,654 MW to generate the target goal of 10,273,036 MWh. C ommenters stated this would require an additional 4,070 MW of wind capacity to be installe d from 2020 to 2030 in West Virginia, which is nearly seven times the state's current capacity. Commenters stated Industry estimates that in 2012, a utility-scale wind turbine costs $1.3 milli on to $2.2 million per MW of nameplate capacity installed and, given the state's mountaino us terrain, the cost in West Virginia would be at the high end of that range, or an overall $9 bil lion investment to support the EPA goal. Commenters stated that, while recent studies by Nat ional Renewable Energy Laboratory (NREL) and others highlight the wind potential, there is m uch more to a wind project than access to favorable wind speeds. Commenters stated that, to d raw an erroneous conclusion from wind maps that West Virginia is deficient in wind develo pment does not consider development issues confronted by the wind industry. Commenters stated the state's mountainous terrain with steep113

hillsides presents significant competitive challeng es. Commenters stated the fact that existing wind projects take advantage of formerly surface-mi ned lands speaks to the development costs of leveling land and putting in new roads to allow forongoing maintenance. Commenters stated wind development remains a contentious energy sourc e in West Virginia. Commenters stated that, while national environmental groups such as t he Sierra Club and the Union of Concerned Scientists support wind development, local environm ental groups such as the West Virginia Highlands Conservancy and Friends of Blackwater are opposed. Commenters stated West Virginia encourages environmentally responsible win d projects, but history teaches us that there will be significant opposition to the expansive lev el of development that would be needed to meet the EPA Building Block 3 goal using wind gener ation.

Commenters referred to a report from the NREL that assesses the land-use requirements for modern wind power plants. Commenters stated three w ind farms in West Virginia were identified with an average total area per unit capa city of 14.05 hectares per MW. Commenters stated the 4,070 MW wind capacity West Virginia wou ld need to satisfy its target goal would have a total area impact of 57,184 hectares, or 571 .8 km2, which represents one percent of the land within West Virginia's state boundaries. Comme nters stated the fact that over 80 percent of the surface area in the state is privately owned re presents a significant barrier to additional wind power development because the State cannot force la nd owners to develop this potential resource. Commenters stated that, considering that the practical locations for wind farms are along the front range of the Allegheny Mountains in the northern and central eastern counties of the state, the total area impact would be close to four percent of the total land within those areas of West Virginia. Commenters stated that, in 2010, NREL performed a study to determine the wind energy potential of each state and that NREL d etermined that the wind energy potential for West Virginia is only 1,883.3 MW of installed capac ity. Commenters stated this is 1,300 MW of additional capacity that could potentially be devel oped. Commenters stated that, if wind resources in West Virginia were to be developed to NREL's estimated potential (an additional 2,869,776 MWh over currently operating wind project s at a 25.2 percent capacity factor), the State would still require an additional 7,403,260 M Wh of electric generation from another renewable resource to meet EPA's proposed goal. Com menters stated that, compared to other states, a considerable share of West Virginia's pot ential wind is already developed and the state has the second highest amount of potential wind cap acity in place in the region.

Commenters did not agree with the EPA that West Vir ginia can grow its renewable energy output from the current 4% of total electric genera tion to 14%. Commenters stated that, when the
EPA's numbers were examined in the WVU Discussion P aper, however, it became clear that growth to 14% was unreasonable. Commenters stated t he WVU Discussion Paper found that
even a more modest 7% increase would be difficult t o attain. Commenters stated West Virginia currently has a wind generation capacity of 583 MW from the state's 327 wind turbines currently in operation. Commenters stated wind turbines need to be strategically placed in order to actually capture wind and in West Virginia--one of the 10 sm allest states in the U.S. by size--the amount of land suitable for wind turbine placement is a me re 0.60% of the state. Commenters stated that, in order to produce the excess wind energy required by Block Three, West Virginia would need to add 1,046 additional wind turbines to 0.60% of t he land in the state, which equates to approximately 145 square miles of suitable land for wind turbine placement. Commenters stated West Virginia, the Mountain State, would no doubt l ose a great deal of its natural beauty if every mountain were topped with multiple wind turbines. C ommenters stated these concerns are114

backed by a recent policy brief from the Union of C oncerned Scientists. Commenters stated that despite this policy brief's support of the Clean Po wer Plan, it found that West Virginia was one of four states where EPA's renewable projections we re far greater than what they projected was possible.

Comment 67: Commenters stated the EPA has not demonstrated the feasibility of adding, in the amounts EPA proposes, to the substantial amount of wind generation already occurring in Texas.

Response 67: The EPA addresses considerations related to the te chnical feasibility and associated grid integration costs of significant RE penetration in both section V.E of the final rule preamble of the CPP and chapter 4 of the GHG M itigation Measures TSD supporting the
final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated Texas generates more electricity from wind than any other state and is already utilizing the most productive wind sites fo r generation. Commenters stated that, by 2030, EPA's building block 3 renewable goal for the state of Texas is approximately 86 million megawatt-hours, a 153% increase above 2012 levels, which would require over 31,000 MW of total renewable capacity (an additional 19,000 MW o ver existing renewable capacity). Commenters stated the EPA fails to recognize that s ites for future wind generation would be lower producing sites as compared to existing wind generation. Commenters stated the EPA's building block 3 proposal does not accurately accou nt for the future cost of utilizing these new sites, including transmission build-out that would be needed to support the amount of additional wind and renewable generation required under buildi ng block 3.

Comment 68: Commenters expressed support for solar energy.

Response 68: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of solar cost and performance assumptions. The EPA has maintained distributed gen eration technologies as non-BSER measures that affected sources may rely upon to ach ieve standards of performance for a number of reasons, including data limitations, the heterog eneity of distributed generation opportunities, and the desire to maintain balance between program flexibility and stringency. The final building block 3 methodology is described in sectio n V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters supported the proposed 111(d) approach a nd stated there is more that the EPA can do. Commenters stated this approach allows states t o take advantage of solar as part of a diverse compliance portfolio. Commenters supported the incl usion of solar and other outside of the fence measures in the definition of the best system of em issions reduction, BSER. Commenters stated there are certain areas that can be strengthened in respect to solar in building block three.115

Commenters stated building block three is based on incomplete data and does not reflect current solar capacity on market projections. Commenters st ated solar capacity in market projections are much higher than stated in the proposed rule. Comme nters stated Pennsylvania can meet the 49 percent emissions reduction with renewable energy r esources, including solar, wind, biomass and hydroelectric, while incorporating energy storage, energy pricing for solar in the way of tariffs and enhancing the state's current alternative energ y portfolio standard, particularly the solar share requirement. Commenters stated that all of these re sources can meet the challenge through the competitive market, forces that will produce result s at no or little cost to consumers while cleaning up our air and providing good jobs with th e real growth of solar. MSEA, PASEIA and SEIA would be very happy to help with that process to go through.

Commenters stated that, based on the growth of solar in markets with favorable solar policy, including New Orleans, analysis shows that Louisian a has a tested opportunity to increase distributed solar generation, both at the utility s cale and residentially. Commenters stated that allowing energy users the freedom to generate their own energy reduces the cost of generation from the utility perspective, and increases the eff iciency with which the energy is distributed as a
result of reduced line-loss. Commenters stated thatgeneration from rooftop solar can displace generation from peaking resources, like natural gas . Commenters stated that a recent study, showed a net benefit in nearly all scenarios analyz ed. Commenters stated they have seen an impressive increase of residential PV systems as a result of falling system and installation costs, and as a result more people are interested in their energy choices than ever before.

Commenters stated solar energy reduces carbon pollu tants and offers a positive economic return while generating affordable and reliable energy, an d as a cost-effective clean energy source,
solar avoids a number of costs associated with foss il fuel resources. Further, commenters stated, solar enjoys widespread bi-partisan support from po licymakers and the general public throughout
the United States. Commenters stated the U.S. solar industry grew by 53% from 2012 to 2013, accounting for nearly 30% of all new electric gener ating capacity added to the U.S. grid in 2013.
Commenters also stated an additional 7.3 GW of solar capacity are expected to be added in 2014, bringing the cumulative U.S. total to over 20 GW- e nough to power more than 4 million homes. Commenters also stated the U.S. solar industry now supports 143,000 employees at more than 6,100 companies spread across all 50 states. Commen ters stated the EPA has already recognized the importance of renewable energy and the role for renewable energy to play in this transition, and has included renewable energy as a part of the best system of emission reduction (BSER) that has been adequately demonstrated to reduce emi ssions from affected EGUs.

Commenters stated the EPA's rule should use solar p otential in the renewable energy building block. Commenters stated that would result in a sig nificant increase in Montana's reduction target. Commenters stated that Montana has an excel lent solar resource, but it remains virtually untapped. Commenters stated that there are currentl y about 1,000 customers with solar arrays across NWE's service territory. Although rooftop solar installations have steadily increased in the last several years, the 1,000 solar installations r epresent less than one tenth of one percent of NWE's total electricity supply, the commenters adde d. Currently, there are no utility scale solar projects in Montana, the commenters said. Commenter s stated that, while studies on Montana's solar potential are limited, the Interstate Renewab le Energy Council estimates that 19% of Montana's energy needs could be met with distribute d solar resources and the NREL calculates Montana's utility scale solar technical potential t o be over 6 GW.116

Commenters stated that, since the solar resource is very similar in North Carolina and Arkansas,
Arkansas should be able to install at least as much solar in the next five and a half years as North Carolina has in the last three and a half years. No rth Carolina added about 430 MW of solar in 2011-2013, and another 70 MW in the first half of 2 014, the commenters noted. Commenters stated that photovoltaics are an important resource category in jurisdictions with much less sunshine than Arkansas, including Ontario, Massachu setts, Vermont, Germany and more recently Minnesota and Wisconsin. Commenters provid ed the following are some examples of the falling costs of utility-scale solar: Georgia P ower recently contracted for 515 megawatts of PV capacity, planned for build-out in 2015 and 2016 , at an average price of 6.5 and Georgia Power received bids for 5,100 MW; in Texas, Austin Energy recently signed a PPA for 150 megawatts of solar for less than 5 cents per kilowa tt-hour; in Colorado, Xcel Energy agreed to purchase 170 megawatts of solar power, after findin g that they were less expensive than natural gas plants; Xcel Energy Minnesota contracted for 18 7 MW of PV capacity for an expected levelized price of 7.3/kWh over 25 years; and in Ut ah, Rocky Mountain Power has contracted for 400 MW of solar at prices below its estimates of av oided cost. Commenters suggested that solar is especially valuable in areas with existing or fu ture T&D constraints, to avoid need for additional facility investments. Commenters said so me smaller utility-scale PV facilities can provide these benefits, as can most customer-sited solar installations.

Comment 69: Commenters expressed concerns regarding solar capa city and growth potential.

Response 69: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE at an interconnection level. The
EPA addresses considerations related to the technic al feasibility and associated grid integration costs of significant RE penetration in both section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD sup porting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters noted that solar implementation is still relatively young in its lifecycle, and continues to show promise as a growing constituent of the total electric power generation. However, commenters said, even in the 5 years of re cords, the growth rate has already slowed substantially, and won't be able to sustain the ave rage year-over-year growth to reach the EPA's required target of 22,109,614 MWh by 2029. Commente rs said that this is 100 times greater than the current generation level and reflects an unachi evable average growth rate of 44% per year sustained for 13 consecutive years. Commenters sugg ested that the EPA take a more practical approach to promoting the development of renewable energy under the proposed rule by quantifying the potential in each state before dete rmining a "conservative estimate" of available renewable energy. In order to support the EPA in a determination of promoting solar, commenters presented three possible scenarios, some of which are very aggressive, but that represent a much more sound approximation of what F lorida can be expected to achieve by 2030. In the first approach, commenters assumed 13% avera ge year-over-year growth beginning with 2012's demonstrated renewable energy generation beg inning in 2017, but looking only at solar (no biomass growth). The second scenario developed by commenters evaluated considers an estimation of potential solar generation in year 20 29 using a quadratic curve. The third scenario117

developed by commenters was based on an approach th at uses an average year-over-year growth rate that is founded in a statistical analysis of a ctual data.

Commenters did not agree with the EPA that West Vir ginia can integrate 410 MW of solar energy capacity by 2030. Commenters stated that, gi ven West Virginia's total installed solar capacity is currently only 1.9 MW, this would call for an increase in solar capacity of 21,479%, which is an unreasonable amount of growth for one s tate in less than 15 years. Commenters objected that the EPA method is not based on a stat e-specific analysis.

Comment 70: Commenters recommended the EPA include distributed generation in building
block 3.

Response 70: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of solar cost and performance assumptions. The EPA has maintained distributed gen eration technologies as non-BSER measures that affected sources may rely upon to ach ieve standards of performance for a number of reasons, including data limitations and EM&V con cerns. The final building block 3 methodology is described in section V.E of the fina l rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the fina l CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated distributed PV capacity (as of Ju ne 2014) will generate 10,450,000 MWh/year and displace 7,206,000 MT of CO2 per year. Commenters stated the mode of carbon displacement for distributed PV is identical or sli ghtly better than utility PV, as distributed PV
does not need to factor in line loss. Commenters st ated distributed PV is clearly an effective means of reducing emissions and must be included in building block 3.

Commenters suggested that, in order to capture all cost-effective methods of reducing carbon dioxide emissions from EGUs, the EPA could consider revising its Block 3 assumptions to expressly consider and include distributed generati on. Commenters stated the City of Chicago has demonstrated, through local programs, the impor tant role that individual residences, businesses, and public buildings have in reducing r eliance on fossil-fuel fired generation.

Commenters said that the Block 3 model does not inc lude distributed generation as a major source of renewable energy capacity, despite the fa ct that net metered capacity now makes up about half of total U.S. solar PV capacity accordin g to the EIA.

Commenters stated the EPA must include all forms of solar, including distributed solar, in its
final determination of the BSER. Commenters stated that, while they generally agreed that renewable energy measures, and solar measures espec ially, are necessarily part of the BSER, the commenters were concerned that building block 3, as it is currently calculated is incomplete
because it does not contain current solar market da ta and it does not include distributed solar. Commenters stated that, as a result, the EPA's prop osal does not accurately reflect the emissions reductions achievable through application of the BS ER. Commenters stated distributed solar, utility solar and CSP are all a system of emissions reduction that is technically feasible, is118

implemented at reasonable cost, is driving solar in novation, and does not negatively impact the electric system. Commenters stated these forms of s olar energy are adequately demonstrated to
reduce emissions from covered sources and for these reasons, the EPA must include solar as part of building block 3 in its determination of the bes t system of emissions reduction. Solar energy measures are technically feasible and are being ins talled across the nation today, the commenters added. Commenters stated Missouri's net metering l aw allows up to 940 MW of solar, an amount which would generate a further 18,000 jobs a nd over $2 billion in economic activity in the Missouri economy (SEIA/GTM Research U.S. Solar Market Insight).

Commenters said that States and utilities can lever age homeowners own capital and promote distributed generation by continuing or implementin g effective net metering policies and by providing performance-based incentives. Commenters said that net metering allows owners of distributed generation systems (such as rooftop PV) to sell excess power back to the grid, generally for the full retail price. Commenters sai d in place in 43 states, these policies have contributed substantially to the growth of resident ial solar in the U.S. and have provided value and benefits to the home or facility net metered an d the grid system. Commenters stated that performance-based incentives (PBI) programs that of fer homeowners an upfront rebate on the cost of distributed generation technologies (with t he dollar size of the rebate linked to the kW size of the system) have been highly successful at promoting growth of rooftop solar PV in the U.S. As the cost of rooftop PV systems continues to decline, however, some states have transitioned away from upfront, capacity-based reba tes toward performance-based incentives (PBI), the commenters added. As opposed to providin g a $/kW rebate when the system is purchased, PBIs offer a $/kWh incentive as an insta lled system actually generates electricity. PBIs can reduce expenses for states and utilities w hile continuing to support deployment of residential solar systems, the commenters said.

Comment 71: Commenters stated distributed generation (DG) inst allations are inherently
situational and need to be modeled at the local dis tribution system level.

Response 71: The resources and data provided in this comment w ere valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of solar cost and performance assumptions. The EPA has maintained distributed gen eration technologies as non-BSER measures that affected sources may rely upon to ach ieve standards of performance for a number of reasons, including data limitations and EM&V con cerns. The final building block 3 methodology is described in section V.E of the fina l rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the fina l CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated each utility has a unique situati on that must be assessed before determining to what degree renewable energy can be deployed, an d stated that, while the EPA makes a projection regarding additional renewables that can be added to the electric system in order to decrease utilization of fossil-fuel fired generatio n, this projection includes a number of assumptions that ignore the on-the-ground realities faced by many operators based on the principle argument of "because someone else did it, you can." Commenters added the Proposed
Rule estimates for renewable resources need to refl ect the increasing costs of integration with the119

increased penetration of these resources. Commenter s said that, while its members support developing and deploying DG, DG must be implemented in a safe, reliable, and cost effective manner. Although Minnesota has been a proponent of many DG initiatives, the commenters stated DG installations are inherently situational and need to be modeled at the local distribution system level. Because benefits and costs to the dis tribution system vary greatly with penetration of DG, cost-based principles are critical, the comm enters said. Commenters stated that efforts to cost-effectively integrate PV and other resources t o benefit the grid can also help ensure the long-term viability of the electric grid that our e conomy and society depend upon.

Commenters said that rates paid to DG customers sho uld be consistent with conventional methods used by utilities to value energy resources and to compensate comparable utility-scale resources. Under that framework, the commenters add ed that utility-sponsored community solar is likely to yield greater net benefits than roofto p solar. For example, in some PV deployment models, especially those that seek to monetize weal th transfers from taxpayers and other utility customers, the value to some individual consumers m ay be greater, but inequities will be introduced and overall costs to the community will be higher, the commenters explained.

Commenters added that in developing DG resources, t he role of government is not to pick winners and losers, but to develop decisional tools and trusted data. Commenters stated that in their opinion to avoid this consequence arising fro m its rule, the EPA needs to provide improved policy resources, and develop objective case study data on cross-resource optimization. This type of optimization promises to allow the commenters me mber communities to make objective and informed tradeoffs resulting in DG projects that ar e most beneficial to the community, the commenters said. Commenters stated locally owned an d controlled utilities know how to facilitate new, more efficient, and cleaner ways of meeting customer demand. Commenters said that supporting innovation is necessary for electri c supply diversification, which helps the utility minimize sharp cost increases or supply disruptions that can come from over reliance on one generating technology. Commenters stated the Propos ed Rule oversteps all of these communitybased initiatives in favor of a brute force modelin g approach.

Comment 72: Commenters stated renewable baseload or dispatchab le generation, such as biopower, is needed to reinforce the variable gener ation resources, wind power and solar photovoltaics.

Response 72: Maintaining sufficient baseload and ramping capaci ty to reinforce variable generation resources is a critical aspect to the IP M modeling used to demonstrate the technical feasibility and cost-effectiveness of the building block 3 target generation levels. Refer to chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP for further detail.

Specifically in regards to biopower resources, biom ass is not considered part of the best system
of emission reduction in this rule and therefore itis not included in goal-setting or compliance evaluations. However, similar to other technologies outside of BSER, biomass may be considered as a part of a state’s plan to meet the emission guidelines.

A discussion regarding the use of some biomass feed stocks for compliance purposes can be
found in sections VIII.I and VIII.K of the final ru le preamble of the CPP.120

The following are summaries of the specific public comments under this comment:

Commenters stated encouraging the deployment of div erse bioenergy resources will serve to insulate ratepayers from fuel price volatility caus ed by widespread reliance on natural gas. Commenters stated diverse biopower will also tend t o insulate electric utilities from severe impacts due to supply curtailments when natural gas demand spikes, such as during the extreme low temperatures of the January 2014 "polar vortex" event.

Comment 73: Biomass and BSER. Many commenters commented on the perceived role of biomass in the baseline, goal setting and complianc e, as well as how to account for biomass in those efforts. Some thought that biomass should notbe included in establishing the baseline, targets, and compliance, other thought that it shou ld be included, and others still just commented that it should be treated consistently (included or excluded in all three components). Some
commenters asserted that biomass should be counted as carbon neutral within building block assessments, whereas others asserted that it should be counted as full emissions. Some commenters thought that states should be able to ch oose whether or not to include biomass as part of state compliance measures. Commenters wante d inclusion of dedicated biomass plants in compliance assessments.

Response 73: Biomass is not considered part of the best system of emission reduction in this rule and therefore it is not included in goal-setti ng or compliance evaluations. However, similar to other technologies outside of BSER, biomass may be considered as a part of a state’s plan to meet the emission guidelines.

For more information regarding Building Block 3, re fer to section V.E of the final rule preamble
of the CPP.

For more information regarding biomass in the IPM b aseline projection, refer to EPA v5.13 Base Case Documentation Supplement to Support EPA’s Prop osed Carbon Pollution Guidelines for Existing Electric Generating Units in the docket.

A discussion regarding the use of some biomass feed stocks for compliance purposes can be
found in sections VIII.I and VIII.K of the final ru le preamble of the CPP.

In November 2014, the agency released a second dra ft of the technical report, Framework for Assessing Biogenic Carbon Dioxide for Stationary So urces. The revised Framework, and the EPA’s Science Advisory Board (SAB) peer review of t he 2011 Draft Framework , finds that it is not scientifically valid to assume that all biogeni c feedstocks are “carbon neutral” and that the net biogenic CO 2 atmospheric contribution of different biogenic fee dstocks generally depends on
various factors related to feedstock characteristic s, production, processing and combustion practices, and, in some cases, what would happen to that feedstock and the related biogenic emissions if not used for energy production.

A discussion of the use of biomass feedstocks and a ssociated biogenic CO2 assessment can be
found in in sections VIII.I and VIII.K of the final rule preamble of the CPP.121

A discussion regarding the current status of the de velopment of the revised Framework and how
information from the revised Framework and the rela ted peer review processes could be used to inform how states and EPA assess biogenic CO2 can b e found in sections VIII.I and VIII.K of the final rule preamble of the CPP. For more inform ation regarding the Framework, see: http://epa.gov/climatechange/ghgemissions/biogenic- emissions.html

The following are summaries of the specific public comments under this comment:

Commenters stated they believe that one of the bigg est flaws of the approach to RE as BSER in the proposed rule is inclusion of wood biomass in t he 2012 Baseline and the calculated average regional growth target. Commenters said that the EP A has not established at this time if biomass electric generation is "carbon neutral" or not, eve n in light of EPA's release of a second draft of the Framework/or Assessing Biogenic CO2 Emissions f rom Stationary Sources and corresponding memos.

Using EIA data, commenters determined seventeen sta tes have over one third of their RE generated by wood. Commenters stated if future EPA rulemaking determines that a portion of
this wood is not carbon neutral or allows some frac tion of the CO2 emitted as a pollutant, it would drastically impact the achievable RE in many states. Commenters said until this decision is made, the EPA cannot include baseline generation from wood to establish RE growth rates and future generation targets. Commenters asserted the EPA must remove wood generation from 2012 RE generation for each state, and recalculate everything for the affected states.

Commenters stated the EPA must be consistent in acc ounting for biomass emissions, both in its state goal calculations and in its regulations for compliance demonstrations, by either adjusting the "effective" 2020 RPS rate to exclude biomass, o r to definitively affirm that states can rely on biomass as a carbon neutral resource in developing implementation plans. Commenters stated that, as with hydroelectric generation, many state RPS are designed to include the contributions
from biomass resources. Commenters stated the EPA u ses the contribution of biomass resources to determine the baseline renewable generation for each state that is then used to develop the building block 3 goals; however, the EPA had not ma de a determination of whether states would be able consider biomass for compliance purposes atthe time of its proposal. Commenters stated that, on November 19, 2014, EPA released its second draft of the Framework for Assessing Biogenic Carbon Dioxide Emissions from Stationary S ources, and anticipates seeking further review of the Framework through the Science Advisor y Board and public comment. Commenters stated the revised Framework does not pr ovide definitive answers on these issues, only proposed calculations that require detailed in puts in order to determine whether, and to what extent, biogenic energy sources may be relied on to reduce CO2 emission rates or mass emissions in the context of the proposed CPP. Comme nters stated that, at present, all EPA has committed to do is to second-guess state plan submi ttals based on criteria that it has not clearly
defined.

Commenters opined that EPA incorrectly assumes zero CO2 emissions from all renewable sources in Building Block 3. Commenters stated the 2012 renewable generation levels used by EPA as the basis for its future renewable generatio n levels for Building Block 3 include various forms of biomass, and commenters noted that they do emit CO2. Commenters stated these biomass CO2-emitting fuels include: black liquor, l andfill gas, municipal solid waste, sludge,122

and wood wastes. Commenters further opined that, th erefore, EPA has not properly accounted
for additional CO2 emissions from biomass sources i n Building Block 3, due to the Agency's failure to examine each state's renewable generatio n mix. Commenters pointed out that the EPA issued second draft of its Framework for Assessing Biogenic Carbon Dioxide from Stationary Sources does not clearly define biomass as a zero-e mission renewable resource; and that the EPA should therefore definitely determine that biomass fuels are carbon neutral and that their use for electricity generation constitutes as a zero-emissi on renewable resource.

Commenters said by lumping bioenergy with all otherrenewables, and biomass and wasteburning as if they reduce emissions as effectively as wind and solar, EPA may be inadvertently promoting these technologies as mitigation measures in the GHG rule. Further, commenters asserted counting these emissions as zero can also introduce significant errors into the estimate of present day power sector CO2 emissions and targe t emissions rates, which are likely to be carried forward as states attempt to meet target em issions goals. Commenters stated this problem is most apparent for those states where bioenergy a nd waste-burning contribute a significant
share of total CO2 emissions.

Commenters stated that biomass co-firing could have a significant impact on their state's future, as right now it is very coal dependent. However, in some areas the transportation of fuels to the plant would be cost prohibitive, and therefore comm enters requested the option to utilize biomass co-firing only where it is cost effective, and not have it forced upon their state.

Commenters stated that EPAs proposed approach sets state RE goals based on 2012 total generation, 2012 RE generation, and regional RPS av erages. Commenters stated 2012 generation data and many of these RPSs do not differentiate on the basis of biomass feedstocks' lifecycle CO2 implications. Commenters stated that a lifecycl e analysis was considered in setting state RE goals under the alternative RE approach, even thoug h existing biomass generation helps determine state RE targets. Commenters stated that in a memorandum issued (Memorandum from Janet G. McCabe) before the CPP comment deadli ne, EPA indicated that biomass generation would be analyzed for compliance purpose s based on a feedstock lifecycle analysis. Commenters stated that EPA should clarify its treatment of biomass in goal-setting and compliance.

Commenters also stated that EPA should clarify the treatment of biomass co-fired with coal, as
some TSDs indicate that co-fired biomass is include d in states' baselines, while the RIA indicates
that biomass co-fired with coal was treated as RE. Commenters also asserted that EPA should clarify whether the useful thermal output from biom ass CHP units was included in states'
baselines.

Commenters stated the whether the EPA intends for b iomass to be considered a carbon-neutral energy source or not, it should provide regulatory consistency in its treatment of biomass generation and not inadvertently penalize states wi th biomass generation. Commenters encouraged the EPA to treat biomass units consisten tly in both target setting and target compliance calculations, and to ensure that final r ule language includes applicability criteria referenced in the proposed rule preamble.123

Commenters stated that biomass co-firing is a promi sing technology, but U.S. EPA errors in allowing for unrealistic biomass usage in the IPM m odel and until the technology has matured and sufficient engineering data and experience are gathered, U.S. EPA should refrain from this unrealistic assumption. Commenters were concerned t hat biomass co-firing could have negative impacts on existing controls, impacting both their efficiency and potentially increasing the amount of maintenance necessary to maintain adequat e levels of controls.

Commenters asserted that NREL and the EPA overestim ate the amount of biomass that is both available and suitable for fuel use. Examples they gave include methane from human/animal waste and crop residues, both of which make unlikel y fuel sources. Commenters noted that most biomass co-firing plants are unable to burn many of the potential fuel sources EPA considers viable in their proposal and states that all new co -firing plants are being built to accommodate wood burning, not crop residue or other waste bioma ss. Lastly, commenters stated how biomass isn't always available year round, and will therefo re need to be stored, which will be expensive.

Commenters agreed that the EPA should include susta inable biomass and waste wood utilization in Building Block Three, Renewables, as a source of reliable and dispatchable low carbon electricity. Commenters supported the inclusion of any measure that mitigates CO2 as credit towards goal achievement, but did not believe that other measures should be required as a facet
of BSER.

Commenters added that the EPA treats biomass units as carbon-neutral resources for goal-setting purposes, by including their MWh of generation in t he denominator of the formula in Building Block 3, but including no CO2 emissions in the nume rator for these units. Commenters were concerned, that in compliance, the EPA implies thatbiomass would not be treated as a carbonneutral resource, since it refers to the EPA's Biom ass Accounting Framework for 111(d) plan development where the methodology describes adjusti ng top-of-stack biogenic CO2 emissions based on the particular feedstock and location. Com menters noted that the EPA acknowledges that in the review of the Framework, the Science Ad visory Board indicated that biomass cannot be considered " ... carbon neutral a priori, withou t an evaluation of the carbon cycle effects related to the use of the type of biomass being con sidered." 79 FR 1446. Commenters said that states are penalized in the goal setting formula fo r having biomass plant because treating such plants as carbon neutral (i.e., not including those plants' CO2 emissions) in the goal setting formula makes the goal more stringent, while treati ng as non-carbon neutral for goal compliance then discounts the use of biomass for goal achievem ent. Whether the EPA intends for biomass to be considered a carbon-neutral energy source or not , commenters said that it should provide regulatory consistency in its treatment of biomass generation and not inadvertently penalize states with biomass generation. Commenters noted si milar concerns and stated that to the extent that such a mismatch makes its way into the final rule, the EPA's assumptions regarding the trajectory of future renewable energy use will be u nrealistic and arbitrary.

Commenters also noted inconsistency in the EPA's tr eatment of biomass when the Agency included existing biomass in the 2012 baseline as r enewable energy in justifying a more stringent emission guideline, but does not allow biomass to c ount toward compliance. Commenters concluded that the EPA must provide consistent trea tment of biomass and should modify any final rule to ensure that any biomass included in t he emission guideline calculation be consistent
with how the EPA will allow states to account for b iomass generation in compliance.124

Commenters stated that BSER must deal with total em issions not a subset of electric generators. Commenters asserted that biomass electric generator s must be included in the performance
standard for 100% of their emissions. Commenters co ncluded that the urgency of climate change demands that we arrive at the best system of emissi ons reduction and that is not what has been proposed.

Commenters questioned if, given that the source of the energy is a natural, renewable source (biogas), this energy should be considered under Bl ock 3 or if it fit better under Block 4.

Commenters disagreed with the EPA's assumption in b uilding block 3 that there are zero CO2
emissions from all renewable sources. Commenters st ated that the EPA has not determined yet whether, or to what extent, such biomass fuel sourc es such as black liquor, landfill gas, MSW, sludge, and wood wastes, will be considered CO2-neu tral for compliance purposes, citing its notyet-finalized Biogenic CO2 Accounting Framework. Co mmenters added that the EPA should address this compliance risk and regulatory uncerta inty by examining each state's renewable generation mix and recalculating its targets based on corrected renewable sources figures, including any determination it makes on biomass.

Commenters added that the state emission limiting g oals proposed by the EPA for renewable energy in building block 3 are extremely optimistic , and it should amend its definition of affected facilities to fully account for CO2-neutral biomass fuel streams in all of its CO2- related NSPS rulemakings.

Commenters stated that EPA needs to provide additio nal guidance and clarity with how biomass can be incorporated in compliance demonstrations un der Building Block 3.

Commenters said that the EPA's proposed BB 3 goals for Florida for renewable energy are extremely optimistic, and if Florida utilities have any hope of achieving CO2 emission reductions envisioned in BB 3, the EPA must amend i ts definition of affected facilities to fully
account for carbon neutral biomass fuel streams in each of the three CPP rules.

Commenters described Michigan's significant biomass resources and recommended that biomass be considered carbon neutral. Commenters suggested that Michigan's definition of biomass meets the requirements of Building Block 3. Comment ers suggested that the final rule should clarify what types of biomass can count toward Buil ding Block 3. In cases where a generator uses multiple fuels, such as a woody biomass plant that burns both woody biomass and tirederived fuel (which is not considered renewable in Michigan), commenters said that the generation reported would include all of the MWh ge nerated, but RECs would only be awarded for the renewable portion of the generation. Commen ters also said that however biomass is treated in the rule, the EPA should treat it the sa me in both the goal setting and the compliance demonstration. Commenters added that Michigan does not agree that biomass be included in the numerator as "other generation" since this is a car bon neutral source of energy. Commenters said
that the treatment of biomass in the final rule sho uld only appear in the denominator as new biomass energy production comes on line and counted as a renewable resource. Commenters agreed that biomass should be explicitly included a s a compliance option for Building Block 3.

Commenters said that the EPA's inconsistent biomass policy undermines the RIA.125

Commenters said that the "illustrative" compliance scenarios used in the RIA to calculate the costs and benefits of the Proposed Rule include onl y those sources "included in the calculation of the state goals." Commenters said that this means t hat the RIA's scenarios include biomass cofiring, but exclude "dedicated" biomass facilities. At the same time, commenters stated, the RIA recognizes that individual states might include "so urces of generation" other than those considered in state goal setting in calculating the ir own emissions rates for compliance purposes. Commenters were concerned that this leaves open the possibility that individual states may rely on expanded biomass energy generation as a complian ce measure. Although the RIA acknowledges this possibility, commenters stated th at it does not fully or fairly account for its costs and benefits, e.g., the RIA does not considerthe costs of CO2 from biomass combustion at
all. Commenters said that the RIA's failure to incl ude dedicated biomass generation in compliance scenarios also omits consideration of th e relatively high cost of this generation. Although the RIA does not consider these costs, com menters added that it does appear to count employment from biomass plant construction and oper ation as a benefit, which obviously skews the resulting analysis. Commenters added that the R IA's exclusion of dedicated biomass from its compliance scenarios also results in a potential un dercounting of costs related to conventional and toxic pollutant emissions. Commenters noted tha t a recent study of 88 air permits for bioenergy facilities shows that permitted criteria air pollutant emission rates for biomass facilities typically exceed those for coal faciliti es on a lbs/MWh basis, and vastly exceed those for natural gas facilities by more than 800% for ev ery major pollutant.

Commenters stated that the EPA considered biomass e nergy as a renewable energy source in calculating the state emission reduction goals unde r Building Block 3. Commenters stated that by relying on state renewable portfolio standard (RPS) programs to calculate each region's potential for renewable energy in its BSER analysis and exclu ding the biogenic CO2 emissions from the total renewable energy CO2 emissions, EPA has impli citly incorporated biomass energy as
carbon neutral. Commenters contended that biomass e nergy is included as a renewable energy source in all state RPS programs and an important o ption for addressing GHG emissions.

Commenters stated that the EPA must fully account f or all biomass CO2 emissions. Commenters stated that the Proposed Rule effectively ignores C O2 emissions from biomass energy generation in both target-setting (by treating biomass energy as zero-carbon "renewable" energy) and compliance (by allowing states to determine whether or not to count biomass CO2). Commenters stated that EPA has provided neither a clear explan ation nor an adequate evidentiary justification for this approach. Commenters asserted that these e rrors must be corrected before the Proposed
Rule can be finalized.

Commenters stated that bioenergy is a costly way to "reduce" CO2 emissions as biomass power plants are expensive to build and require substanti al and ongoing infrastructure investments. Commenters stated that bioenergy is substantially m ore expensive than onshore wind, per kilowatt-year, including both the initial infrastru cture investment and ongoing fixed and variable costs. Commenters stated that replacing some coal w ith low levels of biomass co-firing may
result in stack CO2 increases.126

Comment 74: Commenters stated it is critical that the EPA util ize up-to-date data in the development of the Clean Power Plan in order to enable more accurate compliance planning.

Response 74: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of solar and wind cost and performance assumptions. The final building block 3 methodology is described in detail in section V.E of the final rule preamble of the CPP a nd in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that, as the rule is currently wr itten, out-of-date data is sometimes used when
more current information is available. Commenters s tated, for example, in terms of solar, the data used does not reflect current solar capacity o r market projections; today's solar capacity is already exceeding the estimates the EPA has used. C ommenters stated this is also the case for other resources such as hydropower.

Commenters recommended that the EPA use the most up -to-date technology data to determine renewable energy potential per state. Commenters st ated that, based on the new wind turbine technology, it is clear that Louisiana's coastal ar ea has some of the country's best wind resources. Commenters stated that, while the National Renewabl e Energy Lab maps used data from the year 2000 to determine wind energy potential, other NREL studies show that Louisiana has a wide range of renewable generation opportunities to appl y to the state's energy mix. Commenters stated that solar, hydro, and biomass are all local resources that have been largely untapped. Commenters stated that hydropower is a reasonable b aseload energy opportunity.

Commenters stated the agency should use the most re cent cost and performance data for renewable energy technologies, such as wind and sol ar. Commenters stated that, by the time the rule is finalized, the EPA should have access to fi nal 2014 data and the agency should use that information in establishing state targets and build ing from the most recent data on renewable generation is critical, given the rapid growth in d eployment of these resources in recent years. Commenters stated the EPA's assumptions should be u pdated to reflect new NREL resource assessments, more recent data from actual projects, and credible studies projecting continued cost reductions and technology improvements through 2030.

Comment 75: Commenters stated there are errors that need to be corrected under the proposed approach.

Response 75: The errors cited by the commenter relate to RPS re quirements, which are not a factor in quantifying the amount of cost-effective RE that is part of the BSER in the final rule. The final building block 3 methodology is described in detail in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mit igation Measures TSD supporting the final
CPP.

The following are summaries of the specific public comments under this comment:127

Commenters stated that, in reviewing the spreadshee t and the inherent calculations EPA relied on to establish the state goals for North Carolina, NC DENR discovered a number of errors or incorrect assumptions in the calculations. Commente rs provided an Appendix C which details
these concerns. Commenters trusted that the EPA wil l make the recommended corrections as outlined in Appendix C so that the final goals for North Carolina will be based on correct assumptions. Commenters stated one area of concern include the misrepresentation of the state's Renewable Energy and Energy Efficiency Portfolio St andard.

Comment 76: Commenters asserted that EPA has no Section 111 aut hority over RE technologies.

Response 76: The incremental RE that affected EGUs may procure t o demonstrate compliance with their relevant rate- or mass-based goals underthe final CPP is not regulated under Section 111. Qualifying compliance resources are not affec ted EGUs. Refer to the applicability definition provided in the preamble for additional information.

The following are summaries of the specific public comments under this comment:

Commenters stated that regarding Block 3, except po ssibly for renewable generation technologies such as biomass, EPA has no Section 11 1 authority over these generation technologies (nuclear, renewable) at all. Commenter s said that first, they do not release any air pollution, preventing the EPA from making an endang erment finding involving these units under Section 111. Commenters said that further, the defi nition of stationary source requires that the source "emits or may emit any air pollutant." Comme nters said since nuclear and non-biomass renewable generation emit no air pollutants of any type, it forecloses the ability of EPA to propose any rules regarding these generation techno logies.

Comment 77: Commenters stated the utilization of imported low- and non-emitting generation
from Canada as a CO2 emission reduction measure sho uld be provided in the final rule as a compliance option for affected EGUs to adjust their CO 2 emission rates.

Response 77: The EPA will work with states using the rate-base d approach that are interested in allowing the use of RE from Canada to adjust CO 2 emission rates. In these cases, all conditions for creditable domestic RE must be met, including t hat RE resources must be incremental and installed after 2012, and all EM&V standards must b e met. For additional information, refer to section VIII of the preamble.

The following are summaries of the specific public comments under this comment:

Commenters said that, the emphasis on maximizing fl exibility for states is a hallmark of EPA's proposal. Commenters said, that the final rule shou ld specifically recognize and leverage the integrated nature of the North American electricity grid, and promote the continued two-way flow in cross-border electricity trade. Commenters said, the rule should clearly affirm that states will have the flexibility to allow affected entitie s to utilize the importation of low- and non-128

emitting electric generation from Canada as a CO2 e mission reduction measure (including in their respective state plans, where appropriate).

Commenters stated the utilization of imported low- and non-emitting generation from Canada as a CO2 emission reduction measure comports with EPA' s assurance that "[s]tates may also identify technologies or strategies that are not ex plicitly mentioned in any of the four building blocks and may use those technologies or strategies as part of their overall plans." [79 Fed. Reg. at 34,837]

Commenters stated in step with the above discussion , CEA notes with encouragement that EPA's commitment to flexibility also encompasses a pledge not to confine states to the four building
blocks determined to constitute BSER. Commenters ad ded EPA makes a definitive declaration along these lines during its discussion of how BSER was determined: "[E]ach state has the discretion to adopt emission reduction measures oth er than the measures found by the EPA to comprise the BSER." [79 Fed. Reg. at 34,879]

Commenters added here again CEA sees strong grounds upon which a state can argue for the ability to leverage integration with Canada as partof its strategy for maximizing CO2 emission reductions under the 111(d) framework. Commenters s tated if states are able to clearly demonstrate how the importation of low- and non-emi tting generation from Canada can translate into measureable, meaningful decarbonisation of the ir electric generation fleets, then CEA believes that: (i) it is incumbent upon the EPA to offer certainty to interested states that they will have this option at their disposal; and (ii) any si gnal to the contrary represents an undue limitation on states' ability to look beyond the fo ur BSER building blocks for permissible actions to achieve their rate-based goals.

3.3.2 Current level of performance

This section discusses methodologies and data used to assess the current performance of Cleaner Generation technologies under building block 3.

Commenters have raised a number of issues related t o this subsection, which are organized by topics (comments) below. Responses are provided for these topics.

Comment 1: The baselines used in the setting of building bloc k 3 targets in the EPA’s proposal were developed using erroneous data or assumptions for some states not representative of actual performance.

Response 1: The final methodology for building block 3 relies on incremental generation from the BSER data year of 2012, which eliminates the ne ed to set a baseline level of generation. Further, State RPS requirements are not a factor in quantifying the amount of cost-effective RE that is part of the BSER in the final rule. The fi nal building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitiga tion Measures TSD.129

The following are summaries of the specific public comments under this comment:

Commenters stated that the EPA should carefully con sider large year-to-year fluctuations that occur and whether such anomalies, such as variation s in hydropower and plant outages, had an undue influence on the proposed baseline in certain states. Commenters noted that if this is the case, then the EPA should work with those states to make appropriate adjustments to the final
rule.

Commenters stated that the EPA should not adopt the use of a renewable generation floor equal
to the amount of the state's actual 2012 renewable generation for states that exceed the regional average. Commenters stated that this would penalize states for taking early action in adopting renewable energy policies. Commenters stated that I owa and other early actors should be rewarded for taking a leadership role in installing renewable generation. In a footnote,
Commenters stated that Iowa utilities' customers ha ve paid for the renewable generation, and setting a floor based on Iowa's 2012 renewable gene ration would not appropriately reward them for their early investments.

Commenters used the analogy of a car to highlight f laws with the EPA's approach. Commenters
stated that the EPA assumes that because for one car at one point in time a speedometer indicated a speed of 60 mph that is the car's velocity of tra vel for the entire trip. Commenters noted that just because the car has that speed at one point do es not mean that it can or should be maintained for the entire trip. Commenters stated that the EPA further assumes that this speed, or rate as applied to the proposed rule, can be applied to all states with no determination as to whether it is
achievable or cost effective. Commenters stated tha t states are not fungible as related to RE potential; the EPA cannot assume that a rate achiev ed by one state in one year can be achieved by another state. Commenters further stated that th e alternative also overburdens states which have developed RE early. Also, commenters stated, s ince the alternative is still based on generation and not capacity, it does not account fo r the fact that wind and solar are unpredictable
and intermittent renewable resources. Commenters st ated that for the above reasons, the EPA should re-propose the rule and set RE targets based on what is achievable for each state, taking into account cost and energy requirements as requir ed by the CAA.

Commenters stated the baseline numbers appear to be erroneous in multiple states, both on a cumulative and individual renewable technology basi s. Commenters stated that the EIA data also appears to include data derived from all generation sectors. Commenters stated that extending the baseline beyond the electric sector, not only modif ies the cumulative values (sometimes significantly), but also is not a representative re ference point in determining final compliance targets. Commenters suggested that actual renewable generation values, as reported by the states, should be utilized to begin with the most accurate data set, as not doing so will ultimately lead to erroneous targets and conclusions. Additionally, th e commenters stated, the characterization of
biomass as a renewable resource that counts histori cally and not as future resource option is inconsistent. Commenters stated the methodology to reach the final targets is a far more important consideration than the baseline values se lected, but more accurate baseline values simply helps to provide the clearest reference poin t to then determine realistic State targets.

Commenters stated EPA used 2012 data as a baseline to establish individual state goals in building block 3, but a single year can be an anoma ly, and EPA should have used a more robust130

set of data in calculating its goals. Commenters st ated increased generation from renewable resources coupled with changes in the total generat ion produced in 2013 and 2014 impact both the regional growth factor calculated by EPA and th e resulting individual state renewable goals. Commenters stated using 2013 generation data would decrease the regional renewable energy growth rate calculated by EPA. Commenters provided a table summarizing this decrease for three regions as an example. Commenters stated the change in the growth rate using 2013 data can have a significant impact on the renewable ener gy goal that EPA calculates for state goals. For instance, the commenters stated that utilizing 2013 data reduces the interim and final renewable energy goals for Arkansas by 15% and 22% respectively. Commenters also stated that likewise, for Louisiana the interim and final renew able energy goals are reduced by 10% and 17% if using 2013 as a baseline. Commenters stated EPA's selection of 2012 as the single baseline year in its goal calculation efforts is un reasonable and arbitrary.

Commenters stated that if EPA establishes state bas elines, they must be representative of actual performance related to the goals of the rule and mu st not, for example, work against states or entities that took early action contributing to tha t goal. Commenters stated that EPA also must consider significant year-to-year variations that h ave occurred, and will continue to occur. Commenters stated that many states have observed, f or instance, anomalies in hydropower and plant outages had an undue influence on their basel ine in the proposal. Commenters suggested EPA should work with those specific states and othe rs with concerns, to make needed adjustments in any final rule to show how such an approach works over time.

Commenters stated that the EPA assumes that currentRES requirements are a reasonable foundation on which to develop state RE requirement s, but this does not account for the fact that the RES (the commenters are referring to the RES fo r the state of Missouri) only applies to
Investor Owned Utilities and not to all utilities. Commenters stated that this assumption inserts
error in the baseline determination for RE.

Comment 2: EPA should apply UCS Recommended Percentage Target s Using the Amount of
Creditable RE in a State.

Response 2: The final methodology for building block 3 relies on incremental generation from the BSER data year of 2012, which eliminates the ne ed to set a baseline level of generation. Further, State RPS requirements are not a factor in quantifying the amount of cost-effective RE that is part of the BSER in the final rule. The fin al building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitiga tion Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters proposed that the EPA apply UCS recommen ded percentage targets using the amount of creditable RE in a state. Commenters sugg ested that EPA may also want to consider modifying how the baseline RE generation and starti ng RE performance level is determined for
each state. Commenters mentioned an alternative to setting the baseline on current RE generation: the EPA could require states, working w ith their utilities and affected EGUs, to account for renewable energy generation, which theywould be able to take credit for under the CPP as of the date they submit their state plan. Co mmenters stated that this would most often131

involve in-state RE generation less RECs owned by o ut-of-state persons and any RECs generated out-of-state but owned in-state plus any RECs gener ate out-of-state but owned in state (referred to as sponsored renewable energy. Commenters stated that the denominator for determining the starting RE performance level and target level of p erformance would be overall consumption of electricity in the state in the starting and compli ance year. Commenters further stated that state target would increase from the sponsored RE baselin e to the target RE performance level via an EPA determined methodology. Commenters stated that states will need to audit their current level of sponsored RE in order to design a state pl an that achieves their RE targets.

Commenters expressed that their suggested approach would allow states which currently export a large amount of renewable energy to establish a mor e accurate baseline; it would also ensure that states which import a large amount of renewable ene rgy would start at a higher RE baseline and are not allowed to backslide or remain stagnant ear ly on in the compliance period.

Commenters noted that using this process from the o utset will allow the EPA the opportunity to resolve at the outset questions about how states wi ll allocate credit for projects with multiple sources of policy support. Commenters then noted th at states would have greater certainty about how different RE policies will work within their pl ans, and it will allow the EPA to test the sufficiency of existing REC trading systems for com piling this type of information so that refinements to the system can be made in time for t he plan performance period.

Comment 3: Baselines Do Not Account for Displaced Coal.

Response 3: The final methodology for building block 3 relies on incremental generation from the BSER data year of 2012, which eliminates the ne ed to set a baseline level of generation. The BSER is forward-looking in identifying cost-effecti ve opportunities for emission reductions from 2012; however, the cost and availability of these e mission reduction opportunities is the result of many factors, including previous actions. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitiga tion Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated that based on EPA's goal calculat ions, both a lower baseline emission rate and high levels of RE and ZE in the baseline year c ause a state's ultimate performance goal to be more stringent. Commenters stated this is because E PA does not account for the coal-fired megawatts that already have been displaced by RE an d NGCCs. Commenters stated existing (i.e., pre-2012) RE and ZE therefore negatively imp acts early-acting states by making the baseline emissions rate artificially low. Commenter s stated for example, RE displaced a significant amount of coal generation in Minnesota prior to 2012. Commenters referenced retirement of coal-fired units that were replaced w ith NGCC facilities, noting these coal retirements resulted in significant reductions in C O2 emissions and the state's average emissions
rate. Commenters also noted the addition of new win d farms and additional large amounts of purchased wind power. Commenters stated this wind p ower, which needed the more flexible, gas-fired generation that Xcel Energy built to repl ace the retired coal plants, also resulted in
reduced utilization of the new NGCC units. Commente rs stated that absent the retirement of
these coal-fired units and the new wind investments , Minnesota's baseline emission rate would132

have been significantly higher. Commenters stated t hat applying EPA's goal calculation methodology to this higher baseline emission rate w ould have resulted in less stringent performance goals for Minnesota.

Commenters also stated that existing hydropower and nuclear energy is not explicitly included in states' baselines even though they displace other f ossil-fuel fired generation. Commenters stated that where such sources would have had an aggregate CO2 emission rate greater than states' baselines under the Proposed Rule, existing hydropo wer and earlier investments in carbon-free nuclear contributes to artificially low baseline ca lculations.

Comment 4: The EPA’s approach to renewable portfolio standard s for states meeting building block 3 requirements is inappropriate for some stat es and does not account for regional disparities.

Response 4: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The final building block 3 methodology is described in detail in V.E of the preamble and in t he GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated that it was inappropriate for the EPA to rely on the NC REPS when setting renewable energy goals for Florida under Building B lock 3. Commenters stated that NC's REPS requirements may be met using hydroelectric, biomas s, and renewable power imported from other states, and up to 40 percent of the NC renewable requirement may be met with energy efficiency. Commenters stated that it was inappropr iate to base Florida's renewable goal on a goal that combines renewables and energy efficiency and to have another goal for energy efficiency in Florida. Commenters stated that the E PA must account for these discrepancies and adjust Florida's goal accordingly. Commenters also expressed concern over EPA's assumptions regarding renewable energy in the Southeast.

Commenters noted that the state of Iowa is a leader in wind energy generation. Commenters stated that Iowa recognizes and appreciates that th e EPA has awarded Iowa's early investment in renewables by using a regional average to calculate state goals. Commenters stated that the same unit of renewable energy may be used to show compli ance with both a state RPS and a 111(d) state plan. Commenters expressed support for the pr oposed rule's position on this issue and stated
that there was no reason this should not be allowed . Commenters also noted that allowing this would permit states to use the same unit of renewab le energy to show compliance with the state's RPS and 111(d) which would reward the state for ado pting proactive policies.

Commenters described the EPA's plan for regional gr oupings (and RPSs) as a hodgepodge which is not demonstrated, which does not exist anywhere in the real world, and the methods for constructing it were intellectually arbitrary. Comm enters stated that the EPA failed to account for exemptions for municipal and coop utilities includi ng those based on purchase of out-of-state power. Commenters also criticized the EPA's assumpt ion that the levels of nuclear generation will continue are based on nothing better than spec ulation.133

Commenters pointed out that the EPA failed to accou nt for the wide regional disparities in the availability and cost of renewable resources in the U.S. when it assigned a de facto RPS for each state within a given region. Commenters noted that the EPA failed to consider some states' existing renewable mandate credits certain types of renewable resources in ways that reduce the absolute amount of renewable generation is required to satisfy the mandate. Commenters provided Delaware and Colorado as examples since bo th offer a credit multiplier for specific types of renewable generation. Lastly, commenters n oted that increasing reliance on renewable energy would require the construction of additional transmission lines which would take years to
build.

Commenters noted that the EPA should not finalize i ts proposed RE target for Texas by applying the RPS of Kansas to Texas while ignoring the exist ing Texas RPS.

Commenters expressed concern over the EPA assumptio n that adopting RPSs would be "best practices" for all states which do not currently ha ve one. Commenters stated that the EPA fails to note that RPSs are an independent legislative choic e meant to trade off higher electric costs for the presumed environmental and economic developmentof renewable power. Commenters pointed out that many states which possess signific ant wind and/or solar resources have chosen to adopt portfolio standards, and many states which do not possess significant quantities of renewable resources have chosen to avoid adopting p ortfolio standards. Commenters made the point that whether or not one state has adopted por tfolio standards has no bearing on the standards another state chooses to adopt or not ado pt; therefore there are not "best practices" which can be imported from state to state. Commente rs also stated that the EPA is not in the position to dictate to states what "best practices" should be in terms of renewable energy.
Commenters stated that the EPA contradicts itself b y claiming that states that have adopted renewable portfolio standards demonstrate "best pra ctices". Commenters noted that the EPA's goals would require states to achieve more renewabl e resources than most states would mandate in that state's applicable portfolio standard. Comm enters stated that what the EPA refers to as best practices are in reality EPA outcome-driven as sumptions as to the type of portfolio standard that it thinks state legislatures should adopt.

Comment 5: Georgia's RE Target Should Be Less Than or Equal t o 7.5%.

Response 5: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The final building block 3 methodology sets target generation levels at the interconnect-level and is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated EPA misinterpreted North Carolina 's Renewable Energy and Energy Efficiency Portfolio Standard (REPS) when setting t he renewable energy target for Georgia and
other Southeastern states. Commenters stated that b ased on North Carolina's REPS, Georgia's RE target should be no more than 7.5%. Commenters stat ed that North Carolina's REPS Secondary Target for electric membership corporations and mun icipalities is 10% by 2018 and thereafter.
Commenters stated that North Carolina's REPS statut e section 62- 133.8(c)(2) states that "An134

electric membership corporation or municipality may meet the requirements of this section by any one or more of the following" including: (c) Pu rchase electric power from a renewable energy facility or a hydroelectric power facility, provided that no more than thirty percent (30%) of the requirements of this section may be met with hydroelectric power, including allocations made by the Southeastern Power Administration." Com menters further stated in this case North Carolina's REPS allows the use of up to 30% of exis ting electric hydro generation to be counted towards the 10% REPS target. Commenters stated thatin EPA's proposal the use of existing electric hydro generation is not allowed; so the ex clusion of hydro generation would effectively reduce the comparable RE secondary target to 7% for EMCs.

Comment 6: Allow states to adjust the emission rate from "Aff ected EGUs" to reflect reductions
in carbon emissions from other fossil fuel carbon e mission sources.

Response 6: There is no building block 3 target generation lev el expressed for Alaska. Refer to section VIII.I for detailed guidance on incorporati ng CO2 emission reduction measures in state plans.

The following are summaries of the specific public comments under this comment:

Commenters asserted that the proposed rule does notclearly explain what RE and EE measures may be used to adjust the statewide emission rate f or compliance purposes. In particular the rule, Commenters opined that it is unclear with respect t o the extent to which a state must demonstrate that RE and EE measures factually result in reduced generation at "affected EGUs." Commenters reported that most electric power in Alaska is gene rated from fossil fuels such as natural gas or diesel fuel and carbon reductions are being achieve d in many communities not connected to "affected EGUs." Commenters stated crediting Alaska for new RE generation not connected to
"affected EGUs" also makes sense because EPA used s tatewide RE generation figures for Alaska's baseline and target rate. Therefore, comme nters requested that EPA clarify that the rule would allow states to adjust the emission rate from "affected EGUs" to reflect reductions in
carbon emissions from other fossil fuel carbon emis sion sources.

Comment 7: A consistent definition of renewable energy techno logies for the goal computation process is requested.

Response 7: All RE technologies that are used to quantify buil ding block 3 target generation levels may be used to demonstrate compliance with t he standards of performance. Further, the EPA has provided additional guidance on non-BSER me asures that may be used to achieve standards of performance in section V.A.6 of the pr eamble. Refer to section VIII.G.1.b for further guidance on actions taken to adjust the CO2 emission rate of an affected EGU.

The following are summaries of the specific public comments under this comment:135

Commenters noted that certain types of renewable ge neration which were included in the goal setting as zero carbon would not be contributed to compliance demonstration under the proposed rule. Commenters requested a consistent definition of renewable energy technologies for the goal computation process and for state compliance purpos es.

Comment 8: The EPA's method of incorporating renewable energy into Building Block 3 only accounts for renewable generation in a specific sta te and fails to address the export and import of renewable energy between states, e.g., for Wisconsi n.

Response 8: The EPA has finalized a building block 3 methodolo gy that is premised on the regional availability of incremental RE, which is d escribed in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated EPA's method of incorporating ren ewable energy into Building Block 3 only accounts for renewable generation in a specific sta te and fails to address the export and import of renewable energy between states. Commenters stated that for example, in 2013 Wisconsin generated only 48 percent of the renewable energy i t used, with the remaining 52 percent being imported from other states.

Comment 9 : The EPA is requested to exempt certain states and/or utilities from the proposed
rule.

Response 9: The final rule applies to all affected sources.

The following are summaries of the specific public comments under this comment:

Commenters described how the EPA assumes that 12% o f electric generation in 2030 will be from renewable energy sources, but Delaware state l aw already requires 25% by 2025.

Commenters noted that Delaware will better the EPA emission rate by 10% and that the state already has a carbon tax, a Renewable Portfolio Sta ndard, and an energy efficiency goal. Commenters stated that for these reasons, Delaware should be exempt from the EPA plan.

Commenters described how the Heartland utility proc ures over 50% of its power supply from renewable energy resources, including hydropower an d wind power. Commenters stated that the EPA treats all utilities equally under the state-ce ntric approach, without regard to the efforts of individual utilities to reduce their carbon footpri nt. Commenters noted that Heartland and other
utilities that have reduced their reliance on coal- fired generation would be penalized along with utilities that have taken no (or minimal) action. C ommenters called for the EPA to revisit the rule in order to exempt utilities, such as Heartland, th at already obtain near or more than 50% of their energy supply from renewable energy resources.136

Comment 10: The EPA is requested to account for Florida's limi ted access to renewable

resources.

Response 10: The EPA has finalized a building block 3 methodolo gy that is premised on the regional availability of incremental RE, which is d escribed in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters noted the EPA has not appropriately acco unted for the fact that Florida has limited
access to renewable resources. Commenters reference d the EIA, which stated that Florida had zero MWH from wind, geothermal, and hydroelectric g eneration over the past 12 months and only 153,000 MWh from solar power. Commenters reque sted that the EPA account for Florida's limited access to renewable resources and to provid e a public comment period on its analysis.

Comment 11: Examples of current renewable energy projects are described.

Response 11: The resources and data provided in this comment we re valuable in reinforcing the role of RE as part of the BSER and in finalizing th e building block 3 methodology.

The following are summaries of the specific public comments under this comment:

Commenters reported the Wheat Belt Public Power exp erienced a balanced energy portfolio from TriStar G&T. Commenters noted that they used n atural gas and coal, and their system provided them with a reliable and efficient portfol io.

Commenters described how EverPower is a developer, owner, and operator of utility-scale wind energy projects. Commenters stated that the currentfleet of turbines in US currently reduces emissions by 127 million tons, which is the equival ent of 20 million cars off the road each year. Commenters also stated that wind energy accounts fo r more than 50,000 jobs across the country, and there are 550 manufacturing facilities across 4 4 states which supply the industry in various ways, commenters also noted that the average cost o f wind has declined by 43 percent in the past four years.

Commenters noted that RE only represented 2 percentof generation (including hydropower) in Ohio in 2012. Commenters noted that Ohio expects to have 9 percent of 2020 generation from
renewables. Commenters also noted that the EPA stat ed that RE generation in 2012 was 12% nationally with over half of the states having established almost 20 percent of 2020 generation by
renewables.

Commenters described actions made by Northeastern U tilities in supporting New England's goals. Commenters stated that NU is expanding renew able and low-carbon generation through direct investment as well as by developing infrastr ucture to bring renewable and low-carbon resources to market, which includes hydro, to their electricity customers CL&P, NSTAR, PSNH,
and WMECo. Commenters stated that NU has committed billions of dollars to long-term137

contracts for the purchase of energy and/or RECs fr om renewable projects within the New England region.

Commenters described a Seminole Electric Cooperativ e policy which has been in place for years to acquire additional renewable resources. Commente rs stated that Seminole's Board Policy No. 308 expressly commits it to develop and utilize num erous requests for proposals for renewable PPAs and entering into those that are cost effectiv e. Therefore, commenters stated, renewable options which are reasonably available and cost eff ective are already being utilized in Florida, and the EPA is wrong in assuming that Florida can d o substantially more.

Commenters discussed the current renewable capacity and legislation related to renewable in the
state of South Carolina. Commenters noted that SC h as added new solar power capacity every year since 2012. Commenters stated that the South C arolina legislature passed Act 236 in 2014; the law increases net metering, increases the size of systems permitted to net meter tenfold following a utility commission proceeding, and seek s to make investments in distributed generation near 3% of peak generation. As noted by the commenters, the Act is expected to lead to 300 MW of new solar generation in SC. Commenters stated the SC is projected to generation an additional 500,000 MWh of renewable energy by 20 21.

Commenters described projects in the states Califor nia, Iowa, and Colorado in order to illustrate how renewable are adequately demonstrated technolog y. Commenters noted that some states already rely on renewable to meet a significant and growing portion of their electric generation needs, and they are doing so at reasonable costs to consumers while realizing economic benefits. Commenters described how California has a state goa l of 33 percent RPS by 2020; the state leads the nation in generating capacity from geothermal, biomass, solar PV, and solar thermal projects, and it is second in the nation in wind and hydropow er generation capacity.

Commenters used Iowa as an example of how renewable will allow for greater reductions than the EPA has projected for most states. Commenters r eferenced the Natural Resources Defense Council in stating that Iowa is now the nation's le ader in wind energy generation with 27 percent of its power coming from wind; Iowa is planning on retiring 4 coal plants by 2016. Commenters noted that Iowa is already on track to meet the 16 percent carbon reduction target set by the EPA
before the standard is even in effect. Commenters u sed Iowa as an example of how deploying renewable is possible, affordable, economically ben eficial, and can result in reductions beyond the modest targets proposed by the CPP. Also noted by Commenters is the use of a state solar tax
credit which lead to an increase in distributed sol ar by turning rooftops, parking lots, and other areas into sources of electricity generation. Comme nters stated that Iowa also focuses on energy efficiency. Commenters referenced the NRDC and desc ribed how Iowa can create over 2,500 jobs and save an average of $6/month on home electr icity bills by including energy efficiency in their state plan. Commenters described how electric companies are set to invest over $900 million dollars on energy efficiency in Iowa over t he next five years.

Lastly, commenters described the efforts made by Co lorado to develops its vast renewable energy resources, which include wind, solar, biomas s, and geothermal; Colorado has an ambitious renewable portfolio standard, a substanti al rebate program, a strong net metering policy, and other market incentives. Commenters sta ted that Colorado has the fifth largest solar PV market and the tenth largest wind market in the U.S. Commenters also stated wind accounted138

for 11.3 percent of Colorado's electricity generati on in 2012; solar PV was growing at a rate of over 50 percent. Commenters noted that Colorado was ranked the single fastest growing state economy in the nation by Business Insider.

Commenters described current emissions reductions a nd efficiency mandates occurring in the
state of Oklahoma. Commenters stated that Oklahoma utilities have already achieved meaningful CO2 reductions and have improved the efficiency of their power-generation fleet. Commenters noted that approximately 15 percent of Oklahoma's e lectricity generation is from wind power. Commenters used OG&E as an example; OG&E accounts f or almost 15 percent of the state's wind generation. Commenters stated that OG&E and ot her state utilities have incorporated wind generation into their portfolios, and they have inv ested in a major transmission line between Oklahoma City and Woodward, Oklahoma. Commenters no ted that the carbon intensity of Oklahoma's utility sector had been reduced by 18 pe rcent since 2005, and emissions are expected to drop even further.

Commenters described efforts by NorthWestern Energy and their customers to invest in acquiring and expanding renewable energy. Commenter s noted that in 2006 NorthWestern Energy had 5000 MW of new generation projects in Mo ntana, most of which were wind generation projects seeking access to markets outsi de of Montana. Commenters noted that NorthWestern Energy's supply portfolio is already c omprised of over 50% renewable.
Commenters described the Mountain States Transmissi on Intertie (MSTIE) project which NorthWestern Energy attempted to develop to provide transmission service for new generation projects; MSTIE was a 500 kV transmission path from Montana to southeast Idaho, but the project was halted in 2012 as a result of a lack of firm commitments that transmission capacity would reach markets and because of the daunting fed eral permitting processes. Commenters raised the question of who would finance and construct the many new transmission lines which would be required to allow the expansion of renewab le, particularly on the timeline and scale proposed by the CPP. Commenters also questioned who would purchase large amounts of renewable energy originating in Montana.

Commenters described current utilization of renewab le energy within the state of Texas. Commenters described the current amount of wind gen eration within the state; as of April 2014, Texas has 12,755 MW of wind generation capacity whi ch accounts for more than 20% of the total U.S. wind capacity and the greatest amount of wind generation of any state in the country.

Comment 12: Arkansas' starting level of performance value in E PA's proposed goal-setting formula is based solely on biomass and wood-derived fuels generation reported to the Energy Information Administration and that combusting biom ass for energy does not produce a one-forone increase in net CO2 emissions.

Response 12: The EPA has finalized a building block 3 methodolog y that is premised on the regional availability of incremental RE, which is d escribed in detail in V.E of the preamble and in the GHG Mitigation Measures TSD. Biomass is not considered part of the best system of
emission reduction in this rule and therefore it is not included in goal-setting or compliance evaluations. However, similar to other technologies outside of BSER, biomass may be139

considered as a part of a state’s plan to meet the emission guidelines. A discussion regarding the use of some biomass feedstocks for compliance purpo ses can be found in Section VIII.I and Section VIII.K of the preamble.

The following are summaries of the specific public comments under this comment:

Commenters noted that Arkansas' starting level of p erformance value in EPA's proposed goalsetting formula is based solely on biomass and wood -derived fuels generation reported to the Energy Information Administration and that combusti ng biomass for energy does not produce a
one-for-one increase in net CO2 emissions because b iomass is part of the natural carbon cycle.
Commenters stated that biomass fuels should be trea ted in the same way as other renewable products, such as wind and solar, for compliance pu rposes since EPA applies the renewable energy annual growth in the goal-setting formula to existing biomass generation.

3.3.3 Target level of performance

This section discusses specifics regarding the targ et level of performance as it applies to building block 3. The methodology for quantifying RE target generation levels under building block 3 is a modified version of the alternative RE approach fro m proposal, with adjustments that reflect the data and information the EPA collected through stak eholder comments.

Commenters have raised a number of issues related t o this subsection which are organized by topics (comments) below. Responses are provided for these topics.

Comment 1: Comments expressed support and opposition to region al target setting approach based on state RPS requirements.

Response 1: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E.6 of the preamble and in the GHG Mitigation Measures TSD

.
A discussion regarding the use of some biomass feed stocks for compliance purposes can be found in Section VIII and Section VIII.K of the pre amble.

The following are summaries of the specific public comments under this comment:

Commenters stated concerns and opposition to the re gional approach for setting RE targets based on state RPS requirements.

Commenters stated EPA's calculation of regional RE energy goals is incorrectly premised on an average of the "effective" renewable generation in 2020 for each state in the region. Regardless of whether a state RPS has been established, commen ters stated the EPA should work closely with each state to determine the potential for futu re RE development to serve as a basis for assumptions used in BB3.140

Commenters questioned the EPA's justification for u sing average regional targets instead of a state by state approach in determining the contribu tion of RE growth in calculating the state goals. Commenters stated that due to the EPA's meth odology, the final RE goals for each region are less than the original RE goals the EPA calcula ted by averaging state RPS goals. Commenters asserted that the differences are large and highly variable among the regions, ranging from 9% below the original regional goal fo r the East Central Region, to 40% below the regional goal for the North Central region, which t he commenters contended was due to a failure to determine RE potentials on a state by state basi s.

Commenters stated the CPP should conduct a state by state analysis of RE options instead of grouping states by region. Commenters said there is a great deal of variability from state to state on the type of RE generation available and the capa city factors and transmission available to move the renewable generation to the load centers a nd each state should be allowed to set targets based on its resources. For example, commenters not ed they provide renewable generation to member owners through PPAs from wind projects in Mi ssouri and Kansas. Commenters added the projects, although in adjoining states, have ve ry different capacity factors; for example, in 2013 for the 4 Missouri wind projects it was 31.4% while in Kansas it was 42.5%.

Commenters stated grouping disparate states into re gions lacks a rational basis. Commenters asserted EPA's own data shows that in many of the r egions, a single state dominates the statistics, such as Texas and New York, which have far greater total renewable resources available for achieving the growth rates that EPA's primary proposal would expect. Commenters stated that the narrowest margin in total RE resour ces is nearly 300%, for the North Central region, where South Dakota has nearly three times t he renewable resources as the state with the lowest RE potential, Wisconsin. Commenters also sta ted that the largest margin is found in the Northeast region, where New York has over 100 times the potential RE resources as the state with the fewest resources, Rhode Island. Commenters quoted EPRI, who stated, "EPA's 'best practices' scenario for developing state-specific r enewable energy targets assumes state equivalency for regional calculations of resource p otential. This assumption is problematic when regions are large and encompass states with appreci ably different renewable energy resources."

Commenters said EPA's presumption that RE-based pow er generation can be equally deployed in all states within a given region, despite signif icant geographic and infrastructural differences among such states. As a result, commenters said suc h an approach dramatically overstates RE generation potential in several states, including P ennsylvania. For instance, commenters said within the East Central region there are considerab le meteorological and topographical differences among these states: coastal states such as Virginia and Maryland have much greater opportunities for wind and solar development as com pared to Pennsylvania and West Virginia, commenters said NREL's GIS-based analysis of state RE potentials shows significant differences in photovoltaic and both onshore and offshore wind- based generation potentials in Pennsylvania and West Virginia as compared to Virginia, Maryland and Ohio, making EPA's methodology in calculating RE targets on a regional basis unreason able.

Commenters stated EPA inappropriately applies regio nal average RE targets without regard for state-specific factors. For their southeastern stat es, the commenters said the assumptions would increase RE generation ranging from 262% to over 40 0%. Commenters added that EPA should141

setting a mass-based target that would be equivalen t to a rate-based target, believing a pay-asyou-go approach would make for exact equivalence.

Commenters said EPA's assertion that states conside red feasibility and cost in the political process is most likely accurate and that state obje ctives vary from state to state. Thus,
commenters asserted state RPS are not a true reflec tion of technical and economic feasibility. Additionally, commenters said the potential cost of RE deployment is sometimes dealt with outside of the target itself. Commenters said a num ber of state RPS laws include cost caps or other language that would adjust targets and timing of compliance based upon cost, so the targets are responsive to higher than contemplated costs. F inally, the commenters said all state RPS laws were initially enacted prior to 2010, with the majo rity of them enacted prior to 2005. Thus, the commenters asserted any analysis performed in relat ion to cost and feasibility given the local resources is likely out of date given the rapid adv ancement in the cost and performance of RE technologies.

Commenters said BB3 targets should be re-evaluated and noted that a number of states have already met the regional target. Commenters noted t hat other state RPS laws have future year adjustments that should be taken into account beyon d what was on the books in 2012.

Commenters supported inclusion of current state RE/EE standards, which are set by law, and determination of future goals based on more recent growth rates of RE (2009 to 2013).

Commenters stated EPA based state RE targets on reg ional RE rates, even though the regions poorly reflect the varied RE potential for many sta tes. Commenters stated, as a result, some states, notably states in parts of the Southeast U. S., are assigned RE targets that are manifestly impossible to achieve, thus putting additional and unfair burdens on those states.

Commenters stated that the regional approach essent ially assumes that the same categories and levels of renewable generation achieved in certain states are achievable in all states in the region. Commenters also stated that it applies policy choic es made in certain states directly to other states in the region with no justification as to wh ether such a policy is feasible in that state.

Commenters preferred the alternative approach based on in-state feasibility. However, the
commenters said that if EPA decides to finalize the RPS methodology for the RE component of BB3, EPA must implement the following actions/corre ctions:

Finalize the use of out-of-state RECs for complianc e because many RPS programs allow the use of out-of-state RECs to meet the state commitment, and therefore provide the financial incentives
for those resources. Ensure that the measures used to develop the regional RPS goals and the subsequent state targets are consistent with the me asures allowed for compliance. Adjust the target setting calculations to include all RE in 20 12 used to satisfy the state-specific RPS (not just the RE generation located within the state). A djust the regional RPS goals and the subsequent state targets as deemed necessary for th e allowance of alternative compliance payment provisions in many states' RPS programs, an d allow for distributed RE generation in state compliance plans.

Commenters said states portfolio requirements typic ally can be satisfied with RE generated in other states. Commenters said it may be economicall y preferable for a state not to import some142

or all of the resources needed to meet the in-state mandate. Commenters stated that by assigning state X an initial renewables goal of, for instance , 10% based on that state's portfolio standard of that amount, EPA is concluding that the "best" syst em for that state entails in-state generation of
10% renewables. But commenters noted that state X's legislature, in allowing the portfolio standard to be met with out-of-state generation, di d not conclude that generating in-state RE at 10% represents wise public policy. Thus, the commen ters concluded that EPA is arbitrarily using state legislation to set an in-state RE target thatthe legislation itself did not set.

Commenters stated the proposed and alternative appr oaches were supportable but warranted modification. Commenters supported the UCS alternat ive approach.

Commenters did not support the UCS proposal for the following reasons:

• Use of the 2009-2013 growth rate may overestimate t he ability of states to develop renewable resources in the long term. The r enewable development growth rate over this period reflects an unpreceden ted build out of renewable energy, helped in large part by a drastic reduction in prices due to a large economic contraction and a global supply glut.

• The proposal requires states that have made early e fforts in expanding renewable energy development to do even more. The proposal wo uld lower the interim and final goals in these states and constrain the limit ed flexibility to use other building blocks to achieve compliance. Under the UCS proposa l, the western region would be required increase renewable energy generation fr om approximately 14% of retail sales to approximately 31% of retail sales.

• The proposal assumes compliance would be facilitate d by an unlimited REC market, which is inconsistent with the current EPA proposal.

Commenters said they cannot comment on the technica l feasibility and reasonableness of BSER under the proposed approach for RE as it would appl y to Tennessee as RE is currently not managed within a state infrastructure by a single e ntity that lends itself to understanding potential contribution and growth of RE to Tennessee s electr icity demands. Commenters said dispatch of its generation portfolio, including RE resources, i s not based on state boundaries. Commenters said that during their current IRP process, they ar e treating RE as a resource that competes on par with more traditional generation options, including fossil fuels and EE. Because the IRP process is ongoing, the commenters stated it is undetermine d what the future growth of RE will be within the TVA service area, making it particularly challe nging to posit how a state plan may credit RE.
Commenters asserted that it is critical that EPA al low states to perform state-specific analysis with the assistance of utilities, PUCs and others around RE to determine what is feasible given each state's particular circumstances. Commenters s aid states may then be able to give EPA meaningful comments regarding RE's potential contri bution to BSER. If EPA is determined to use the proposed RE approach, commenters recommende d EPA consider incorporating state progress to-date in achieving RPS requirements.

Commenters recommended that the EPA completely repl ace the current methodology for calculating RE targets with a methodology based on progression of technology costs for the two143

dominant IRGs, wind and solar PV, and based on mode ls of state wind patterns and solar irradiance. Commenters stated the progression of te chnology cost should justify the total amount of IRGs deployed nationwide, and the relative usage of each IRG. Commenters asserted that EPA would be justified in arguing that no feasible scenario will result in increases in the cost of wind and solar PV generators and that all probable technology developments in RE between now and 2030 will serve only to increase the general av ailability of renewable generators. Commenters suggested the following:

Use models of wind patterns and solar irradiance to classify the quality of various regions of the country for IRG deployment. EPA could then fill in the highest-quality regions with IRGs until 13% of total generation (or some other quantity jus tified by the cost analysis suggested in the first point) is provided by those IRGs, i.e. identi fy the sunniest places, and put solar PV there. Identify the places with the highest quality sustai ned winds, and put wind turbines there. Apply that generation to the state goals of the states wh ere the modeled IRGs are located.

Commenters said that EPA should adjust the RE growt h assumptions to more accurately reflect the potential in states and regions. As technology and deployment prices continue to plummet, Commenters said many states have already, or will s oon, meet the level of RE generation that
EPA assumed that wouldn't be met until 2020. Commen ters agreed that the bar should be set higher.

Commenters said because the current proposal will i ncrease generation from renewable sources by only 2% above BAU in 2030, it does not meet the BSER standard, but rather represents the status quo without taking into account any of the t echnological and market dynamics that will likely drive further RE development over and above current BAU forecasts.

Commenters said that EPA's growth rate formula serv es as a growth cap, constraining states from doing more. Commenters stated EPA should elimi nate this constraint as many states are seeing wind and solar growth rates of well above th e highest regional rate of 15%. Additionally,
the commenters said the EPA model has not accounted for the growth of renewables beyond the 2020 end date of many state RPS plans. Commenters s aid assuming renewable levels will be the same in 2030 as they are in 2020 is unreasonable an d EPA should update its model to better account for potential growth in state RPS requireme nts.

Commenters said should the EPA default to the curre nt RPS approach in setting state targets, several key changes must be made. First, the commen ters stated EPA should use the highest RPS in a region to set the state targets, not the avera ge RPS. Secondly, the commenters said EPA should use 2030 RPS targets, not 2020 targets in se tting the state goals. As the compliance period for the CPP extends out to 2030, not 2020, selectin g the RPS goals for 2020 severely limits the RE potential for an entire decade. Commenters added that selecting a 2030 RPS goal sends a clear message on the potential for a state to inclu de renewables as part of a balanced state energy portfolio by 2030.

Commenters were opposed to the use of RPS requireme nts to establish RE targets and stated that many RPS targets - including Connecticut's - includ e the possibility of alternative compliance payments, which can be paid in lieu of acquiring RE generation and protect against significant ratepayer impacts if the market cost of RE generati on exceeds certain levels. Commenters said144

that Connecticut's RPS was enacted in 1998 and was not intended to address climate change. Rather, the commenters said it was designed to achi eve several objectives: diversify the state's energy resource mix to promote reliability, provide a hedge against volatile fossil fuel prices, improve environmental conditions by reducing air em issions, create clean energy jobs, and enhance the quality of life in the state. According ly, commenters said that while many RPSeligible RE technologies can improve environmental conditions by reducing air emissions and creating clean energy jobs, ultimately technical an d economic feasibility dictate which RE technologies are brought to market to satisfy RPS t argets. Commenters stated these technical and economic circumstances are not necessarily aligned with the CPP goal of reducing CO 2 emissions.

Commenters were generally supportive of RE as a mea ns to reduce carbon emissions but opposed EPA's proposed methodology for estimating R E's contribution to reduced carbon emissions, and preferred the Alternative RE approac h. Commenters stated they have significant concerns with the proposed approach, including the issue that Tennessee currently has no RPS requirement, nor does it have a traditional PUC or single entity charged with keeping track of RE generation. Also, the commenters said the use of RP S requirements established within other states, even if only applied to states within a sim ilar region, is unreasonable for setting BSER. Commenters stated using RPS requirements to estimat e potential RE growth targets is unsound given that often such requirements are established without any consideration to resource potential, costs, and feasibility with respect to a chievability.

Commenters supported EPA including in its guideline a system that will allow the power plants that serve such areas to take advantage of the ener gy efficiency and renewable energy opportunities available in states without affected power plants and recommends that EPA use the regional alternative approach as described in the O ctober 30, 2014 NODA. Commenters also recommended that EPA include the potential renewabl e energy from such areas in its determination of the regional potential for renewab le energy, which would provide for that potential to be included in the targets of states i n the region.

Commenters said EPA's alternate proposed approach a ddresses some of the key flaws in the proposed approach by focusing on state RE potential instead of individual state RES requirements. However, the commenters said this app roach relies on unsubstantiated assumptions about the rate at which states can deve lop renewables and the future costs of RE generation technologies. Commenters stated EPA's pr oposed primary and alternate methods for setting RE generation goals raise significant conce rns about whether the proposed goals can be achieved by the states. Commenters asserted the reg ional approach inappropriately assumes that RES mandates are proxies for RE potential and that neighboring states have similar RE potential. Further, the commenters said EPA's use of RES requi rements fails to consider key design features of state RES programs that serve to reduce the stringency of these programs. Finally, the commenters said EPA fails to consider the technolog ical challenges of integrating additional renewable generation into the interconnected power system and how the other proposed building blocks and the interconnected nature of the power s ystem could affect a state's ability to achieve the proposed levels of RE generation.

Commenters asserted that renewable should be used i n the compliance determination for CPP but not factored in the state goal calculation as a requirement. Commenters said RE is neither as145

reliable nor does it generate the same quantities o f electricity as traditional generation. Therefore,
commenters stated it is not realistic to make the u se of RE a required step in achieving compliance but should be left up to the states for determining credit towards compliance.

Commenters said EPA's approach ignores the differen ces and unique challenges that exist from state to state when it comes to increasing RE deplo yment and provides no weight to states that have chosen not to implement an RPS. Commenters sta ted RE resources can vary greatly between neighboring states and even within a state. Further, the commenters said state RPS are often aspirational and contain "safety valve" mecha nisms that slow or pause requirements if, for example, electricity rates increase above a thresho ld level. Thus, commenters said just because a state has adopted a state RPS requirement does not mean that the technical or economic achievability of the standard has been demonstrated for that state or its neighboring states. Commenters said most state programs have these fail -safe or safety-valve provisions to ensure that the aspirational goals of the programs will no t endanger reasonable cost and reliability requirements.

Commenters stated that EPA should update its formul a to account for the displacing effects of RE. Commenters said EPA's approach in the NODA is i nconsistent with EPA's treatment of BB2, in which increased utilization of natural gas plants is presumed to displace equivalent amounts of coal generation. Moreover, commenters st ated the approach is contrary to EPA's description of its RE assumptions in the original p roposal. Commenters said EPA's calculations did not substitute or reduce generation from fossil -fired resources in the amount associated with new RE resources, with the result that EPA's target -setting fails to capture the full extent of
available carbon emission reductions. When EPA sets final state targets, commenters asserted it should use the corrected formula proposed in the NO DA to ensure that RE is given full credit for
its carbon reduction benefits. Commenters added tha t because of the displacing effects of RE and EE on fossil units, reliance on the four building b locks in target setting would result in overcompliance, i.e., Virginia would achieve a target r ate lower than its 2030 goal. Commenters stated this is an important reason to view applicat ion of the building blocks for target-setting as distinct from their use for compliance. Commenters said it also shows that Virginia's route to compliance is less burdensome than a narrow focus o n the target-setting would indicate. Commenters asserted Virginia's pursuit of measures under BB 3-4 will result in substantial carbon reductions, especially if those measures are allowed to displace fossil generation on a pro-rata basis. Commenters suggested crediting foss il MW displaced between 2012 - 2020 toward compliance. Commenters said this would cushi on the harsh effects of the interim goals if any interim goal would remain in a final rule and w ould create an economic incentive for companies to bring on renewable resources as quickl y as possible. Commenters added that this would benefit both the environment and the economy.

Commenters stated that adequately accounting for th e spatial and temporal distributions of
renewable resources and their associated costs is a n essential consideration in regulatory design; however, the primary approach for calculating state -specific RE targets assumes state equivalency for regional calculations of resource p otential. Commenters stated that this assumption is problematic when regions are large an d encompass states with drastically different renewable resources. Commenters stated given the si zeable areas spanned by the 6 EPA regions, there is evidence of differing levels of RE resourc e adequacy and availability across these proposed regions.146

Commenters stated EPA's reliance on regions is misp laced and EPA makes inaccurate estimates of RE technical potential. Commenters stated that i n developing its regions for regulating purposes, EPA assumed that neighboring states can a chieve similar levels of RE generation and, therefore, grouped states into regions based upon N ERC regions and RTOs. Commenters stated neither NERC nor the RTOs considered RE technical p otential in the formation of their regions. Commenters stated the Agency justifies the assumpti ons by claiming "[s]tates within each region exhibit similar profiles of [renewable energy] pote ntial or have similar levels of renewable sources." Commenters stated this claim, however, is inaccurate, as highlighted through proper analysis of the Southeast region. Commenters stated EPA's referenced NREL analysis compares each Southeast state's combined solar, wind, and bi omass technical potential and shows a 198% difference between the highest and lowest technical potentials. Commenters stated that these states clearly do not have "similar" levels of rene wable resources. Commenters stated other regions also produce incongruous results. Commenter s provided the example that Texas and Louisiana are grouped together in the South Central region; however, per NREL's technical potential analysis, the Texas solar, wind, and biom ass technical potential is 1,512% greater than Louisiana's technical potential. Commenters stated that if EPA's assertion that the states within a region maintain similar levels of renewable resourc es were true, which it is not, it contradicts the state-level targets produced by the Agency. Comment ers stated EPA's BB3 contains different RE targets for each state within a region. Commenters stated, for example, there are 8 states in the Southeast region and yet 3 of the states (Alabama, Florida, and Georgia) have more stringent RE targets than North Carolina, whose state RPS legisl ation is used to establish the Southeast's target. Commenters also stated Florida's RE target for BB3 is 89% higher than North Carolina's target. Commenters stated that EPA's own outcomes c ontradict its assertion that states within a region exhibit similar renewable resource potential ; these disparate starting places and outcomes strongly indicate that EPA should not rely upon a r egional approach as the foundation for setting RE targets.

Commenters said the proposed regional approach usin g NERC regions does not reflect similarities between states based on RE potential. Commenters stated a more precise and comprehensive basis for state clustering would be i nformed by the consideration of costs, competition and regulatory schemes. Even if renewab le resources across states in a region have similar technical potentials, the commenters said t he approach does not consider how these profiles may have dissimilar market potentials. Com menters said identical standards for groups of states clustered by their technical potentials a re not necessarily reflective of relative compliance burdens, systems of cost recovery, and s iting concerns. Commenters said that not accounting for this cost information yields a metho d that may overlook opportunities for lowercost reductions that would be exploited using a mor e flexible approach with more precisely drawn regions.

Commenters said EPA's approach to setting the RE go als for each state by dividing the states into contiguous regions is illogical and inequitabl e. For example, commenters stated in a DOE study relied on by EPA, Arizona has 5.8% of the tot al national RE potential, but Arizona has a RE goal based on only 3.9% of its 2012 generation; by contrast, West Virginia, which has 0.07% of the national RE potential (1.2% of Arizona's) ha s an RE goal based on 14% of its 2012 generation, almost 4 times as great as Arizona's. C ommenters added that if a state has done an expert assessment, it should stand as the RE goal f or the state unless EPA can challenge it on a sound technical basis. Furthermore, commenters said that an expert assessment done by one state147

cannot be assumed to have any validity for another state simply because they were arbitrarily grouped together by EPA.

Commenters said EPA's methodology ignores the uniqu e qualitative characteristics of each of the states in the region that should influence the setting of targets. For example, commenters noted that PA is a major generation state and net e xporter of electricity with a large population and industrial load, while MD and DE are far smalle r with reference to land areas, population, generation and load but are given equal weight in c alculating RE potential.

Commenters stated EPA's approach to determining reg ional RE generation targets is flawed in several respects. First, the commenters stated, it is arbitrary for EPA to assume that each state is capable of achieving similar levels of RE generatio n as its neighboring states. Commenters noted the Agency acknowledges that state RPS goals reflec t "policy objectives including both feasibility and costs" and not merely RE potential. Commenters stated these policy objectives may vary widely from state to state within individu al regions, and RE potential is highly statespecific and depends on each state's natural resour ces (e.g. insolation, availability of wind energy, biomass resources, etc.), existing transmis sion infrastructure, and current RE development. Commenters stated that the proposed "r egional" approach is simply based on NERC regions and does not reflect similarities betw een states based on RE potential.

Commenters said EPA's BSER goal calculation approac h does not appear to recognize that the Kansas RES goal is based on peak demand capacity (i n MW), whereas state BSER targets are based on net electricity generation (in MWh). Becau se there is no direct or predictable correlation between the extent of RE deployment (me asured in MW) and RE utilization (measured in MWh), the commenters said it is imposs ible to accurately translate capacity directly into generation (yet, this is the approach that EPA took when calculating the BB3 RE goals for each state in the South Central region).

Commenters stated EPA's failure to account for the precise nature of existing state RPS goals leads to unreasonable results. For example, the com menters stated, the RE target for the South Central region is based entirely on Kansas's 2020 R PS target of 20% RE capacity. Commenters stated that because actual generation is significan tly less than capacity, a 20% target based on capacity would not come close to approximating a 20 % generation-based RE target. Moreover, the commenters stated, in adopting its RPS, Kansas was building upon its experience with 24.2% average annual growth in wind from 2008 to 2012. Co mmenters stated no other states in the South Central region have a generation-based RPS; t he Texas RPS is also capacity-based. Thus, the commenters stated, EPA erroneously imputed a RE generation-based target to the entire region that does not exist in any state in the Sout h Central region.

Commenters said that instead of this "average" calc ulation, EPA should develop in the final CPP a calculation of renewable generation targets consi stent with principles of rationality and efficiency.

Commenters stated that in the Southeast and South C entral regions, only one State in each region has a RPS in place to set the regional target, and yet EPA assumes that every state in these regions can meet targets based on that single state 's RPS. Commenters stated EPA fails to provide a systematic look at the actual renewable p otential across the states in these two regions148

and fails to explain why it assumes that one state in each of these two regions is representative of what all states in these regions can reasonably acc omplish. Commenters stated EPA's failure to factor states without any RPS requirement into the regional averaging is irrational and arbitrary. Commenters stated that EPA's proposal fails to reco gnize or consider that many state RPS policies have cost caps to ensure that the renewabl e mandates are not overly costly and that these costs caps can operate to limit future renewable ex pansion that EPA projects is needed to achieve statewide goals.

Commenters stated that in the South Central region, EPA used the Kansas standard, but improperly extracted the numeric standard without applying the other determinates in the Kansas RPS statute. Commenters stated that the imaginary K ansas RPS that EPA applies to establish the regional goal is based on energy, yet the actual Ka nsas RPS is a capacity-based requirement established for seven utilities operating in-state, it does not apply to any other cooperative or municipal utility in the state, nor does it apply t o the load served by these utilities in other state s. Commenters stated that the Kansas RPS also treats a s renewables certain resources that EPA does not treat as renewables in the guidance - spec ifically hydropower. Commenters stated Commenters stated these failures to accurately eval uate the Kansas RPS and adjust the region's renewable goals make the region's goal irrational, unsupportable, and capricious. Further, the commenters stated, since the Kansas RPS does not ap ply to utilities in the state other than the seven named, or to the loads served by these utilit ies in other states, even if EPA were to adopt the real Kansas requirements as indicative of a reg ion-wide target, the target would have to be reset to represent a value consistent with the prop osal's definition of renewable generation under
BB3.

Commenters also stated that Arkansas has no state R PS and limited capacity for developing
renewable resources as it does not have the wind re source potential of Kansas, Nebraska, Oklahoma, or Texas. Commenters stated it has small amounts of solar resources using current technologies. Arkansas has the potential for develo ping biomass resources, but it is currently unclear whether biomass generation will be consider ed CO 2 neutral in the final rule. Commenters also stated it has existing hydropower with some po tential for development. Commenters continued that under the proposal, Arkansas has a 2 0% RE-based target in 2029 of 4790 GWh, but given that the Kansas RPS is capacity-based, no t energy-based, the Kansas RPS is actually 12% energy-based. Commenters stated therefore Arkan sas' RE target in 2029 should be 12% energy-based, or at most 2872 GWh, 60% lower than t he proposed target. Commenters stated thus, if EPA were to adopt the real Kansas requirem ents as indicative of a region-wide target, the target should be no greater than 12%.

Commenters stated EPA's renewable energy goal for A rkansas is based on the Kansas Renewable Portfolio standard (RPS). Commenters stat ed that standard is based on nameplate capacity of the renewable resource, and not on the energy generated. Commenters stated also, Kansas counts existing hydropower and includes a bo nus multiplier for in-state renewable generation. Commenters stated because of this, the Kansas RPS appears to be more stringent than it actually is, and Arkansas, as a member of K ansas's region, has been given significantly overstated renewable resource goals. Commenters sta ted in fact, in the preamble to the proposed rule, EPA states that the renewable standard will b e set based upon renewable generation and not capacity. Commenters stated however, this does not seem to have been the case with Arkansas's region.149

Commenters stated EPA's broad application of region al RPS targets is flawed because it assumes that only those states that have enacted RPS requir ements have assessed the feasibility and cost of RE standards. Commenters referenced the Virginia State Corporation Commission comments on the Proposed Guidelines, which stated that there are many reasons, including geographic and economic, why states have approached renewable gene ration differently. Commenters stated the decisions of other states to impose RPS requirement s were not intended to (and cannot) demonstrate what is achievable in Virginia.

Commenters said the state RE targets are unreasonab ly aggressive and do not take into account factors affecting the actual RE growth potential in each state and that the RE generation goals that EPA has calculated for many states are unachie vable. Commenters stated EPA's methodology for determining these goals is fatally flawed because it arbitrarily ties each state's goal to the RPS goals of other nearby states, which often do not actually require as much RE generation as they appear to and reflect each st ate's highly unique mix of RE potential.
Commenters stated EPA's failure to account for fact ors specific to each state's potential RE generation leads to several inequitable and unreaso nable results.

Commenters also said the targets are based on overl y aggressive assumptions and, for Texas, Arkansas and Louisiana, are not achievable, particu larly in the case of Texas since there are already significant amounts of existing RE capacity in the state. Commenters stated that even
with all the transmission built in Texas for RE in recent years, the transmission system is not capable of handling this additional generation. Com menters stated it would also require much more backup generation to be built to firm up the v ariable renewable resources (EPA ignores the additional carbon emissions from this back-up gener ation). Commenters stated and it could have serious distorting effects on the energy markets. C ommenters also said that of the states in the South Central Region, only Kansas and Texas have an RPS, although Texas uses a fixed MW standard that equates to a much lower percentage. E PA has set the final RE target for Texas at
20% - which commenters said seems rather arbitraril y tied to Kansas whose electricity sector is
1/10th the size of Texas'.

Commenters also stated that EPA's analysis reflects an oversimplified understanding of the nature of state RPS goals. Commenters stated that s ome state RPS goals are voluntary, while others only establish requirements for large electr ic utilities or apply less stringent secondary or tertiary RPS goals to smaller utilities, public pow er utilities, or cooperative utilities. But, commenters stated, the Proposed Rule applies the mo re stringent primary RPS goals to all instate generation and treats all goals as mandatory, artificially leading to more aggressive renewable energy generation targets. Commenters sta ted that in addition, some state RPS goals allow utilities to comply through mechanisms other than actually developing in-state renewable energy generation.

Commenters stated EPA developed BB3 goals based on an arbitrary assignment of states into regions that presume that neighboring states will h ave similar opportunities for the development
of renewable resources. Commenters also stated thatthe Agency then used an average of mandatory state renewable portfolio goals in these regions to assume that what may be technically and economically achievable in terms of renewable development and generation in some states will be achievable by all states within each respective region. Commenters stated that this approach is flawed in that EPA:150 • mischaracterized the design and overstated the stri ngency of existing state RPS;

• incorrectly assumed that existing RPS represent ach ievable targets for renewable resource development in other states;

• ignored the renewable energy experience and perspec tives of states with no RPS;

• did not fully consider significant geographic and e conomic differences between states in a region; and

• relied upon "effective" 2020 renewable energy targe ts that have not been adequately demonstrated and may not be representati ve of specific RPS requirements.

Commenters stated there are serious problems with t he RPS-based methodology. Commenters stated each region spans a large swath of the count ry, encompassing states with vastly different renewable generation potential. Commenters provided the example of South Central region, which includes both Kansas, which has the third bes t wind resources in the country, and Louisiana, which is ranked 48th in the country in w ind resources. Furthermore, the commenters stated not all states have RPS requirements; EPA ne vertheless assumed that those states could achieve renewable increases based on the RPS requir ements of other states in their region. In fact, commenters stated, targets for states in two regions - the South Central and Southeast regions - were based on a single state's RPS. Comme nters also stated EPA failed to consider that increased dependence on renewable energy generation will require construction of additional transmission lines to access areas that have higher -grade wind and solar resources, which are generally remote areas. Commenters stated that stat es must begin to achieve emission decreases by 2020 to meet their respective interim goals; thi s does not allow for enough time to build the transmission lines needed to implement the RE requi rements under BB3. Commenters also stated that the Existing Source Proposal leaves many key q uestions concerning the implementation of the RE requirements unanswered, such as: "Upon whom are the requirements placed? Under what authority? Which state gets credit- the energy importer or exporter - for RE generation that
crosses state lines? How will the costs of the rene wable resources needed to attain state goals be allocated and who has the responsibility to mandate such allocations?"

Commenters stated EPA's proposed approach may overe stimate what is achievable in some states, particularly those that do not have existin g RES mandates, and ignores policy decisions that have already been made in those states. In add ition, commenters said EPA failed to recognize that certain RES design elements can have the effect of reducing the amount of in-state generation necessary for compliance. Further, comme nters said EPA did not adjust state RES goals to reflect the fact that generation from exis ting hydropower generation and other resources cannot be used for compliance under the proposed 11 1(d) guidelines, despite the fact that many state RES goals rely on these resources. Commenters said EPA also has indicated that some, but not all, biomass that is eligible under state RES p rograms could be used for compliance, adding further uncertainty to the RE assumptions in the pr oposed guidelines.

Commenters said EPA did not recognize that signific ant differences often remain among states within a given region, and what may have been demon strated to be achievable in one state may151

not be achievable in another. Commenters stated ene rgy market prices, geography, topology, transmission, load, seasonality, endangered species -related siting rules, state or local permitting and siting rules, congestion and existing energy mi x are just a sample of the many factors that play a role in where renewable resources are develo ped.

Commenters said states within a region can have ver y different solar or wind potential - for example, Louisiana and Kansas have dramatically dif ferent wind resource potential, but are unreasonably included in the same region. Commenter s asserted that NERC further highlighted this problem with the BB3 methodology in a recent r eport, which found that "[g]iven the combination of a low population, large land area, a nd very high wind resource availability, Kansas has relatively low costs to meet its RPS. Ho wever, Louisiana (ranked #48 in wind resources and double the retail sales) is assigned the same non-hydro renewable target. To put these two States in the same region sets unattainab le targets for Louisiana." Initial Reliability
Review at 12. Commenters said that if EPA chooses t o retain a regional approach to developing state RE goals, the Agency should allow a state to change regions if it can demonstrate that another region is more representative of its RE pot ential, or alternately allow a state-specific analysis of what is achievable within a state.

Commenters said the regional approach will place in creased pressure on states with high capacity factor wind generation to build more wind than they currently need for their own usage. Commenters stated this approach would require plann ing and construction of additional
transmission infrastructure in their service area f or wind that will not be delivered within that area. A key issue, Commenters stated was how entiti es or regions outside that region would pay
for such additional transmission service and infras tructure. Commenters stated issues like these need to be addressed by EPA and FERC and time given to plan and construct additional
transmission infrastructure in order to accommodate this suggested modification. Further, Commenters asserted that any definition of "region" used by the EPA in the establishment of BB3 targets should be based on the boundaries of or ganized market.

Commenters said EPA cannot set targets assuming tha t multistate plans will be developed and implemented as it could result in inflated RE goals for states that are not able to engage in multistate compliance plans. Moreover, the commenters st ated that generation planning is typically done at the state level (or service territory level or organized market level in areas where RTOs or ISOs exist). Commenters also stated it can take many years, along with many changes to existing rules and regulations, to adapt and evolve toward a regional approach in electric generation planning. Commenters indicated that the guidelines do not provide sufficient time for states to design and implement the regional complia nce approaches needed to achieve the proposed RE goals.

Commenters said EPA's calculation of regional RE go als does not recognize some states existing RES requirements, making the renewable goal in some regions more stringent than if it were an average of all states in the region. Commenters sai d EPA ignored the fact that some states have
made a determination that their RE resources are no t sufficient for mandating a required level of RE generation in a particular state. Commenters sai d EPA's approach to averaging state RES mandates to develop a regional RE goal is particularly problematic in the Southeast and South Central regions, where many states do not currently have RES requirements because it ignores152

the question of whether the other states in these r egions have the same potential to deploy an increased amount of renewable generation.

Commenters said a state's RES requirements reflect that state's assessment of the potential to deploy RE generation and RE-related policy decision s and a range of policy choices that have nothing to do with technical RE potential. Accordin gly, commenters said that if EPA continues to average state RES mandates to derive regional RE generation goals, they should include all states in calculating the average, even those with no RES requirements to provide an actual average of the state requirements in the region and ensure that one state's RES is not arbitrarily and inappropriately imposed on all other states in the region. Similarly, commenters asserted EPA should control for states with significantly mo re aggressive RES requirements when determining regional RE goals.

Commenters stated EPA's proposed policy-based appro ach, which groups states into regions and averages the effective 2020 generation-based RPS fo r states in each region to arrive at individual state goals, results in arbitrary state renewable t argets based on political considerations rather than technical availability. Commenters stated for example, only one state in the Southeast has a qualifying RPS (North Carolina) and that single sta te policy results in EPA assuming all eight states in the EPA-defined Southeast region can meetthe same target. Commenters stated it is unclear why one state's policy implies that other s tates can meet the same level of renewable deployment, and conversely, a lack of an RPS does n ot indicate a state could not deploy renewable generation. Commenters also disagreed wit h EPA's conclusion that existing state policies "support the feasibility and costs" associ ated with the scenarios developed by EPA. Commenters stated the existing state policies refle ct policy decisions made in the states with the RPSs based on the myriad objectives of the state (w hich may not be the same as EPA's objective here; e.g . carbon reduction) and the projected cost and avai lability of renewable energy at the time the state targets were passed. Commenters stat ed that in some states, costs are moderated with alternative compliance payment provisions thatlimit the need for renewable generation if costs exceed expectations. Commenters also stated m any state RPS targets were also predicated
on the existence of a national market for renewable energy credits to limit costs and increase availability of qualifying resources, which include many resources not considered for compliance under the proposed rule, such as large hydropower. Commenters stated that while EPA refers to that market, it does not use the market to justify the target renewable energy levels.

Several commenters said the goals do not account fo r load growth and that actual load growth should be correctly identified and reflected in CPP projections. Commenters noted, however, NV Energy's load projections have tended to overstate load growth and, thus, historical trends should be carefully analyzed. Commenters said the load or demand for electricity is expected to increase during the period of performance from 2020 through 2029 and some of this increase in demand may be supplied by new power generation facilities not subject to the CPP, but a portion may be generated by tapping unutilized capacity in existin g EGUs. Commenters said this will require a commensurate increase in RE/EE to maintain complian ce with the rate-based goal and that estimates of the rate of load growth vary by state and region. To assist states in their analysis of the proposal and state plan preparation, commenters recommended that the EPA use available load growth projections to adjust target RE values to better approximate the actual levels of RE that may be required to meet state rate based goals

.153

Commenters said if EPA elects to redistribute RE de velopment potential on a regional basis, Maine supports reallocation on a mass-based allocat ion similar to the manner in which RGGI allocates emission credits, or by peak-load allocat ion as done in ISO-NE for pooled transmission facility costs. Commenters said that because most f ossil-fuel EGUs are in operation more so under regular peak conditions than low-load conditi ons, the peak-load allocation is most representative of times when the most units to be r egulated by EPA's 111(d) proposal would be in operation. For this reason, the commenters added that the peak-load allocation already in use in New England is a technically appropriate allocat ion method.

Comment 2: Commenters had concerns on use of “main tiers” to determine effective RE levels.

Response 2: The EPA is not finalizing an approach to building block 3 that relies on state RPS requirements to set a regional target for RE. The f inal building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mit igation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated that in the GHG Abatement Measure s TSD, EPA states that they "added together each state's tiers, as standardized by DSI RE, to determine states' effective RE levels for 2020, but excluded tiers, other than main tiers, th at include energy efficiency or any fossil fuel" (p. 84). Commenters questioned if it is EPA's inten tion to include RPS "main tiers" even if they count EE or fossil fuel (i.e. CHP) for the target-s etting.

Comment 3 : Commenters expressed concerns regarding approach to state calculations and varying energy mix.

Response 3: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public c omment under this comment:

Commenters stated the characteristics of each state 's renewable generation mix vary significantly in the South Central Region, which encompasses four NERC regions and three RTOs: (i) the SPP (Kansas, Nebraska, Oklahoma and the Texas Panha ndle); (ii) ERCOT (remainder of Texas); and, (iii) MISO (Arkansas and Louisiana). Commenter s also stated that like the Southeast Region, EPA's regional renewable generation target for the South Central Region is based on the 2020 RPS goal of one state: Kansas. Commenters stat ed Kansas's 20% target in 2020, which is based upon capacity and not generation, is dominate d by a single fast-growing renewable source (wind) and is applied to states within the region w ith an entirely different renewable generation
mix and in different RTOs. Commenters stated that EPA fails to distinguish the big difference between renewable capacity and generation and the i ntermittency of renewable resource (e.g.,154

wind stops blowing). Commenters provided a table to illustrate how EPA misused the Kansas
RPS standard in Arkansas.

Comment 4: Commenters had concerns regarding overestimation of targets

Response 4: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public c omment under this comment:

Commenters stated that industrial CHP facilities in Arkansas burning wood or wood derived fuels comprised 95% or more of the state's total re newable generation between 2008 and 2012. Commenters stated these industrial CHP sources expe rienced 1.6% average annual growth between 2008 and 2012; however, EPA applied the Kan sas RPS, in which wind comprised almost 100% of state's total renewable generation, at a 24.2% average annual growth between 2008 and 2012. Commenters stated EPA's application of a RPS from a state with rapidly increasing renewable wind energy to a state whose p rimary RE source has remained almost flat results in a significant and unreasonable overestim ation of renewable generation in that state.

Commenters stated EPA also failed to account for fa ctors limiting certain renewable generation in particular states - factors that would prevent c ertain states from meeting their goals. Commenters noted that Arkansas cannot reasonably qu adruple its growth rate of 1.6%, as it would be required to do to meet its RE target. Simi larly, commenters stated Kentucky has very low wind and solar generation potential.

Comment 5: Commenters were concerned regarding use of solar a nd EIA’s forecasts and EPA
IPM results.

Response 5: The EPA has updated its cost and performance assum ptions for utility-scale solar technologies.

The following are summaries of the specific public comments under this comment:

Commenters stated that if EPA has authority to incl ude RE in its goal setting methodology, EPA would need to thoroughly examine each state's renew able generation mix and as well as EIA's
RE forecasts and EPA's own IPM results.

Commenters stated EPA should more accurately accoun t for the growth trajectory for solar power, including reductions in cost that will in tu rn have a greater impact on solar energy's ability to decrease emissions.155

Comment 6: Commenters stated goals need to recognize states in dividual circumstances.

Response 6: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters said BB3 has flaws that work against cer tain regions and states. Commenters asserted the RE regional goals should be computed b ased upon all states in the region and reflecting the appropriate Arizona RE goal. Comment ers asserted that each state's RE MWh was limited to its 2020 RPS goal - in Arizona, the tota l RE energy could not exceed 10%. Commenters stated this has the effect of lowering a state's lbs CO2/net MWH goal and accounts for 5% of the reduction in Arizona's proposed goal. Commenters said that in calculating the 2020 effective RE levels for the Western region of 20.62 5%, EPA left out the states with a zero target. Commenters asserted these states with zero targets should be included in the calculation of the average, which would reduce the average to 16%. Com menters agreed that states with no RPS (zero values) should not be excluded from the calcu lation.

Commenters stated EPA arbitrarily concluded that th e RE capacity of some states can be used to set RE goals for other states, which have differentresources and economic circumstances. Commenters said the states cannot be compared in th e way EPA has done. Commenters asserted EPA should revise its methodology for renewable ene rgy based on resource availability and
market realities.

Commenters said EPA should consider the disparities in renewable potential between states, noting, for example, Arkansas is in an unusual posi tion in that it sits next to windy states, but has little wind potential of its own. Commenters stated the same wind turbine will produce considerably more electricity for the same investme nt in Kansas, Oklahoma, or Texas than it will in Arkansas. For that reason, Commenters said EPA s hould consider both the regional potential and the in-state potential in setting its target. M ost importantly, Commenters urged EPA to structure its rule in a way that encourages placeme nt of RE facilities in consideration of the location of the resources, and not state lines on a map.

Commenters stated EPA's calculation of RE goals in BB3 is flawed because it ignores individual state determinations in favor of regional RE benchm arks that are arbitrarily assigned. Commenters stated that concerns regarding the appli cability of RPS programs from one state to another, as well as the methodology used to calcula te state RE goals are further exacerbated by EPA's arbitrary design of six regions in BB3. Comme nters stated that in defining these regions, EPA incorrectly assumed that what may be achievable , but not yet demonstrated, in terms of RE development and generation in some states (with the aid of subsidies from the Federal
Production Tax Credit and from the investment of ou t-of-state utilities and customers) is achievable by all states within each respective reg ion. Commenters said EPA assumes that states within each region exhibit similar profiles of RE p otential or have similar levels of renewable resources. However, commenters stated EPA's rationa le is not supported by the technical information referenced by the agency in the propose d rule or by the consideration of RPS in the156

regional calculations. Commenters said examples of conflict between EPA's characterization of
individual state RPS and the technical data used to support EPA's proposal are provided below for the South Central, Southeast, and East Central RE regions. Commenters stated that in each region, an objective assessment of the existing sta te standards and technical data evaluating resource availability and cost would result in much lower targets than those established in EPA's guideline.

Commenters stated that the South Central region is not homogenous in terms of potential renewable resources as four states have far superio r resource potential, greater access, and lower cost renewable development options. Commenters stat ed that as a result, Arkansas and Louisiana are unfairly and inappropriately penalized and burd ened with unrealistic goals that cannot be cost-effectively achieved through the development o f in-state resources. Commenters stated that to achieve their goals most cost-effectively, these states would have to rely on the development of out-of-state resources without certainty regardi ng if or how such projects would be treated by
the host states. Commenters also stated that in ter ms of differences in renewable resource potential, consider the average wind speed or solarresource across the region, a key variable in evaluating the feasibility of wind energy developme nts, and the availability of potential solar resources. Commenters provided figures from the U.S . DOE NREL that indicate that there is significant variability across the U.S. and within the South Central region, which indicates significant differences in the opportunities for de veloping wind energy and solar resources.
Commenters stated Arkansas and Louisiana bear a far closer visual resemblance to the states in the Southeast region (Alabama, Florida, Georgia, Ke ntucky, Mississippi, Tennessee and the Carolinas) than they do to the states in the South Central region.

Commenters also stated that while EPA claims to hav e based its determination of "achievable" state goals based on average values for existing st ate programs, only one state in the EPAdefined South Central region, Kansas, has a mandato ry RPS that was considered by EPA. Therefore, commenters stated, the Kansas RPS, and o nly the Kansas RPS, is the sole basis for determining the RE goal for all states in the South Central region, regardless of differences in the geographic potential or cost-effectiveness for achi eving such a goal among states in the region. Commenters also stated EPA also gave no considerati on to provisions within the Kansas RPS, such as implementation of cost mitigation measures and in-state renewable credit multipliers, that reduce the overall stringency of the program. Commenters quoted the Kansas Corporation
Commission that "Kansas' standard differs from othe r state's RPS in that it is based on gross generation capacity rather than total retail sales. In general, the gross generation capacity is the amount owned or leased by a utility minus the auxil iary power used to operate the facility."
Commenters stated that based on EPA's own statementthat it "did not [intend] to include [RPS] targets that were capacity-based," the Kansas RPS s hould not have been considered in determining the renewable energy goal for the regio n, and the South Central region would have no qualifying RPS upon which to base a regional goa l.

Comment 7: Commenters noted varying state-level technical reso urce potential.

Response 7: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation157

levels under building block 3 is described in detai l in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated that Section 4 of the GHG Abateme nt Measures TSD assumes that all states in each region can achieve by 2030 the average of t he 2020 requirements of RPS states in that region. Commenters stated that to accomplish this, the TSD assumes that states within each region exhibit similar levels of renewable resource s, an inference made from state-level technical resource potential projections reported in a NREL G IS-based analysis. Commenters stated that a review of this NREL report reveals a rather wide variation in renewable technical potential for specific regions and by renewable resource; for exa mple, the technical potential for biomass varies significantly across virtually all regions. Commenters also stated additionally, in the NREL study, all biomass feedstock land resources we re considered available for biopower use. Commenters stated competing uses of available land and biomass resource, such as for biofuel production, were not considered. Commenters stated this could further affect the technical resource potential for biopower within a region. Co mmenters stated the variation of renewable resource technical potential is perhaps the most pr onounced for the West region. Commenters said significant variability in renewable technical resource is indicated for hydrothermal, urban photovoltaic (PV), rooftop PV, concentrated solar p ower (CSP), and hydropower.

Commenters stated that even if renewable resources across states in a region had similar technical potentials, the primary RE approach does not consider how these profiles may have dissimilar market potentials. Commenters stated tha t accounting for heterogeneous abatement
cost functions for renewable resources across state s is an important element in reaching specified emissions targets while minimizing abatement costs (or conversely in reducing more emissions for a given expenditure level). Commenters stated i dentical standards for groups of states clustered by their technical potentials are not nec essarily indicative of relative compliance burdens, especially in the presence of grid integra tion costs, siting concerns, and the provision of balancing flexibility from existing assets. Comment ers stated that inadequately accounting for this cost information may overlook opportunities fo r lower-cost reductions in other states or building blocks, which would be exploited in an app roach with broader coverage and greater flexibility.

Commenters stated that a more appropriate and compr ehensive basis for state clustering would be informed by the market potential for RE developm ent, which would include technology costs, fuel costs (e.g., for biomass), investor response, regional competition for other resources, learning-by-doing and network effects, regulatory l imitations, and public acceptance.
Commenters stated these externalities will influenc e regional RE costs. Commenters noted EPRI assessed and reported the regional costs for deploy ment of renewable generation in two key
reports.

Commenters stated that many state RPS goals include hydroelectric power generation, but EPA does not include existing hydroelectric power towar ds compliance with its Proposed Guidelines. Commenters stated that including this component of the RPS in the Building Block 3 goals without allowing states to rely on existing hydropo wer for compliance will substantially increase158

the amount of new renewables required in each state , even in states that have already reached their own RPS goals.

Commenters stated that many state RPS goals include hydroelectric power generation, but EPA does not include existing hydroelectric power towar ds compliance with its Proposed Guidelines. Commenters stated for example, New York counts hydr oelectric power towards its 29 percent RPS target, and this source accounted for 83 percen t of the state's renewable generation in 2012. Commenters stated including this component of the R PS in the Building Block 3 goals without allowing states to rely on existing hydropower for compliance will substantially increase the amount of new renewables required in each state, ev en in states that have already reached their own RPS goals.

Commenters stated the regions were formed arbitrari ly, and EPA did not group states with comparable RE resources. Commenters asserted EPA di d not consider whether or not a particular state within the region possessed the same renewabl e resources as the benchmark state, which is a crucial oversimplification. For example, commente rs noted that NREL estimates that Kansas ranks number two in the country for wind energy pot ential based upon potentially developable wind capacity, Texas ranks number one, and Nebraska ranks number four - by comparison,
Arkansas ranks 28 and Louisiana ranks 39. Commenter s added that the NREL Wind Resource Map below shows dramatically that Louisiana, Arkans as, and even most of Texas have very different wind resources than Kansas, Nebraska, Okl ahoma, and northwest Texas. Commenters said NREL estimates that Kansas has more than 950,0 00 MW of potential wind resources with >30% capacity factor - by comparison, Arkansas and Louisiana have 9,000 MW and 410 MW of potential wind resources with >30% capacity factor, respectively.

Commenters also noted a study DOE conducted in 2008 showing projected wind capacity development from a 20% national RPS scenario that n oted that some states, such as Louisiana and Mississippi, have lower quality wind resources, and that, even under the modeled "20% RPS policy scenario," there would be virtually no wind capacity development in Louisiana by 2030. Yet, commenters stated, EPA projects that Louisianawill be able to nearly triple its current nonhydro RE production of roughly 2,430,000 MWh per ye ar to 7,572,000 MWhs by 2030. Realistically, commenters said lack of a wind resou rce leaves only woody biomass, waste heat recovery, geothermal, off-shore wind, and solar PV as RE alternatives. Commenters noted that virtually all of Louisiana's current RE production is from pulp and paper plant "black liquor"
waste that is not scalable like wind.

Comment 8: Commenters expressed concern regarding the NREL re port.

Response 8: The technical potential limiter is not included in the final methodology for quantifying building block 3 generation. The final methodology is described in section V.E of the preamble and in the GHG Mitigation Measures TSD

.

The following are summaries of the specific public comments under this comment:159

Commenters stated EPA attempts to determine the tec hnical potential of state renewable resources by relying on a 2012 NREL report. Comment ers stated that this report by design only represents resource potential, with some caveats, h owever, as the report notes: "The estimates do not consider...economic or market constraints, and therefore do not represent a level of renewable generation that might actually be deploye d." Commenters stated the report indicates
that these "economic or market constraints" include technology and fuel costs, policy considerations, regulatory limits, and regional com petition with other energy sources. Commenters stated that EPA also acknowledges the si gnificant limitations of this study. Commenters stated that other factors that impact th e amount of the technical potential resources that can actually be developed include seasonal imp acts, transmission considerations, state regulatory processes, and project siting rules and limitations associated with certain endangered species and other environmental programs. Commente rs stated these issues present technical, cost, regulatory, and practical challenges that can and do limit actual opportunities for developing these potential resources, yet, EPA did not consider these factors in deriving the technical potential or assumed development rate for each resource.

Commenters discussed the EPA approach in which a be nchmark development rate for each renewable technology based on the arbitrary average of the top 16 states for each resource was developed. Commenters stated the benchmark rates fr om this limited number of states are then incorrectly applied to all states. Commenters stat ed EPA's approach is fatally flawed as the agency incorrectly assumes that the technical poten tial and experience of 16 states is sufficient for establishing renewable energy goals for all oth er states. Commenters stated EPA's reliance on historic renewable energy development in only the t op 16 states disregards the fact that experience of these limited states may not be appli cable or achievable by other states, as the top performing states are typically those with the grea test renewable generation potential, greatest access to transmission, and have lower development costs. In addition, commenters stated, EPA made no attempt to evaluate the quality of the reso urces developed, the manner in which they were funded (out-of-state entities, federal tax cre dits, grants, etc.), or other drivers for development that may not be applicable to other sta tes. Commenters stated that given that subsidies such as the federal production tax creditand investment tax credit have already expired or are scheduled to expire before the states even f ile their compliance plans, it is not reasonable to expect that past development of renewable resour ces is necessarily indicative of future development potential as experienced in recent year s when these tax benefits were available. Further, commenters stated, EPA did not consider wh ether existing renewable resources represent opportunistic or nuanced circumstances fo r development that cannot be readily replicated or expanded.

Commenters stated that the NREL report acknowledges these state differences by estimating potential renewable resources based on varying assu mptions on the capacity factors that would be expected from each technology. For example, comm enters said NREL provides state-specific estimates of capacity factors for photovoltaic reso urces. Commenters noted that for the states in the EPA-defined South Central region, the capacity factors for photovoltaic resources ranged from 19.6% (Louisiana) to 23.8% (Kansas), and state d EPA does not consider that the development rates derived from the top performing s tates may not be achievable by other states
that are not able to utilize their resources at the same rate due to differences in the availability o f the resource. Commenters stated the agency has prov ided no rationale for why it is appropriate to assume that the development achieved to date by sel ect states, with different technical, cost, and160

policy considerations, is replicable and represents what is achievable by all states going forward; nor has EPA provided any rationale for using prior growth rates as an indication of achievable future growth, particularly given the technical cha llenges associated with incorporating increased renewable energy into the power supply system, such as the need for additional transmission
investment.

Comment 9: Commenters stated concerns with the approach to qua ntifying RE potential.

Response 9: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters said some state RPS are designed as capa city (MW) only standards, yet EPA assumes that these are energy (MWh) produced standards in their goal calculations. Commenters added that most state RPS programs apply to only a fraction of the electricity consumed in the state, excluding for example municipal and cooperat ive generators, yet EPA applies its RPS requirements on 100% of the generation in the state

.
Commenters said that in both of the proposed RE app roaches, the goals are based, in part, on prior renewable development trends, yet prior growt h is not necessarily an indication of future growth. Often, commenters stated, the most rapid an d cost-effective gains are achieved in the early years of development and in those areas with the greatest resource potential and the greatest potential to deliver and integrate these r esources (i.e., available transmission). In addition, commenters stated many of the prime areas for RE development are located far from load centers, requiring new transmission to be buil t to deliver the power to load centers, with a typical transmission line requiring 5 years or more to site, permit and construct, particularly if it
crosses federal or tribal lands. Commenters stated large-scale transmission projects, such as high voltage overlays and those needed for RE integratio n can involve even longer lead times. For territory on federal land, Commenters added it woul d take multiple years to design and permit
new transmission lines. Commenters said that additi on of incremental renewables to the grid (especially if geographically far from load) potent ially will come at an increasingly higher cost. Also, commenters said EPA's approaches are predicat ed on the assumption that large quantities of new RE can be integrated into the grid but has n ot accounted for the technical challenges related to integrating and managing large quantitie s of renewables into the existing transmission and distribution systems. Commenters agreed that an y approach to quantify RE potential should
take into account transmission constraints and the issues surrounding new transmission construction that come from siting, permitting, env ironmental impacts, and landowner opposition.

Comment 10: Commenters expressed support and opposition to the target rates.161

Response 10: The resources and data provided in this comment wer e valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Several commenters asserted the targets should be s trengthened. Commenters asserted the CPP goals for RE should be strengthened, noting that th e RE target for 2020 proposed in the CPP is actually lower than the EIA projection (9%) under a business-as-usual scenario, and the CPP's 2030 target of 12% is barely higher than the EIA's business-as-usual projection of 10%. Commenters stated given the significant levels of R E generation already achieved by many states, a more ambitious national goal is clearly w ithin reach. Commenters stated that Florida, in particular, could deliver significantly higher leve ls of RE generation; the state has the thirdhighest potential for rooftop solar potential in th e U.S., but currently ranks only 12th in installed capacity. Commenters asserted we should work toward a much larger emission reduction goal of
35 to 40% reductions below 2005 levels in 2020.

Commenters stated EPA's target is only marginally m ore ambitious than what the U.S. EIA projects for RE generation under its business-as-us ual case. Worse, commenters stated that in 2020, EPA's RE targets are less than what EIA says will be achieved under business as usual. Commenters said EPA's methodology in determining th e potential for BB3 was more of an "average system of emissions reductions" rather tha n the best system. Commenters added that EPA's methodology results in 17 states with lower R E targets than the level that the Lawrence Berkeley National Lab projects they will reach by m eeting existing RPS mandates.

Commenters supported development of RE targets, butthought they could be strengthened. Commenters said that setting a low floor for RPS st ates will not create enough of an incentive to move these states forward where they need to go. Co mmenters stated that Colorado, for example, while a national leader in growing a clean energy e conomy, should have a SIP that pushes it forward and brings other states along. Commenters a dded that the final rule should allow periodic review of progress toward targets and enco urage early efforts to reduce emissions by giving full credit to emissions reductions achieved by projects that are completed prior to 2020.

Commenters stated that for the 29 states that have RE standards in place; 21 of them, including Colorado, would have to do little or nothing more t han to achieve the current RES targets in order to meet or exceed the proposed targeted EPA u se to calculate their emission reductions requirements for 2030. Commenters stated EPA is und erestimating 2030 levels of RE - these are lower than even the current RE generation from near ly all states with RPS/RES.

Commenters fully supported EPA's determination to i nclude RE generation as a separate BB, but felt the target must be significantly increased and the time line for requiring contributions from
this source accelerated. Because of the critical ne ed for RE, EPA should estimate the full potential of RE available to the power system. Comm enters added that EPA has adopted a targetlimiting selection methodology, artificially constr ained its estimates of the achievable energy generation target rates and of the cost-effectivene ss of RE, that it must correct in the final rulemaking.162

Commenters stated that the NREL estimated that untapped offshore wind resources in the U.S. are so abundant they could power the entire country . Commenters added that current trends show how much potential for dramatically increasing rene wable generation exists:

• Wind capacity increased by 75% and solar capacity b y 473% from 2009 to 2013.

• The national average cost of wind power has dropped more than 60% since 2009, making it competitive with new fossil fuel plants i n many regions.

• Solar photovoltaic system costs fell by about 40% f rom 2008 to 2012, and by
another 15% in 2013.

• The trends of improved technologies and reduced cos ts are expected to continue.

Commenters asserted the targets are overly conserva tive, and this is principally the result of the methodology used, which creates state-level targets using regional averages of existing state RPS statutes. Commenters said achievable, cost-effectiv e targets are not well reflected in existing state mandates which tend to understate the potenti al for RE deployment. Commenters stated that developing targets based upon these existing statut es, and pulling down these targets by including states with no RPS goals, creates an arti ficially low target for BB3. Commenters asserted that a methodology which averages in and i s partially defined by do nothing approaches cannot be BSER. Commenters urged EPA to determine t hat the target-setting methodology used in the draft guidelines falls short of the BSER sta ndard, and replace it with a methodology more reflective of a true BSER, such as a modified versi on of the Alternative Renewable Energy Approach described by EPA, updated with more realis tic assumptions of technology costs and growth rates. Commenters recommended the following with respect to Building Block 3:

• Higher RE targets should be established.

• No state target under the CPP should be based on as sumptions projecting lower renewables use in future years than actually exists in 2014.

• The methodology for calculating targets should use a modified version of the Alternative Renewable Energy approach, not a framew ork based upon averaging existing statutes.

• The potential contributions of distributed renewabl e generation, which appear to have been omitted to date, must be fully accounted for.

• The assumptions used for target setting under the p roposed Alternative RE Approach should be updated to better reflect actual renewable technology deployment and pricing, yielding more accurate esti mates of renewables potential
over the time horizon of the CPP.

• If EPA continues to use a target-setting approach b ased upon existing state policy, it should modify the approach proposed in the draftrule, replacing this with a163 framework that is defined on the basis of best prac tices rather than one based on average practices.

Commenters stated EPA underestimated RE's likely gr owth and its potential role within the BSER and should make significant improvements in ho w it calculates the BB. Commenters said by choosing the regional average RE standard approa ch, the EPA severely underestimates the potential deployment of clean energy into the grid. Commenters stated the "best practices" approach simply averages the political environment for RE several years ago and that high achieving states like Maine, Minnesota, South Dakot a and Iowa were already exceeding what EPA expects the state to achieve by 2030 under this scenario for 2012. Commenters also noted that North Dakota, the windiest state the country, is only expected by EPA to generate 15% of its electricity from renewables, an amount that it was already achieving in 2012. Given the low price of wind energy, commenters said there is no r eason to think that high achieving states will stop the growth of their clean energy generation - after all, clean energy is competing economically with fossil generation, and holding do wn overall electricity prices. If EPA wants to use RE standards as a proxy for RE potential, comme nters said it would be better to use the highest RE standard for that region, giving a close r approximation of the medium term potential carbon pollution reductions through RE for that reg ion. Commenters stated EPA described an
alternative method based on the technical and econo mic potential to calculate RE generation building block, which would likely be a better esti mate of clean energy's potential, but a better way would be to use the Union of Concerned Scientis ts (UCS) model in the BSER. Commenters
said UCS estimates that the EPA could almost double RE targets within the BSER, from 12% of total 2030 U.S. electric sales to 23%; and found th at deploying higher levels of RE would be a cost effective way of reducing carbon pollution. Co mmenters added that adoption of a more aggressive approach will reinforce the need for New York's continued long term support for RE while further aligning the CPP with the objectives espoused in the 2014 draft New York State Energy Plan to reduce carbon intensity from the ene rgy sector by 50% by 2030 and a key component of the state's overall climate pollution reduction goal of 80 % by 2050. Commenters added that they had concerns about impacts to wildl ife from all developments, and seeks to safeguard wildlife from undue harm. Thus, the comme nters asserted strong state and federal involvement is needed to guide RE development to en sure that it is done responsibly and in a wildlife-friendly manner. Commenters asserted that with careful planning, renewables can be developed in a way that provides significant electr icity generation for consumers while protecting wildlife and habitat.

Commenters said this "average system" approach fail s to represent the BSER and fails to account for demonstrated growth in states over the last sev eral years, producing overly conservative targets that are already being exceeded by several states. Commenters urged EPA to assume a rate of RE deployment more consistent with recent h istorical rates of deployment. Commenters encouraged EPA to adopt UCS' Demonstrated Growth ap proach, as it would produce targets more in step with recent trends, more accurately re flecting the role that RE can play in reducing
carbon emissions. Commenters added that EPA should update its formula to correctly account
for emissions reductions from RE because it is inco nsistent with the way in which EPA discussed the RE/EE BSER assumptions in the proposa l. Commenters said EPA's calculations did not substitute generation or reduce generation from fossil-fired resources in the amount associated with new RE/EE resources. As such, Comme nters stated EPA should revise its formula for setting the state targets and adopt the corrected approach proposed in the NODA to164

ensure that incremental renewable resources do in f act reduce the equivalent level of fossil-fired generation. Commenters also supported the approach, offered by the UCS, which found that EPA's approach significantly underestimates the pot ential role of RE in allowing states to reduce
carbon emission.

Comment 11: Commenters stated issues with estimating the effec tive 2020 rate.

Response 11: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated EPA's calculation of RE goals in BB3 is flawed because it is premised on "effective" 2020 rates calculated by EPA that do no t reflect the specific requirements within those existing RPS programs. Commenters stated the EPA's use of "effective" 2020 RPS requirements reflects rates that are overstated due to the failure to consider RPS provisions that reduce the overall stringency of individual state r equirements. In addition, the commenters stated, the future effective 2020 RPS rates have no t been "adequately demonstrated," which the CAA defines is a necessary prerequisite for determi ning BSER. Commenters said that in the design of most RPS, states acknowledged the challen ges associated with increased development and utilization or renewable resources by including provisions that gradually increase implementation over two decades, that allow for alt ernative compliance plans in lieu of renewable resource development, and that reduce the stringency of standards in order to mitigate retail cost (cost caps) or transmission reliability impacts. Commenters stated that EPA acknowledges that full compliance to date has been challenging with RPS that are much lower that the effective 2020 rates considered in BB3 by stating that " ...recent improvements in RPS compliance rates indicate to the EPA the reasonable ness of current RPS growth trajectories. Commenters stated weighted average compliance rates among all states have improved in each of the past three reported years (2008 - 2011) from 92.1% to 95.2% despite a 40% increase in RPS obligations during this period. " Commenters st ated EPA further acknowledges that these less than 100% compliance rates include considerati ons that are not accommodated by EPA's proposal "The RPS compliance measure cited is inclu sive of credit multipliers and banked RECs utilized for compliance, but excludes alternative c ompliance payments, borrowed RECs, deferred obligations, and excess compliance. This estimate d oes not represent official compliance statistics, which vary in methodology by state."

Commenters stated that regardless of how the percen tage of historic RE is calculated, the regional renewable goals developed by EPA have not been adequately demonstrated. For example, Commenters stated, the agency calculated r egional goals for the East Central and Southeast regions of 16% and 10%, respectively; how ever, the maximum RE demonstrated in 2012 by individual states in those regions was 4.2% in the East Central Region and 3.2% in the Southeast Region - states that do not have mandator y RPS programs.165

Commenters said that state RPS statutes contain a n umber of "off-ramps" related to cost, reliability, and crediting provisions that can resu lt in a lower standard and that EPA gives no consideration to these off-ramp provisions in estim ating the "effective" 2020 rate.

Commenters said EPA arbitrarily creates a national RE target by lumping states into zones and then asserting a standard renewable percentage base d on its analysis of "best practices." Commenters said many states meet their RPS through a tradable REC system, a system that does not appear to be easily transposable into state pla ns. Commenters also said many state RPS have off-ramps, cost caps, and alternative compliance op tions, one of which can be EE improvement.
Commenters asserted that f a state's RPS allows EE to be counted as RE, EPA should reduce that state's RPS assumption in the state goal calculatio n.

Comment 12: Commenters expressed concern regarding RE offset p otential.

Response 12: The BSER no longer includes energy efficiency unde r building block 4. The EPA believes that the replacement of affected source ge neration with RE is technically feasible, adequately demonstrated, and cost-effective. Refer to preamble section V.A and V.E for
additional information.

The following is a summary of the specific public c omment under this comment:

Commenters disagreed that RE offsets existing fossi l fuel generation to any appreciable extent as empirical data suggests intermittency and demand fl uctuations nullify any supposed zero-sum relationship. Additionally, commenters said offsett ing RE against the baseline would exacerbate all of the other problems with the calculations for BB4, by requiring an absolute reduction in demand every year between now and 2030.

Comment 13: Commenters showed concerns on the use of the NC RE PS for the Southeast and South Central Regions.

Response 13: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in V.E of the preamble and in the GHG Mitigation Measures TSD.

Biomass is not considered part of the best system o f emission reduction in this rule and therefore it is not included in goal-setting or compliance ev aluations. However, similar to other technologies outside of BSER, biomass may be consid ered as a part of a state’s plan to meet the emission guidelines.

A discussion regarding the use of some biomass feed stocks for compliance purposes can be found in Section VIII.I and Section VIII.K of the p reamble.

The following are summaries of the specific public comments under this comment:166

Commenters stated that has misread North Carolina's REPS. Commenters said EPA neglected to account for the fact that the 10% 2018 goal include s EE measures (which EPA separately addresses in BB4), out of state energy production, thermal energy, and existing hydroelectric energy. Additionally, commenters stated the methodo logy, proposed by EPA, to apply an overall growth rate to individual states' current renewable penetration levels, results in a requirement that states with currently heavy investment in RE increa se their renewable production substantially, while a state that has relatively no renewable pene tration will be required or expected to barely
increase its renewable investment. Commenters EE me asures can be used by an electric power supplier to comply with the requirements of the REP S. Furthermore, commenters said EPA has double counted EE in its calculations by utilizing the NC REPS that includes EE as its proxy for RE generation in BB3 and then separately calculatin g reductions based on achievable EE in BB4. Commenters said IOUs can fulfill up to 25% of the REPS requirements up until 2020 through EE measures. Commenters stated in 2021, thi s limitation is increased to allow IOUs to comply with up to 40% of their REPS requirements th rough EE measures. With the exception of small set-asides for energy from solar, swine waste and poultry waste resources, commenters stated NC REPS legislation contains no limit to the amount of EE and DSM measures that can be used to satisfy the REPS by EMCs and municipalities . Commenters asserted that actual approximation of RE generation anticipated as a res ult of the REPS, 3.75%, is far lower than
EPA's 10%. Commenters said that when 3.75% is inser ted into EPA's application of BB3, in place of 10%, the resulting BB3 reduction adjusts f rom a 165 lbs/MWh reduction to a reduction
of 67 lbs/MWhr.

Commenters said states in the Southeastern region w ere given a RE target of 10% of statewide electrical generation and this regional approach wa s based on the assumption that the potential to expand RE resources varied by region. Commenters st ated the figure for the Southeastern region is based upon the average of all RPS of all states in that region, however, North Carolina is the only state to have such a standard. As such, commen ters stated North Carolina became the standard for the region. Commenters stated it is, h owever, a combined renewable energy/efficiency standard that allows utilities to meet a portion of their targets through efficiency measures, rather than the deployment of new renewable energy generation. Commenters questioned if EPA has considered the eff ect of this on its BB3 calculations.

Commenters stated EPA misinterpreted NC REPS when s etting the RE target for Georgia and
other Southeastern states. Commenters stated that b ased on North Carolina's REPS, Georgia's RE target should be no more than 7.5%. Commenters stat ed EPA based the Southeast regional RE target of 10% on North Carolina's REPS; however, th e North Carolina standard contains provisions which allow both RE and EE measures to s atisfy the requirements. Commenters stated EPA's Southeast Regional RE Target is based on North Carolina's (NC) REPS Primary Target of 12.5% for Investor Own Utilities (IOUs) b y 2021 and thereafter. Commenters cited
North Carolina statutes that discussed how electric public utilities in the state may meet the requirements through RE resources or through reduce d energy consumption through EE
measures. Commenters stated North Carolina's statut e has defined 'renewable energy resources' to include over 16 different potential fuels that are not known to be significant or sustainable renewable resources in Georgia. Commenters also sta ted that by comparison, EPA states that "The East Central and Southeast regions show modera te to strong resources in both biopower and rooftop PV potential." Commenters also stated t hat the statute states that up to 40% of the North Carolina 12.5% RPS target can be met by the i mplementation of energy efficiency167

measures, which translates to an effective RE targe t of 7.5%. Commenters stated that because of the inconsistencies between the handling of RE in t he proposed section 111(d) rule and the flexibilities incorporated in North Carolina's REPS , they asserted that EPA misinterpreted the North Carolina requirements when setting the RE tar get for Georgia and other Southeastern
states. Commenters stated that based on North Carol ina's REPS, Georgia's RE target should be
no more than 7.5%.

Commenters stated that thermal energy is not includ ed in EPA's definition of RE generation on which it bases its calculation in BB3, though it ca n be used by an electric power supplier to comply with North Carolina's REPS requirements. Com menters added that the statutes impose no limit on the amount that can be used for complia nce. Theoretically, the commenters said an electric power supplier could satisfy its entire re quirement by purchasing or generating thermal energy (with the exception of a small set-aside for electricity from swine waste).

Commenters stated the proposed rule relies heavily on the North Carolina RPS for guidance on what is achievable in this part of the country, as it is the only state with an RPS in the Southeastern region. Commenters stated the North Carolina standard includes several items that may not be achievable or applicable to Georgia and does not properly fit within the confines of the proposed rule. Commenters stated the renewable standard allows for energy efficiency to be 25-40% of the renewable goal for all IOUs and 100% for Municipal and Cooperative Utilities. Commenters stated the goals outlined are not direct ly applicable to the methods used to craft reduction potential in the proposed rule. Commenter s also stated the RPS is based on a mandate from North Carolina legislature to achieve goals, n ot on technical feasibility resulting from a detailed study of resource availability. Commenters stated that identifying the BSER for renewables to comply with this rule should rely upo n robust scientific study to determine Georgia's potential and should be parsed with reali stic accounts for current technological and
economic constraints. Commenters said the final rul e must be modified to reflect a realistic and feasible target for Georgia that is a compliance op tion and not a mandated level of RE.

Regarding the NC RPS, commenters said that just bec ause a state is leading in renewables does not necessarily mean that the other states in that region are capable of meeting the same level of renewable generation.

Commenters stated the Agency significantly misconst rued state-level RPS in developing regional targets. Commenters stated primary and secondary pe rcentage requirements ("tiers") for specific renewable resources (e.g., solar) were considered b y EPA when initially determining a state's total renewable energy compliance potential. EPA ex cluded tiers that included energy efficiency or any fossil fuel unless it was part of a primary tier. Commenters stated a region's target was then determined by averaging the individual state's 2020 renewable energy compliance requirements within a region. Commenters stated Nor th Carolina's REPS was the only state program in the Southeast region and thus establishe d the region's target. Commenters stated Commenters stated the use of a single state program to establish goals for an entire region is completely misplaced. Commenters stated North Carol ina's program contains numerous eligible compliance options that were not taken into accountin BB3. For example, the commenters stated, compliance options for covered entities in North Carolina include: demand-side management, EE measures, electricity demand reducti on, existing hydroelectric resources, credit multipliers for biomass, and out-of-state unbundled REC. Commenters also stated demand-side168

management, EE measures, and electricity demand red uction are eligible resources within North Carolina's REPS primary tier; thus, EPA did not exc lude these resources. Commenters stated electric public utilities in North Carolina may use EE measures to meet up to 25% of the REPS requirements through 2020 and up to 40% beginning i n 2021 and electricity demand reduction is allowed to meet up to 100% of a utility's requireme nt. Commenters stated EPA's proposed guidelines do not recognize these resources as elig ible for meeting its BB3 RE targets - in fact, these resources are captured, in part, by requireme nts in BBs 1 and 4. Commenters stated Commenters stated EPA has made two errors: (1) EPA excluded numerous compliance options available under North Carolina's REPS that signific antly increased its stringency; and (2) the Agency double counted potential compliance measures across building blocks. Commenters stated, the stringency of BBs 1, 3, and 4, for at l east the Southeast region, are based on identical measures - EE measures and electricity demand reduc tions.

Commenters stated EPA's limited definition of renew able technologies further increases the stringency of North Carolina's program. EPA's propo sed guidelines, compared to North Carolina's program, narrow the types of renewable t echnologies that count toward compliance with a state's goal by defining renewable energy as technologies that are "fueled by the sun, wind, water, organic matter, and other resources re gularly replenished by physical or biological cycles." Commenters stated the North Carolina REPS defines RE resources much more broadly: "Solar electric, solar thermal, wind, hydropower, g eothermal, or ocean current or wave energy resource; a biomass resource, including agricultura l waste, animal waste, wood waste, spent pulping liquors, combustible residues, combustible liquids, combustible gases, energy crops, or landfill methane; waste heat derived from a renewab le energy resource and used to produce electricity or useful, measurable thermal energy at a retail electric customer's facility; or hydrogen derived from a renewable energy resource." Commenters stated that North Carolina's REPS, furthermore, specifically allows a hydroelect ric power facility with a generation capacity of 10 MW or less to count towards compliance, where as EPA explicitly excluded pre-existing hydroelectric power generation as an option for com pliance with state goals. Commenters stated EPA, however, did not reduce the stringency of Nort h Carolina's program to account for these limited compliance options when setting a renewable energy target for the Southeast region within BB3. Commenters agreed that fuels such as la ndfill methane gas and hydropower should count toward compliance.

Commenters said it should be noted that the definit ion of a RE resource in North Carolina is not limited to emission reducing technologies. Commente rs stated biomass, pulping liquids, methane captured from poultry and swine farms are all examp les of resources eligible to comply with the North Carolina REPS where their use as a fuel may a ctually increase carbon emissions when compared to certain traditional forms of generation . Commenters stated biomass utilized for compliance was not backed out with the other elemen ts in this analysis as biomass is also included in the 2% figure for current RE generated in state that EPA relied upon for its starting point to apply the growth rate. However, commenters noted that the inclusion of biomass in both
instances attributes carbon reduction to resources that have not been proven to do so.

Commenters said EPA's initial decision to use the N orth Carolina REPS as a proxy for the entire Southeast region is flawed because it uses the only REPS in the region, while for other regions, EPA used an average of portfolio standards across t he region to approximate each region's potential. Commenters said that by simply using the only REPS in the region, EPA has assumed169

that all states in the Southeast have a similar pot ential to North Carolina. Commenters said if North Carolina had not passed its REPS, if EPA woul d expect the Southeast region to have 0% renewables in its application of BB3. Likewise, Com menters asked if one other state had made a goal of 1%, would the goal for the entire region th en drop to 5.5%?

Commenters stated the RE target for the entire Sout heast region is based solely on North Carolina's 2020 RPS goal of 10% and assumes a RE gr owth rate of 13% per year for each state. Commenters stated that in Georgia and Alabama, indu strial CHP sources burning wood or woodderived products (such as pulp and paper mills) con stitute over 90% of each state's RE generation. Commenters stated between 2008 and 2012 , these industrial CHP sources grew at an annual rate of only 2.1% in Georgia and actually de clined by 5.1% annually in Alabama. Commenters stated these sources have little potenti al for growth, so in order for Georgia to achieve its state renewable energy target, other re newable energy sources would need to increase by over 44% per year. Accordingly, commenters stat ed, EPA's approach is inherently defective because it does not account for these state-specifi c limits on achievable renewable energy potential.

Commenters stated that in the Southeast Region, EPA set targets based on North Carolina's RPS but many of the other states do not have the same w ind capacity. Commenters stated EPA's GHG abatement measures TSD, citing an NREL study, claim s that states in each region exhibit similar RE potential, but other SE states lack onshore wind potential, and it is the only renewable option close in terms of cost to sources it would be repla cing. Commenters questioned what renewable resource(s) does EPA expect these states to deploy. Commenters also questioned how does the Agency account for potentially mandating renewables for states in which RE generation (i.e. offshore instead of onshore) could be significantly more expensive.

Commenters stated that in the Southeast and for Flo rida, Georgia and South Carolina where their member utilities operate, the most cost effective s ource of RE, wind power, is not a feasible or
cost effective resource and neither wind nor solar generation produces reliable base load power. Commenters said EPA eliminated a number of importan t modifying features included in the N.C. REPS when establishing the renewable requirement fo r the Southeastern states in the proposed rule. Commenters stated N.C. REPS caps the cost of the program for retail, commercial and industrial customers - EPA ignores this legislative ly imposed limiter on the program. Further, Commenters asserted N.C. REPS includes EE, demand r eduction and the ability to buy RECs as components of its 10% requirement - all features th at would reduce the absolute costs and stringency of the portfolio standard. Commenters ad ded that N.C. REPS directs the state PUC to develop a procedure for modifying or delaying provi sions if the Commission determines that it is in the public interest to do so - there is no such feature in the proposed rule which specifically rules out "backsliding" from mandatory standards, n o matter what real world conditions states
confront in the future.

Commenters said it is unreasonable for EPA to predi cate RE requirements for multiple states, each with completely different RE resources and com pletely different energy resource and infrastructure bases, on the renewable plan for N.C . and to impose on those other states an RPS from a single state in the region that contains non e of the cost and feasibility safety valves provided by that state. Commenters urged EPA to rec onsider the decision to ignore state-170

mandated price caps, alternative compliance options and programmatic off-ramps when imbedding the REPS into the NSPS as the model progr am.

Commenters stated EPA's NODA proposal is not accept able because section 111(d) grants states the authority to set standards of performance - notEPA or, by proxy, NREL. Commenters stated EPA's nomination of NREL to set RE targets in EPA-p roposed state goals will further overstep
the authorities EPA has under the law. Commenters a dded that RE penetration has an impact on the grid that extends beyond just feasibility. Comm enters stated NERC has repeatedly made clear that the increased penetration of variable resource s can and will strain the grid making the assessment of RE targets a decision that requires a ssessments beyond NREL's area of expertise.
Commenters asserted states are best suited to ascer tain the level of RE penetration that they may choose in developing state plans. Commenters urged EPA to assess the wisdom of setting in place a process (allowing NREL to set RE targets) t hat will establish a national reduction goal that will become inviolate without allowing an oppo rtunity for comment to affected entities.

Commenters stated the calculation of the regional r enewable energy goal for the Southeast region relies on the RPS of only one state, and thu s the North Carolina RPS, and only the North Carolina RPS, is the sole basis for determining the renewable energy goal for all states in the Southeast region, regardless of the unique design a spects of the North Carolina program or different geographic potential or cost-effectivenes s for achieving such a goal among states in the region. Commenters stated the North Carolina RPS co ntains a number of unique elements that significantly affect the extent and types of specif ic renewable resources that may be applicable to other states in the region. Commenters provided the following examples of these unique provisions:

• Up to 40% of the standard can be met through energy efficiency measures;

• Up to 25% of the standard can be met by using out-o f-state renewable credits; and

• ~10% of the standard must be met by energy recovery from swine and poultry

waste.

Commenters stated the U.S. Department of Energy's D atabase of State Incentives for Renewables & Efficiency (DSIRE) describes the North Carolina standard as follows: "Due to the combined circumstances that it 1) has fairly string ent per-account cost caps, 2) allows for energy efficiency and conservation measures to comprise 25 % of General Requirement compliance through 2021 and 40% thereafter, North Carolina's R EPS [Renewable Energy Portfolio Standard] can function in ways similar to an Energy Efficiency Resource Standard (EERS). However, commenters stated since it does not requir e specific annual targets for efficiency and demand-side management, it is not formally consider ed by DSIRE to be an EERS." Commenters stated by including both EE measures and renewable resources in a single goal, North Carolina's standard is far different from the goals EPA claims to be establishing for groups of states on a regional basis. Commenters also stated EPA's method ology, which sets both EE and renewable goals as part of the state goals, effectively ignor es the dual role those measures play in North Carolina, and has increased the state's standards. Commenters stated EPA should have adjusted the actual percentage to reflect this duality, and reduced the renewable portion of the North Carolina and Southeast regional goals.171

Commenters stated one major reason for EPA's overes timation of renewable generation relates to its broad selection of RE targets for specific regi ons, without any detailed examination of or justification for these targets. Commenters stated EPA's Southeast Region has an effective RE target of 10% by 2029, which is based on North Caro lina's REPS of 10% by 2020. Commenters stated this region generally encompasses most of th e SERC, as well as the Florida Reliability Coordinating Council (FRCC). Commenters stated the North Carolina REPS allows utilities to meet the REPS requirements through various mechanis ms. Commenters stated two mechanisms that EPA failed to consider in its adoption of the 10% renewable target for the entire region are utilities' ability to (i) reduce energy consumption through energy efficiency measures and (ii) purchase renewable energy certificates (REC) from o ut-of-state facilities. Specifically, Commenters stated, the North Carolina REPS allows a utility in 2020 to meet 25% of its REPS requirement through energy efficiency and another 2 5% of its REPS requirement through RECs,
which could reduce the effective 2020 in-state rene wable generation target to 5.0%. Therefore, commenters stated, EPA has not only overestimated N orth Carolina's target, it has overestimated the 2020 target for the Southeast Region and the 20 20 to 2029 renewable generation levels in
those states.

Commenters stated that the statute for North Caroli na's REPS state that "an electric public utility may meet up to forty percent (40%) of the requireme nts of this section through savings due to implementation of energy efficiency (EE) measures." Commenters noted that EPA accounts for EE in proposed BB4, thus the "RE Factor" for the So utheastern U.S. should be adjusted
downward to account for this issue.

Commenters stated that in North Carolina (the basis for the Southeast region target), utilities can demonstrate compliance using EE measures. Commenter s stated that consistent identification of what is and is not a qualifying resource will be im portant and may be a difficult task if EPA retains an RPS-based approach for setting BB3 targe ts.

Commenters stated that the EPA does not account for the fact that states define renewable resources that are subject to their portfolios diff erently than EPA. Commenters noted EPA used the North Carolina standard for the Southeast regio n and stated that the EPA extracted the numeric standard without applying the other determi nants in the North Carolina RPS statute.
Commenters stated that the North Carolina REPS coun ts existing hydropower, REC, and EE to fulfill the requirements. Commenters also stated th ere are provisions in the North Carolina REPS that allow utilities to petition for a waiver if ma ndates are not attainable. Commenters stated the use of the appropriate determinants would reduce th e effective 2020 in-state renewable generation target for the Southeast region to 5%, h alf of what EPA proposed.

Commenters stated that the EPA does not consider th e details of North Carolina's RPS in applying it across the Southeast, and the requireme nts of the RPS do not line up with the requirements of the Clean Power Plan. Commenters sa id that North Carolina's standard includes eligible resources that EPA does not include in Bui lding Block 3, such as hydroelectric generation, landfill gas, biomass, and CHP/cogenera tion. Commenters also said that North Carolina allows energy efficiency measures to accou nt for 25 percent of a utility's requirement (40 percent after 2021), and electricity demand red uction can meet up to 100 percent of a utility's renewable energy requirement. Commenters asserted t hat even if it were appropriate to assume that North Carolina's RPS represents a good proxy f or other state's renewable energy172

development potential, the eligible technologies co unted in North Carolina's RPS do not align with EPA's specification of Building Block 3, and are not reasonably supported for application with respect to other states, such as Mississippi.

Commenters stated EPA underestimated NC's RE potent ial.

Commenters stated North Carolina's RE and EEPS goal allows utilities to meet 25% of their requirements by reducing energy consumption through EE measures, and another 25% of their requirements by purchasing RECs from out-of-state f acilities. Commenters stated that thus, the 10% RPS target EPA assumed for North Carolina effec tively requires in-state RE generation to reach only 5% by 2020 with remaining 5% achievable through EE and RECs. Commenters
stated because North Carolina's RPS alone sets the regional target for the entire Southeast region, EPA's target is roughly 100% too high for 8 states. Commenters said other states, along with North Carolina, have built cost-control mechanisms into their RPS goals to reduce the requirements for utilities if compliance becomes to o burdensome. Commenters stated that EPA did not account for any of these flexible complianc e mechanisms when dictating regional RE generation targets; it should do so.

Comment 14: Commenters requested consideration for credit mult ipliers.

Response 14: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated that another inconsistency betwee n North Carolina's REPS and EPA's application of the program is the presence of a cre dit multiplier. Commenters stated the first 20 MW of biomass RE generation capacity located in Nor th Carolina clean fields RE demonstration parks receive triple credit. Commenters stated thatEPA states that multiple credits cannot be included as a measure in a state plan. Commenters s tated this discrepancy is not limited to EPA's application of North Carolina's program. Commenters stated that 12 of the 29 state renewable programs contain credit multipliers, though EPA ign ored the impact that credit multipliers have on the stringency of the state standards. Commenter s stated RECs derived from out-of-state RE facilities are also a compliance option under the N orth Carolina REPS and may be used to meet up to 25% of the program's requirements. Commenters stated the 25% threshold does not even apply to an electric public utility with less than 150,000 North Carolina retail jurisdictional customers as of December 31, 2006. Commenters state d EPA assumed that the stringency of North Carolina's program was reflective of the rene wable resources available within the state's boundaries; this is not the case.

Commenters stated EPA erred by omitting from consid eration the effect of multipliers for differing technologies. For example, commenters sai d that in New Mexico, solar PV generation satisfying certain conditions qualified for a 3-fol d multiplier, resulting in a lower level of required renewable generation than was assumed by E PA in calculating New Mexico's BB3 goal173

Comment 15: Commenters had concerns regarding the application of NC’s secondary requirements for smaller utilities.

Response 15: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public c omment under this comment:

Commenters stated that further undermining the REPS as a standard setting tool, North Carolina is one of six U.S. states to establish secondary re quirements for smaller utilities - EMC and municipalities. Commenters stated that in developin g the Southeast region's BSER renewable energy target, EPA only considered the primary targ ets that solely affect electric public utilities. Commenters stated the Agency falsely states that "b y only considering primary requirements,
there is additional inherent conservatism in the RP S estimates, as additional state-level RPS obligations are not included in the calculated targ ets." Commenters stated this conservatism, however, is eroded by applying the calculated primary target to the entire region's total net generation, which includes generation from EMC and municipalities. Commenters stated this application of North Carolina's program also ignore s the fact that, in North Carolina, EMC and municipalities are able to use existing hydroelectr ic generation for compliance. Commenters stated that only five of the 29 state programs anal yzed by EPA cover a state's entire load; for example, Arizona's RPS only covers 58.6 percent of the state's load.

Comment 16: Commenters stated NC allows use of out-of-state RE C for compliance.

Response 16: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated that out-of-state RECs can be use d by an electric power supplier to comply with the requirements of the REPS. Commenters said out-of-state purchases will not increase the level of renewable generation in the state but are acceptable for meeting the 10% requirement of electric power suppliers - IOUs, EMCs and municipal ities can fulfill up to 25% of the REPS requirements by purchasing out-of-state RECs.

Commenters stated that yet another difference betwe en North Carolina's program and EPA's
BB3 is the treatment of banked RECs. Commenters sta ted the North Carolina REPS allows banking of RECs which encompasses "electricity or e quivalent energy supplied by renewable energy or reduced by the implementation of an energ y efficiency measure." Commenters stated a REC can be used in the year in which it was acquire d or any subsequent year, thus entities with a174

compliance obligation can bank RECs for an indefini te period of time. Commenters stated that EPA states that the use of banked RECs is not an ap provable compliance option within a state's plan.

Comment 17: Commenters noted NC’s penalties for noncompliance with state-level RPS.

Response 17: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public c omment under this comment:

Commenters stated EPA established the stringency of Building Block 3 based on the presumption that states are required to meet state- level RPS. Commenters stated that this is a large oversight. Commenters cited the NCUC's final rules, stating that there are no specified penalties or alternative payments for noncompliance with state's RPS. Commenters stated that
EPA has indicated that cost containment mechanisms or off ramps are not an option within an approvable state plan. EPA states, "[a]lthough thes e ACP [alternative compliance] payments may be directed to programs to promote the deployment o f renewable energy technologies, these payments are not equivalent to renewable energy gen eration and should not be accounted as such." Commenters stated that this discrepancy is n ot limited to North Carolina, as twenty-one of the 29 state programs have explicit cost containmen t mechanisms.

Comment 18: Commenters asserted the EPA approach ignores NC RE PS cost cap.

Response 18: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public c omment under this comment:

Commenters stated EPA's plan to apply the terms of the North Carolina REPS in an overly prescriptive and rigid manner to the Southeast regi on ignores one of the most fundamental aspects of the North Carolina policy - the renewabl e energy goals in the North Carolina REPS are conditioned on an explicit cost cap set forth i n the REPS statute. Commenters stated that under the North Carolina REPS, the state's utilitie s may pass to customers the "incremental costs" they incur to comply with the REPS. Commente rs stated that the REPS statute, however, imposes a limit on the amount of such incremental c osts that can be imposed on customers. Commenters stated, for example, the statute express ly provides that residential customers can be charged no more than $34 per year for the increment al cost of REPS compliance. Commenters stated that obviously, the cost cap provisions of t he North Carolina REPS protect consumers, but175

just as importantly, the REPS framework limits the obligations of the North Carolina utilities.
Commenters cited the North Carolina REPS statute th at specifically states that "[a]n electric supplier shall be conclusively deemed to be in comp liance with the requirements of [the North Carolina REPS] if the electric suppliers total annu al incremental costs incurred equals an amount equal to the per-account annual [cost caps set fort h herein]." In other words, commenters stated commenters stated once a North Carolina utility inc urs costs for REPS compliance equal to the statutory cost cap, that utility's compliance oblig ations cease, regardless of whether the utility has met the renewable energy goals set forth in the Nor th Carolina REPS. Commenters stated that thus, EPA has, in effect, used North Carolina's fle xible and cost-constrained renewable energy goals to now seek to misapply them in a wholly infl exible manner without regard to the cost to consumers. Commenters also stated that EPA compound s this error by misapplying those goals beyond North Carolina to an artificially created So utheast region.

Comment 19: Commenters had North Carolina state target concern s.

Response 19: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public c omment under this comment:

Even if EPA is unwilling to depart from using exist ing REPS goals as the best method for establishing BB3 reductions, commenters said EPA sh ould allow states with established REPS to
use these in their calculation. Commenters said NC established its REPS based on what was technically achievable for the state, so NC's BB3 r eductions should adopt the complete NC
REPS as the standard for NC. Commenters said this w ould entail recalculating NC's emission
standard based on the REPS as established in the NC general statutes, said the commenters, including all means by which NC electric generators may comply with the statute. Commenters
said it would reestablish NC's standard based on re tail electric sales rather than generation and require adjusting NC's reductions under BB4 to elim inate double counting since up to 25% of REPS compliance can be satisfied through EE.

Comment 20: Commenters supported linking performance-based reg ulations with state targets.

Response 20: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public c omment under this comment:

Commenters supported linking performance based regu lations with state targets. Commenters listed 10 principles for designing performance-base d regulations that would result in a utility176

earning higher rate of returns if they perform well under the targets set by the state. Commenters supported providing flexibility by allowing flexibi lity for annual goals by setting an 8-10 year target and allowing for benchmarks to be achieved i n a cluster of 2-3 year increments. Commenters concluded that it would benefit states p olicymakers, regulators, and the utility customers by creating a market-based solution to po licy goals and shifting risk to the utility in exchange for greater revenue opportunities. Comment ers suggested that EPA encourage states to adopt performance-based rates that allow electric u tilities to make money during the energy transition for high carbon sources to clean energy sources. Commenters added that the federal agencies can assist states in setting good solid me asures and metric for set performance goals of reducing greenhouse gases and using energy efficien cy.

Comment 21: Commenters suggested the EPA underestimated RE gro wth potential.

Response 21: The resources and data provided in this comment wer e valuable in finalizing the building block 3 methodology, particularly in reeva luating the assumed cost and performance of wind and solar RE technologies. The final methodolo gy does not use state RPS requirements to quantify cost-effective RE and is described in sect ion V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters contended that EPA underestimated the po tential for growth of RE. Commenters added that the rule should rely on resource availab ility, which is already measured in each state, instead of basing assumptions on RPS and said RPS are a floor and not a ceiling. Commenters added that EPA rightly includes wind/solar resource s in setting state targets, but the availability and quality of opportunities assumed is too low, le aving substantial achievable reductions off the table. Commenters stated EPA should analyze resourc e availability and costs on a state and regional basis rather than limiting the assessment of potential development to mandated RE and state RPS. Further, commenters asserted that EPA sh ould remove any artificial limits on RE growth and use the annual RE growth factor for each state that reflects the renewable potential for states and regions.

Commenters contended that EPAs proposed rule "signi ficantly underestimates" the role of renewables in establishing state-level emissions ta rgets, and fails to reflect the falling cost of renewables. Commenters compared a business-as-usual (BAU) scenario against a natural gas fuel switching, scenario, and a 30% RPS to determin e which strategy achieves the greatest
emission reductions at the lowest cost. Commenters stated that the comparison showed that the
30% RPS can reduce Wisconsin's CO2 emissions below EPA targets, at a lower cost than the fuel switching scenario. Commenters added that thes e results were shown under conditions where fossil fuel prices rise steadily at 2% annual ly, and a scenario where natural gas prices reflect historical volatility observed from 1998-20 13. Commenters stated that the 30% RPS produced lower costs than the fuel switching scenar io under each simulation, illustrating the value of renewables as a hedge against price volati lity. Commenters referenced the UCS analysis which found that ramping up RE deployment to 23% by 2030, compared to 12% of total retail sales under the proposed rule, would increase avera ge electricity prices by just 0.3% per year177

above a BAU scenario. Commenters stated that the UC S results are even more favorable than the results of modeling for the state of Wisconsin. Com menters added that the analysis supports an aggressive shift to RE in Wisconsin, and across the nation, is clear.

Commenters said the regional growth factor should n ot be used as it limits the ability of many states to reach the regional target with no rationa le for why such limitations would occur. Commenters stated there is ample evidence that the targets are achievable within the timeframe
of the CPP at reasonable cost. Commenters asserted EPA should assume each state can meet the regional target rather than limit RE adoption throu gh the regional growth factor. Commenters
asserted EPA's calculation underestimates the abili ty to grow renewables; states that have not implemented RPS, and essentially have not made it a point to deploy RE, bring down the regional growth factor. Commenters said eliminating the regional growth factor's unnecessary constraint on states achieving the calculated RE ta rgets results in incremental RE target of 139,791 GWh in 2030 - if both 2030 RPS targets are used and the growth factors are eliminated, the net increase to RE targets is 195,735 GWh in 20 30, a 37% increase.

Comment 22: Commenters expressed Wyoming specific target conce rns.

Response 22: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.
The following are summaries of the specific public comments under this comment:

Commenters stated roughly two-thirds of the electri city generated in Wyoming is consumed by users outside the state, but EPA did not account fo r this in the baseline data used to establish the state's goal, as all of the electricity generated i n the state from both fossil fuel and RE was used
to establish the CO2 lb/MWh rate for 2012. Commente rs said assumptions made in the goal calculation should be based on reasonable options f or demonstrating compliance in the future. Commenters said many questions have been raised abo ut how the "credit" from RE would be distributed among the states for purposes of demons trating compliance in the future. Based on calls with EPA staff, the commenters said they unde rstand that Wyoming would bear the burden of carrying all the fossil fuel energy produced in the state regardless of where it is consumed and receive no credit for any RE produced in Wyoming th at is consumed out of state. Commenters stated this would put the state at an extreme disad vantage in any negotiation with other states regarding multistate plans. Commenters asserted EPA 's accounting method disadvantages energy exporting states like Wyoming, making compliance wi th the Proposed Rule impossible and said EPA must use a consistent accounting method in establishing state goals and compliance options.

Commenters stated EPA's proposed RE growth is unrea sonable because it did not consider how states with RPS set their goals, including the star t date of the RPS and how much RPS were already in place at the times the goals were set. S pecifically, commenters noted the average annual growth rate in the West Region for states th at have a RPS is 0.95%. Commenters stated the most aggressive growth directive came from Wash ington at 1.5% annually, which considered its baseline year to be 2012. Commenters said no st ate with an RPS initiative considered a 6%178

growth rate, even though they envisioned increasing demand for electricity and had the legislation in place to encourage RE development. F urther, commenters said state RPS are established state goals and EPA's data does not ind icate if those goals are being achieved. Thus, commenters considered a reasonable RE growth to be the average annual RPS growth rate of the West Region, which is 0.95%; Wyoming cannot supporta 6% annual RE growth rate.

When establishing the goal for Wyoming's reduction in CO2 emissions from power plants,
commenters said EPA failed to consider the inter-de pendency that some states located in the western region have on the same utility system; dem ands on the energy system are not exclusive to the supply residing within the state borders. Wh at was uniform, said the commenters, was the need for reliable (time-of-dispatch) energy to sust ain the system that may be supporting multiple states. On the west side, Wyoming shares a utility system (PacifiCorp) with Idaho, Utah, Washington, Oregon, and Northern California. Commen ters stated Wyoming customers constitute less than 10% of the total, and Wyoming energy is less than 20% of the system's total. On the northeast side, Commenters stated Wyoming sh ares a utility system (Black Hills Corporation) with South Dakota and Montana, and tha t on that system, Wyoming customers represent less than 4% of the total customers serve d. Commenters added these facts demonstrate that Wyoming is not creating the demand for more re sources, and, therefore, those new resources would not be invested into on behalf of Wyoming. Co mmenters concluded that not including base load and reliability as part of its analysis m akes EPA's analysis incomplete.

Commenters said Wyoming, has a maximum RE amount of approximately 10.2 million MWh, but applying the 6% regional growth factor between 2017 and 2030 yields only 9.4 million MWh of RE generation in Wyoming. Commenters said that b ecause the state is only expected to satisfy the regional growth requirements, rather than its m aximum RE amount, it falls short of that maximum amount by some 800,000 MWh.

Comment 23: Commenters expressed Maine specific target concern s.

Response 23: The BSER is forward-looking in identifying cost-eff ective opportunities for emission reductions from 2012; however, the cost an d availability of these emission reduction opportunities is the result of many factors, includ ing previous actions. The final building block 3 methodology is described in detail in V.E of the pr eamble and in the GHG Mitigation Measures
TSD.

The following are summaries of the specific public comments under this comment:

Commenters said that by not including hydropower pr oduction as part of Maine's existing RE when applying BB3, the proposed rule ignores the pr ofound effect that Maine's existing hydropower facilities have had in preventing CO 2 emissions over many years. Commenters said that, according to EIA, Maine generated 84,713,011 MWh of electricity from hydropower
between 1990 and 2012. Commenters stated if this el ectricity had been generated at a NGCC plant meeting the new construction standards of 1,0 00 lbs of CO 2 /MWh proposed in the NSPS, it
would have resulted in well over 84 billion lbs of CO 2 emissions. Commenters stated that in reality, the avoided emissions would have come from a less efficient EGU, and would consequently have been much greater. Commenters sta ted Maine continues to reduce their179

carbon footprint by adding new wind generation capa city, working with developers to encourage investment in offshore wind energy generation capac ity, exploring opportunities to increase their hydropower generation capacity, and through partici pation in RGGI, which generates revenues used in implementing demand-side management program s. Commenters stated EPA's methods do not recognize Maine's leadership in avoiding and reducing dependence on fossil fuels and avoiding and reducing GHG emissions. Commenters sta ted the efforts and investments that have been made over the years by states like Maine shoul d be recognized regardless of whether they were started or accomplished prior to the date of E PA's proposed rule. To recognize these established and ongoing benefits, the commenters st ated EPA should establish a standard
maximum CO 2 emission rate for all states, and apply it inclusi ve of all EGUs. Commenters said
states that have contributed and continue to contri bute more to the problem of atmospheric carbon can justifiably be required to bear the grea test burden in reducing emissions. Commenters also said states that have generated the least atmo spheric carbon should not be required to make up the difference for states that have generated hu ndreds of times more. Commenters added that EPA should use Maine as an example to other states, to show that it is possible to economically provide needed energy to residents and to industry without damaging the environment.

Comment 24: Commenters asserted there is a need to revise Ohio ’s RPS requirement.

Response 24: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public c omment under this comment:

Commenters stated Ohio's RPS requirement was recent ly revised downward from the figure EPA used in its renewable energy calculations, and prio r to the issuance of a final rule, EPA should revise Ohio's renewable energy target to reflect th at change.

Comment 25: Commenters expressed Kansas specific target concer ns.

Response 25: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. Targ et generation levels under building block 3 are quantified and assigned at the interconnect level, rather than the state-level. The final methodology is described in detail in V.E of the pr eamble and in the GHG Mitigation Measures
TSD.

The following are summaries of the specific public comments under this comment:

Commenters said EPA should adjust the interim and f inal Kansas emission goals to better reflect that portion of RE generation that is credited to a nother state for use toward their compliance obligations. Commenters said the interim and final emission goals would have the reapportioned180

quantity of electrical generation from renewable so urces removed from the denominator of the goal setting equation and new interim and final goa ls would be calculated for Kansas. Commenters also said that if EPA is planning to reapportion RE generation to other states for future compliance obligations, EPA should also reap portion other types of electrical generation.
Commenters stated EPA should subtract from the nume rator and denominator of the goal setting equation for Kansas that portion of electrical gene ration and associated emissions and credit both
of these values to the numerator and denominator of other states that receive electrical generation from Kansas' coal- and other fossil-fired generatio n. Commenters added that Kansas should be able to consider credit for future compliance from out of state sources such as NGCC generation. Commenters were not opposed to alternative methods of crediting and deducting electrical generation sources from the Kansas goal setting equ ation for future compliance demonstration in other states. However, commenters did oppose any al ternative reapportioning methodology that will adversely affect the proposed Kansas interim a nd final emission goals and ability to comply with those goals.

Commenters said EPA did not correctly interpret the applicability of the Kansas RE standard and the administrative regulations adopted by the Kansa s Corporation Commission to implement them. Commenters said only IOUs and electric cooper atives are subject to the Kansas RES.
Commenters also said EPA should have included Texas ' RE standard in developing the regional rate, not only Kansas. In using Kansas's nominal 20 % RES for fixing the regional RE level at 20%, Commenters said EPA failed to take into accoun t two factors about the Kansas standard: (a) the standard does not apply to all electric uti lities in-state, but to IOUs and electric cooperatives only- i.e., not municipal utilities; a nd (b) according to the standard, "[e]ach megawatt of eligible capacity in Kansas installed a fter January 1, 2000, shall count as 1.10 megawatts for purposes of compliance." Thus, commen ters stated for calculation purposes when used to compare standards among different states, t he actual (or effective) 2020 RES/RPS used for Kansas should be (20% / 110%) x (7,974/8,473) = 17.1 %, or 17%.

Comment 26: Commenters stated reasons why the Texas target is unrealistic.

Response 26: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.
The following are summaries of the specific public comments under this comment:

Commenters stated BB2 includes flawed assumptions o n nuclear energy and arbitrarily and unrealistically assumes as a vast expansion of rene wable energy in Texas. Commenters stated EPA derived this capricious and unrealistic goal by arbitrarily lumping Texas with five other states, of which only Kansas has a planned RPS. Com menters stated the EPA methodology ignores all differences between states. Commenters stated that in this calculation, EPA ignores Texas's own statutorily mandated RPS standard of 5, 880 MW of renewables capacity. Instead, Commenters stated, the proposed rule averages all e xisting RPS targets in a "region" and assigns the "average" to each state. Commenters stated ther e is no basis to use Kansas's RPS as the basis for a 20% energy RPS for Texas. Commenters stated K ansas's RPS is tailored to Kansas - a capacity-based RPS which includes biofuels and hydr opower - and is inappropriate for the181

intermittent zero carbon dioxide emitting renewable resources of Texas. Commenters stated that conversion of Kansas' 20% capacity RPS to a 20% ene rgy RPS for all states in EPA's South Central grouping is the very definition of arbitrar y. Commenters cited The Kansas Corporation
Commission comments to EPA:

"EPA states that it uses only energy-based RPS stan dards in assigning targets. Because Kansas has a capacity-based RPS, Kansas was assigned the S outh Central Region's average target of 20% of generation as a default. Besides Kansas, Tex as has the only other RPS target in the South Central Region. Like Kansas, Texas's RPS target is capacity-based. Because no other states in the region have RPS standards, EPA had no energy-ba sed RPS targets in the region that could establish an energy-based target for the region. Th us, EPA used an arbitrary energy-based RPS target of 20% for Kansas and the rest of the South Central Region."

Commenters stated additionally, Kansas's RPS has nu merous safety valves should retail rates rise above 1%. Commenters stated EPA failed to analyze t he likelihood that these cost containment provisions effectively bind the Kansas RPS (or its application in other states) to a lower standard.

Commenters also stated that application of one stat e's renewable standard to other states is arbitrary because it does not account for the relat ive size of the states; Kansas's electricity sector is 1/10th the size of Texas's electricity market, a ccounting for only 6% of the South Central state region's retail power sales, and has the third-bestwind resources in the country. Commenters stated that a 20% renewable standard for Kansas imp lies approximately 2,800 MW of wind generation capacity (at a 35% annual capacity facto r) whereas the same standard for Texas implies over 25,000 megawatts of wind generation capacity. Commenters stated such results clearly demonstrate that the BB3 component of the e missions calculation is both disparate and arbitrary.

Commenters stated the EPA's approach for estimating potential future renewable energy in Block 3 is arbitrary and flawed. Commenters stated the EPA has not justified the rationale for dividing the country into the specified regions for renewable energy. Commenters stated that some of the regions have multiple state RPS include d in the average while the South Central Region and the South Eastern Region only have one s tate RPS used for each region. Commenters stated the EPA's assumption that Kansas' renewable energy goal is applicable to the entire South Central Region is flawed and without any technical merit, especially considering that Texas' total generation is ten times that of Kansas and represen ts the majority of generation in the South Central Region. Furthermore, commenters stated, the EPA's growth rate approach penalizes states with more renewable energy in 2012 and rewar ds states that have little renewable energy in that year. Commenters stated EPA's approach actu ally rewards some states by giving credit
under BB3 while Texas is assumed to be able to more than double the state renewable generation, even though Texas produces approximatel y 11% more non-hydro renewable energy
than the combined total of the states that received credit for their renewable energy.

Commenters also stated the EPA did not provide a ra tional explanation for why the Texas RPS
was excluded from EPA's consideration in this Block 3 analysis for the South Central Region
other than a footnote in the GHG Abatement Measures TSD stating that the EPA did not include targets that were capacity-based. Commenters stated this unsupported conclusory statement cannot support the EPA's exclusion of Texas' RPS. C ommenters also stated the Kansas182

Renewable Energy Standards Act is in reality a form of a capacity-based RPS. Commenters stated that according to Kansas Statutes Annotated (K.S.A.) 66.1258, Kansas' renewable energy portfolio requirement is for net renewable generati on capacity as a percent of peak demand. Furthermore, commenters stated, Kansas' Renewable E nergy Standards Act established an exception in K.S.A 66-1261(b) to exempt a utility f rom administrative penalties if the utility can demonstrate that the retail rate impact for the uti lity has reached or exceeded the 1% level set in K.S.A 66-1260 and the utility has not achieved full compliance with the renewable portfolio requirement in K.S.A 66-1258. Commenters stated thi s stop-gap measure to avoid excessive costs that might result from the Renewable Energy S tandards Act was not considered by EPA.

Commenters stated the 8% growth rate EPA has applie d has a disproportionately large impact on Texas because Texas produced more non-hydro renewab le energy in 2012 than the other five states in the South Central Region combined. Commen ters stated the Texas renewable energy target under Block 3 reaches the 20% cap and result s in an assumption that Texas can increase its renewable generation by 52 million MWh by 2029; how ever, Arkansas, Louisiana, and Nebraska are expected to increase their renewable energy far less than Texas because their renewable generation in 2012 was a very small percent of thei r total generation. Commenters stated Commenters stated the total increase in renewable g eneration assumed for all five other states in the South Central Region is less than half what EPA assumed for Texas only. Commenters stated EPA's approach actually rewards other states for im plementing less renewable energy and penalizing Texas for implementing more renewable en ergy in 2012.

Commenters also stated that four states are receivi ng credit for their 2012 renewable energy generation: Iowa, Maine, Minnesota, and South Dakot a. Commenters stated the EPA's block-byblock calculations for these four states show that their state goals become less stringent at Block 3. Commenters stated that Texas produces approximat ely 11% more non-hydro renewable energy than these four states combined, yet despite the tremendous efforts Texas has made to become the nation's leader in wind energy, the EPA is not only not giving Texas credit for its 2012 renewable energy generation, EPA assumes that Texas can more than double its renewable energy generation by 2029. Commenters stated the EP A's arbitrary approach in evaluating renewable energy potential is rewarding these four states and penalizing Texas.

Commenters stated that the EPA's assumption that Te xas can more than double the state's renewable energy generation fails to consider a mul titude of local, state, and federal factors, for example: geographic siting issues such as land use restrictions; transmission infrastructure requirements and restrictions; and local, state, an d federal laws. Commenters stated that while not subject to TCEQ permitting requirements, construction of new wind capacity is not exempt from environmental and other legal considerations; the federal Endangered Species Act and the Migratory Bird Treaty Act are just two examples of legal factors that can impact a wind generation facility's viability. Commenters stated that local legal issues can also be a factor, such
as common law nuisance claims. Commenters stated th at EPA's proposed approach does not consider any of these factors because the EPA arbit rarily, and incorrectly, applied Kansas' RPS to the entire South Central Region. Commenters stat ed that the EPA did not consider these factors in the alternate renewable energy approach and the NREL report did not consider any of
these factors. Commenters stated that EPA's flawed approach of setting the benchmark based on states with technical potentials exponentially lowe r than Texas' technical potential did not take183

such factors into consideration and, while IPM is e ssentially a "black box" model, the TCEQ does not see any means for IPM to take these factor s into consideration either.

Commenters said that is comparing apples to oranges when basing Texas' target on the Kansas standard. Commenters stated EPA's goal-setting meth odology uses a mw-hr basis for BB3, but the Kansas standard is based on renewable capacity, not the actual mw-hr of electricity produced by that capacity. By using a capacity standard to s et a mwt-hr target, the commenters said, EPA overstates the Texas target substantially and that if the Kansas goal was converted to a mwt-hr basis, the Texas 20% target would drop to approxima tely 12%. Commenters added that the Kansas RPS is capacity-based, not generation-based, and applying it to other states greatly overstates the renewable generation required.

Comment 27: Comments concerning Pennsylvania’s proposed target s.

Response 27: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.
The following are summaries of the specific public comments under this comment:

Commenters stated EPA's proposed renewable targets- which are based on a complex formula that expects states to adopt RPS at or similar to l evels mandated in neighboring states-appear to disproportionately burden Pennsylvania. Commenters stated that under EPA's proposal, PA would have to add more than 30,000 Gigawatt-hours o f renewable generation by 2030 - the second-most of any state in the country and an incr ease of almost 800% over current levels. Commenters stated this appears to have been the res ult of EPA effectively punishing Pennsylvania for having implemented a RPS before th e baseline 2012 year, as a cursory review of carbon emission states in regions of the country where states by and large have not adopted such standards indicates such states are not expect ed to significantly increase renewable generation targets or reduce their carbon emissions to the degree that Pennsylvania is. Commenters stated that EPA also appears to have inc luded Washington, D.C.'s renewable electric supply mandates into the northeastern regi on's renewable building block- even though Washington, D.C. is not a state and does not have a ny power generation.

Commenters said Pennsylvania is expected to increas e its renewables by eightfold over the next 15 years, and they believe that happened because EP A incorporated Washington D.C.'s renewable supply mandates, even though they only ac tually have one power plant in the city, and it actually powers the Capital. Thus, commenters as serted the renewable supply requirements are informing a renewable generation requirement, which they feel is a bit perverse.

Commenters said EPA incorrectly projects that BB3 c an reduce emissions in Pennsylvania by
323 lbs CO 2 /MWh. Commenters said EPA's calculation is based on an average of predicted RE for 8 states, 2 which do not currently have RPS; an d does not account for the fact that Pennsylvania exports approximately 42% of its gener ation. Thus, commenters said Pennsylvania would need to enact and implement an RPS based on l oad within the state of 25% by 2030, over
3x the level of its current RPS. Had EPA used the l evel of RPS currently in effect in184

Pennsylvania, commenters asserted it would have cal culated potential reductions at 180 lbs
CO 2 /MWh instead.

Commenters said EPA's projected growth rates discri minates against states like PA that have successfully developed state RPS programs. Commente rs stated many states, such as IA, ND, SD, (in the EPA North Central Region) have far grea ter RE resource potential than PA yet none have enacted RPS programs. Commenters stated the sa me inconsistency exists in the RE potential in the South Central Region with an RE po tential much higher than PA but that are assigned a target for the region of only 8%. Commen ters stated this target compares starkly Commenters stated to the average for the East Centr al Region of 17%. Commenters said EPA's proposed method fails to recognize the potential fo r RE resource development in these states while imposing unrealistic annual growth rates on P A.

Commenters added that EPA targets will require PA r atepayers to pay additional amounts for out-of-state REC with no benefit to the PA economy and primarily benefit other states in meeting their targets. During the most recent repor ting period, the commenters said that more than $50 million was expended by PA electric utilit ies to purchase Tier I credits to meet their RPS requirements. Commenters stated the majority of these credits were purchased from RE generators from IN and IL. As a result, the comment ers said a significant portion of RE resources that form the basis for EPA's computation of potent ial RE resources to meet future targets derives from out-of-state sources that not only rec eive the revenues but are benefitted by
enhancement of their RE resource industries includi ng job growth. Commenters said EPA must consider the inherent inequity in the derivation of the PA RE targets vis a vis the burdens placed
on other states.

Comment 28: Commenters stated the EPA overestimated Texas wind capacity.

Response 28: The capacity factors assigned to Texas wind resour ces in the EPA’s analysis represent expected annual production. The 8.7% valu e referenced by the commenters was applicable to the capacity of ERCOT resources, not the expected output. The EPA’s modeling of
cost-effective RE assumes continues to assume 8.7% of total capacity is credited against total reserve margin capacity.

The following are summaries of the specific public comments under this comment:

Commenters stated EPA overestimates the generating capacity of Texas wind from a reliability standpoint. Commenters stated that in determining t he BSER for Block 3, EPA uses a capacity
factor for Texas wind of between 39% and 41%. Comme nters stated that for reliability purposes, ERCOT previously assigned wind an 8.7% wind capacit y factor which was the estimated availability of wind during summer peak. Commenters stated that ERCOT recently approved a new methodology for calculating wind capacity facto r, and under its new methodology, ERCOT will use historical performance of wind generation facilities in different parts of the state to predict the percentage of installed capacity ERCOT can expect during summer and winter peak conditions. Commenters stated the installed capacit y factors for non-coastal wind generation facilities (which constitute the majority of instal led wind capacity in Texas) resulting from this185

new methodology are expected to be substantially be low the capacity factor EPA assigns to Texas wind energy.

Comment 29: Commenters had concerns regarding Virginia mandato ry goals.

Response 29: The EPA has updated it cost and performance assumpt ions for onshore wind and solar. Additionally, the EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measu res TSD.

Several commenters viewed the general methodology o f RE goal setting for states as flawed, for reasons related to the use of regional averages tha t do not apply to specific state situations and the calculation of renewable generation excluding w hat has been adequately demonstrated in a state. Many commenters voiced support for the carb on neutral treatment of biomass and one voiced the same treatment for black liquor. Other c ommenters raised concern over inconsistent treatment of biomass in the baseline, goal setting and compliance scenarios., with one noting that
whether biomass is treated as carbon neutral or not , the treatment of biomass across these three components should be consistent and in some cases w ill need to be adjusted to reflect consistent

treatment.

Biomass is included in the IPM baseline projection. Biomass is not considered part of the best system of emission reduction in this rule and there fore it is not included in goal-setting or compliance evaluations. However, similar to other t echnologies outside of BSER, biomass may be considered as a part of a state’s plan to meet t he emission guidelines.

For more information regarding Building Block 3, re fer to Section V.E of the preamble.

For more information regarding biomass in the IPM b aseline projection, refer to EPA v5.13 Base Case Documentation Supplement to Support EPA’s Prop osed Carbon Pollution Guidelines for Existing Electric Generating Units in the docket.

A discussion regarding the use of some biomass feed stocks for compliance purposes can be
found in Section VIII.I. and Section VIII.K of the preamble.

In November 2014, the agency released a second draf t of the technical report

, Framework for Assessing Biogenic Carbon Dioxide for Stationary So urces. The revised Framework, and the EPA’s Science Advisory Board (SAB) peer review of t he 2011 Draft Framework , finds that it is not scientifically valid to assume that all biogeni c feedstocks are “carbon neutral” and that the net biogenic CO 2 atmospheric contribution of different biogenic fee dstocks generally depends on
various factors related to feedstock characteristic s, production, processing and combustion practices, and, in some cases, what would happen to that feedstock and the related biogenic emissions if not used for energy production.

For more information regarding the revised Framework , see: http://epa.gov/climatechange/ghgemissions/biogenic- emissions.html186

The following are summaries of the specific public comments under this comment:

Commenters stated that Virginia's Mandatory Goals are calculated based on, among other things, a 16% regional renewable generation "target level" that the Proposed Regulation asserts is
achievable. Commenters stated that to create the 16 % regional target applied to Virginia, EPA lumps eight states into an "East Central" region an d then uses state RPS requirements established by six states other than Virginia. Commenters state d both this calculation and the asserted rationale for its extrapolation to Virginia are fla wed. Commenters stated that a fundamental problem with EPA's addition of future renewable gen eration into the calculation for Virginia's Mandatory Goals is that it does not establish what has been adequately demonstrated in Virginia, as required by the CAA. Commenters stated that for the eight states in the "East Central" region in which EPA places Virginia, EPA's data shows thatthe renewable generation in 2012 ranged between 1 to 3%, with Virginia at 3% for that year. Commenters stated this is the level of renewable generation that has been adequately demon strated in Virginia. Commenters stated that other states have future legislative requirements, and no assurance that they will be met, does not change the reality in Virginia.

Commenters stated that even if the legislative proc ess of one state could establish a level of renewable generation that has been demonstrated in Virginia, which would not justify giving less weight, or no weight at all, to Virginia's legislat ive determination to not impose RPS requirements. Commenters stated that EPA's math is wrong; by using a simple average of the six states with mandatory RPS goals to calculate the Ea st Central regional target, EPA treats six states proportional to each other and ignores the o ther two states (Virginia and West Virginia). Commenters stated that for purposes of determining what is achievable in Virginia, Delaware's legislative determinations regarding achievable RPS levels and load counts as much as those of Pennsylvania or Ohio, which have much larger in-sta te generation fleets and loads, and more than those of West Virginia and Virginia (which is disregarded).

Commenters stated EPA's data demonstrates why a sim ple average for calculating a regional target is wrong. Commenters said the states in EPA' s "East Central" region that have higher future RPS requirements are those with relatively l ittle generation compared to the others in this region. Commenters stated that Delaware, D.C., Mary land, and New Jersey generated approximately 111 million MWh in 2012 and are assigned "2020 Effective RE Levels" between 19 to 22%. Commenters stated that in contrast, Penn sylvania, Ohio, Virginia, and West Virginia generated approximately 500 million MWh in 2012 and are either ignored in the calculation o r assigned a "2020 Effective RE Level" no greater tha n 9%. Commenters said there is no rational basis, legally or mathematically, for giving such u ndue and unintended influence to certain legislatures at the expense of others, including Vi rginia.

With respect to the growth rate determined by EPA, commenters stated that Virginia is assigned
12% and 16% interim and final renewable levels that , when plugged into EPA's formula, significantly lower the carbon emission rates in th e Mandatory Interim Goal and Mandatory Final Goal, respectively. Commenters stated the ren ewable levels assigned to Virginia are the highest in the East Central region. Commenters stat ed that even though EPA relies on the legislative determinations of states with renewable requirements to determine what is achievable across a region, the final result of EPA's calculat ion is that states with such requirements are actually expected to achieve less than Virginia, wh ich has no renewable requirement. In fact,187

commenters stated, for the states with renewable re quirements, EPA's formula sets renewable levels for those states that are lower than the fig ures built into the regional target that was then applied to Virginia. Commenters stated the results of EPA's formula are illogical: Virginia is expected to achieve renewable levels that are calcu lated based on other States' renewable requirements that the EPA's formula does not ultima tely expect those States to achieve.

Commenters stated EPA's calculation of RE goals in BB3 is fundamentally flawed because it relies upon RE targets that have not been adequatel y demonstrated. Commenters stated that the Virginia State Corporation Commission also expresse d concern that the regional renewable goals proposed by EPA had not been adequately demonstrate d by noting that: "Another fundamental problem with EPA's addition of future renewable gen eration into the calculation for Virginia's Mandatory Goals is that it does not establish what has been adequately demonstrated in Virginia, as required by the plain text of the Clean Air Act. For the eight States in the East Central region in which EPA places Virginia, EPA's data shows thatthe renewable generation in 2012 ranged between 1 to 3%, with Virginia at 3% for that year. This is the level of renewable generation that has been adequately demonstrated in Virginia. That other States have future legislative requirements, and no assurance that they will be me t, does not change the reality in Virginia."

Commenters stated the assumptions about the level o f EE achievable in Virginia are unattainable and arbitrary and cannot reasonably be used to lowe r a carbon emission rate assigned to the Commonwealth. Commenters said Virginia has an EE go al, rather than a requirement, which EPA disregarded and, in effect, "vetoed" by the dif ferent policies of other states - states with demographics, climates, load and generation profile s different from those of Virginia. Commenters stated the result of' incorporating the proposed unsupported extrapolation of a 1.5% annual "energy efficiency policy performance" onto Virginia is that the proposal forces 1.2% and 9.3% "savings targets" into the denominator of the formula that calculates Virginia's mandatory goals, inappropriately driving down the carbon emis sion rates assigned to Virginia.

Commenters said that to reflect Virginia's true RE potential, EPA should: (i) update RE costs to ensure costs reflect up to date information; (ii) e nsure that the growth rate of RE deployment is at least as aggressive as historical rates; (iii) assu me full compliance with current RPS requirements that are set by state law; (iv) account for actual and expected RE growth between 2013 and 2017; (v) update its formula to correctly account for emi ssions reductions from RE; and (vi) clarify that out of state RECs can be used towards compliance to ensure the most cost effective use of RE.

Commenters noted that the Virginia RE target is dri ven by the dominance of biomass in the state relative to the other states in the region from whi ch the regional RE targets were calculated. Commenters stated that if biomass and black liquor were no longer considered carbon neutral and removed from the 2012 baseline, Virginia would have the lowest starting point (at 1.3 percent - tied with Ohio) in the region and a much lower 2030 renewable target. Commenters stated that if either of these types of renewable g eneration are not considered carbon neutral, then the starting point for Virginia should be adjusted accordingly.

Commenters said described Dominion's significant in vestment in renewable wood biomass and said that it is important for their customers that biomass emissions be carbon neutral for purposes
of this rule. Commenters added that the EPA relied upon state renewable portfolio standard (RPS) programs, some of which recognize biomass as non-emitting, in its calculation of the188

renewable component of the building blocks used to determine the state targets for purposes of
this rule. Commenters said that the EPA included bi omass in the 2012 state renewable generation baseline from which the renewable component of the state targets was calculated. Commenters shared the concerns of the Virginia SCC about the d raft rule in effect exporting public policies from states with higher electric rates and bills to Virginia. Commenters said that it would be a paradoxical outcome to calculate a goal based on co mponents of state RPS standards that could not be met by the resources counting under these ve ry standards. Commenters provided an example of such impacts and concluded that it is im perative that the EPA move forward with guidance on the treatment of biomass in the contextof GHG emissions for this rule. Commenters said that states should be able to use the megawatthours from both existing and new biomassbased units, including the biomass portion of fossi l fuel-fired units that co-fire with biomass, for compliance with this rule (and for RPS purposes). A t a minimum, commenters said, waste wood
and forest residuals should be considered carbon ne utral for purposes of setting the state goals and compliance with the state goals of this rule, a s well as any future accounting framework. If the EPA does discount biomass in a regulatory accou nting framework, commenters said, it must recalculate the state renewable components and stat e reduction targets.

Commenters raised similar issues and noted that the EPA's proposal treats CO2 emissions from biomass generation inconsistently. Commenters said that in establishing each state's emission rate goal, the EPA included a state's existing 2012 biomass generation in the denominator of the goal calculation and appropriately acknowledged its carbon neutrality by not including its CO2
emissions in the numerator. Commenters cited severa l EPA statements in the preamble that affirm this action by referencing the benefits of b iomass generation. Commenters noted that the EPA's compliance modeling treated biomass different ly than the goal calculations and historic regulatory modeling. In all of the EPA's IPM scenar ios, including both the base case and the compliance scenarios, commenters said, an emission factor of 195 lbs/MMBtu was assigned to
biomass combustion. Commenters stated that the EPA must maintain consistency with the goal calculations and treat CO2 emissions from biomass g eneration as carbon neutral.

Comment 30: Commenters expressed concerns with the Tennessee t arget.

Response 30: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.

The following are summaries of the specific public comments under this comment:

Commenters said it is illogical for EPA to assume T ennessee has a similar capacity or technical potential for and ability to deploy RE as North Car olina, and this approach clearly disregards any state specific resource characteristics or context that contributes to a state's RPS or its potential to achieve its RPS. Commenters stated RPS are enacted for a variety of reasons and are frequently specific to each state and its accompanying charact eristics, including geography, attracting industry, political context, and other economic dev elopment priorities. Commenters asserted EPA's methodology for the treatment of RE essential ly forces, state-specific decisions upon other states while ignoring the contrary decisions of the other states.189

Commenters stated that by failing to capture any of the recent or expected growth in RE in Tennessee between 2012 and 2017, EPA's approach ign ores the significant investments that are already underway. Since 2012, the commenters said T VA's RE generation has increased by at least 376 MW and these increases are expected to co ntinue due to ongoing declines in the price of RE technologies and future commitments that are expected under TVA's 2015 integrated resource planning process. Commenters urged EPA to update its projected RE generation targets for Tennessee both in the final rule and again in 2 017, basing them on its actual renewable generation levels in 2017 as well as its abundant p otential for future growth.

Commenters further stated that UCS identified sever al problems in EPA's treatment of Tennessee's RE potential: EPA fails to account for both (1) the continued growth and falling costs of RE projected by market experts and (2) the RE deployment rates that states are already achieving. Commenters asserted EPA should revise an d update several of its underlying assumptions and that to reflect Tennessee's true RE potential, EPA should: (i) update RE costs to ensure costs reflect up-to-date information; (ii) e nsure that the growth rate of RE deployment is at least as aggressive as historical rates; (iii) a ccount for actual and expected RE growth between 2013 and 2017; (iv) update its formula to correctly account for emissions reductions from RE; and (v) clarify that out of state RECs can be used towards compliance to ensure the most cost effective use of RE. Doing so, commenters stated, w ill show that Tennessee can reach a much higher RE target, around 13% of 2030 electricity sa les, at a reasonable cost.

Comment 31: Commenters stated decisions of states to have RPS should not be basis for states
that do not.

Response 31: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.

The following are summaries of the specific public comments under this comment:

Commenters stated that, as a major renewable energy developer, it does not support the EPA's approach to assessing state renewable energy potent ial by comparison with RPS levels in other states that are at best arbitrarily related. Commen ters said a number of empirical, well-grounded studies of state renewable potential are readily av ailable, and would form a better basis for this important component of a low carbon future. Comment ers also said that state policies, such as RPS requirements, are important in terms of renewab le development, but cannot reasonably be considered the only determinant of a state's potent ial.

Commenters stated the basis relied upon by EPA for assuming future RPS requirements are achievable targets that States have already assesse d feasibility and costs cannot lawfully be applied, much less in the haphazard manner proposed by the Proposed Regulation. Commenters stated the Proposed Regulation incorrectly assumes that the States that have enacted mandatory RPS requirements and only those States have assesse d the feasibility and costs of RPS requirements. Commenters stated that if, as EPA ass umes, the legislature of one state can speak to what is achievable in another, which it cannot i n this context, which assumption would have to work both ways. Commenters stated there are many re asons, including geographic and190

economic, why States have approached renewable gene ration differently, and, just as Virginia's legislative decision not to impose RPS requirements in Virginia was not intended to, and cannot, speak to what is achievable or unachievable in othe r States, the decisions of other States to impose RPS requirements were not intended to, and c annot, demonstrate what is achievable in Virginia. Commenters stated to foist in-state decis ions upon other States, and to do so while ignoring the contrary decisions of other States, is arbitrary, capricious, and unlawful.

Commenters stated EPA has ignored details that redu ce the stringency of existing RPS, has not considered the renewable energy experience of state s without mandatory RPS programs, and has failed to fully consider differences in the availab ility of potential renewable resources between states. As a result, commenters stated, the agency has derived state renewable energy goals in building block 3 that are technically and cost-effe ctively flawed, and that are inconsistent with the prior assessment of these resources by individu al states. Commenters stated that prior state experiences are claimed to be strongly valued by EP A in their development and application of renewable energy targets in the calculation of stat e goals. Commenters stated that ironically, EPA ignores these "expert assessments" of state reg ulators in establishing the renewable energy goals for states that have mandatory RPS or that ha ve previously evaluated potential opportunities for developing renewable resources. C ommenters stated that a review of the renewable energy goals that EPA used to develop bui lding block 3 reveals that EPA's goals are more stringent than the effective 2020 RPS goals fo r 14 states, while for 12 of these states the building block 3 goal is less than the RPS target d erived from its own expert assessment.

Commenters stated EPA's calculation of RE goals in BB3 is fundamentally flawed because it excludes consideration of states without mandatory RPS programs. Commenters stated that for states without mandatory RPS, the agency made no ef fort to investigate or defer to prior state determinations of the adequacy or cost-effectivenes s of integrating renewable resources into their generation portfolios. Commenters stated had EPA do ne so, there would have been no reason to deviate from the conclusions reached by these state legislatures and regulators, nor is there any reason to attempt to impose more stringent requirem ents in the establishing the BSER. Instead, commenters stated EPA ignored the decision of those states without an RPS in the calculation of the regional average RE goals because the agency di d not deem them to be "leading states." Commenters stated the agency failed to consider tha t perhaps these states have previously evaluated RE opportunities and determined that they were not currently technically feasible or cost-effective. Instead, commenters stated, EPA's p rocess forces states to conform to the policies developed by other states that are based on differe nt considerations of feasibility, cost, and public
interest.

Commenters stated Louisiana is an example of one st ate that has evaluated opportunities for RE and determined not to implement an RPS program. Com menters stated, in 2010, the Louisiana Public Service Commission approved a Renewable Ener gy Pilot Program for the state with the goal of determining whether an RPS is suitable for Louisiana. Commenters stated that as part of the program, an AEP subsidiary, Southwest Electric Power Company (SWEPCO), conducted an all-source Renewable Request for Proposal, bids wer e received for 46 proposed RE projects, and only 14 were for projects to be located in Louisian a (one wind, five solar, three waste heat recovery, four biomass, and one landfill gas projec t). Commenters stated the balance of bids came from other states within the same RTO, the Sou thwest Power Pool (SPP) states. Commenters stated the most practical source of rene wables that could be secured to serve191

SWEPCO customers was from a portion of a wind proje ct being developed in Kansas. Interestingly, commenters stated, the single wind p roject that was proposed to be located in
Louisiana was more than three times the cost of the selected wind energy bid from Kansas. Commenters stated none of this experience was consi dered by EPA in the proposed rule, and
Louisiana's decision to not to establish an RPS bas ed on the current lack of cost-effective and technically feasible renewable resources is ignored in the calculation of the South Central region goal.

Commenters stated that with respect to states that have previously evaluated opportunities to develop renewable resources and decided that a stat e RPS was currently not feasible and/or economic, EPA has ignored that state experience and applied RE goals that may not be technically or cost-effectively achievable with in- state resources. Commenters referenced the Louisiana Renewable Energy Pilot Program, noting th e program ended in 2013 with the LPSC concluding that while the program "was a useful mea ns of gaining valuable information and experience with renewable resources," "a mandatory RPS is not warranted at this time...[because] the levelized cost of renewable te chnologies exceeds the cost of conventional resources." Commenters stated that despite this exp erience and these conclusions from the LPSC, EPA utilizes as 20% RE target in calculating the proposed state goal for Louisiana. Commenters also stated that ironically, but consist ent with the findings of the LPSC, EPA's Alternative Approach found that the technical poten tial for additional renewable energy in Louisiana is very small, and that even when modeled with a $30/MWh advantage over other available resources, no new renewable capacity woul d be added in Louisiana by 2030.

Commenters referenced comments submitted by the Vir ginia State Corporation Commission (SCC) which further highlight the concern that stat e decisions to not establish RPS programs has been ignored by EPA in the building block three cal culations. Commenters stated the SCC noted that "The fact that Virginia does not have a mandat ory RPS requirement is not considered at all in EPA's calculations or the extrapolation of other States' RPS requirements on Virginia." Commenters stated that even if the legis lative process of one state could establish a level of renewable generation that has been demonst rated in Virginia, which would not justify giving less weight - indeed, not weight at all - to Virginia's legislative determination to not impose RPS requirements. Commenters stated EPA's ma th is wrong.

Commenters stated the state of Arkansas is another example of one that does not have a mandatory RPS, and for which EPA has applied a RE t arget in the state goal calculation that is premised on the standards established for the state of Kansas that has superior potential renewable resources that could be developed more co st-effectively. Commenters stated the RE target applied to Arkansas in building block 3 is o ne example of the absurd results produced by EPA's flawed methodology. Commenters stated that EP A includes Arkansas in the South Central region, which EPA determined has a 20% RE target an d annual growth rate of renewable
resources of 8.3%. Commenters stated if Arkansas wo uld have instead been included in the Southeast region (that has a lower regional target of 10%), one would expect that Arkansas would have a lower RE goal; however, the Southeast region has a lower baseline level of renewable generation relative to its regional targe t, which translates into an annual RE growth rate for states in the region of 13.4%. Commenters stated, thus, in this example, Arkansas would move to a region with a lower RE target (from 20% t o 10%), but would have a more stringent RE growth rate (from 8.3% to 13.4%) leading to a hi gher 2030 RE goal.192

Commenters said EPA does not accurately represent t he standards that states have actually adopted and that most state standards contain "off- ramps," where the state could acquire a lower
amount of renewable resources than the numerical le vels set forth in the standards depending on impacts on cost or grid reliability. Commenters sta ted these "off-ramps" also represent legislative choices that EPA ignores given its view that it sho uld be the arbiter of "best practices" for renewable resource development. Commenters added th at that states define renewable resources that are subject to their portfolios differently th an EPA.

Commenters said EPA fails to account for the fact t hat municipal and cooperative utilities typically are exempt from portfolio standards. For instance, commenters stated that although Montana has a 15% RPS, that standard does not apply to consumer-owned utilities, public power projects, or generators owned by out-of-state utili ties. As a result, commenters said Montana's RPS is far lower than EPA assumes, thus, EPA has no basis to cite state portfolio standards in proposing regulations that would encompass municipa l and cooperative load.

Comment 32: Commenters stated West Virginia target was unachie vable.

Response 32: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.

The following are summaries of the specific public comments under this comment:

Commenters said West Virginia's target is unachievable. Commenters stated EPA has tasked West Virginia with an unrealistic RE goal of 14% in crease based on the 2012 total state RE generation - a total of 10,273,036 MWh from new low - and zero-carbon generating capacity by 2030. Commenters stated that excluding 2012 RE gene ration from hydropower, as the proposed rule directs, this amounts to nearly an 800% increa se (792.3%) over the 1,296,563 MWh produced through these sources in the base year for West Virginia. Commenters stated this RE goal was developed using an arbitrary methodology t hat did not take into account the realistic potential of renewable resources available. Comment ers stated that creating state-specific goals from neighboring states, RPS is completely misguide d. Commenters also stated a RE portfolio standard is a matter of state-level energy policy t hat EPA and the federal government have no authority to dictate to states.

Commenters stated it may be difficult for West Virg inia to achieve the proposed targets.
Commenters added that alternative and RE standard d oes not provide incentives for development of renewables. Commenters added that West Virginia has significant wind solar, biomass, and hydro resource potential.

Comment 33: Commenters expressed concerns regarding the abilit y to Michigan to achieve goals.193

Response 33: The data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation
Measures TSD.

The following is a summary of the specific public c omment under this comment:

Commenters stated Michigan should achieve, or come close to achieving the emission reductions set forth in Building Blocks 3 and 4 if it can also achieve reductions in CO2 emissions equivalent to those in Building Blocks 1 and 2. Commenters sta ted Michigan is required to have 10 percent of its electricity sales come from RE by 2015, and Michigan is on track to meet this standard; however, the USEPA has not adequately described whi ch RE resources will "count", both in terms of the energy source (biomass, incremental hy dropower, etc.) and the facility's initial operational date. Commenters stated that if the age ncy accepts the emission reductions from: 1) a wide variety of RE sources, and 2) all RE facilitie s that use the eligible energy sources, without regard to the facilities' construction dates as lon g as they are operating within the 2020 to 2029 timeframe, then Michigan should be capable of match ing the USEPA's RE targets for the state and probably would not need to pass a more stringen t RPS in the immediate future. However, commenters stated, a renewal of the RPS, possibly w ith greater stringency, may be warranted because there is the risk that if legislation does not replace their current standard, then Michigan's 2015 level of RE will slip below 10 perc ent from 2015 to 2030, making it more difficult for Michigan to meet its final and interi m goals.

Comment 34: Commenters stated Alabama's target is unreasonable

. Response 34: The final building block 3 methodology does not rel y on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE at an interconnection level. The
EPA addresses considerations related to the technic al feasibility and availability of regional RE resources in both the preamble (section V.E) and GH G Mitigation Measures TSD.

Biomass is not considered part of the best system o f emission reduction in this rule and therefore it is not included in goal-setting or compliance ev aluations. However, similar to other technologies outside of BSER, biomass may be consid ered as a part of a state’s plan to meet the emission guidelines.

A discussion regarding the use of some biomass feed stocks for compliance purposes can be found in Section VIII.I and Section VIII.K of the p reamble.

The following are summaries of the specific public comments under this comment:

Commenters asserted Alabama's targets are unreasonable. Commenters stated EPA's proposal consists of unreasonable assumptions about Alabama' s access to renewable energy because it identifies potential RE targets for individual stat es by looking at the regional capacity of RE, without considering the actual availability of rene wable resources within each state.194

Commenters conducted an internal study to determine what, if any, measures could be taken to comply with the BB3 goals, which indicated that to replace the Lowman coal-fired projected energy production in the compliance period with sol ar would require, depending on natural gas prices, installation of solar capacity occupying an area ranging from 2,200 to 12,000 acres at a cost of from $1.4 to $7.7 billion dollars. Commente rs said this is unworkable and that Alabama also has a limited capacity for many types of renew able generation, such as wind energy. Additionally, commenters stated the areas in which Alabama could conceivably establish some additional renewable generation, such as biomass or hydropower, are ignored by EPA in the proposed rule. Commenters asserted the best option for RE (although still not at the levels identified by EPA) in their region is biomass, whic h EPA fails to even include as an option. As such, commenters said the proposal unduly discrimin ates against the region; even if biomass were included in the proposal, it would not provide enough generation to replace the generation
from Lowman.

Comment 35: Commenters asserted Minnesota targets should recog nize state's early action and credit nuclear generation.

Response 35: The BSER is forward-looking in identifying cost-ef fective opportunities for emission reductions from 2012; however, the cost an d availability of these emission reduction opportunities is the result of many factors, includ ing previous actions. The final building block 3 methodology, which does not rely on RPS requirement s, is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters said Minnesota's Next Generation Energy Act of 2007 provided for several climate action friendly measures, including the setting of Minnesota GHG emission reduction targets relative to 2005, an aggressive RPS and expanded Mi nnesota customer conservation. Commenters stated this energy-based RPS initiated a glide path for expanded Minnesota RE starting in 2005 and continuing to 2025, and was up dated with renewables targets through 2030. Commenters noted that in EPA's June 18, 2014 propos al, EPA's base option assigns a 15% RE target for CPP target determination in the Minnesot a region. Commenters stated EPA asked for comments on the imposition of an alternative RE val ue for state target setting that gives consideration to RE potential for in-state developm ent.

Commenters recommended that EPA give deference to M innesota's RPS as satisfying BB3 requirements by recognizing Minnesota's early actio n for renewable deployment as sufficient for satisfying EPA's targets. Commenters also suggested that EPA provide full credit for nuclear generation that has its licensing renewed to an ove rall 80-year facility life. Minnesota RE measures were established by the Minnesota legislat ure, giving consideration to feasible rates for RE deployment and the ability of electric generatin g systems to assimilate the dispatch of intermittent RE resources without creating system r eliability problems. Commenters stated EPA should not implement its suggested expansion of ren ewable targets to "resource potential" in Minnesota, instead recognizing that the magnitude a nd pace of RE deployment in Minnesota has already been exhaustively assessed and provided for in the RPS established by the Minnesota195

legislature and Minnesota regulators. Commenters al so added that Minnesota customers have paid for these renewable assets and other resource actions and should receive full credit.

Commenters stated that in the case of Minnesota, th e state RPS cited by the EPA fails to consider the state actually includes three different RPS req uirements. Commenters noted there is one for Excel Energy, one for other investor-owned utilitie s, and one for municipals and cooperatives.
Commenters also noted the State of Minnesota exclud es from the RPS requirement electricity load for the mining and ore processing industry, wh ich makes up a substantial load in parts of the
state. Commenters said the recalculated RPS for the state, adjusted for these factors, is 25%, which lowers the requirement for the region that in cludes Minnesota from 15% to 14.1%.

Comment 36: Commenters expressed concern regarding Missouri's ability to meet the target.

Response 36 : The final building block 3 methodology does not r ely on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE at an interconnection level. The
EPA addresses considerations related to the technic al feasibility and associated grid integration costs of significant RE penetration in both the pre amble (section V.E) and GHG Mitigation
Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters did not believe Missouri could expand to the goal set by EPA and stay within the 1% rate cap established by the Missouri Renewable E nergy Standard ("RES"), adopted by the Missouri legislature. Commenters stated compliance with the RES is not limited to renewable generation sited in Missouri, nor is it based on th e presumption that exclusively siting all renewable generation for RES compliance in Missouri is possible or likely. Commenters said RES allows for purchases of RECs, purchases of RE ( with RECs), and use of RECs from utilityowned renewable generation from both in and out of Missouri. At present, commenters added, RES applies only to investor-owned utilities in Mis souri and not municipal utilities or rural electric cooperatives; compliance with RES is subje ct to a 1% rate impact limitation functioning as a constraint on current RES portfolio targets. A ccordingly, the commenters said that to the extent EPA used RES targets in its emission formula , such targets may overstate achievability. Commenters stated that by making a requirement thatundermines the RES, EPA improperly substitutes its policy judgment for that of the Mis souri legislature.

With regard to wind generation, commenters said man y factors constrain development, including capital and financing constraints, technical and lo gistical constraints, site permitting and land lease agreements. In addition, commenters stated th e current RES compliance requirement of a 1% rate cap limit, makes EPA's RE goal is unachievable.

Commenters encouraged EPA to treat existing goals u nder state law as reductions that will already occur. Commenters stated that when determin ing the BSER for Missouri and other states, EPA should consider the pre-existing legal obligations under which EGUs are operating in their respective states. In the case of RPS, EE res ource standards, and similar state law obligations, the commenters said EPA should view th e reductions that will occur as a result of196

these policies as the context in which its CPP will function; at minimum, BSER for BB3 and 4 should presume full compliance with these state law s.

Commenters said this approach has special significa nce in Missouri, which requires IOUs to achieve 15% RE by 2012 - and said implementation of this law has been far from smooth. Commenters stated several utilities have attempted to comply by using RECs unconnected with any power delivered to Missouri, despite the law's prohibition of such methods of compliance. Commenters stated a number of other schemes and que stionable interpretations of the law have been proposed to avoid compliance with the RES law. Although Missouri has made substantial progress in RE, the commenters were concerned that individual utilities may fail to comply. Commenters stated EPA should view the 15% RE targetas achievable and already-in-progress
when EPA determines BSER for BB3. Commenters added that while Missouri's RES requires all IOUs to increase their usage of RE to at least 2% b y 2011, 5% by 2014, 10% by 2018 and 15% by 2021. While some investor-owned power was genera ted from renewables prior to 2011, the
commenters said no utilities in Missouri retired RE Cs associated with RE power delivered to Missouri before 2011 - any RECs representing "clean energy attributes" of RE were either not retired, or sold to other states to count towards t heir active RES compliance requirements before
2011.

Comment 37: Commenters had concerns regarding Illinois' abilit y to meet state target.

Response 37: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE at an interconnection level. The
EPA addresses considerations related to the technic al feasibility and associated grid integration costs of significant RE penetration in both the pre amble (section V.E) and GHG Mitigation
Measures TSD.

The following is a summary of the specific public c omment under this comment:

Commenters said the Illinois RPS increases procurem ent quantities over time, and each new procurement is subject to a cap on increases in cus tomer rates of approximately 2%. Through procurements made by the Illinois Power Agency (IPA ), the commenters stated suppliers meets RPS quantity requirements while staying below the s tatutory cap. To comply with EPA's proposed rule, the commenters said the Illinois sta te legislature may need to increase the rate cap that was originally adopted to protect customers fr om significant cost increases. Further, the commenters stated the Illinois RPS allows procureme nt quantities to be met through the procurement of RECs from in- and out-of-state suppl iers. To the extent that out-of state procurements are not allowed under the CPP, the com menters said customers would bear
additional costs. Commenters added that Illinois ha s a new Governor and it is uncertain what future policy positions the new administration will take to meet the requirements of the RPS while addressing the potential for compliance under CPP, assuming such "beyond the fence line" measures required to be implemented by distribution companies are determined to be lawful.

Comment 38: Commenters expressed concerns regarding Washington State targets.197

Response 38: The information provided in this comment was valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated that EPA asks for comment on a si tuation unique to Washington, where the state's RE target generation (under the primary pro posed approach) exceeds the state's 2012 fossil-fueled generation level. EPA asks whether th e target should be capped at the baseline 2012 fossil-fuel level. Commenters stated that regardles s of the target setting approach taken by EPA, they support setting the target such that the diffe rence between a state's RE target and its corresponding level of RE does not exceed the state 's reported baseline fossil-fuel fired generation. Commenters noted that in doing so EPA i s asking, from a target setting perspective, that no more than 100% of a state's generation be d erived from carbon pollution free generating
resources relative to the baseline. Commenters stat ed it is clear that asking that the entirety of a state's generation be carbon pollution free is a su fficiently stringent upper bound for setting the RE target for any given state.

Commenters stated there is no reason to limit the m ethodology by modifying the approach for quantifying the RE generation component of each sta te's goal so that the difference between a state's RE generation target and its 2012 level of corresponding RE generation does not exceed the state's reported 2012 fossil fuel-fired generat ion.

Comment 39: Commenters were concerned regarding the Kentucky t arget.

Response 39 : The final building block 3 methodology does not r ely on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE at an interconnection level. The
EPA addresses considerations related to the technic al feasibility and availability of regional RE resources in both the preamble (section V.E) and GH G Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters said EPA gave Kentucky the third-lowest carbon-reduction target of all 50 states. Commenters asked why Kentucky is at the bot tom when they are the ones with the most health benefits to gain from shifting to cleaner en ergy sources. Commenters asserted that, according to recent reports, the utilities in Kentu cky will get more than halfway to the EPA target without taking a single step and that the ba r is not high enough.

Commenters said biomass is the only opportunity for in-state renewables in Kentucky.
Commenters stated that OMU has a 28 MW allocation o f capacity from the SEPA Cumberland River dams and manage 62 MWs of that capacity for a ll the Kentucky municipal electric utilities. Commenters said bringing in wind from the upper Mid west is a possibility, but would be more expensive than generation at ESGS. Commenters state d that currently wind receives a $19/MWh
tax credit which makes the cost of wind at the bus as low as $29/MWh but delivered to OMU the cost would be approximately $52.45/MWh. However, co mmenters said if the tax credit were to go away the cost would rise by that $19/MWh making the all in cost as high as $71.45/MWh.198

Commenters added that bringing in wind energy to se rve the load and assuming that 20% of capacity is replaced by wind, the incremental cost to OMU would be $2.5 million/year for
transmission. Commenters said that while wind can b e purchased for $29/MWh, that is the price at the point of generation. To move it to OMU, the commenters said, will expose OMU to "transmission congestion," a real cost that will dr ive the cost up. For 2013 the congestion from the wind rich areas to the LGE/KU interface was $11 .69/MWh, said the commenters, making the delivered cost of wind energy approximately $52.45/MWh. Commenters said wind energy capacity factors typically are in the high 20% to t he low 30% and are not well correlated with peak demand. Assuming all wind energy is consumed b y OMU retail customers, the commenters said the net annual impact to customer is $11 milli on more in required revenue, representing a rate increase of approximately 12% to OMU residenti al customers and ESGS capacity factors would not be impacted because it would only create more surplus energy that would be sold into
the wholesale electric market. Commenters stated wi nd is not a dependable source of energy, noting that on the hottest day of the year when mar ket prices for wholesale power are the highest, wind is not likely to be there and thus the wind capacity must be backed up by some other form of dependable capacity. As such, commenters said OM U would still rely on coal units to meet load obligations and because the volume of wind ene rgy is unknown it is uncertain how they would be able to rely upon the CO2 offsets as part of the compliance plan. Finally, commenters stated the Kentucky Legislature has for at least th e past 7 years not allowed RPS to come before
the full house or senate for a vote. Commenters sai d BB3 is usurping the Kentucky Legislature's intent that RPS not be mandated in Kentucky.

Comment 40: Commenters expressed concern regarding the Mississ ippi target.

Response 40: The final building block 3 methodology does not re ly on state-specific deployment estimates, but rather cost-effective RE at an inter connection level. The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (se ction V.E) and GHG Mitigation Measures
TSD.

The following is a summary of the specific public c omment under this comment:

Commenters said Mississippi averages 52 in/yr rain and wind is intermittent at best during peak load seasons. Commenters added that no significant renewable generation has been built in Mississippi other than biomass, due to the prevaili ng weather conditions, so the assumption by the EPA that Mississippi can achieve a 10% RE stand ard seems arbitrary and is unsupported by
the facts.

Comment 41: Commenters expressed concerns regarding the South Carolina target.

Response 41: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.199

The following are summaries of the specific public comments under this comment:

Commenters said there are differences between South Carolina and other states in the amount and type of renewables available for electric produ ction and that the state does not have the resources to meet a renewable requirement of 10% by2030.

Commenters stated UCS identified several problems i n EPA's treatment of South Carolina's RE potential: EPA fails to account for both (1) the co ntinued growth and falling costs of RE projected by market experts and (2) the RE deployme nt rates that states are already achieving. Thus, the commenters said the RE potential represen ted in BB3 is likely to be quite conservative relative to the actual potential for deployment of resources such as solar and wind in South Carolina by 2030. Commenters stated that technical potential estimates, recent cost declines, and reliability studies as referenced herein indicate t hat South Carolina can achieve and significantly exceed the levels of RE envisioned in BB3, such tha t RE/EE could serve as the primary means of compliance with their state emissions target. Comme nters stated EPA should revise and update several of its underlying assumptions, which will s how that South Carolina can reach a higher RE target than EPA assumes at a reasonable cost.

Comment 42: Commenters had Georgia specific concerns.

Response 42: The EPA is not finalizing an approach that relies o n state RPS requirements to set a regional target for RE. The final building block 3 methodology does not rely on state-specific deployment estimates, but rather cost-effective RE at an interconnection level. The EPA
addresses considerations related to the technical f easibility and availability of regional RE resources in both the preamble (section V.E) and GH G Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters said that 8 years ago a Southern Company subsidiary, Georgia Power, and other Georgia utilities committed to be the nation' s first to construct new nuclear power units in almost 30 years. While utilities across the coun try will benefit from the path paved with Votgle 3 and 4, this step was taken to further dive rsify the fleet and help prepare for upcoming GHG requirements. Rather than reward the S tate of Georgia, the commenters said EPA used the zero-carbon energy source to further p enalize the state for its early actions.

Commenters urged EPA to update its projected RE tar gets for Georgia both in the final rule and again in 2017, stating Georgia's RE target should b e based on its actual RE generation levels in 2017 and its abundant potential for future growth. Under its Demonstrated Growth approach, the commenters said UCS has determined that Georgia can achieve more than 22 million MWh of RE generation by 2030, almost double EPA's projecti ons. Commenters stated if Georgia were to achieve even 3/4 of the UCS projected levels of RE penetration, and displace fossil generation (along with EE increases under BB4), Georgia could reach its target reduction without any natural gas re-dispatch; in fact, Georgia would exc eed the target, reaching an emission rate of
782 lbs/MWh.200

Commenters stated the low level of existing RE gene ration in the Southeast region results in the second highest annual growth factor of any region. Commenters said Georgia's 2012 RE generation was about 3% of total generation, well b elow the national average of 6.5%. Given the combination of Georgia's current level of RE genera tion and the regional growth factor of 13%, Georgia's RE target grows rapidly from 4.4% in 2020 to 8.3% in 2025, reaching the regional RE target in 2027. Commenters stated Georgia does not have a mandatory RPS and the amount of generation produced by the hypothetical RPS predica ted on use of the NC RPS greatly exceeds EPA's 2020 target for Georgia and is equivalent to the 2030 target set by the EPA for Georgia. Commenters said the Southeast region's RE potential is not nearly as high as it is in other parts of the country. Nevertheless, Commenters said Georgia' s technical potential for RE generation greatly exceeds the state's 2012 total generation: indeed, Georgia's utility-scale solar potential alone is over 45 times greater than current state g eneration. Commenters added that a states' ability to use renewables for 111(d) compliance wil l depend, in part, on EPA's decision in the final rule on whether qualifying RE must be sited w ithin the geographic boundary of the state, or whether a state's purchase of RECs from other state s may count towards compliance. Because Georgia does not currently have an RPS, the comment ers asserted that utilities have no obligation at present to buy RECs from anywhere. Co mmenters asserted that because Georgia has few incentives in place to encourage renewable construction in-state, it is likely that the most cost-effective strategy to pursue BB3 will come thr ough bundled out-of-state REC purchases. Commenters stated bundled purchases would include b oth delivered energy and RECs, meaning that Georgia will be able to claim both generation and emission benefits associated with these
RECs.

Comment 43: Commenters had concerns regarding the Florida targ et and stated use of NC RPS
unreasonable and unlawful.

Response 43: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.
The following is a summary of the specific public c omment under this comment:

Commenters said the RE target that EPA calculated f or Florida under BB3 arbitrarily ties Florida's goal to an oversimplification of North Carolina's 2020 RPS goal and is unreasonable and unlawful. Commenters said EPA's analysis does n ot consider that North Carolina's RPS goals allow utilities to comply through mechanisms other than actually developing in-state RE. More specifically, the commenters said North Caroli na's RPS goal allows utilities to meet 25% of their requirements by reducing energy consumptio n through EE measures, and another 25% by purchasing RECs from out-of-state. Thus, comment ers stated the 10% RPS target EPA assumed for North Carolina effectively only require s in-state RE to reach 5% by 2020.
Commenters said use of North Carolina's RPS results in levels roughly 100% too high for 8 states, including Florida.201

Comment 44: Commenters expressed Nevada target concerns.

Response 44: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

. The following is a summary of the specific public c omment under this comment:

Commenters questioned how the state agencies came t o their assumptions about existing and future RE opportunities in Nevada. Commenters state d starting with a calculation showing that only 2,510,974 MWh of Nevada's 2012 RE production c ould be used for section 111(d) compliance, the State Agencies assume 4,943,138 MWh of RE by 2029 (rather than the 6,364,153 MWh assumed by EPA) is a more feasible go al to use in establishing Nevada's adjusted emission rate goals. Commenters said the s tate agencies' 2029 RE target is difficult to understand, given the significant RE generation tha t has been added since 2012 and is projected to occur over the next 15 years. Commenters include d a Table 1 comparing the state agencies' calculations to EPA's assumptions and NV Energy's p rojections from its proposed SB 123 implementation plan. Commenters stated NV Energy's projections, like those of the state agencies, only consider RE used to serve Nevada loa d, and exclude RE exported to serve load in
other states.

Commenters said the state agencies' proposed targetis too low compared to both EPA's assumptions and NV Energy's forecast. For example, commenters noted that NV Energy's forecast of RE production shows that it alone could reach the state Agencies' 2029 target for Nevada around 2017. Commenters said the state agenc ies' target of 4,943,138 MWh equates to only 13.72% of NV Energy's forecast system energy b y 2029, which is 4 years after Nevada's RPS hits 25% of retail sales. By comparison, the co mmenters stated NV Energy's forecast shows RE for 2015 is expected to already be 11.47% of sys tem energy. Commenters asserted the Nevada agencies are essentially asking the EPA to a ssume that Nevada's transition to RE, which has been accelerating over the last few years, will decelerate and then almost stall out over the next 15 years. Commenters said Nevada will have no problem generating enough RE to meet BB3's assumptions just under a business-as-usual ap proach, and EPA's goal of 18% by 2029 is easily attainable.

Comment 45: Commenters asserted the Colorado target is unachie vable.

Response 45: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.

The following are summaries of the specific public comments under this comment:

Commenters asserted the plan overestimates the redu ction that will be achieved by Colorado's RES and does not account for the use of multipliers . Commenters said that while the stated mandate is 20-30% for the major electric suppliers, there is additional credit given in the RES for the use of specific resources: for example, solar r esources brought on line prior to June 30, 2015202

have a "three times" multiplier for compliance with the RES. Commenters stated this will reduce the overall energy generation from renewable resour ces. Also, the commenters said not all renewable generation credited in Colorado is requir ed to be generated in Colorado: for example,
Tri-State Generation and Transmission Association i s WREA's wholesale supplier and also serves 18 of Colorado's 22 electric cooperatives. C ommenters said Tri-State has generation assets in 5 states to serve its membership requirem ents, including a 30MW solar facility in New Mexico, thus, while the overall generation for Colo rado's cooperatives may approach 20%, it will not all be generated inside the state.

Commenters stated that another factor to consider i s that Colorado's RES actually allows credit for eligible generation resources not considered in the EPA Plan, including industrial waste heat,
biomass from beetle kill and methane from landfills and coal mining. Commenters acknowledged that combustion from burning biomass a nd methane emits greenhouse gases, but they asserted the overall benefit from combusting t hese fuels should be accounted for in the Plan.

Comment 46: Commenters raised Utah-specific concerns on the ta rget that the EPA calculated
for that state.

Response 46: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. Targ et generation levels under building block 3 are quantified and assigned at the interconnect level, rather than the state-level. The final methodology is described in detail in V.E of the pr eamble and in the GHG Mitigation Measures
TSD.

The following are summaries of the specific public comments under this comment:

Commenters said that the assumed contribution of re newables to Utah's final CO2 emission target is based on policy decisions, including RPS, made in other states that are outside Utah's control. Commenters asserted these assumptions do n ot reflect the technical potential of renewable generation in Utah, and are inappropriate for Utah.

Commenters also stated that the EPA's treatment of renewable electricity further complicates the target calculation. Commenters stated Commenters st ated the EPA used a state jurisdiction
method to include renewable resources located in Ut ah in the state's rate-based target, but has since suggested allocating credit for Utah's renewables to out-of-state renewable power purchasers. Commenters indicated that 60 percent of Utah's renewable electricity generation in 2012 was exported, inflating Utah's building block 3 target proportionally. Commenters stated that excluding exported renewable electricity from Utah's goal computation would reduce Utah's 2030 compliance gap by 56 lbs CO2/MWh. Commenters e xpressed concern about this potentially inconsistent approach in allocating cre dits for renewables, asserting that consistency is required between how the EPA sets state CO2 emis sion targets, and how states are allowed to meet those targets. Commenters concluded that the E PA's inconsistent and unclear method for calculating the state's CO2 emissions target impede s the State of Utah's ability to provide substantive feedback on the EPA's proposed rate-bas ed target.203

Comment 47: Commenters expressed Louisiana specific concerns o n target.

Response 47: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE at an interconnection level. The
EPA addresses considerations related to the technic al feasibility and availability of regional RE resources in both the preamble (section V.E) and GH G Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Concerning Louisiana, commenters said EPA's estimat es do not consider (in most cases) economic or market constraints, and therefore do no t represent a level of renewable generation that might actually be deployed. Thus, commenters s tated that even where states have similar potentials, the NREL recognizes that there may be o ther factors which inhibit the development of the same RE sources in one area and not another yetEPA conducted no such state-specific analysis.

Commenters stated Louisiana's RE technical potentia l differs substantially from that of Kansas, Nebraska, Oklahoma, and Texas, not surprising given the geographical differences in this region of the country. According to the NREL's estimates, the commenters said Nebraska and Oklahoma have approximately 3x the RE potential of Louisiana, Kansas 4.5x more, and Texas 12.2x more. Discounting offshore wind power, which cannot be deployed in a timeframe needed for it to facilitate compliance with the proposed rule, the commenters stated Oklahoma has 3.6x the RE potential of Louisiana, Nebraska 3.9x more, Kansas 5.7x more, and Texas 15.1x more. Consequently, the commenters said that EPA's assump tion that Louisiana can meet the RPS of Kansas, which, per EPA's own data, has almost 6x th e RE technical potential, is incorrect.

Commenters said, in 2005, J. Kennedy and Associates , Inc. was engaged to assist the LPSC in conducting a feasibility study of implementing an R PS requirement in Louisiana. Commenters stated that report concluded that "due to the lack of availability of renewable resources in Louisiana and the current energy production capabil ities, an RPS was not feasible." Accordingly,
the commenters stated the LPSC decided not to estab lish an RPS, but did create a voluntary "green pricing tariff' on a trial basis. Commenters stated that for the trial, Entergy Gulf States Louisiana, LLC (EGSL) agreed to implement a pilot p rogram known as "Geaux Green". Commenters explained that program began in 2008 and offered customers the opportunity to voluntarily purchase 100 kWh blocks of RE at an add itional cost of $2.25 per block; EGSL used the premiums to acquire RE to meet the customer dem and. Commenters said the program had limited success in attracting customers and was eve ntually terminated. In 2009, the commenters said LPSC recognized that the recent volatility in natural gas prices (natural gas spiked to $14/1000 Btu in mid-2008) warranted the re-evaluati on of an RPS for Louisiana. At the direction of the Commission, commenters said the LPSC staff h eld task force meetings, received comments from interested parties, and performed a d etailed review of the best practices of other states that had established RPS requirements, then in 2009, issued a broad report on RPS policies. Commenters stated the report detailed var ious RE technologies that would be suitable for Louisiana - generation from rice hulls; wood, m ill, and forest residue biomass; municipal solid waste; bagasse; cogeneration; energy efficien cy; and wood co-firing in coal-fired boilers - and contained a cost impact evaluation. Following t his, the commenters said LPSC decided to implement a 3-year RE pilot program (REPP) to inves tigate the viability of an RPS. Commenters204

stated the REPP required Louisiana's utilities (Ent ergy, Cleco, and SWEPCO) to evaluate and implement RE resources, and included a research com ponent and an RFP component for larger new RE resources. At the end of the 3-year REPP per iod, the commenters said LPSC staff
concluded:

"[B]ased on the information filed by the utilities, as well as Staff's participation throughout the process, a mandatory RPS is not warr anted at this time. The data provided by Cleco, Entergy, and SWEPCO indicate tha t the levelized cost of renewable technologies exceeds the costs of convent ional resources. For example, the levelized cost of a combined cycle gas turbine is below the cost of any of the major renewable technologies (wind, solar, biomass) . Current prices for natural gas have put renewable technologies at a cost disad vantage."

Commenters added that although Louisiana does not h ave an RPS, it has incentivized programs that promote the wise use of the state's natural en ergy resources to enhance both conservation efforts and economic development. In fact, the comm enters stated the Louisiana legislature has
declared that:

increasing the consumption of RE resources promotes the wise use of Louisiana's natural energy resources to meet a growing energy demand, increase s Louisiana's use of indigenous energy fuels, and fosters investment in emerging renewable technologies to stimulate economic development and job creation in the state; and Loui siana should actively encourage the manufacture of new technologies through promotion o f emerging energy technologies.

Commenters stated Louisiana provides several incent ives, such as a tax credit for the purchase and installation of new solar and wind energy syste ms installed at either a residence or a residential rental apartment complex and property t ax exemptions. Commenters said the LPSC also requires publicly owned utilities and rural el ectric cooperatives to offer net metering to customers with systems that generate electricity us ing solar, wind, hydropower, geothermal, or biomass resources. Commenters said utilities must p rovide customer-generators with a meter capable of measuring the flow of electricity in bot h directions and pay for meter itself, with net excess generation credited to the customer's next b ill indefinitely. Additional incentives include a home energy loan program administered by the DNR, a nd a green jobs corporate or income tax credit for qualified capital infrastructure project s that are directly related to "green" industries, including the RE power industry. Thus, Commenters a sserted Louisiana has instituted a number of programs and tax credit offerings that encourage the development and use of RE and implementation of demand-side EE measures. Commente rs asserted EPA should not assume its simplified analysis supplants the expertise and exp erience of Louisiana's PSC and electric utilities. Commenters concluded that imposing a de facto RPS on Louisiana's citizens is neither economical nor necessary.

Commenters said that even if an RPS was established in Louisiana, the state has low wind and solar resources. As a result, the commenters said m ost RE will have to be transported from other states. Commenters said it appears that EPA has giv en permission to Louisiana to use the wind and solar energy developed in other states as part of its RPS standard, but high RE states, such as Kansas, may not be willing to give those renewable wind resources away without a legal fight Without sufficient RE from other states, the commen ters said Louisiana will be handicapped in205

meeting this emissions target. Even if Louisiana is able to use renewables from Kansas or other states as part of the rate based standard, the tran smission and backup generation resources needed when the wind does not blow may not exist to day, according to the commenters. Commenters added that any additional time and cost required cannot be calculated without a detailed study that would have to extend beyond the comment period timeframe. Additionally, commenters stated the IPM model is not set up to de termine hourly dispatch. Commenters stated thus, cannot accurately predict the additional cost s and resources needed to integrate renewables into Louisiana's energy system.

Commenters said EPA's calculated average annual gro wth factor of 8.35% for Louisiana is unrealistic and that non-hydro RE generation in Lou isiana has actually been falling over the past
decade. Commenters were concerned because RE resour ces are some of the most expensive to deploy, and will have a considerable impact on the cost of complying with the proposed rule. Commenters said use of a regional average is highly subjective and assumes that the states in a region are similar in terms of their specific polic ies and incentives regarding RE development and assumes that all states included in a region ar e comparable in terms of their technical potential for RE generation - this is clearly not t he case for Louisiana and the region in which it was assigned.

Commenters said EPA's approach effectively sweeps u nder the rug over 10 years of Louisianaspecific analysis in favor of its own generalized approach, which is inconsistent with the basic tenets of the CAA and with traditional utility reso urce planning practices in Louisiana that seek to acquire supply and demand side resource on a lea st-cost basis. Commenters concluded there is no way an approach that averages projected RE gener ation additions over a geographic region that spans from the plains of Nebraska to the Gulf of Mexico can be consistent with these least cost resource procurement practices.

Commenters asserted the amount of RE is not practic ally achievable for Mississippi. Looking at the particulars of the proposed goal, the 2012 base line RE for Mississippi is 1,509,000 MWh, which is almost all from biomass energy generation from pulp and paper mills, according to the commenters. Assuming that this can be counted towar ds compliance (the rule is not clear that biomass can be counted as zero carbon), the comment ers said it would result in the state having to develop over 4,000,000 MWh of additional RE gene ration. Commenters said Mississippi has no wind potential nor the solar capacity that weste rn states have. In fact, the commenters asserted the future year IPM runs that EPA performed did notindicate any additional RE for Mississippi because the results showed RE generation was too co stly. Therefore, the commenters concluded there is no basis to require an increase of new RE to this magnitude due and that mandating it is an excessive and unnecessary cost for rate payers.

Commenters added that the alternative goal approach did not project any solar or wind generation because they were not considered cost ef fective and included only a small amount of biomass; most projected RE is from hydroelectric ge neration based on a feasibility study, not proven technology. Commenters said hydroelectric ge neration is not an available resource for Mississippi. Based on the alternative approach and ruling out hydroelectricity and biomass (due to its uncertainty in accounting), the commenters s aid the future RE goal for Mississippi should
be zero.206

Comment 48: Commenters had concerns regarding proposed East Ce ntral Region goals.

Response 48: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.
The following are summaries of the specific public comments under this comment:

Commenters stated the six of the eight states in th e East Central region have a mandatory RPS that was used by EPA to calculate the regional and state goals. Commenters stated even though both Virginia and West Virginia have evaluated rene wable energy opportunities and adopted RPS policies, EPA gives no consideration to this ex perience in calculating the regional goal. Commenters stated that interestingly, the RPS for t he District of Columbia is included in the calculation of the regional average, but the Distri ct of Columbia had zero renewable generation in 2012, and its standard focuses on the utilizatio n of out-of-state renewable resources as a percentage of sales. Commenters stated EPA has not proposed a state goal for the District, and
should have excluded its RPS from the calculation o f the East Central regional goal.
Commenters stated EPA must also consider the renewable energy experience of Virginia and West Virginia, along with other geographic and cost -effectiveness differences for renewable energy development that exist across the entire reg ion.

Commenters stated EPA's own data demonstrates why a simple average for calculating a regional target is wrong. Commenters stated that th e States in EPA's East Central region that have higher future RPS requirements are those with relatively little generation compared to the others in this region. Commenters stated Delaware, D.C., Maryland and New Jersey generated approximately 111 million MWh in 2012 and are assig ned 2020 Effective RE Levels between 19 to 22%. In contrast, commenters stated, Pennsylvani a, Ohio, Virginia, and West Virginia generated approximately 500 million MWH in 2012 and are either ignored in the calculation or assigned a 2020 Effective RE Level no greater than 9%. Commenters stated there is no rational basis - legally or mathematically - for giving such undue and unintended influence to certain legislatures at the expense of others, including Vi rginia.

Commenters identified several defects with EPA's gr ouping methodology. First, commenters said DC has a state-designated RPS goal of 20% (amo ng the highest) but possesses no fossil generation, limited renewable generation and import s almost all of its power. Commenters stated inclusion of DC as part of the East Central Group b iases the results insofar as it has no traditional generation resources and no emissions. Consequently , the commenters said there is no in-state generation that would be offset by DC's renewable c redits.

Commenters said EPA's proposed state emission rate goals in the East Central Region must be recalculated due to the passage of S.B. 310 in Ohio just prior to the publication of EPA's proposed rule. Commenters stated Ohio S.B. 310 amen ded EE and alternative energy resource mandates (including renewable mandates) by imposing a 2-year pause on EE, peak demand reduction and RE resource requirements. Commenters stated it eliminated both the RE resource in-state requirements and advanced energy resource requirements, thereby reducing the former alternative energy resource mandate by half. Due to the timing of Ohio SB 310, the commenters207

said EPA did not reflect the impact of this new sta te law in the BB3 calculations for the East Central Region, and must recalculate these goals ba sed on its passage.

Commenters said EPA erred in its computation of RE targets by taking the arithmetic average of the six states with RPS programs, which amounts a r egional average of 16%. Commenters stated that VA and WV were assigned an effective RE level of 0% but not included in the averaging calculation and that including the values from thes e two states, as would be appropriate, would have produced a lower regional compliance target of 12%. By excluding these two states, that have chosen not to enact RPS targets, the commenter s said EPA penalizes the rest of the region with a higher regional compliance target that trans lates into higher required targets in the 2020-
2029 timeframe. Commenters asked EPA to recalculate its East Central regional compliance targets to correctly reflect only those states thathave promoted RE.

Comment 49 : Commenters expressed concern on use of the Kansas RPS for South Central Region.

Response 49: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.

The following is a summary of the specific public c omment under this comment:

Commenters noted that Kansas is the only state in E PA's South Central Region that has an RES/RPS in percent form. Commenters stated that Tex as' standard of 10,000 MW by 2025 was not used by EPA, apparently because it is explicitl y capacity-based (i.e., not in percent form). However, commenters stated the Kansas RES - and oth er states' standards expressed in percent terms - are capacity-based, a fact which EPA overlo oked when utilizing the DSIRE data. Commenters asserted that there is therefore no obje ctive reason to exclude Texas' RPS for use in finding RE levels. For the South Central Region, co mmenters proposed that the Texas standard of 10,000 MW be converted to a percent value, then averaged with Kansas' 17.1 percent (the
value that commenters derived for the Kansas standard after making other suggested revisions). Commenters suggested that the easiest way to do thi s (and a conservative way considering growth) is to divide the 10,000 MW Texas standard b y the state's latest available total generating capacity - using the 2012 unit capacity supplied by EPA the 2012 total generation capacity for Texas is 148,944 MW. On this basis, commenters calc ulated that in percent terms, the Texas renewable standard is therefore 10,000 MWh/148,944 MWh = 6.7%. Commenters concluded that averaged with the effective Kansas RES of 17.1 %, the Kansas-proposed RE level for the South Central Region should be 11.9%. Rounded to th e nearest percent, this is 12%.

Comment 50 : Commenters expressed the need for consideration o f capacity-based RPS.

Response 50: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.208

The following are summaries of the specific public comments under this comment:

Commenters noted that in the South Central region, the Kansas RPS is capacity-based despite EPA stating in the proposal that it did not include capacity-RPS targets.

Commenters stated EPA should also review its conclu sions for the South Central region under an RPS-based approach. Commenters stated that it was t heir understanding that, when calculating the regional averages, EPA did not include capacity -based RPS targets; however, in the South Central region, EPA based the regional renewable en ergy goal on the Kansas RPS, which is capacity-based. Commenters stated that without the Kansas renewable goal, there are no states with qualifying RPS programs in the South Central r egion. Commenters stated that instead of a 20 percent regional goal, the target for the South Central region should be either zero percent (if EPA were to follow its existing methodology) or 10 percent (if EPA were to follow its methodology for Hawaii and Alaska).

Commenters stated that while the proposal indicates that "EPA does not include targets that were capacity-based," it appears that it did exactly tha t in the South Central region. Commenters questioned as to why this took place and if EPA pla ns to examine this issue further. Commenters also questioned if EPA analyzed the different targe ts that would have resulted from a regional generation-based target.

Comment 51: Commenters had concerns regarding crediting of in- state and out-of-state generation.

Response 51: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE at an interconnection level. The
EPA addresses considerations related to the crediti ng of RE resources in section VIII of the preamble.

The following are summaries of the specific public comments under this comment:

Commenters said the final rule should recognize tha t RE generation should be credited where the RECs apply, not to the state where the RE is genera ted. Commenters noted that the RE generated by existing renewable are often used in other state s for RPS compliance, and that portion of the
RE is not available for use in the state where it i s generated. Commenters added that a state specifying a floor on the amount of RE that must be produced within the state has determined that locally-produced RE will likely be much more e xpensive than RE produced in another state. Commenters said the state whose customers are payin g for RE should receive compliance credit for that RE in its 111(d) plan. Commenters said tha t existing RE resources have been significantly financed and used by out-of-state cus tomers; and commenters said EPA erred in ignoring interstate electricity trade in the propos ed rule, giving no consideration to this fact and giving states where the physical asset is located 1 00% of the credit in their goal calculation. Commenters said many existing RPS include out-of-st ate RE generation, meaning that the Proposed Rule's RE targets reflect the assumption t hat out-of-state RE generation can be counted towards compliance. Commenters asserted that since these RE targets are incorporated into each state's CO2 goal, the goals inherently assume that some states will rely on out-of-state RE209

generation to meet their targets. If EPA bars state s from doing so, the commenters said states will face greater difficulties in meeting EPA's CO2 emis sions targets because the targets are based on the assumption that states can rely on RE projects both within and outside of their borders. To
remain consistent with its foundational calculation s and minimize the burden on states, commenters said EPA must finalize this proposed app roach and allow states to include out-ofstate renewable generation in their plans. Commente rs stated that EPA's approach is not consistent with the general nature of the interconn ected electric system, which is not bounded by state borders and supported an approach that more c losely aligns each state's target with the
resources that will be available to that state for compliance purposes.

In contrast, commenters suggested that to be consis tent in the interstate treatment of renewable energy and fossil energy, EPA assign both the coal- fired emissions and the credits for the reductions from RE generation to the state in which they are located. Commenters stated that use of (in some cases only a portion of) existing RE re sources in a state to calculate the baseline, then allowing other states where the renewable gene ration is used to count the generation toward reductions in CO2 is patently unfair to ratepayers and unconstitutional. Commenters said that for a regional facility, it is not only customers livin g in a state with a renewable mandate who pay for the construction and operation of those resourc es. For a regional utility, the commenters said all members pay the same rates for their power supp ly, which includes an amount necessary to recover the costs of renewable wind energy.

Several commenters stated that EPA should recalcula te the baseline and compliance targets to
reflect emissions reductions achievable for each st ates considering RECs and where the RE is
credited. Commenters stated that for states that de fine a limit on the use of imported RECs as a means of compliance, the EPA should recalculate the state RPS portion that includes only the amount of RE that must be produced in the state, no t that which can be supplied from outside the
state in the form of RECs. Commenters said this rec alculation should be done so the rule would not inadvertently discourage states from serving as host for RE facilities in excess of their own compliance requirements, if that is the most econom ic location for RE to be constructed or operated. Commenters asserted EPA's approach to det ermining a regional average RE component of existing generation needs to be correc ted to also include consideration of RE that may be distributed across an international border. Commenters also stated that in the recalculated targets, EPA should account for the credit multipli ers that some states apply to certain resources and that any state RES mandates used by EPA in sett ing regional or state RE goals should be discounted to reflect these credit multipliers.

Commenters stated EPA did not consider RES design e lements that reduce the required levels of in-state RE generation when setting regional RE goa ls. Commenters said the regional RE goal calculations do not recognize important elements of individual state RES programs, such as the use of out-of-state RECs for compliance, alternativ e compliance payments and credit multipliers for certain resources; mechanisms that serve to red uce the actual levels of in-state RE generation needed to satisfy RES mandates. Commenters stated E PA's failure to consider these factors results in inflated state RE goals that may not be achievable by certain states. Commenters also stated state RES mandates are not proxies for a sta te's potential to deploy more RE generation, but rather, Commenters stated reflect policy choic es made in each state with regard to how much and what type of renewable resources it wants to encourage, at what cost and in what timeframe. Commenters said this is underscored by t he fact that at least 23 of the 29 states with210

an RES allow compliance deviations due to cost impa cts, supply constraints or reliability
concerns. Commenters added that 11 states allow com pliance deviations based on a force majeure finding or if utilities have made good fait h efforts to comply but cannot because of factors beyond their control.

Commenters said that, although the CPP proposal con templates the possibility of allowing states to credit out-of-state RE that they fund and suppor t, EPA must recognize that a state does not have control over the permitting, siting, and regul ation of facilities located outside its borders. Commenters said that state RPS contain necessary op tions and flexibility with regard to this and that such flexibility, however, may be lost if a st ate's RPS becomes a part of the federally
enforceable CPP.

Comment 52: Commenters expressed support for the regional trea tment of RE.

Response 52: The resources and data provided in these comments were valuable in finalizing the building block 3 methodology, particularly in recog nizing the interstate nature of RE. The full methodology is described in section V.E of the prea mble and in the GHG Mitigation Measures
TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated both existing and new renewables should receive regional treatment in any goal setting methodology. Commenters stated that Ma ine electricity generation exists in a regional marketplace, and this existing regionalize d market extends beyond electrical energy to include the renewable attributes of that energy. Co mmenters stated that over two-thirds of the wind power projects in Maine under construction or in permitting are under direct contract with out-of-state entities and more will serve regional load. Further, commenters stated, all of the existing wind generation in Maine is qualified and receives revenues from the sale of RECs into other New England state RPS programs. Commenters al so stated hydroelectric and biomass facilities located in Maine also sell energy and RE Cs out of state. Commenters stated that whatever final specific methodology is adopted by E PA, the goal setting methodology should reflect the reality of the existing regionalized re newable energy contracts, transfers and markets that exist in New England and New York that result in new and existing renewable projects including wind, hydroelectric and biomass serving r egional load and regional customers outside
of Maine. Commenters stated it is unfair to allocat e responsibility for new or existing renewables in BB3 entirely to Maine because the wind resource exists within Maine but serves out of state
load.

Commenters stated EPA's approach for determining st ate-by-state CPP targets ignores ownership rights in generating resources. Commenters said tha t while state targets were established by considering generating resources within a state and electricity customer retail sales in the state, actual sourcing of electricity to service those sal es may come from both within and outside state borders. Commenters said electric utilities may own or operate electric generating resources in one state that may or may not serve electricity cus tomers in that state. Commenters said joint ownership, assignment and long-term sales are commo nplace in the electric industry, due to the211

high capital cost, long-lived assets and economy of scale benefits larger assets offer. By allocating the renewable attributes of a generating resource to a state, regardless of whether the owner of the generating resource resides in that st ate or uses the generation to serve customers in that state, the commenters asserted EPA has effecte d an unlawful taking of property rights.

Commenters stated EPA's approach for determining s tate-by-state CPP targets ignores ownership rights in generating resources. Commenter s said that while state targets were established by considering generating resources wit hin a state and electricity customer retail sales in the state, actual sourcing of electricity to service those sales may come from both within
and outside state borders. Commenters said electric utilities may own or operate electric generating resources in one state that may not serv e electricity customers in that state. Commenters said joint ownership, assignment and lon g-term sales are common in the industry, due to the high capital cost, long-lived assets and economy of scale benefits larger assets offer. By allocating the renewable attributes of a generat ing resource to a state, regardless of whether the owner of the generating resource resides in tha t state or uses the generation to serve customers in that state, the commenters asserted EP A has effected an unlawful taking of property rights.

For example, commenters noted renewable generation constructed in North Dakota to help meet
the Minnesota state-mandated RPS is counted toward North Dakota RE goals in the TSD.
Commenters said that when EPA established their CPP target portion for BB3 renewables, EPA referenced each state's retail electricity sales an d assigned a percentage for qualifying RE. In turn, the commenters said, the EPA 15% renewables t arget was established by EPA analysis based on the average RPS for states in the region w ith an RPS. However, commenters said CPP state renewables BSER targets may also include stat e approved RPS qualifying RE options (such as existing hydro) that EPA is proposing will not b e recognized for CPP proposed compliance. Consequently, the commenters said, the relative str ingency of a CPP renewables target set in a state is affected by considering both renewables de ployed in other regions that qualify for satisfying a state RPS and renewables that EPA has not determined will count for CPP compliance. Thus, the commenters stated, EPA create s situations where resources deployed and paid for on behalf of electric utility customers in one state may have their underlying RE value
attributed to another state.

Commenters also recommended that any asset or PPA r ecognized, approved and paid for by utility customers be credited when accounting for C PP compliance. In the case of Minnesota Power, its significant North Dakota wind investment s, PPAs and Canadian Hydro PPAs should be included and credited towards Minnesota complian ce with the CPP. Commenters said customers risk disaggregation from the benefits of RE resources for which electricity customers have been paying when renewal is due. Commenters sa id a PPA may expire and may be up for renewal at the time when capital investment service d by satisfaction of a state RE standard is still under cost recovery.

Comment 53 : Commenters asserted there were insufficient RE re sources to meet state goals.

Response 53: The resources and data provided in these comments were valuable in finalizing the building block 3 methodology, particularly in recog nizing the interstate nature of RE. The full212

methodology is described in section V.E of the prea mble and in the GHG Mitigation Measures
TSD.

The following is a summary of the specific public c omment under this comment:

Commenters stated an example of the incorrect outco mes from EPA's flawed methodology is that the required expansion of RE resources does no t necessarily occur in the states with the most
abundant renewable resources and the most cost-effe ctive opportunities. Commenters stated for example, in the South Central region, Kansas has th e second largest amount of RE potential in the region, but increases their RE generation by th e lowest amount of any state in the region. Meanwhile, the commenters said, states such as Arka nsas and Louisiana, with the least abundant and more expensive RE resources, are required to in crease their RE development and generation the most. In fact, the commenters stated, EPA's goa l calculations assume that only 0.03% of the potential generation from renewable resources in Ka nsas would be developed, with no additional increases occurring after 2023. Further, commenters stated, despite the fact that Louisiana has only 16% of the potential renewable resources of Ka nsas, EPA's goal presumes that Louisiana would increase its annual renewable generation by 8 30 GWh more than the increase assumed for Kansas. Commenters provided a summary figure discus sing these issues for the South Central region.

Comment 54 : Commenters recommended focusing in-state RE targe t based on that state’s technical and economic potential.

Response 54: The resources and data provided in these comments were valuable in finalizing the building block 3 methodology, particularly in recog nizing the interstate nature of RE. State RPS requirements are not a factor in quantifying the am ount of cost-effective RE that is part of the BSER in the final rule. The full methodology is de scribed in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public c omment under this comment:

Commenters stated because the EPA has structured it s building block methodologies to express the best system of emission reductions on an indivi dual state basis, it recommended that the focus of establishing an in-state renewable generat ion target should be on the technical and economic potential for the expansion of renewable g eneration within the boundaries of the individual state. Commenters stated that such an ap proach is different than the EPA's proposed derivation of an in-state renewable generation targ et from an averaging of the renewable portfolio standards in the corresponding region. Co mmenters stated renewable portfolio standards are a mechanism by which to drive investm ent in renewable energy through the participation of a state in a larger regional marke t. Commenters stated that through an RPS approach, renewable resources are incentivized to b uild at the most economically and technically
feasible location within the borders of the defined RPS market - borders that generally correspond to the regional grid in which the state operates, rather than aligning with individual
state boundaries. Commenters stated that in establi shing aggressive RPS policies, states consider the potential for the regional market to fulfill th e demand created by the state policy, and do not necessarily require the siting of all incentivized renewable energy to occur within their individual213

state borders; to do so would be to ignore the bene fits and realities of participating in a regional transmission organization. Commenters stated that c ontrary to these fundamentals, the EPA's proposed methodology relies on state RPS goals to y ield in-state renewable generation targets and does not fully capture the benefits of the RPS mechanism as a regional tool. Furthermore, the commenters stated, the EPA's proposed approach negl ects to appropriately incentivize renewable energy in states and regions that previously disreg arded the benefits of investing in a cleaner energy infrastructure. Commenters stated for exampl e, the Southeast regional renewable energy generation target corresponds to only 10 percent as proposed by the EPA since only 1 of the 8 states in the identified region previously adopted a renewable portfolio standard. Commenters stated this is in stark contrast to the 25 percent regional renewable energy generation target proposed for states in the Northeast.

Comment 55: Commenters expressed concern regarding the RE grow th assumption methodology.

Response 55: State RPS requirements are not a factor in quantify ing the amount of cost-effective RE that is part of the BSER in the final rule. Targ et generation levels under building block 3 are quantified and assigned at the interconnect level, rather than the state-level. The resources and data provided in this comment were valuable in fina lizing the building block 3 methodology, particularly in the reevaluation of solar cost and performance assumptions. The final methodology is described in detail in V.E of the pr eamble and in the GHG Mitigation Measures
TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated BB3 reductions should be based on economic RE potential. Commenters stated RE reductions are an important component of the guidelines, and in crafting this building block, EPA should leverage what is known about the economic potential of different RE resources and the potential for RE markets to meet this economic potential. Commenters stated that for states without an RPS, basing RE targets o ff the RPS of neighboring states may significantly under-represent the state and regiona l potential. Commenters also stated that for states with an RPS, basing RE targets off the RPS o f neighboring states may significantly overrepresent the state and regional potential. Comment ers stated that the alternative approach put forth by EPA is not subject to this concern, as EPA combines state-specific RE technical potential assessments with a methodology to determi ne state-specific economic potential by RE
category.

Commenters stated that, though not preferred, if EP A continues with its proposed methodology for establishing BB3 targets, it should consider th at the methodology is based on the nominal RE generation requirements in state RPS, but most stat e RPS pertain only to a portion of electric load. Commenters stated that EPA is likely to recei ve comments requesting that BB3 targets be based on the effective level of RE in state RPS, ra ther than the nominal level. Commenters stated that if EPA were to make such a change, BB3 RE targ ets would be reduced. Commenters stated it would not support such a change where the resultis less than the achievable economic RE potential in the state.214

Commenters stated electricity demand growth will vary by state (e.g., EPA assumes 45% growth in California between 2012 and 2030, but -23% "grow th" in Wisconsin). Commenters said EE/RE are easier to implement in a growth environme nt, but there is no adjustment for that in the EE/RE target.

Commenters said that EPA should adjust the RE growt h assumptions to more accurately reflect the potential in states and regions. As technology and deployment prices continue to plummet, commenters said many states have already, or will s oon, meet the level of RE generation that
EPA assumed that wouldn't be met until 2020.

Commenters said EPA should consider the rapidly dec lining costs of RE sources and recent improvements in technologies when determining the l evel of RE each state could potentially produce in complying with the CPP. In 2013, the com menters said CO 2 emissions were 15%
below 2005 levels as a result of a reduction in the carbon intensity of power generation and slowed demand growth. Commenters asserted emerging trends in the marketplace are driving these changes and could allow for a transition to a low-carbon future at a much lower cost than commonly assumed, with net financial benefits for p ower companies and customers potentially accruing in some parts of the country. Commenters s aid these benefits include public health benefits from replacing old, inefficient, and heavi ly polluting power generation with new, cleaner forms of generation. Commenters said their analysis (www.wri.org/publication/seeingbelieving-creating-new-climate-economy-united-state s) shows that most states could generate a lot more of their electricity from economically com petitive renewable sources than is commonly
assumed.

Comment 56: Commenters stated the EPA should use a weighted av erage.

Response 56: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.
The following are summaries of the specific public comments under this comment:

Commenters stated it is more appropriate to use a w eighted average, so as not to create unattainable goals based on the RPS averages, where many of the states with high RPS contribute much lower amounts of energy to the grid , such as Maryland or Washington D.C. Commenters also stated it asserted that the quantif ication of RE generation needs to include cost factors, availability during critical periods of en ergy demand, land use and environmental impacts, and effects on reliability of the electric grid due to meteorological variability.

Commenters stated that in the East Central region, the renewable target was inflated by including the relatively high RPS's of Delaware and DC, which only produce 3 percent of the region's renewable energy, and questioned if EPA has conside red basing its target on a generationweighted basis.

Commenters stated an approach that would address so me of the concerns would focus on actual renewable generation or future generation in each s tate that is weighted for load factor.215

Commenters stated if the regional averaging approac h is carried forward, they proposed that the RE target level of performance should include all s tates in each region in the calculation, irrespective of whether that state has a formal RPS or not. Then, the commenters continued stating that using some measure of actual current o r projected-for-2020 renewable generation, a weighted average where the load (electricity usage) in each respective state is factored into the average could be calculated. Commenters stated this results in calculated regional RPS values that more accurately reflect the total amount of RE generation in each state comprising those regions. In addition, the commenters stated, it pro vides a more reasonable assessment of RE potential in accordance with the concept that Build ing Block 3 serves as a component of the proposed best system of emissions reduction.

Comment 57: Commenters recommended use of region-specific pote ntials for RE development.

Response 57: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public c omment under this comment:

Commenters stated that based on EPRI research, a mo re effective and comprehensive basis for state aggregation would be informed by the region-s pecific potentials for renewable energy development, which would include technology costs, fuel costs, network effects, and regulatory requirements. Commenters stated investor response, regional competition for other resources, learning-by-doing and network effects, regulatory l imitations, and public acceptance also should
be considered.

Comment 58: Commenters stated the EPA should delineate RE tech nologies available for compliance.

Response 58: All RE technologies used to establish building blo ck 3 generation are eligible for compliance. Additionally, the EPA has described the use of non-BSER measures to achieve standards of performance in section V.A of the prea mble.

The following is a summary of the specific public c omment under this comment:

Commenters stated it strongly urges the EPA to deli neate in the final rule the renewable energy technologies used in the goal computation process a nd those that are available to the states for compliance purposes. Commenters stated that whateve r the ultimate decision by the EPA with respect to the qualifying renewable technologies, c ommenters urged consistency between targetsetting and compliance options so that the stringen cy of the nationwide goal is maintained. Commenters noted that this specificity and consiste ncy is needed across all building blocks and for all proposed methodologies; if a reduction pote ntial or technology is considered when computing a state's target, then that same mechanis m should be available to the states for compliance purposes. Commenters strongly recommende d that this consistency is a fundamental of all elements contained in the final rule, whethe r addressing renewable technologies such as216

hydroelectric or biomass resources, new natural gas combined cycle units, or any other component of the BSER determination.

Comment 59: Commenters expressed support and opposition on set ting a floor.

Response 59: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE at an interconnection level. The regional quantification and application of building block 3 has eliminated the need to evaluate state-specific RE minimums or maximums. The final m ethodology for building block is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Numerous commenters generally supported setting a f loor for RE targets, and several suggested methods for setting a floor or situations in which a floor should be set. Commenters suggested using each state's RPS goals as a floor for achieva ble renewable generation in that state. Commenters supported a floor for cases where the target-setting methodology produces a result below 2012 RE levels. Commenters supported use of a floor and said that setting actual 2012 RE generation as the floor is one methodology that cou ld be utilized, but this underestimates the ability to deploy RE. Commenters said that another methodology for establishing a floor would be to use the greater of 2012 generation or a parti cular state's own RPS target for 2030. Commenters recommended looking at the current exist ing renewable infrastructure in each state and using that generation to set a generation "floo r" that all states must maintain moving forward. Commenters stated a state's existing gener ation and, if applicable, its existing state RPS requirement, should both serve as a floor to set th e minimum level of emissions reductions available for that state. Commenters stated using a level lower than the state has already demonstrated (either through generation or a state RPS target) would indicate a lower level of
emissions reductions than the state has found to be available. Commenters said if a floor is established, low RE generation states would be requ ired to generate a minimum level if they will not meet the target generation by 2030. Alternative ly, states like North Carolina that established its REPS based on what is technically achievable, s hould be allowed to adopt the REPS as the standard under BB3. Commenters supported requiring the same region-wide RE generation level
across states as a floor.

Several commenters opposed setting a floor for RE t argets. Commenters opposed use of a floor in calculating RE targets, stating the goal of any rule should be to achieve desired reductions in the most economically efficient manner. Commenters said that if states choose to achieve compliance with their targets on a regional basis, then no rule should (1) discourage or "discount" any otherwise eligible RE measure in any state from counting towards regional compliance, nor (2) burden any state with an obliga tion to exceed its pro rata regional share (per MWh of generation) of RE. If a state either has or acquires more than its pro rata regional share of RE, the commenters stated that surplus should (1 ) be available and credited toward reducing the state's own remaining compliance requirements, or (2) be applied toward meeting the compliance requirements of the region. Commenters s aid establishing a floor for states with large amounts of existing RE which they cannot go below s eems arbitrary when there is no floor that
states with little or no RE must achieve. Commenter s said this would penalize forward thinking217

states for their existing accomplishments in loweri ng EGU CO2 rates. Instead, the commenters
said a state's final CO2 rate should be based on ac hievable and realistic CO2 reductions at the effected EGUs. Commenters stated RE should only be used as a means to achieve that goal, giving states the flexibility to move between build ing blocks as they see fit to meet their goals to minimize cost and maintain reliability of electric generation. Commenters stated that including a RE floor in the BB changes it into a separate RE ma ndate. Commenters said EPA should be completely indifferent regarding how a state meets the final CO2 emission reduction target and
therefore should not include a RE floor. Commenters asserted instituting a floor based upon 2012 RE generation would require some states to supply m ore RE than those states' regional share would otherwise require, which could cost consumers more. Commenters said application of a floor would overturn a basic premise of this propos al - that a state's achievable RE is based on regional targets. Thus, commenters concluded, once a state's share of those regional targets is met, the state should not be further obligated.

Several commenters did not agree with using 2012 as a baseline year for the floor. Commenters suggested EPA use an earlier baseline year or allow states to accumulate a bank between 2012 and 2020 to use for compliance in subsequent years. Commenters said BB3 targets should be reevaluated and noting that some state RPS laws have future year adjustments that should be taken into account beyond what was on the books in 2012. Commenters did not support the use of a single baseline year, particularly due to the year- to-year variability of hydropower. Commenters said that because each state's target emission rate builds from its power generation system as it functioned in 2012, annual variations in hydro gene ration mean a snapshot taken of single year may not be an accurate representation. Commenters a sserted using an average of 2011-2013 data may soften the impact of this variability, though d id not have a preference for a specific approach. Commenters suggested a 3-to 5-year genera tion average. Commenters encouraged EPA to use a baseline methodology that accurately a ccounts for the power generation system in each state regardless of the magnitude of the pract ical change compared to the Proposal. In addition to changing the "starting point" for each state, the commenters said this adjustment could have an impact on states" target emission rat es by changing the available NGCC capacity in EPA's goal computation calculations.

Several commenters did not agree with EPA's "best p ractices" approach. Commenters stated there are no "best practices" for state RPS. Commen ters said EPA fails to note that RPS represent a legislative choice to trade off higher electric costs for the presumed environmental and economic development benefits of renewable powe r. As such, the commenters stated there are no "best practices" that can be imported from o ne state to another, nor can EPA dictate to states what RE "best practices" should be. Commente rs asserted that what EPA calls "best practices" are really only EPA's desired assumption s as to the type of portfolio standards that EPA thinks state legislatures should adopt. Comment ers stated that the "best practices" method
relies on the belief that an individual state's RPS was based on an assessment of the actual feasibility of generating that level of RE within t he state rather than other factors, such as state politics or income level of consumers. Commenters a lso said the EPA provides no evidence to support its assertion the levels of RE prescribed b y one state's RPS could be achieved in every other state in the region, given cost and resource constraints. Commenters stated the EPA's rule oversimplifies often-complex state RPS programs by attempting to translate the top-line renewable energy goals into an MWh goal without inc luding the varying program components often included in those programs, such as credit mu ltipliers, REC importation, use of EE or other218

measures, and cost caps. Commenters stated that by failing to incorporate a state's own RPS commitments in its BSER determination, in which a r egional average RPS target is applied to states that have already exceeded that target, EPA undermines its own justification for the Best Practices Approach. Commenters noted that not all s tates are participating in RE, which can impact target compliance with goals outside of thos e states' RE capability.

Several commenters stated that the EPA should consi der early action taken by states to increase
RE use and decrease emissions. Commenters said EPA must consider investments made prior to 2012 and state-by-state assessments when determinin g RE targets and allow states, companies and customers who have taken early action to use bo th new and existing RE to comply with the proposed goals. Commenters also stated that it is i mportant that EPA retain in its final rule the flexibility for states to utilize existing renewabl e resources for compliance purposes. Commenters supported EPA's approach, which included existing non-hydro renewable generation in its calculation of each state's base- year megawatt hours and proposes to allow states to include existing renewables for complianc e purposes beginning in 2020. Commenters stated this approach appropriately recognizes compa nies and customers with a long history of supporting the installation of renewable energy. Co mmenters added that states that have already taken significant steps to reduce their carbon foot prints reasonably expect their efforts to be reflected in and supported by the Clean Power Plan. Commenters stated that EPA's proposal has the opposite effect: states that have taken early a ction to reduce emissions are penalized and asked to go further at greater expense than those s tates that have done less. Commenters stated that the penalties for taking positive action can a nd should be remedied in order to better
accommodate state actions consistent with EPA's ove rall objectives. Commenters opposed establishing a "floor" based on 2012 generation, as this would penalize states for early actions.

Comment 60: Commenters expressed concerns regarding the criter ia for reapportioning state RE targets - total electricity sales vs total generati on.

Response 60: The EPA is not finalizing an approach that relies o n state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.

The following are summaries of the specific public comments under this comment:

Commenters stated total generation is the most appr opriate criteria for reallocation of RE generation within regions. Commenters stated the on ly exception is with EE, which, by its nature, tracks sales rather than generation (by low ering demand at all facilities that serve that state). However, commenters said RE is more closelytied to total generation than to total sales, so reapportionment should track generation.

Commenters suggested EPA use annual state retail sa les of electricity as the basis for the target (the same as BB4), instead of total in-state electr icity generation. Commenters stated that in most cases the targets set by RPS policies in states are applied to the total retail sales within a state, as opposed to the in-state generation total or as a capacity target within a state. Commenters stated that EPA's proposed approach is contrary to this fu ndamental design approach of most RPS policies. Commenters suggested that using retail sa les as the basis for the target also creates an219

important link to BB4 where an analogous EE resourc e standard approach is used (essentially a RPS for EE). Commenters stated EPA justifies the in -state generation target approach by implying that the primary motivation for state RPS policy is to increase in-state renewable generation. Commenters stated that reducing GHG emi ssions and catalyzing RE development, regardless of location, are clearly major factors a s well. Commenters stated that given that most RPS policies allow RE to come from a broad geograph ic area demonstrates that state RPS policies are more broadly focused than on just enco uraging in-state renewable generation. Commenters stated Commenters stated this approach i s also consistent with using RECs to track compliance, since they may come from out of state.

Commenters suggested EPA adjust the regional averag e RPS target to reflect the RPS targets in state laws or regulations multiplied by the amount of statewide retail sales to which those RPS targets apply. Commenters stated that in practice, RPS policies do not require that the full effect of their "simple" targets be achieved. Commenters s tated that all RPS policies have some conditions or limitations on scope that result in t he effective target of the RPS being less than the "simple" target outlined in the law, and typically the difference is not insignificant. Commenters stated that for Washington, given the limited cover age of the law, and given cost cap provisions and other aspects of the law, the effective RPS tar get for Washington is about 10%, in contrast to the "simple" target of 15%. (For example, the Washi ngton RPS has a "simple" target of 15% by 2020 embedded in the state's Energy Independence Ac t (Chapter 19.285 RCW) that applies to 17 of the 63 utilities in the state, covering about 80 % of the load in the state. Therefore, the loadweighted RPS target for Washington is around 12% 20 20.) Commenters stated that ideally, the RPS targets used to develop the regional "proxy RPS " target would take into account the full spectrum of qualifiers that might apply, but projec ting all of these effects out to 2030 may be prohibitively difficult. Therefore, commenters reco mmended at least accounting for the retail sales (i.e., load) to which the RPS targets apply, instead of assuming all load is affected.

Comment 61: Commenters noted concerns on the EPA’s target-setti ng methodology.

Response 61: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.

The following are summaries of the specific public comments under this comment:

Commenters recommended the following improvements t o EPA's methodology to more accurately reflect best practices and existing tren ds of RE growth. Commenters stated that many of the state RPS goals extend beyond 2020, yet EPA used 2020 targets only in determining average regional RPS levels for the states for a 20 30 emissions reduction target. Commenters suggested EPA reassess regional targets based on th e last target year in state law: whether it be 2015, 2020, 2025 or another year, in setting the 20 30 renewable target.

Commenters stated some states have multiple RPS tar gets for different load serving entities (for example, one target for IOUs and another for coops or municipal utilities; or one target for larger utilities and another for smaller utilities). Comme nters stated that in any state with multiple220

targets, EPA should use the larger of the targets i n formulating the regional average. Commenters stated that since EPA seeks BSER, it sho uld use the highest renewables targets being adequately demonstrated by states. Commenters stated while some states may have determined that lower targets are acceptable for so me classes of utilities, they did not do so in the context of seeking the BSER. Commenters stated the higher targets, which have been demonstrated to be economically and technically ach ievable, clearly demonstrate BSER. Commenters agreed it would be better to use t he highest RE standard for a region to give a closer approximation of the medium term potential carbon pollution reductions through RE that region.

Commenters suggested EPA eliminate growth rate cons traint, and choose best of: existing generation, existing state RPS requirement, and sta te goal based on the regional RPS average. Commenters agreed that RPS are instructive in evalu ating BSER opportunities. Commenters stated some states have achieved higher RE generati on and integration than is required by their RPS, indicating that an RPS should not be a cap on renewable generation; however, in EPA's target-setting methodology, some state targets fall below existing generation and existing state RPS requirements.

Comment 62: Commenters asserted the EPA should incentivize sta tes already meeting their
targets.

Response 62: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.
The following is a summary of the specific public c omment under this comment:

Commenters stated that for a state where renewable generation (based on 2012 levels) already meets or exceeds the regional renewable energy targ et proposed under this quantification in Building Block 3, its obligation under the target i s capped at its share of the regional renewable energy target. Commenters also stated that similarl y, once a state meets its share of the regional renewable energy target from 2017-2030, its obligat ion is capped. Commenters stated one alternative approach would be to incentivize states that have already met the renewable energy target to continue promoting renewable development and consider this 'added' renewable generation as an overall contribution to the region al renewable energy target. Commenters stated Commenters stated such an approach could better acc ount for the economic and market externalities that will impact individual state ren ewable energy deployment within a region.

Comment 63: Commenters questioned the validity of RPS to estab lish RE targets.

Response 63: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.221

The following are summaries of the specific public comments under this comment:

Commenters stated EPA's proposed approach of averag ing a region's RPS goals to establish a target renewable energy level also is valid. Commen ters stated individual states within a geographic region generally share similar levels of renewable energy technical potential, among other characteristics that may make grouping approp riate. Commenters also stated that the lack of a RPS program does not mean that a state has no or less renewable energy potential than its neighbors.

Commenters stated that RPS is not a reasonable foun dation for quantifying renewable generation potential because they are based at least partly on state policy choices, which naturally disqualify RPS from being a reasonably scientific basis upon w hich to quantify renewable energy potential. Commenters said state-specific politics plays a key role in whether states adopt renewable portfolio standards and the stringency of those sta ndards and provided an example of Illinois. Commenters said in that state, political negotiatio ns to fix the State's 2007 RPS have been dragging on for years without yielding a resolution , illustrating the peril in using standards that may be outdated and are subject to the prevailing p olitical winds.

Comment 64: Commenters expressed WECC region specific concerns

.
Response 64: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.
The following are summaries of the specific public comments under this comment:

Commenters said that western states exhibit differi ng generation profiles with hydropower and natural gas generation comprising a significant amo unt of generation within the Pacific coast states, while the intermountain states have been mo re heavily dependent on coal-fired generation (although this generation serves other parts of the west as well). Commenters stated this translates to significant differentiation among sta tes in terms of which compliance pathways are available to them and to what degree. Further, comm enters said hydropower is subject to significant variation on an annual and seasonal bas is due to changes in rainfall, snowpack, and other reasons, which can have a significant effect on baseline assumptions and, ultimately, compliance responsibility under the state goals.

Commenters said that in the West region, multiple s tates (Idaho, Wyoming, Utah) have no RES requirements and one state, California, has the mos t aggressive RES requirements in the country. Commenters stated California's RES dramatically inc reases the regional RE goal and EPA made no effort to control for its aggressive RES require ment as an obvious outlier among state RES mandates in the West region. Commenters said Califo rnia was able to set such an aggressive RES, in part, because other states in the region ha ve not. Commenters asserted that much of the renewable generation built in the West is relied up on for compliance with California's RES, and may be unavailable to count toward compliance with the RE goals in the state in which the facility resides - further increasing the stringenc y of many of these western states' goals as proposed. Alternatively, commenters stated Californ ia may have trouble finding RE to import if222

the other western states now need the generation to meet their own stringent in-state RE goals, making it more difficult for California to achieve its goal.

Comment 65: Tribal and Territorial – Commenters expressed Nava jo National RE investment

cost concerns.

Response 65: The application of building block 3 is premised on the availability of incremental
RE at the interconnection level. Procurement of in cremental RE need not result from direct ownership or project development, as described in s ection V of the preamble.

The following is a summary of the specific public c omment under this comment:

Concerning tribal nations, commenters stated the Na vajo Nation is working to develop RE projects on Navajo land, with the energy to be used by others. Commenters said Navajo Nation is highly dependent upon capital from others to financ e these RE projects. However, as the Navajo Nation noted during its consultations with EPA, com menters said the Proposed Rule and Supplemental Proposed Rule have created some obstac les toward development of these projects, which EPA should rectify. Commenters said that, unl ike wealthier states or territories, the Navajo Nation does not have the resources to pursue these projects without partnering with project developers. Commenters added that these RE projects are crucial for providing valuable employment opportunities for impoverished families on the Navajo Nation.

Comment 66: Tribal and Territorial – Commenters asserted RE wi ll become economic burden to Navajo Nation.

Response 66: The application of building block 3 is premised on the availability of incremental
RE at the interconnection level. Procurement of in cremental RE need not result from direct ownership or project development, as described in s ection V of the preamble.

The following is a summary of the specific public c omment under this comment:

Regarding tribal concerns, commenters said there wo uld be no CO 2 benefit in replacing one carbon-free source with another, so setting a renew ables goal offers no real benefit in terms of
CO 2 reduction, but does place an unnecessary economic burden on the Navajo people. Commenters asserted that while it could be argued t hat future growth in Navajo Nation electricity demand could be met from RE sources, th e historical trends for electricity demand on the Navajo Nation have been flat to shrinking, roug hly a 0.5% per year annual reduction in demand. Therefore, commenters stated until the Nava jo Nation can develop a more vibrant economy that actually increases electricity usage, applying goals for RE based upon future demand growth will be harmful to the already weak N avajo Nation economy.

Commenters specifically opposed EPA's setting a goa l of 0.37% of total generation that may grow to 1% of total generation. Commenters said tha t most of the electricity generated on the Navajo Nation is used off of the Navajo Nation and setting such a percentage, which would be223

exclusively applied to the Navajo Nation, would be a very large portion of its electricity demand. Commenters stated that, unlike other states or terr itories that are primarily reliant on fossil energy for electricity, electricity used by the Nav ajo Nation comes mainly from carbon-free
sources. Commenters said there would be no CO 2 benefit in replacing one carbon-free source with another. Therefore, commenters stated that set ting a renewables goal offers no real benefit
in terms of CO 2 reduction, but again places an unnecessary economi c burden on the Navajo people.

Comment 67: Tribal and territorial – Commenters expressed conc ern that BB3 does not apply to Navajo Nation.

Response 67: The application of building block 3 is premised on the availability of incremental
RE at the interconnection level. Procurement of in cremental RE need not result from direct ownership or project development, as described in s ection V of the preamble. Building block 3 is applied to affected EGUs within an interconnection rather than jurisdictions.

The following is a summary of the specific public c omment under this comment:

Regarding the Navajo nation, commenters said that b ecause the electricity in the Navajo Nation is mainly hydro-electric, BB3 does not apply. Comme nters said that applying the proposed methodology to the tribes would result in no additi onal emission reductions required for the Navajo Nation, and thus no change in its goal.

Comment 68: Commenters had concerns regarding BB3 target assum ptions and need for modification - support and opposition.

Response 68: The resources and data provided in this comment wer e valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of solar cost and performance assumptions.

The following are summaries of the specific public comments under this comment:

Commenters said the rule's targets are much lower t han what is possible and the majority of states have mandatory/voluntary RE portfolio standards, many of which require more RE than EPA predicts. Commenters said many states have huge RE potential to meet their entire electricity needs and all should be required to gre atly increase their reliance on clean RE such as wind and solar. Further, Commenters said those stat es that have been more ambitious should be forced to go further, and coal dependent states sho uld be forced to make substantial shifts from coal to clean RE.Commenters supported use of RE as a compliance option but stated EPA's proposed and alternative approaches should be based on an updated and fair assessment of each state's RE potential. Commenters supported the appr oached offered by the Union of Concerned Scientists (UCS) in a recent report. In both approa ches, the commenters stated EPA's assumptions regarding the amount of renewable gener ation that can be feasibly and at reasonable224

cost added to the grid are overly conservative. Com menters stated the UCS report showed that EPA significantly underestimated the potential role of RE in setting state targets. Commenters
stated several of the issues UCS identified are evi dent in EPA's treatment of renewables potential: EPA fails to account for both (1) the co ntinued growth and falling costs of renewables projected by market experts and (2) the RE deployme nt rates that states are already achieving. Commenters stated that updating and revising severa l of the underlying assumptions will show
that states such as Alabama and South Carolina can reach a higher RE target than EPA assumes at a reasonable cost. Commenters stated Georgia wil l have almost double the amount of RE that EPA assumes as a result of recent significant inves tments in solar and wind. Commenters stated that in a period of just four years, Georgia Power Company is poised to grow its solar portfolio from approximately 50 MW to over 900 MW, and its wi nd portfolio from zero to 250 MW. Commenters stated showing that EPA's assumed annual growth rate for Georgia of 13% is overly conservative.

Comment 69: Commenters expressed concerns with the EPA’s RE pr ojections.

Response 69: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE at an interconnection level. The
EPA addresses considerations related to the technic al feasibility and associated grid integration costs of significant RE penetration in both the pre amble (section V.E) and GHG Mitigation
Measures TSD. Biomass is treated as a non-BSER mea sure in the final rule, please refer to section V.A.6 of the preamble for additional detail

.
A discussion regarding the use of some biomass feed stocks for compliance purposes can be found in Section VIII.I and Section VIII.K of the p reamble.

The following are summaries of the specific public comments under this comment:

Commenters stated the state targets set by EPA are not feasible or adequately demonstrated.
Commenters stated EPA made several errors in develo ping BB3: (1) EPA misconstrued state RPS; (2) EPA did not adequately consider the costs associated with renewable generation; (3) EPA treated biomass inconsistently; and (4) EPA ign ored factors that hinder the development of
RE.

Commenters said EPA's projections for renewable exp ansion are beyond other projections, including some of EPA's own. Commenters stated EPA' s assumed growth in non-hydro renewable capacity is out of line with other predic tions and likely to be unattainable.

Comment 70: Commenters stated there is a need to consider Rura l and Small Electric Coops in goal setting.

Response 70: The EPA addresses the availability of cost-effecti ve RE to all affected sources in
section V.E.6.225

The following are summaries of the specific public comments under this comment:

Commenters stated most small and/or rural coops, mu nicipal utilities, and competitive electricity suppliers in Montana do not currently consume signi ficant percentages of RE and do not operate or participate in programs to promote EE, with the exception of a few western Montana coops that purchase most or all their power from the Bonn eville Power Administration. Commenters said these small electricity providers represent ha lf of the retail sales of electricity annually in Montana and are not regulated by the state's PSC. C ommenters said it will be more challenging to grow the procurement of RE/EE by small electrici ty providers along the same trajectory as larger utilities in urban states, or even the expec ted average size electric utility. Commenters said small electricity providers lack the existing insti tutional structures for the procurement of RE/EE.
Commenters said EPA should revise its BB3 & 4 metho dologies to account for the more limited resources of smaller electricity providers.

Additionally, commenters noted that Montana's RPS, as is the case with many state RPS programs, does not apply to electric coops, municip al utilities, or small competitive electricity providers. As a result, commenters stated EPA's met hodology for determining the growth in RE in the various regions of the country overestimates the potential growth in RE by ignoring the often significant percentages of total state retail sales that are not subject to state RPS programs or other requirements to procure specific percentag es of retail sales from renewable resources. Commenters suggested EPA rerun its BB3 calculations to take into account the portion of state retail electricity sales that do not have to comply with a state's RPS requirements.

Commenters said EPA should be aware that states suc h as New Mexico with a large rural population and many rural electric cooperatives oft en have secondary and even tertiary
standards. Commenters stated these standards are ne cessarily lower than those for IOUs due to the demographics of the rural population as well as transmission constraints of rural areas. Commenters said focusing only on primary standards in setting a regional "average" RPS ignores the demographics and constraints unique to rural el ectric cooperatives.

Commenters said public power utilities and cooperat ives are not strangers to RE resources and as a percentage of total owned generation, public powe r utilities actually have a much higher percentage of RE capacity than do investor-owned ut ilities: 18.5% vs 7.82%. Thus, commenters said there is nothing inherent to the public power model that makes it more difficult to acquire or utilize RE resources. Commenters said smaller publi c power utilities are uniquely well placed to incorporate large levels of RE because it can be bu ilt in smaller increments and scaled up as demand from the utility grows, making it a preferab le investment especially for small utilities, because it prevents them from having to commit too many resources to any individual power source. Commenters added that municipal utilities are also well-suited to RE projects, which are characterized by high up-front capital costs and lo w operation and maintenance costs. As public entities, commenters said, municipalities can acces s low-interest bond funding models to finance these projects at much lower rates than investor-ow ned, or other publicly held, utilities.

Commenters said rural electric cooperatives, both d istribution coops and generation & transmission, are also increasingly making RE part of their portfolios. Commenters stated that NRECA noted co-ops are making significant investmen ts in RE generation, using loans from the Rural Utilities Service and other sources; with sol ar becoming more cost-competitive, solar226

development is growing quickly also. In addition, c ommenters said co-ops purchase RE from large projects such as the 31 MW Cimarron Solar Fac ility in New Mexico and the 7.7 MW Azalea Solar Power Facility in Georgia, and nearly 40 cooperatives have or are planning community solar programs, recognizing that solar di versifies the fuel portfolio, and helps to build new community partnerships, a key cooperative value. Commenters added that NRECA has produced an interactive map detailing how hundr eds of cooperatives are diversifying their portfolios using RE.

Comment 71: Commenters noted inaccuracies in the EPA’s RPS RE calculations.

Response 71: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.

The following is a summary of the specific public c omment under this comment:

Commenters questioned how closely EPA looked at eac h state's RPS. For example, commenters stated that Nevada's RPS only applies to certain en ergy providers above a certain threshold, which is about 60% of generation in the state. Ther efore, commenters stated, the actual statewide RE is only 13% compared to the 22% that EPA used fo r its calculations. Commenters asked
if EPA has considered situations like this occurrin g with other states and the effect on development of the RE goals.

Comment 72: Commenters expressed RPS methodology concerns.

Response 72: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.

The following are summaries of the specific public comments under this comment:

Commenters stated in creating its methodology, EPA assumed it knew better than states without RPS or with below "average" RPS what the "best" res ource portfolio in those states should be, based solely on what would reduce CO2 and without a ddressing any of the many factors states consider in setting renewable goals, including the cost of renewable resources and other options available in those states, the need for economic de velopment for different business sectors, availability of other fuels in the state, availabil ity of transmission in the state, the costs and benefits of achieving environmental, economic, and power supply goals through alternative
means such as tax credits and investment incentives , economic conditions for electric consumers in the state, and more. Commenters stated that EPA ignores the details of all of the RPS it reviewed that reflect many of these considerations, such as reliability exemptions, cost caps, and
inclusion of renewable resources not counted as "re newable" by EPA, such as hydro, stranded gas, and coal-bed methane.227

Commenters also said that states lacking RPS were e xcluded improperly in setting the average, and that EPA did not credit any fossil fuel sources (e.g., coal bed methane in PA) in setting the
targets.

Commenters said a state's RE target should account for the amount of fossil fuel-fired generation in the state, and that failing to do so can create a RE target that is larger than the amount of the state's 2012 fossil fueled generation. Commenters s aid assuming additional RE "dilutes" the emissions rate from fossil fueled generators by add ing emission free electricity to the grid, displacing power from fossil fueled sources, it mak es sense not to set a target that exceeds a state's 2012 fossil generation. Doing so, commenter s said, would mean that the excess RE is displacing other non-emitting generation sources, n eedlessly increasing the costs of lowering
fossil emissions with no noticeable emission benefi ts and increasing compliance costs.

Commenters said states with renewable portfolios ti e them to power consumption rather than power generation, which appears to be a disconnect.

Commenters asserted EPA improperly based each state 's effective 2020 RPS goal solely on that state's primary RPS. Commenters said EPA lacks a fu ndamental understanding of how state RPS programs work: these secondary and tertiary RPS pro grams do not impose additional requirements on top of primary RPS goals, but rathe r establish alternative, less stringent requirements for small cooperative and municipal ut ilities. By disregarding secondary RPS goals and applying primary RPS goals to the entire state' s generation profile, commenters said EPA overestimates the applicable RPS requirements in th ose states.

Commenters said this error has significant effects for states in Tri-State's service territory.
Commenters stated EPA assumed that the 2020 effecti ve RE levels for Colorado would reach 30%, but the state's primary RPS goal applies only to IOUs. For cooperatives, commenters said the state's RPS requires that 20% of the energy pro vided to members at wholesale must be generated from RE in 2020. Likewise, commenters sta ted EPA assumed that New Mexico's statewide RPS goal is 20%, but again, that target applies to IOUs; rural cooperatives are required
to have RE account for 10% of retail sales in 2020. Commenters stated ignoring these secondary RPS goals does not make EPA's BB3 targets more cons ervative. Commenters stated that it artificially inflates them, making the proposed sta te goals excessively stringent.

Comment 73: Commenters stated targets should remain stable.

Response 73: The concepts provided in this comment were valuabl e in finalizing the building block 3 methodology, particularly in the gradual in troduction of building block 3 target generation over time. The final methodology is desc ribed in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public c omment under this comment:

Commenters said targets should be stable, ramp up s teadily over time, and not be subject to sudden or uncertain shifts. Commenters stated a pre dictable, stable market that decreases risk for228

investors necessarily requires long-term credibilit y in RE policy, lowers the cost of capital for developers, produces cheaper power and reduces the need for public incentives over time.

Comment 74 : Commenters asserted further guidance is needed fo r RE.

Response 74: As part of the final rule, the EPA has provided si gnificant guidance for states and other jurisdictions seeking to pursue emission redu ction opportunities through incremental RE in section VIII of the preamble.

The following are summaries of the specific public comments under this comment:

Commenters said the proposed rule does not provide adequate guidance to states seeking to expand the role of RE or signal what RE policies co uld or should be included as part of a SIP. Commenters stated the rule should provide states a menu of policy options demonstrated to increase RE deployment.

Commenters said significant uncertainties exist reg arding the design, implementation, and demonstration of compliance strategies to achieve t he BB3 goals. Commenters stated this includes uncertainty regarding who has the regulato ry authority to require the development and operation of specified amounts of renewable resourc es and nuclear power, how such requirements are designed in context with RTO and s tate-dispatch regulations, how compliance is to be demonstrated, and where the compliance obl igation resides.

Comment 75: Commenters opposed use of minimum level of RE in N avajo Nation.

Response 75: In the final rule there is no minimum level of RE assigned to jurisdictions or affected EGUs. The application of building block 3 is premised on the availability of
incremental RE at the interconnection level. Procu rement of incremental RE need not result from direct ownership or project development, as de scribed in section V of the preamble.

The following is a summary of the specific public c omment under this comment.

Commenters agreed with EPA's methodology for applyi ng BB3 to Indian country because it is consistent with the proposed methodology from the J une 18, 2014 CAA section 111(d) proposal. However, commenters did not support the use of a mi nimum level of RE, such as EPA's assignment of 0.37% of the total 2012 generation fo r each area of Indian country - an amount equal to the lowest RE generation among the 50 stat es in 2012 - to establish a baseline RE generation rate in 2012 for the Navajo Nation. Comm enters said the Navajo Nation noted during consultation with EPA that application of BB3 is no t appropriate, because the tribe's use of electricity is negligible compared to the generatio n output of the power plants and commenters supported the Navajo Nation on this issue. Thus, th e commenters said that, as EPA notes in the Supplemental Proposal, applying an amount equal to 0.37% of total generation to each area of Indian country as an RE goal results in RE generati on being the primary source of electricity
used on tribal lands. Commenters said this translat es to 15% of load, surely an over-aggressive229

goal for the Navajo Nation. In fact, commenters ass erted, this goal is higher than more than half of the states' goals under EPA's CPP. Commenters su pported the sensible use of RE generation to offset higher carbon-emitting sources of generat ion; however, believed, as EPA proposed, application of BB3 on the Navajo Nation should resu lt in an RE amount of zero.

Comment 76: Commenters noted inaccuracy in Delaware RPS.

Response 76: State RPS requirements are not a factor in quantify ing the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public c omment under this comment:

Commenters said there is a minor error in how Delaw are's RPS reflected in BB3 for 2020 - the correct value should be 20% versus the incorrectly stated value of 19% in the EPA proposal.

Comment 77: Commenters had concerns regarding treatment of low or zero emission facilities.

Response 77: The BSER is forward-looking in identifying cost-ef fective opportunities for emission reductions from 2012; consequently, buildi ng block 3 is premised only on generation that is incremental from the BSER data year of 2012 . The final building block 3 methodology is described in detail in V.E of the preamble and in t he GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters said should the goals be revised to assu me that all low- or zero-emitting facilities are considered as similar to NGCC units, EPA needs to complete further evaluation on the realistic availability of these units. Commenters s tated the sun doesn't always shine for solar panels and the wind doesn't always blow during the periods required to generate electricity when it is most needed, and that if these resources are unavailable and NGCCs are operating almost to capacity, it is unclear if other forms of electrici ty-producing units would be available to fill in as a backstop without violating a state plan and excee ding the state goals.

Commenters said EPA arbitrarily excludes certain fo rms of zero-carbon or low-carbon energy from emission rate goal achievement. Given that EPA recognizes other existing forms of clean power such as wind and solar, the selective applica tion of excluding hydropower and nuclear produces arbitrary and unfair results. For example, commenters said four states in the North Central region - Iowa, Minnesota, North Dakota, and South Dakota - would not need to grow their renewables at all because they could include their existing wind power resources in the computation of their final emission rate. Because t he majority of existing nuclear and hydropower would not be counted in a state's final calculation, the commenters asserted this effectively encourages generation from new natural gas plants to be substituted for generation from existing nuclear power or hydropower plants. C ommenters stated that, in the real world,230

such substitutions would increase, rather than decr ease, carbon emissions. However, commenters asserted that EPA's decision to leave out existing nuclear and hydropower, such substitutions-or even the closure of all existing nuclear and hydrop ower plants-would have either no effect on the
EPA-calculated carbon emission rate or could concei vably reduce it. If EPA's intent is to lower carbon intensity by reducing GHG emissions from exi sting fossil fuel-fired EGUs, then the commenters stated EPA must create a greater incenti ve for all zero-carbon and lower-carbon energy sources without arbitrarily excluding any of these sources. Commenters added EPA must not provide a contradictory incentive to increase c arbon emissions in order to achieve a final calculated goal.

Comment 78: Commenters asserted the EPA should remove "at risk " nuclear from BSER and goal calculations.

Response 78: Existing nuclear has been removed from the BSER. T he resources and data provided in this comment were valuable in finalizin g the building block 3 methodology, which is described in section V.E.6 of the preamble and in t he GHG Mitigation Measures TSD.

The following is a summary of the specific public c omment under this comment:

Commenters asserted the "at risk" nuclear componentof BB3 should be removed as BSER and from EPA's calculations. Commenters asserted the pr oposed "at-risk" nuclear provision penalizes states with existing nuclear capacity by assigning them more stringent goals, creating a disadvantage for states with nuclear generation. Fo r example, commenters said that if Point Beach Nuclear Plant retires when its licenses expir e in 2030 and 2033, this zero carbon generation will likely be replaced with non-zero carbon generation, thus creating an additional compliance obligation for Wisconsin. If the at-risk nuclear provision is retained, commenters asserted EPA should allow states' goals to be adjus ted upon expiration of nuclear plant operating licenses. Commenters added that rather than penaliz ing states in which nuclear plants shut down, the rule should provide an incentive for nuclear un its to continue to operate, and, if possible, to increase their output or capacity factor. Commenter s stated excluding existing nuclear from the goal-setting calculation, but allowing states to take credit for a portion of their nuclear generation for compliance purposes, would provide such an ince ntive. In addition, commenters said EPA should recognize early action taken to increase nuc lear plant output, such as extended power
uprates.

Comment 79: Commenters stated the EPA should recognize wind en ergy resources and impact on energy market.

Response 79: The EPA addresses considerations related to the te chnical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:231

Commenters said wind is recognized by MISO as an in termittent resource, with unique rules in place to accommodate its intermittency and the new transmission required to bring more wind energy from its source in the west to the concentra ted population centers that use the energy in the east. Yet wind energy, as an intermittent resou rce, the commenters added, is most available when energy is least needed. In MISO's recent study of the impact of the GHG Rule, commenters said it found through modeling that RE c ould not be expected to replace the fossilfuel retirements already planned due to MATS, nor t hose expected to retire due to the GHG Rule. Commenters said the MISO study supports that EPA's assumptions regarding increase in RE are unrealistic, and threaten both grid reliabil ity and an affordable energy supply for this
country.

Commenters stated that in the GHG Abatement Measure s TSD, EPA makes the point regarding the ample availability and affordability of new RE generation and the fact that this would not increase power prices. Commenters stated that this highlights a problem with RE studies that fail to take into account the negative impacts on the wi der power market. Commenters said that during nighttime hours, when wind turbines typicall y produce power, RE has been cited as a source of negative wholesale power prices in parts of the United States with large amounts of wind energy. Commenters continued by saying wind op erators, harvesting the value of the Production Tax Credit, bid into the market at a neg ative price in an effort to secure dispatch. Commenters said this bidding behavior drives prices down, which severely impacts deregulated nuclear units, which cannot back down generation an d so must effectively pay wind operators to
not run. Commenters said this destruction of value in deregulated nuclear units is causing them to retire before the end of their license, causing a significant increase in system-wide CO2
emissions. Commenters stated the cost and effective ness of RE at large deployment levels in terms of reducing CO2 is not well understood and sh ould not be seen as an easy means to lower
CO2.

Comment 80 : Commenters stated that thermal energy is eligible for compliance with NC REPS.

Response 80: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.

The following is a summary of the specific public c omment under this comment:

Commenters stated that thermal energy is not includ ed in EPA's definition of RE generation on which it bases its calculation in BB3, though it ca n be used by an electric power supplier to comply with North Carolina's REPS requirements. Com menters added that the statutes impose no limit on the amount that can be used for complia nce. Theoretically, commenters said an electric power supplier could satisfy its entire re quirement by purchasing or generating thermal energy (with the exception of a small set-aside for electricity from swine waste).232

Comment 81: Commenters said customer-side RE and demand side m anagement should be
excluded.

Response 81: In the final rule, distributed generation technolog ies and energy efficiency measures are non-BSER compliance measures available to affected sources.

The following is a summary of the specific public c omment under this comment:

Commenters stated that customer-side RE and demand side management should be excluded from CAA enforceable programs and state goals shoul d be modified to reflect this exclusion. Commenters said that Colorado Springs Utilities pio neered Community Solar Gardens and offers
rebates for investment in customer-side RE and cons ervation. Commenters asserted this shared accountability builds our community and fulfills th e purposes of the proposed rule, but is totally inappropriate for CAA enforceability purposes. Comm enters stated the owners of existing sources should not be responsible for compliance th at relies on customers and independent
contractors. Commenters said the state commitment approach can be a useful tool to address this problem. Commenters said states should have the fle xibility to set aside a portion of the goal for state-only enforcement, whose programs may be admin istered by agencies other than the environmental agency including, for example, the ut ilities commission, the energy agencies or building commissions.

Comment 82: Commenters were concerned about the EPA's feasibil ity analysis for annual RE growth rates for each region.

Response 82: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.

The following is a summary of the specific public c omment under this comment:

Commenters were concerned that EPA did not include targets that were capacitybased. Commenters questioned why only NC was used f or the Southeastern states based on their legislatively adopted requirements and why the othe r states in the region averaged in as "zeros".
Commenters stated the North Carolina RPS includes a number of modifying features that would not be part of the renewable requirement for the so utheastern states in the proposed rule; for example: cost caps for retail, commercial and indus trial customers. Commenters also said NC REPS directs the state PUC to develop a procedure f or modifying or delaying provisions if the Commission determines that it is in the public inte rest to do so but the proposed rule does not.

Comment 83: Commenters asked that the EPA clarify the target p ercentages to be percent of a state's generating capacity.233

Response 83: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.
The following is a summary of the specific public c omment under this comment:

Commenters stated the proposed rule is unclear as t o the measurement of RE used to calculate the BB3 portion of the final goal, and should clari fy that the targets are expressed as a percent of a state's generating capacity. Commenters stated th at first, the EPA references the RE capacity in a state; however, the EPA then states that the 10% figure applies to total annual generation. Commenters stated that given the difference in capa city factor for renewables, which are accepted to have a capacity factor significantly lo wer than the fossil-fuel fired generation they will replace, versus the total annual generation in MWh, the EPA should clarify that the 10% level equals 10% of a state's generating capacity. Commenters stated therefore, using 2012 benchmark figures for determining the BB3 portion o f the Final Goal, RE would account for 5,745 MW of generating capacity. Commenters stated that in 2012, Florida had 1,400 MW of RE generating capacity, so Florida would need a 4,345 MW increase of renewable generating capacity to reach the figures the EPA used to calcu late the CO2 emission reductions in Block 3.

Comment 84: Commenters encouraged the EPA to account for offsh ore wind potential and distributed technologies in calculating state targe ts.

Response 84 : Distributed technologies, as a demand-side resou rce, present unique data and technical challenges (such as the role of evaluatio n, measurement and verification (EM&V) procedures in verifying their production, the diver se economic incentives of different parties involved in their deployment, and the variety of gr id integration policies and conditions across potential deployment sites) that complicate identif ying a technically feasible and cost-effective level of generation. Consequently, the EPA is, at t his time, choosing not to include distributed technologies as part of the BSER (although, as expl ained in section VIII.K of the preamble, distributed RE technologies that meets eligibility criteria may be used for compliance).

Additionally, any RE technology that has not been d eployed in the United States, including demonstrated RE technologies for which there is cle ar evidence of technical feasibility and costeffectiveness (e.g., offshore wind), contributes no generation to building block 3 under the final methodology that is based on historical capacity de ployment. These RE technologies are consequently reserved for compliance, which offers affected EGUs additional flexibility and will reduce their need to rely on other emission reducti on measures or building blocks.

Refer to section V.E of the preamble for additional information.

The following is a summary of the specific public c omment under this comment:

Commenters encouraged the EPA to include and accoun t for both offshore wind potential and distributed technologies in calculating state targe ts for building block 3. Commenters said there is immense generation potential from these sources, as distributed solar is rapidly growing, and234

offshore wind developments are in the works and setto come on line within the next year. Commenters stated these are both "adequately demons trated," particularly distributed solar, which is at use in the market and growing astronomi cally in certain areas. Commenters further stated that the costs and non-air quality health an d environment impact and energy requirements make these technologies reasonable and clearly affo rdable, and, thus, they should be included in
the BSER and used to calculate carbon reduction rat es under the CPP.

Commenters stated agreement with EPA's approach for determining the BSER. Commenters said renewable energy measures, and solar measures espec ially, are necessarily part of the BSER; however, building block 3 (renewable energy measure s) as it is currently calculated is incomplete because it does not contain current solar market data and it does not include distributed solar. Commenters said EPA's proposal d oes not accurately reflect the emissions reductions achievable through application of the BS ER. Commenters said EPA must include all forms of solar, including distributed solar, in its final determination of the BSER. Commenters said distralibuted solar, utility solar and CSP are all a system of emissions reduction that is technicly feasible, is implemented at reasonable co st, is driving solar innovation, and does not negatively impact the electric system. Commenters s aid these forms of solar energy are adequately demonstrated to reduce emissions from co vered sources. Commenters said EPA must include solar as part of building block 3 in its de termination of the best system of emissions
reduction.

Commenters stated EPA can improve the proposed thir d building block to more accurately reflect what American clean energy is in reality al ready achieving and how much it can cost effectively grow. Commenters said the levels of ren ewable energy's availability and quantity assumed by the EPA are far too low, based as they are on a metric that doesn't accurately reflect reality. Commenters said rather than basing block t hree on arbitrary and unambitious state RPS mandates as proposed, block three should instead be based on proven resource availability. Commenters said on a state and a regional basis, ac cording to the proposal of alternative approach. Commenters said EPA should also include t he full potential of distributed solar and off-shore wind in its analysis of what is possible and cost effective.

Commenters stated in addition to fuel switching to natural gas, significant additional zeroemitting sources of energy will be required. Commen ters said the equivalent of 5,000 to 20,000 MW of new zero emitting capacity will need to be ad ded, depending on the resource chosen. Commenters said this is a substantial increase, esp ecially when compared to Florida's current total capacity of 55,000 MW. Commenters said if sol ar energy is used, for example, it will require adding new solar capacity resources equal t o about 20,000 MW, which is 37 percent of current statewide capacity from all sources. Commen ters said adding new nuclear capacity would require about 5,000 MW, and biomass approxima tely 5,600 MW.

Commenters stated EPA should make significant impr ovements in how it calculates the renewable energy building block. Commenters said si gnificantly increasing the role that renewable energy plays in the rule is also supporte d by CAA Section 111, which the draft rule notes is designed to "promote the development and i mplementation of technology, including the diffusion of existing technology as the BSER."235

Comment 85: Commenters asserted the EPA has underestimated th e amount of RE states can cost-effectively employ in meeting requirements.

Response 85: The information provided in this comment were valu able in finalizing the building block 3 methodology, particularly in the reevaluati on of onshore wind and utility-scale solar cost and performance assumptions.

The following is a summary of the specific public c omment under this comment:

Commenters stated that the EPA also appropriately c onsidered potential emissions reductions that could be achieved by utilizing renewable energ y. Commenters stated that EPA has significantly underestimated the amount of renewabl e energy states can cost-effectively employ in meeting emissions reduction requirements. Commen ters noted that EPA described two potential frameworks for analyzing the potential fo r reduction of carbon emissions through the use of renewable energy. Commenters stated that one involves the use of regional averages of renewable energy policies, and the other involves a technical-economic potential analysis. Commenters stated that both frameworks significantl y underestimate the emission reductions achievable through renewable sources because they f ail to reflect the significant reductions in the cost of renewables that have occurred in recent years. Commenters stated that urged EPA to use the most current data in evaluating the quantity of renewable energy that can be cost-effectively employed in each state. Commenters stated that this is particularly important given that renewable energy is emissions free.

Comment 23: Commenters expressed concern that meeting renewabl e energy goals by an individual state, only perhaps or to a large extentthrough outside activities, for example through interstate trading of renewable energy certificates (herein "RECs"), could hurt DW inadvertently, and impede EPA's broad mandate to protect the envir onment.

Response 23: Distributed technologies, as a demand-side resourc e, present unique data and technical challenges (such as the role of evaluatio n, measurement and verification (EM&V) procedures in verifying their production, the diver se economic incentives of different parties involved in their deployment, and the variety of gr id integration policies and conditions across potential deployment sites) that complicate identif ying a technically feasible and cost-effective level of generation. Consequently, the EPA is, at t his time, choosing not to include distributed technologies as part of the BSER (although, as expl ained in section VIII.K of the preamble, distributed RE technologies that meets eligibility criteria may be used for compliance). Further, the EPA believes the final rule would not be streng thened by restricting the significant compliance flexibility afforded to affected EGUs to achieve the BSER.

The following are summaries of the specific public comments under this comment:

Commenters believed that some states may choose lar ger projects only, or fossil fuels, etc., with little if any regard to the environmental and socia l impacts of "mega-projects" or to the important
role of DG and DW at the local level. Commenters re commended EPA consider a minimum threshold of renewable energy generation, and a DG sub-requirement per State. In other words, commenters explained, a reasonable floor ought to b e set for each State to use its own resources236

(wind, solar and biomass included) to generate its own renewable energy to help build the nascent renewable energy industry, especially to gi ve DG technology a footing when the "cards are stacked" against it absent forward-thinking, an d careful policies at the Federal, State and
local levels. Commenters believed a State would the n have to find that energy using resources available and have to apply to EPA for a waiver fro m its minimum (or de minimis) threshold instate generation requirement to go out of State. Co mmenters believed burgeoning technologies such as DW are at a competitive disadvantage to a v ariety of other resources, and in particular fossil fuels, given historical and present day ineq uities in the marketplace, as well as the public policy realm. Commenters believed EPA must be caref ul that this entire rule, when final, doesn't inadvertently dis-incent DG and DW in particular, e ven as it is working to earnestly promote renewable energy generation writ large concurs with EPA's suggested floor for a renewable energy generation baseline, using 2012 figures. Com menters stated there is a clear public policy imperative to generate increased levels of renewabl e energy, consistent with the Administration's Climate Action Plan, and broader policies in place both at the Federal and State levels, and a state's reported 2012 fossil fuel generation should not be treated as a ceiling for its renewable energy generation target as the relative economics of many technologies are changing rapidly.

Comment X: Commenters cited a case in point is the CPP's ren ewable energy goal computation for Virginia where the CPP assumes Virginia can obt ain 16% of its generation from renewable sources by 2030.

Response X: The EPA has revised its block three quantification based on comment. See Section V.A. and V.C. of the final rule preamble for more i nformation.

The following are summaries of the specific public comments under this comment:

Commenters believed EPA gets that figure by averagi ng the future RPS requirements of six other jurisdictions in the "East Central" region: Distric t of Columbia, Delaware, Maryland, New Jersey, Ohio, and Pennsylvania but Virginia, by del iberate policy choice, does not have an RPS program, and what those other jurisdictions aspire to do provides no knowledge of what is achievable in Virginia. In effect, commenters belie ved, EPA gives those jurisdictions authority to determine Virginia's electricity policies but comme nters stated that no state may lawfully dictate policy to another, and "To foist in-state decisions upon other States, and to do so while ignoring the contrary decisions of other States, is arbitrar y, capricious, and unlawful," the VSCC staff observes. Commenters continued, stating that f Virg inia's renewable energy goal were based on local knowledge, it would be nowhere close to 16%, and regardless of aspirations expressed in other states' RPS programs, as of 2012, renewable g eneration in the East Central region ranged from only 1% to 3%, with Virginia at 3% for that ye ar. Commenters quoted "This is the level of renewable generation that has been adequately demon strated in Virginia." Commenters added that even assuming those six states can achieve the ir RPS targets, taking a simple average of those targets is an inappropriate way to determine what is achievable in Virginia. Commenters argued that the CPP's methodology ignores the fact that it is cheaper to obtain a given percentage of renewable electricity in jurisdictions with rela tively little generation (D.C., Delaware, Maryland, New Jersey) than in states with much larg er base loads (Pennsylvania, Ohio, Virginia, West Virginia), and "There is no rational basis - l egally or mathematically - for giving such undue and unintended influence to certain legislatu res at the expense of others, including237

Virginia." Commenters observed that although Virgin ia has no RPS program, the State's Building Block 3 goal is at the top end for states in the region, quoting "Thus, even though EPA relies on the legislative determinations of States with renewable requirements to determine what is achievable across a region, the final result of EPA's calculation is that States with such requirements are actually expected to achieve less than Virginia, which has no renewable requirement."

Comment 11: Commenters argued that the EPA's process for deter mining renewable energy (RE) "best practice" targets is arbitrary because i t did not conform with section 111 requirements to consider feasibility and cost factors in setting the target.

Response 11: The EPA has revised its block three quantification based on comment. See Section V.A. and V.C. of the final rule preamble fo r more information.

The following are summaries of the specific public comments under this comment:

The commenters noted that the EPA set each region's proposed target by averaging the 2020 renewable portfolio standard (RPS) requirements fro m states within each region that have adopted RPS requirements. The commenters noted thatin the Southeast, the only state with an RPS is North Carolina. Therefore, commenters stated , for the Southeast Region, the EPA has effectively assumed that one state's particular pol itical decision to adopt an RPS represents a meaningful estimate of the "feasibility and cost of the best practices scenario" for all other states in the region.

Commenters argued that the EPA has not demonstrated that any such consideration by North Carolina's state government was representative of t he consideration of what level of RE generation might be achievable or cost effective fo r the seven other states in the Southeast region. The commenters argued that the EPA did not inquire whether those other state legislatures considered the statutory factors from section 111 on which EPA and states must base their designation of BSER, and reached a different conclusion from North Carolina about the feasibility and cost of an RPS or RE. The commenter s argued that this conclusion is bolstered by the fact that EPA's alternative approach projects t hat North Carolina can only realistically produce 2 percent of its in-state generation from R E by 2030.

The commenters argued that EPA's RPS approach essen tially cherry-picked among states in setting the regional RPS targets and ignored inform ation from other states in the region. Specifically, commenters stated, the EPA's approach ignored the fact that state legislatures in other Southeast states have considered and rejected any level of RPS commitment for their states. In so doing, the commenters argued that the EPA's approach had selected a single political decision in North Carolina with which the agency ag rees while ignoring the political judgment of the other seven states in the Southeast Region. The commenters argued that the EPA has not explained why it did not consider the decisions of all the states in the region. The commenters estimated that if the EPA were to factor in the pol itically-determined RPS levels from all states in the Southeast Region (not just North Carolina) t he new regional average target for 2030 would be 1.25 percent of each state's in-state generation (i.e., 10 percent averaged over eight states in238

the region). The commenters argued that EPA's failu re to explain its cherry-picking of state policies made the proposal unreasonable, arbitrary, and capricious.

Comment 20: The following commenters suggest an alternative ap proach for the Building Block 3 proposal.

Response 20: The EPA appreciates the UCS approach and is using a final methodology that relies on the most recent five years of RE capacity deployment data (2010-2014) to set building block 3 generation levels.

The following are summaries of the specific public comments under this comment:

Commenters stated the UCS developed an alternative method to determine the best system of emissions reduction for building block 3. Commenter s said its approach sets a national benchmark for the renewable energy growth rate base d on demonstrated state growth between 2009 and 2013, assuming states will meet the requir ements of any state-level renewable energy standards in place. Commenters said under the UCS approach, the amount of U.S. electricity generated from renewable energy sources in 2020 wou ld reach 14 percent of electricity sales in 2020, twice the level achieved by the Clean Power P lan. Commenters said by 2030, renewable energy would comprise a 23 percent share of electri city sales under the UCS approach, compared with only 12 percent under the Clean Power Plan. Co mmenters said the UCS analysis found that this more ambitious commitment to renewable energy could reduce carbon pollution by 40 percent below 2005 levels, compared with the 30 per cent reduction envisioned by the Clean
Power Plan. Commenters said this assumes that the n ew renewable energy generation displaces mostly natural gas-fired generation.

Comment 17: Commenters stated that in Building Block 3, EPA in cludes expanded "zeroemission" renewable energy generation, and to do so , EPA applies a regional approach which averages existing State RPS targets in a given regi on and then applies that average target to each State in that region, based on the assumption that renewable energy opportunities are uniform within a region.

The following are summaries of the specific public comments under this comment:

Response 17: The final methodology for quantifying building blo ck 3 generation levels does not rely on state RPS requirements. The final methodol ogy is described in section V.E. of the preamble.

Commenters said EPA also applies a growth factor th at is based on the State's current renewable energy generation to ramp up renewable energy gener ation until the target generation level is achieved, and central to EPA's analysis is the assu mption that State RPS targets are an accurate reflection of the renewable energy potential for th e State and, by extension, for each State in the region. Commenters posited that EPA does not adequa tely consider the seven following factors239

that call this assumption into question: Factor 1) EPA's broad-based regional approach fails to account for differences in renewable energy potenti al among States. Commenters said the fact that two States are in relative geographic proximity does not mean that they have the same potential to produce renewable energy. Commenters s aid some forms of renewable energy, such as wind, vary dramatically by location even within a State. Thus, commenters said the potential for wind energy in a given State says very little about the potential for wind energy in other States in the same general part of the country. Com menters said, for example, West Virginia has been grouped with coastal States such as Maryland a nd Virginia with the potential to generate substantial amounts of electricity through off-shor e wind power. Commenters said the fact that Maryland and Virginia can generate substantial off- shore wind power provides no basis for concluding that a land-locked State like West Virgi nia can achieve comparable levels of windgenerated power. Commenters said, for other renewab le energy sources, such as biomass, opportunities vary significantly between States tha t EPA has placed in the same region. Commenters said, for example, Minnesota, a heavily forested State with significant potential to produce energy from woody biomass, is placed in the same region with North Dakota, a State
with few forest resources. Commenters said it is ar bitrary and capricious to establish aggregate regional renewable energy targets without addressin g key differences in renewable energy potential among the States in each region. Commente rs stated that the problems with EPA's regional approach are exacerbated by the small numb er of State RPS goals that EPA uses to establish some regional targets. Commenters stated, in some cases, EPA relies on a single State's RPS goal to set a regional renewable energy target. Commenters said, for example, Kansas is the only State on which EPA relies in setting a renewab les target of 20% in the 6-State South Central region. Commenters said, likewise, North Carolina i s the only State on which EPA relies in setting a renewables target of 10% for the 8-State Southeast region. Commenters stated, while the reasoned judgment of a majority of States in a given region may have some relevance in projecting a region's renewable energy potential, i t is arbitrary and capricious to ignore the views of the majority of the States in favor of a single State. Commenters said, under any statistical assessment, a single data point is too small a samp le size on which to make such a significant decision. Further, commenters stated that in order to justify the imposition of regional renewable energy targets, EPA must rely on something more tha n mere physical proximity. While, in some circumstances, commenters said two neighboring Stat es may share some common potential for renewable energy generation, those similarities lar gely disappear at the level of aggregation proposed by EPA. Commenters stated that EPA's brief two page summary of its regional approach in a technical support document is far fro m sufficient to demonstrate the reasonableness of this regional approach. Moreover, commenters noted that EPA offers no reason to suggest that the NERC and RTO regions tha t EPA relies on to group States into regions for assigning Building Block 3 goals have any relev ance for assessing renewable energy potential. Commenters suggested that EPA must demon strate that any regional division it selects for Building Block 3 has a nexus to renewable energ y potential. Commenters asserted that it is arbitrary and capricious for EPA to propose a regio nal grouping for State renewable energy potential based on the current rulemaking record. F actor 2) Commenters said EPA's assumption that a State's RPS target accurately reflects renew able energy potential within that State is misguided. Commenters said state RPS targets may be aspirational and not necessarily supported by an analysis of renewable energy potential within the State. Commenters said, for instance, States sometimes incorporate safeguards into RPS targets in the event that they cannot be achieved. Commenters said, in some cases, States ma y include safety valves that suspend or240

scale back the RPS programs if cost thresholds are exceeded. Commenters said, in other cases, States create incentives for certain types of renew able energy by offering additional credits for preferred energy sources, meaning that the credits produced for compliance with the RPS will exceed the actual level of generation. Finally, com menters stated that States may exclude certain classes of power generators, such as municipally-ow ned power plants or cooperatives, from the RPS obligations, meaning that the States' actual pe rcentage of renewable energy generation on a State-wide level will be less than the amount requi red by the RPS target. (Kavulla Testimony at 11 (noting that Montana RPS does not apply to consu mer-owned utilities, public power projects, or generators owned by out-of-State utilities).) Co mmenters stated that it is arbitrary and capricious for EPA to ignore these issues when rely ing on State RPS targets under Building Block 3. Factor 3) Commenters stated that EPA's ren ewable targets does not fully consider the intermittent nature of many renewable energy source s, such as wind and solar. Commenters said, in some cases, challenges associated with such inte rmittent generation could make EPA's renewable energy targets infeasible. In Texas, for example, wind energy is both intermittent and inversely related to demand. Commenters said, for e xample, wind speeds are typically highest in the early morning, when demand for electricity is a t its lowest. Commenters said, likewise, wind generating capacity in some States, such as Texas, is greatest during the fall and spring months. (Written Testimony of Kenneth W. Anderson Jr., Texa s Public Utility Commissioner, House Energy and Commerce Committee, "State Perspectives: Questions Concerning EPA's Clean Power Plan" 7 (Sept. 9, 2014)) Commenters said, in fact, if Texas were to meet EPA's proposed 20% renewable energy goal, renewable energy could, in some circumstances, exceed demand. (Id.) Commenters noted that such an occurrence coul d have significant repercussions that have not been evaluated by EPA. Commenters said, for exa mple, a Texas Public Utility Commissioner has testified that during periods of high renewable generation, Texas could not simultaneously dispatch both nuclear and renewable facilities as E PA assumes in its BSER analysis. (Id.) Further, commenters stated that given the long cycl ing time for nuclear EGUs, they cannot be utilized as reserve capacity to respond to short-te rm variations in renewable generation. (Id at 7- 9) Commenters said the potential of having to choos e between nuclear and renewable generation will jeopardize the ability of Texas and other Stat es to achieve the emission reduction targets set by EPA. Rather than simply assuming that its BSER a nalysis can be achieved based on annual generation data, commenters suggested that EPA mustcarefully consider the shorter term, seasonal changes in energy demand and usage that co uld prevent a State from consistently meeting the electricity generation assumptions used by EPA. Commenters said not conducting sufficient seasonal modeling also renders EPA's BSE R analysis arbitrary and capricious. Factor 4) Commenters noted that EPA's reliance on State RP S targets does not address the fact that many State RPS programs allow out-of-State renewabl e energy generation to satisfy the State's RPS goal. Commenters said, for example, a Minnesota utility may be able to satisfy its RPS obligation through construction of a wind farm in N orth Dakota. Commenters said, to the extent that a State permits such out-of-State compliance, its RPS standard may not be a good indicator of the State's assessment of renewable energy poten tial within the State. Commenters stated further complicating matters is the fact that neigh boring States with the potential to export renewable energy under RPS programs may elect to en act more modest RPS programs, or forego them entirely, because it is more profitable for th eir utilities to sell renewable energy credits to other States. Thus, in regions where such interstat e transfers are common, commenters stated that it would be arbitrary and capricious to assume that all States can achieve the RPS targets of the most aggressive States. Factor 5) Commenters assert ed that it is arbitrary and capricious for EPA241

to focus on renewable energy consumption represente d by State RPS goals to define State obligations for renewable energy generation. Commen ters stated, under EPA's approach, for example, smaller States with little electricity gen eration can dramatically skew regional renewable energy targets by mandating the consumpti on of a large percentage of renewable energy imported from neighboring States. Commenters said, for example, Washington D.C. has no commercial energy generating capacity, but never theless has set an effective RPS target of 20%. Commenters said including this RPS target on a n equal footing with others in the East Central region produces a significant increase in t he region's renewable energy generation target, despite the fact that it is not backed up by any re newable energy potential at all. Commenters stated that it is arbitrary and capricious for EPA to treat each State equally when setting renewable energy generation targets, without taking into account the specific circumstances impacting each State. Commenters said EPA does not consider a generation-weighted approach that gives greater weight to State RPS targets sele cted by the States that will bear the brunt of any renewable energy mandate adopted by EPA. Factor 6) Commenters stated that EPA's growth projections for renewable energy does not fully acc ount for the cost and implementation challenges faced by large-scale renewable energy pr ojects. Commenters said, particularly for States with large generating capacities, annual gro wth factors in the double digits may prove difficult to sustain. Commenters said, for example, in Texas "a State with a 20% growth factor" EPA projects that renewable energy capacity can inc rease by 5 million MWh per year during the interim compliance period. Commenters said past exa mples of large-scale renewable energy programs suggest that this assumption is inadequate ly justified. Commenters said, for example, in 2008, the Texas PUC assigned nearly $5 billion t o construct the lines needed to transmit approximately 18,000 MW of wind power from west Tex as and the Texas Panhandle to population centers. Commenters stated that this mas sive infrastructure project, which took more than six years to complete after authorization from the PUC, demonstrates both the time and resources needed to construct renewable energy capa city and ensure it can be delivered to customers. Commenters suggested that EPA must more fully consider these implementation challenges and how they may affect its projected gr owth assumptions. Factor 7) Commenters stated that EPA's calculations are arbitrary becaus e they effectively disregard State findings that no significant RPS target could be set. Commenters stated, specifically, while EPA purported to
take as determinative States' assessments of their own potential for renewable energy, 79 Fed. Reg. at 34,866, it in fact only took as determinati ve the findings by States that have adopted a specific RPS target. In contrast, commenters said E PA disregarded the conclusions of any State that considered adoption of an RPS standard, but ul timately decided that binding renewable energy targets were not feasible. Commenters said i ncluding States that adopted a voluntary RPS that is effectively a 0% RPS would dramatically alt er the regional renewable energy targets calculated by EPA in its BSER analysis. Thus, comme nters said, for example, even though West Virginia determined that a mandatory RPS standard w as not feasible for the State, EPA nonetheless disregarded that finding without any ex planation, and instead assumed that West Virginia could achieve a 16% RPS. Commenters said i ncorporating West Virginia's decision not to adopt a mandatory RPS would have reduced the ent ire region's target from 16% to 14%.242

3.3.4 Start year for state efforts

This section discusses when and how implementation of RE measures should begin to be credited toward a state’s compliance with its CPP g oal.

Commenters have raised a number of issues related t o this subsection which are organized by topics (comments) below. Responses are provided for these topics.

Comment 1: The EPA should incentivize early utility investmen ts in RE and EE programs, emission reduction programs and carbon reducing pro jects as measures towards state compliance

Response 1: Qualifying RE generation, inclusive of BSER and no n-BSER technologies, deployed after 2012 may be fully recognized in stat e plans for all performance occurring during a compliance period. The performance of incremental RE starting in 2020 may be creditable to encourage early action. Refer to section VIII of th e preamble for additional information on general eligibility requirements for resources used to adjust a CO2 emission rate. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Several commenters stated that the EPA should incen tivize early utility investments in renewable and energy efficiency programs, emission reduction programs, and carbon reducing projects for the period between the baseline (2012) and the star t of the interim period (2020) by recognizing these projects as measures towards state compliance . Commenters supported the inclusion of measures taken during this period by noting that th e EPA's stated goal in CPP is to achieve a 30% reduction from 2005 emission levels by 2030, making this a reasonable and logical approach. Commenters also included wind generation and demand-side energy efficiency as projects occurring from 2012-2020 that should be re cognized towards CPP compliance. Commenters noted that excluding emission reductions from renewable energy programs online in 2012 from compliance determination would be unfa ir and bad environmental policy. Several commenters further noted that excluding emission re ductions achieved from the compliance period by renewable energy brought online between 2 012 and 2020 would be inconsistent with the EPA's goal in introducing this rule.

Commenters stated that establishing 2017 as the ram p start for renewable energy has the unintended consequence of devaluing investments in renewable or efficiency within the 2012-
2017 timeframe. Commenters noted that failure to cr edit these technologies installed between 2014-2020 as 111(d) compliance would cause business es and utilities to delay investment in new advanced energy and carbon reducing projects until 2020. In order to prevent this, commenters
stated that the EPA should incent and credit the de velopment of renewable energy. Commenters supported the EPA's proposal to permit states to co unt avoided CO2 from existing RE and EE measures towards compliance with state performance goals. Several commenters stated that this approach would create a strong incentive for compan ies to bring on new RE as early as possible and a more graduated compliance trajectory. Comment ers noted that it would also avoid243

distortive market signals and ensure consistent inv estment in renewable energy; this would prevent states from scrambling to meet their interi m targets.

Commenters raised the concern that states would notbe able to reasonably and cost-effectively implement compliance measures and to meet interim e missions reduction targets in the timeframe proposed by the EPA if credit is not give n for action taken during the period between the finalizing of the proposed rule and the start o f the interim period. Commenters noted that many states had already implemented, or were in the process of developing, measures to reduce carbon emissions, which included deploying renewabl e energy and displacing fossil fuel, prior to
the issuance of the draft CPP. Commenters described how the state of Iowa has made significant investment in wind projects ($6 billion since 2003) and energy efficiency programs ($100 million annually) at great costs to Iowa's utilitie s and their customers. Commenters described how the CPP fails to give sufficient credit for the se programs, policies, and early actions that take place between 2012 and 2020. Commenters stated that it is important that the CPP recognize
the contribution of Iowa's investments in wind ener gy and energy efficiency towards meeting Iowa's CO2 emission reduction targets.

Comment 2: Support allowance of early action credit and bank credits of renewable energy and energy efficiency added prior to 2020

Response 2: Qualifying RE generation, inclusive of BSER and no n-BSER technologies, deployed after 2012 may be fully recognized in stat e plans for all performance occurring during a compliance period. The performance of incremental RE prior to 2022, whether in generation or avoided emissions, is not creditable. Refer to sect ion VIII of the preamble for additional information on general eligibility requirements forresources used to adjust a CO 2 emission rate. Under the final methodology for building block 3, t here is no pre-compliance year at which RE deployment is assumed to increase beyond baseline p rojections. The final methodology is described in detail in V.E of the preamble and in t he GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Several commenters urged the EPA to allow early act ions taken by states and individual utility companies to comply with the proposed goals, and se veral commenters suggested that states be allowed to bank credits for renewable energy and en ergy efficiency (EE) added prior to 2020.

Commenters pointed out that several states and util ities had already begun to incorporate renewables and would do so irrespective of the prop osed rule. Commenters cited the example of
NPPD and other Nebraska utilities which are current ly adding wind resources to their generation mix. Commenters noted that any actions implemented by states prior to 2020 will begin to reflect
their contribution to emissions reduction at that t ime and will begin to realize emission benefits as soon as implemented. Several commenters noted th at the proposed rule provides no incentive for states to take early action by adding renewable energy prior to 2020 as there is no way for a state to benefit from early reductions for complian ce purposes. Commenters noted that this lack of incentive may create the unintended consequence of delaying actions that reduce emissions. Commenters also noted that the proposed rule provid es no incentive for adding renewables or244

taking measures that go beyond what is required to meet a state's goal during the compliance period. Commenters stated that states should be all owed to use RE generation and EE resulting from measures implemented prior to 2020 by adding s uch generation to the denominator in subsequent compliance periods or to allow a state t o extend beyond 2030 the impact of the final emission rate goal. Commenters stated that the EPA should clarify that utility programs and
commitments to invest in RE and EE measures constit ute 'existing measures' that states may count towards compliance.

Commenters said that states could accumulate an RE and EE 'bank' between 2012 and 2020 that could be used to demonstrate compliance in 2030 and subsequent years; commenters called for a bank for renewable generation added prior to 2020. Commenters called for a bank to credit new actions taken on or after January 1, 2017. Commente rs stated that the bank credits could be used for compliance purposes beginning in 2020, and the EPA should allow any credits that exceed the state's goal during a compliance period to be b anked for use in a subsequent compliance period. Commenters noted that implementing an RE an d EE bank would recognize that states who are leaders in RE and EE, and who thus have alr eady harvested some of the 'lower hanging fruit' of cost-effective opportunities, may require more time to reach their final goal.
Commenters stated that a bank would facilitate util ity planning and the likelihood of renewable energy purchases for 111(d) compliance prior to the compliance period beginning on January 1,
2020.

Commenters suggested that the EPA incorporated rene wable energy credits (RECs) in order to be more consistent with individual state RES progra ms; these programs include the ability to apply out-of-state resources to in-state compliance goals. The proposal determines goals based on the geographic location of the generation resour ce irrespective of ownership or use, and commenters stated that the EPA approach must recogn ize that state RES programs allow for the use of out-of-state RECs as a compliance measure.

Comment 3: Concerned that the EPA requires the actual use of RE generation 3 years before the compliance period in 2020

Response 3: Under the final methodology for building block 3, there is no pre-compliance year at which RE deployment is assumed to increase beyon d baseline projections. The final building block 3 methodology is described in detail in V.E o f the preamble and in the GHG Mitigation
Measures TSD.

The following are summaries of the specific comment s under this comment:

Several commenters noted that the EPA assumed that states will begin the ramping of the actual use of RE generation in 2017, 3 years before the st art of the compliance period in 2020. Commenters called this assumption irrational. To pu t this timeline in perspective, several commenters stated that initial state plan submissio ns are not due to the EPA until June 30, 2016, and the EPA is allowing itself until June 30, 2017, to take final action approving or disapproving these plans. Thus, commenters stated the EPA's Prop osed Rule would require states to begin implementing their plans before they have even rece ived plan approval. Commenters questioned how the EPA accounts for this in the setting of sta te goals. Several commenters also stated that245

this disconnect is even greater in light of the fac t that states may delay plan submission until June 30, 2017 (for various reasons), or June 30, 2018 (f or multi-state plans), pushing final EPA approval of these plans to mid-2018 or -2019. In ad dition, several commenters stated that building new renewable energy generation capac ity can often take several years to allow for planning, obtaining funding, seeking regulatory app roval, and construction. Several commenters noted that increasing renewable energy capacity wil l, in many cases, also require new transmission infrastructure, which can take 8 to10 years to complete. Commenters also raised the question of why the EPA did not account for the tim e it takes to build new RE. Commenters noted that the EPA provides no explanation as to ho w states could begin to increase their renewable resources in 2017 in response to the prop osed rule. In effect, states need to have begun efforts to implement building block 3 several years ago. According to several commenters, this is plainly unreasonable.

Comment 4: States do not receive compliance credit for early action taken prior to 2012.

Response 4: The BSER is forward-looking in identifying cost-ef fective opportunities for emission reductions from 2012; however, the cost an d availability of these emission reduction opportunities is the result of many factors, includ ing previous actions. The final building block 3 methodology is described in detail in V.E of the pr eamble and in the GHG Mitigation Measures
TSD.

The following are summaries of the specific comment s under this comment:

Commenters stated that under the proposed rule stat es do not receive compliance credit for early action taken prior to 2012. Commenters stated compa nies and states that have been addressing climate change through investments in RE, new NGCC units, and coal-unit retirement are effectively given zero credit and are penalized for measures taken prior to 2012 since the EPA uses 2012, a single, late year, as the basis from w hich future RE goals are set. Commenters stated that Texas electric-cooperatives have added biomass , hydro-electric facilities, and wind power to their generation portfolio for which they may not r eceive credit under the proposed rule; and noted that Texas wind power capacity increased by 5 7 percent in 2007. Commenters stated that the rule effectively penalizes environmental leader ship, and, in regards to RE, states that have taken early action are affirmatively penalized beca use their maximum RE requirements are imposed much sooner than other states. Commenters s tated that states that have taken early actions may be put in the position of having to imp lement extremely expensive options since they have already made the most economic reductions . Commenters pointed out that softer Block 3 targets are given to states that have developed r enewable energy more slowly. Commenters suggested that the start date of creditable GHG red uctions should begin in 2005, which would account for GHG reductions achieved by the electric ity sector to date. Commenters noted that
the AECC and its Board have invested in renewable h ydroelectric energy, and its members have entered into long-term agreements to buy wind capac ity from Kansas and Oklahoma. However, commenters noted that the proposed rule fails to gi ve credit for these actions.246

Comment 5: Issues with EPA's assumption that there will be "N either Improvement Nor Decline in Performance" of RE generation between 2012 and 2 017

Response 5: The final methodology assumes incremental RE will continue to be deployed consistently with the EPA IPM Base Case through 202 1. The final building block 3 methodology is described in detail in V.E of the preamble and i n the GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters stated issues with the EPA's assumption that there will be "neither improvement nor decline in performance" of RE generation between 20 12 and 2017. Several commenters called the EPA's assumption that states would begin increa sing renewable energy in 2017, but beginning at 2012 levels, an overly conservative me thod, and this approach was called insupportable by commenters. Several commenters des cribed the increase in renewable energy from 2012 to 2013, and they also described future p rojects through 2017. As noted by commenters, non-hydroelectric renewable generation increased 16 percent from 2012 to 2013, and it is expected to grow 35 percent by 2015. Comm enters pointed out that wind capacity increase 75 percent from 2009 to 2013, and commente rs described how installed wind capacity increased by 28 percent in 2012 alone. Commenters d escribed the increase in solar capacity as well. Commenters noted that solar capacity increase d by 473 percent from 2009 to 2013, and commenters noted that installed solar PV grew by ov er 83 percent in 2012. Commenters also pointed out that the average costs of wind power an d solar PV systems dropped from 2008-2012 by 60 percent and 40 percent, respectively.

Some commenters noted that assuming zero growth in renewable energy for a five year period is not consistent with the EPA's obligation of relying on the best system of emission reduction that has been adequately demonstrated. Commenters noted that only six states had failed to grow their percentage of renewable energy generation ove r the past five years. Commenters suggested that, should the EPA keep the basic framework of th is approach, the EPA must assume growth of RE generation at a rate of no less than 1 percent p er year between 2012 and 2017. This recommendation is based on the demonstrated growth data compiled by UCS. Commenters suggested that the CPP should assume each state's r enewable energy generation is able to grow beginning in 2012 until it meets the regional targe t, rather than expecting zero growth from 2012 to 2017; Commenters also suggested that the state's renewable energy generation at the time that the CPP is finalized, rather than 2012, be used as the starting pointing from which its renewable generation is expected to grow. Commenters stated t hat it is clearly technically feasible and costeffective for a state to increase renewable energy generation from the amount of annual generation it has already achieved when the Clean P ower Plan is finalized.

Comment 6: Commenters expressed concern the design of the BSER would lock in long-term utility power sector investment that was incompatib le with the intent of the final rule.

Response 6: The program start date of 2022 and the phasing in of building blocks 2 and 3 are designed to enable long-term investments that are c onsistent with the emissions trajectory embodied by the final goals. Refer to section V of the preamble for additional information on
the establishment of the BSER.247

The following are summaries of the specific comment s under this comment:

Commenters stated that states and utilities should be strongly encouraged and incentivized to meet requirements in Building Block 2 and 3 through renewable energy sources such as wind, solar, geothermal, or hydroelectric. Commenters sai d clean, renewable energy makes a better neighbor. Commenters said recent studies show that health savings from clean air would more
than cover the cost of conversion from fossil fuel to clean energy. Commenters said that on the other hand, construction of new gas fired plants an d supporting infrastructure will lock us into continued fossil fuel combustion for the next 40 ye ars and divert capital investment away from long term solutions. Commenters said they strongly advocate that a higher value be placed on building blocks that improve public health by promo ting energy efficiency and clean energy than the valuation of building blocks that have lesser o r opposite effects.

3.3.5 Pace at which states improve from start year to target level

The comments in this section address the EPA's esti mates of RE growth and the ability of states to meet target growth rates.

Commenters have raised a number of issues related t o this subsection which are organized by topics (comments) below. Responses are provided for these topics.

Comment 1: Commenters stated that the EPA has overestimated R E growth and its impact on annual growth.

Response 1: The EPA does not believe that a lower level of RE deployment in the EPA’s illustrative compliance modeling or AEO projections represents an ‘overestimation’ of building block 3 target generation, but rather is indicative of lower-cost emission reduction opportunities available for compliance. This point is reinforced by observing that the cost of compliance, expressed on a $ per ton basis in the Regulatory Im pact Analysis (RIA), is significantly lower than the cost-effectiveness of building block 3, as described in the preamble. The higher cost RE opportunities identified under building block 3 wer e simply not required to demonstrate compliance. This does not mean those opportunities did not exist or were not cost-effective, as defined by the EPA in the preamble. Additionally, the EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the pr eamble and in the GHG Mitigation Measures
TSD.

The following are summaries of the specific public comments under this comment:

Commenters opined that the EPA has overestimated re newable energy growth by 2029 and its impact on annual growth.248

Several commenters stated the assumptions and metho dology employed by EPA to predict renewable generation levels in Building Block 3 res ult in 522,723 GWh of national renewable generation in 2029 that is included in the state go als. Commenters stated that when one compares this target to the EIA's Annual Energy Outlook (AEO ) 2013, as well as EPA's IPM results projecting the consequences of compliance with Opti on 1 under a state-focused compliance approach, EPA's 2029 estimate ranges between 36 and 47 percent higher than these two modeled
estimates. Commenters stated this overestimation ha s been pointed out by NERC, which has raised reliability concerns. Commenters also stated EPA's overestimation is reflected in its assumed average annual growth in renewable generati on. Commenters stated for the purposes of Building Block 3, average annual growth in renewabl e energy generation is projected at 7.1 percent between 2020 and 2029, compared with both A EO and IPM's projections of a more modest 1.5 percent and 1.1 percent for the same tim e period, respectively. Commenters asserted that, to put EPA's error into perspective, AEO's pr ojected average annual growth in the nation's total electrical generation for the 2020 to 2029 ti me period is expected to be 0.7 percent.

Commenters stated it should be noted that IPM incorporates AEO 2013 RPS in its Base Case
v.5.13. Commenters stated the AEO 2013 and IPM mode ling results are similar, not only because IPM incorporates AEO RPS, but also because IPM utilizes AEO 2013 projections of future electrical demand (adjusted downward by EPA to represent its goals for reduced demand through energy efficiency measures). Commenters sta ted the reason EPA's renewable energy generation levels are below both AEO and IPM prior to 2025 is that EPA does not apply its regional growth factors until 2017.

Commenters expressed that comparing some EPA state- specific estimates with a comparable regional estimate from AEO 2013 shows the same over estimation in state renewable generation. For example, commenters compared EPA's predicted Al abama and Georgia renewable generation levels to those from AEO 2013 for the SE RC Reliability Corporation - Southeastern (SERC-SE), which includes most of Alabama and Georg ia, plus a small section of eastern Mississippi and the Florida Panhandle. Commenters s tated the projected 2029 renewable generation levels in EPA's state goal calculations for Alabama and Georgia are almost 42 percent higher than AEO 2013 levels, even though SERC-SE in cludes a larger geographical area. Commenters opined that, but more importantly, AEO S ERC-SE renewable generation levels are projected to increase only 2.0 percent annually bet ween 2020 and 2029, whereas the target generation levels used in Building Block 3 for EPA' s state goal computation are designed to increase between 2020 and 2029 by an astronomical 1 1.4 percent per year.

Commenters stated EPA has significantly overestimat ed state renewable generation used in Building Block 3 and if one corrects for this overe stimation, individual states' 2030 Final Goals
and 2020-2029 Interim Goals would increase. Comment ers stated as an example of such a correction, the commenters utilized EPA's approach to estimate future renewable generation for Alabama and Arkansas using revised annual growth ra tes. Commenters stated their revised 2012 to 2029 regional annual growth rates were based upo n AEO 2013 regional renewable generation levels for SERC-SE (Alabama) and SERC-Delta (Arkans as). Commenters provided a table which illustrated a difference between EPA's region al growth rates and those calculated from AEO 2013, as well as the resultant 2029 renewable g eneration. Commenters stated that using growth rates derived from AEO 2013 would significan tly reduce the level of renewable generation that would be incorporated into Building Block 3 for the year 2029. Consequently, the249

commenters stated, less renewable generation will b e incorporated into the denominator for both Alabama and Arkansas, thereby increasing each state 's 2030 Final Goal.

Commenters stated EPA's BSER determination is not f easible or adequately demonstrated in the Southeast. Commenters stated EPA developed regional renewable energy generation targets based on state-level RPS, and EPA's methodology ass umes all states in each region can achieve by 2029 the average of the 2020 requirements of sta te-level RPS in that region. Commenters stated that EPA's methodology, however, is fatally flawed, producing state-level renewable energy generation targets that are neither feasible nor adequately demonstrated. Commenters
stated there are numerous flaws exist in EPA's meth odology to establish regional- and state-level renewable generation targets. Commenters stated EPA arbitrarily applied regional annual growth factors to each state's historical (2012) renewable energy generation level. Commenters stated the annual renewable energy growth factor prescribe d to the Southeast region is an overly aggressive 13 percent. Commenters stated EPA provid es no documentation to support this annual growth level. EIA-based modeling projections depict the infeasibility of EPA's growth assumption for the Southeast. Commenters stated EIA 's most recent Annual Energy Outlook 2014 (AEO2014) contained results from 30 distinct s cenarios to illustrate a range of potential outcomes under different circumstances, and not one of the 30 scenarios analyzed by EIA exceeds a 4.5 percent average annual growth rate of renewable energy generation over the modeling horizon (2012-2040) in the SERC Southeast region. Moreover, the commenters stated, the EIA scenarios most likely to incentivize the de ployment of renewable energy generation - the low renewable technology cost and $25/metric ton pr ice on CO2 scenarios - only project 4.5 percent and 3.3 percent average annual growth rates for the SERC Southeast region.

Commenters stated that comparing EPA's state-specif ic renewable energy estimates with SERC Southeast AEO2014 regional estimates shows EPA sign ificantly overestimated renewable energy generation. Commenters compared EPA's projec ted Alabama and Georgia renewable energy generation levels to those from AEO2014 scen arios for the SERC Southeast region. Commenters stated the SERC Southeast region include s most of Alabama and Georgia, in addition to a small portion of southeastern Mississ ippi and the Florida panhandle. Commenters stated EPA's projected 2029 renewable energy genera tion for Alabama and Georgia are higher
than all of EIA's AEO2014 scenarios for the entire region, even though the SERC Southeast region includes a larger geographic area.

Commenters pointed out that the EPA assumes renewab le energy growth of 86 percent from 2020 to 2030; this assumption exceeds the Agency's own modeling results. Commenters stated that the EPA's modeling of the least cost strategy depicts 325 TWh of non-hydro renewable generation by 2030, but the EPA set state CO2 rates assuming 525 TWh -- almost 33 percent
more. Commenters further stated that the EPA's assu mptions ignore each state's economically
reasonable resource limitations and the cost effect iveness of each type of renewable source. Commenters pointed out that RE growth is dependent on permitting, financing, transmission access, and technical challenges posed by integrati on of intermittent electricity sources into the grid. Commenters asserted that the EPA has not take n these factors into account. Commenters also noted that many RE sources are intermittent, s o their performance varies seasonally and daily. Commenters also stated that the EPA's propos al involves many implausible assumptions about future energy demand, dramatic shifts in gene ration sources, the addition of intermittent RE generation sources, and reductions in energy use in 48 states.250

Comment 2: Commenters stated that the EPA's approach for dete rmining emission reduction potential of RE does not account for demonstrated g rowth in states over the last several years which results in overly conservative targets (the U CS demonstrated growth approach is discussed).

Response 2: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The resources and data prov ided in this comment were valuable in finalizing the building block 3 methodology, partic ularly in reevaluating the cost and performance assumptions of onshore wind and solar t echnologies. The final methodology for building block 3 is described in section V.E of the preamble and in the GHG Mitigation
Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated that the proposed rule is overly conservative with respect to the expected level of renewable energy growth given historical t rends.

Commenters stated that under the proposed rule 522 TWh of renewable energy generation is expected nationally by 2029; this constitutes 13 pe rcent of 2012 net electric generation or 11.5 percent of EIA's projected 2029 net electric genera tion in the Reference Case of the 2014 Annual Energy Outlook. Commenters stated historical growth rates in renewable energy generation and the pace of improvements in technology performance and cost over the last decade indicate a high likelihood that renewable energy generation wi ll continue to grow quickly. Specifically, the commenters noted that net renewable generation in t he U.S. grew 176 percent from 2002 to 2012. Commenters further stated that as such, the t argets in the Proposed Rule are overly conservative with respect to the potential for rene wable generation growth over time.

Commenters stated that in establishing a regional g rowth rate, EPA used unnecessary constraints that limited the pace of renewable energy growth. C ommenters stated EPA's approach generated growth rates well below what has been demonstrated in the last several years and below what is achieved in most projections for the next decade. C ommenters stated that, for example, the top 16 states in solar deployment all grew at growth ra tes higher than 40%, with 11 states growing at rates above 100%, between 2009 and 2013. Commenters also stated that according to EIA data, the top 16 states in wind development have all expe rienced growth at rates higher than 15%, with a national growth rate of 30%, sustained over a lon ger period between 2006 and 2013. Commenters stated that in contrast, only one region in EPA's Proposed Approach is expected to meet a growth rate above 15% (East Cent ral, 17%) in EPA's target- setting. Furthermore, Commenters stated, when setting a grow th rate EPA should rely on the most recent available capacity data, and should not ignore new and under-construction capacity. Commenters asserted that renewable generation is quickly growi ng to meet and exceed state RPS requirements, and states with those standards have demonstrated that the levels required by these standards are both feasible and economic, and as su ch, assumed growth rates should more closely resemble the impressive growth from leading states during the last decade.

Commenters stated that EPA's approach for determini ng emissions reduction potential of renewable energy fails to account for demonstrated growth in states over the last several years,251

which produces overly conservative targets which ar e already being exceeded by several states. Commenters urged the EPA to assume a rate of renewable energy deployment that is more consistent with recent historical rates of deployme nt and to adopt the UCS' Demonstrated Growth approach; this approach calculates national average renewable energy benchmark growth rate of 1 percent of annual electricity sales based on actual state data from 2009 to 2013 from
EIA. Commenters stated that for states below the be nchmark, the EPA should assume they can gradually ramp up to 1 percent by 2020, and for the leading 15 states, the EPA should assume they can continue at their 5-year average rate up t o 1.5 percent per year. Commenters noted that this approach would expand the role that renewable generation can play in reducing carbon emissions. Commenters discussed renewable growth in the state of Alabama under the proposed
rule. Commenters noted that the EPA assumes that Al abama will have no growth in renewable generation between 2012 and 2017; however, Alabama' s renewable investments have increase since 2012, and it is expected to further investmen ts before 2017. Commenters noted that currently, Alabama Power's recent wind procurements provide more than 1.6 million MWh of renewable generation, an increase of 60 percent ove r 2012 levels. Therefore, commenters asserted that Alabama's starting point will be much higher than the EPA assumes, and showing that the state is capable of achieving annual growt h rates much higher than 13 percent. Commenters stated the EPA's assumptions are overly conservative and fail to recognize Alabama's technical potential for renewable generat ion. Commenters urged the EPA to update its projected renewable generation targets for Alabama both in the final rule and again in 2017. Commenters stated that Alabama's renewable target s hould be based upon actual renewable generation levels in 2017 as well as its abundant p otential for future growth; the UCS
Demonstrated Growth determined that Alabama could a chieve 10.6 percent versus the EPA's 9.3
percent.

Comment 3: Commenters requested that the EPA set regional tar gets based on 2030 RPS targets and reasonable growth rates.

Response 3: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters suggested EPA set 2030 regional target b ased on 2030 RPS targets and reasonable growth rates. Commenters stated EPA uses 2020 goals in states' RPS within a region to set 2030 targets, and includes no justification as to why st ates should only be expected to meet 2020 targets by 2030, rather than 2020. Commenters state d this approach is not consistent with EPA's justification for using state RPS policies in the f irst place; if states in a region have determined that a certain level of renewable generation is ach ievable by 2020, shifting that target back 10 years does not constitute the best system of emissi on reduction that is demonstrated.
Commenters stated EPA should instead use each state 's 2030 RPS requirements to set 2030 targets, rather than using 2020 RPS requirements to set 2030 targets. Commenters stated in that252

way, the calculation of achievable renewable genera tion as part of Block 3 would not ignore the commitment by policymakers in some states to add re newable generation after 2020.

Commenters further stated that for states with requ irements that do not continue to increase through 2030, the Best Practices Approach should de termine a reasonable growth rate based on
historical market trends to estimate an achievable level of renewable energy growth between the last year in which a state has an increasing requir ement and 2030. Commenters stated one viable approach to calculating growth rates utilizing mark et data over the last five years was recently outlined in the brief titled, Strengthening the EPA 's Clean Power Plan, authored by the Union of
Concerned Scientists.

Comment 4: Commenters opposed the EPA's use of regions to set RE targets.

Response 4: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.
The following are summaries of the specific public comments under this comment:

Commenters stated that EPA’s use of regions to set RE targets is arbitrary and capricious. Commenters provided the following discussion:

"Under the Proposed RE Approach, a state's 2029 RE target is based on the 2020 RPSs of states in the same EPA-determined "region." EPA's use of t hese regions to determine RE targets is unreasonable because the methodology does not resul t in goals that logically reflect the amount
of renewable resources in each state.

EPA proposes that a state's 2029 RE target is deter mined by averaging the 2020 RPSs of states in the same region. For example, EPA set the North Cen tral Region 2029 RE target at 15 percent: the average of the 2020 Illinois (16 percent), Mich igan (10 percent), Minnesota (30 percent105), Missouri (10 percent), and Wisconsin (10 percent). EPA determined the constant rate at which each state would need to increase its RE generation each year to reach the regional RE target if these rates are applied in the period of 2017-2029. The constant rate of annual RE generation increase is called the "growth factor." The growth factor for the North Central Region is 6 percent. Id. EPA applied the region's annual growth factor to each state's 2012 RE generation level to calculate a new level of RE generation forthat state in the initial year of 2017. This calculation was repeated for each year in the 2018- 2029 period, such that the 2018 RE goal would be the 2017 RE multiplied by 6 percent, the 2 019 RE goal would be the 2018 goal multiplied by 6 percent, and so on.

This methodology is unreasonable because EPA did no t group states with comparable RE
resources. The failure to consider the circumstance s of each state results in arbitrary and capricious RE targets. For example, the South Centr al Region includes Louisiana, Arkansas, Nebraska, Kansas, Oklahoma, and Texas. The only sta te in the region that has an RPS is Kansas. If Kansas were not included in the region, the othe r states in the region would have an RE goal of zero percent, or ten percent (using the methodology applied for Hawaii and Alaska). However,253

because Kansas is included in the South Central Reg ion, EPA applied a growth factor of eight percent to the entire region.

This growth factor is imposed without consideration of the existing mix of RE resources in each state, which are situated very differently. For exa mple, the NREL estimates that Texas ranks number one in the country for wind energy potential , based on potentially developable wind capacity. Kansas ranks number two and Nebraska rank s number four. By comparison, Arkansas ranks 28 and Louisiana ranks 29. The disparities ar e due to the weather and geography
characteristics intrinsic to each state. The econom ic potential for developing wind capacity and generation is based on the amount of windy land are a available for development within a state. Areas with annual average wind speeds around 6.5 me ters per second and greater at 80-m height and showing capacity factors of 30 percent or great er are generally considered to be a resource suitable for wind development. Arkansas and Louisia na have significantly less suitable land for wind development; combined, they have only one perc ent of the available windy land of Kansas, when only geography and weather are considered. The se disparities are not unique to the South Central Region. The disparate wind resources across the county are illustrated in Figure 3. EPA's
failure to consider the actual renewable resources in each state renders its RE targets arbitrary and capricious."

Commenters provided a Figure 3 of wind resources of the United States.

Comment 5: Commenters commented that the EPA's handling of re newable energy (RE) in Building Block 3 is arbitrary.

Response 5: The EPA is not finalizing an approach that relies o n state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.
The following are summaries of the specific public comments under this comment:

Commenters stated EPA's inconsistent treatment of R E in the calculation of state goals and the proposed methodology for demonstrating compliance i s unreasonable. Commenters stated EPA calculated state emission rate goals based on the r egion-wide RPSs and by applying a "growth
factor" to each state to force the state to increas e its RE; however, EPA ignored the reality that the RE that forms the basis for the ultimate RE goa l for some states includes RE that is exported
to other states. Commenters stated at the same time , EPA proposes to allow out-of-state endusers to count that RE towards compliance, even if that user serves load in a different state from where the RE is generated. Commenters stated the ef fect of this approach is that the RE goals for RE-exporting states are disproportionately high bec ause EPA has ignored the exported RE in applying the growth factor. Further, the commenters stated, since the RE-exporting state would not be allowed to rely on the exported RE for demon strating compliance, EPA would impose on such states higher prospective RE obligations to ac hieve the emission rate goals. Commenters stated, for example, the majority of non-hydroelect ric RE generated in Oregon is used to comply
with California's RPS. Commenters stated if Califor nia is allowed to count this RE toward254

compliance, Oregon will be faced with a more string ent compliance burden, especially with regard to the interim goal due to the accelerated g rowth factor.

Commenters stated that EPA believes that every stat e should adopt RPSs to increase their use of renewable resources and states that already have RP Ss should adopt more aggressive standards. Commenters stated that the amount of renewable powe r that the EPA believes can be brought online within the compliance timeframe is unreasonable. Commenters stated that the EPA's projections assume that the country can increase th e annual rate of growth of new renewable resources over projected growth rates by a factor o f five. Commenters finished by stating that the notion that the country can quintuple an already un precedented rate of renewable growth lacks a
rational basis.

Comment 6: Commenters provided general comments on the timing to implement building
block 3.

Response 6: Building block 3 target generation is not assumed to increase beyond expected baseline performance until the first year of compli ance in 2022. Further, the phasing in of the building block 3 target generation level over time ensures adequate lead time for investments and planning necessary to begin to integrate higher lev els of RE. The EPA addresses this and other considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (se ction V.E) and GHG Mitigation Measures
TSD.

The following are summaries of the specific public comments under this comment:

Commenters provided opinions on the timing to imple ment Building Block 3. Commenters stated that the proposed rule underestimates the na tion's capacity to move quickly to a fully renewable energy economy; the commenters further no ted that the proposed rule should shape the direction of the rapid conversion to renewable. Conversely, commenters stated that the EPA wishes into existence the necessary infrastructure required for Building Block 3 on an arbitrary
schedule.

Comment 7: Commenters stated that municipal utilities will re quire additional time to procure RE resources to meet building block 3 levels.

Response 7 : Building block 3 target generation is not assumed to increase beyond expected baseline performance until the first year of compli ance in 2022. Further, the phasing in of the building block 3 target generation level over time ensures adequate lead time for investments and planning necessary to begin to integrate higher lev els of RE. The EPA addresses this and other considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (se ction V.E) and GHG Mitigation Measures
TSD.

The following are summaries of the specific public comments under this comment:255

Commenters asserted that municipal utilities will n eed additional time to procure renewable energy resources to meet the levels in Building Blo ck 3. Commenters stated that state plans should have enough flexibility to allow municipal u tilities time to procure renewable generation
in an economical manner. Commenters further stated that if this does not occur, then Iowa's families and businesses may be adversely impacted b y the costs. In order to avoid adverse impacts, the commenters stated that the cost of pro curing renewable resources must be spread over a longer period of time.

Comment 8: Commenters commented on the EPA's regional RE grow th rates.

Response 8: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.
The following are summaries of the specific public comments under this comment:

Commenters stated that starting in 2017, EPA applie s regional annual growth factors to 2012 generation levels for all states in a region to pre scribe regional goals. Thus, commenters stated
EPA assumes that renewables in all states within a region will grow at the same rate to reach their targets, and will maintain their relative ran ks in renewable penetration. Commenters also stated the proposal also stipulates an interim goal that averages the state's RE performance level
from 2020-2029. Commenters stated that unlike treat ment of renewable generation in state RPSs, the proposal's goals only recognize renewable resou rces developed within state borders. Commenters stated a state's target goal is determin ed by using its initial 2012 RE level multiplied annually by a calculated growth factor to reach the 2029 state target. Commenters stated that because electric systems are integrated, many renew ables are developed to meet demand and/or RPS requirements in neighboring states and benefit from the grid balancing and other integration services inherent in our interstate system. Comment ers stated the proposal's treatment of renewable electric generation that is transmitted a nd distributed interstate is arbitrary and capricious. Commenters further asserted that the pr oposed rule is, in general, inconsistent and arbitrary and capricious in its treatment of all ty pes of generation that serve multiple states.

Commenters stated that existing RPS programs are ty pically percentages of retail sales within a state, but resources used for RPS compliance may no t be limited to resources physically located
within that state. Commenters further stated that t his illustrates the disconnect between RPS requirements and Building Block 3, which applies an RPS requirement as a percentage of generation physically located within a state. Comme nters provided that they do not support the establishment of regional potential RE targets sinc e states in a designated region would have no control over the policies and actions of others tha t could ultimately impact their own compliance. Commenters recommended that the EPA keep the Buildi ng Block 3 assumptions that RE targets and credits are derived from in-state generation so urces, and states should be allowed to use outof-state renewable energy certificates for complian ce under 111(d) and to recalculate their renewable energy targets to account for the import and export of energy between states.
Commenters stated that this would avoid double coun ting RE sources for compliance, and the continued exchange of renewable energy between stat es would not be further restricted.256

Commenters noted that the EPA's RE growth rate is u nsupported by market analyses or realities of the generation market. Commenters stated that th e EPA determined that Indiana had 3 percent of 2012 generation from RE, and set a future targetof 15 percent by grouping Indiana in the North Central region with states that have 2020 RPS requirements and applying an average of these RPS requirements to all states in the region. Commenters stated that the EPA arrived at the 110,786,236 MWh for 2029 by multiplying the 2012 ge neration by 15 percent. Commenters stated that each state in the North Central region should have a 6 percent growth rate applied to its 2012 RE generation beginning in 2017. Commenter s stated that the 2029 RE generation goal is 7 percent of 2012 generation. Commenters noted t hat Hoosier Energy has voluntarily invested significantly in RE facilities even though Indiana has no RPS, and commenters listed examples
of these investments. Commenters noted that it is n ot clear if landfill gas and coal bed methane will be considered for RE compliance with the rule. Commenters also noted that the EPA should clarify if RE generation from Illinois can be credi ted for compliance by Hoosier in Indiana, otherwise utilities and cooperatives with out of st ate RE will lose the value of these investments made in good faith and that were made voluntarily.

Comment 9: Commenters stated that the proposed rule requires states that are early-acting in terms of RE to meet more stringent goals.

Response 9: The EPA is not finalizing an approach that relies on the amount of existing RE to set state-specific target generation levels under b uilding block 3. The final building block 3 methodology is described in detail in V.E of the pr eamble and in the GHG Mitigation Measures
TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated EPA's proposed goal calculation m ethodology also requires early-acting states to meet more stringent interim goals, and on a faster timeline than they otherwise would have been required to meet. Commenters stated the r esult of EPA's methodology for using regional annual growth factors to set interim and f inal goals is that states that had high levels of RE during the baseline period (i.e., those that had taken early action to institute an RE program) are required to meet more stringent interim goals o n a faster timeline. Commenters provided the following examples and discussion:

"Minnesota's RPS requirement for Xcel Energy of 30 percent makes the North Central Region 2029 RE target higher than it would have been had M innesota not legislated an RPS. Moreover, Minnesota's RE generation level (which, in this cas e, is the same as the 2029 RE target) is determined by multiplying the region's RE target (1 5 percent) by Minnesota's 2012 total generation (52,194 GWh), which equals approximately 7,889 GWh. Even though Minnesota's 2012 RE generation (9,453 GWh) exceeds this goal, E PA added 7,889 GWh to the denominator of Minnesota's BSER calculation beginning in 2020 a nd running through 2029. If Minnesota's 2012 RE were less than the state's 2029 goal, Minne sota's annual RE goals would have been determined by multiplying Minnesota's 2012 RE by th e region's annual growth factor (6 percent) beginning in 2018 to determine Minnesota's RE targe ts from 2020 through 2029. The growth257

factor would be utilized through 2029 unless Minnes ota hit its maximum target in advance (at which point the growth factor would no longer be us ed).

Because Minnesota's 2012 RE exceeds its 2029 goal, the annual growth factor does not apply and the state is offered no ramp-up period. Instead , Minnesota's 2020 generation level is the same as its 2029 RE target. Minnesota has no cushio n to minimize the impact of the other emission reduction requirements the BSER calculatio n contemplates, including the unrealistic coal plant heat rate improvements and increased nat ural gas dispatch. Minnesota's reward for early action on RE is a more stringent final perfor mance goal that must be reached in 2020.

Idaho also has high baseline levels of RE generatio n. As EPA has recognized, Idaho's 2012 renewable generation (including hydropower) exceede d 87 percent of total generation. The Proposed Rule would require that Idaho even further expand RE within its generation mix. The presumption that Idaho should be expected to increa se its RE generation to levels above 91 percent imposes unreasonable obligations on the sta te. Indeed, EPA's decision to ignore hydropower in its guidance, except for the purpose of driving more, non-hydro RE through Building Block 3, is on its face arbitrary and capr icious."

Commenters noted that the use of a growth rate thatis a certain percentage of existing RE generation leads to inequities among states by requ iring more growth from states with existing RE. Commenters stated that the EPA should apply a g rowth rate that does not depend on a state's starting point if the EPA continues to rely on a gr owth rate. Commenters listed a linear growth rate applied equitably to all states as an example of a growth rate measure that the EPA could use. Commenters requested that the EPA consider the practical limitations on growth of RE including the requirements to integrate new RE into transmission/distribution systems, the difficulty of obtaining regulatory approval for new RE, and the time to build new RE generation

sources.

Comment 10: Commenters argued against the EPA's use of prior r enewable development trends to set the RE goals for Building Block 3 as an indi cation of future growth.

Response 10 : The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

. Response 10: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The BSER is forward-looki ng in identifying cost-effective opportunities for emission reductions from 2012; however, the cos t and availability of these emission reduction opportunities is the result of many facto rs, including previous actions. The EPA
addresses considerations related to the technical f easibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures
TSD.

The following are summaries of the specific public comments under this comment:258

Commenters opined that the EPA has not sufficiently assessed the technical challenges associated with the increased penetration of renewable resources. Commenters stated that in both of the Agency's proposed approaches, the RE goals are based, in part, on prior renewable development trends, yet the prior growth of renewab le resources is not necessarily an indication of future growth. Commenters stated in some cases, the most rapid and cost-effective gains are achieved in the early years of development and in t hose areas with the greatest resource potential and the greatest potential to deliver and integrate these RE resources (i.e., available transmission). In addition, the commenters stated m any of the prime areas for renewable development are located far from load centers and w ill require new transmission to be built to deliver the power to load centers. Commenters state d that NERC noted that EPA's "analysis assumes that adequate transmission capacity is avai lable to deliver any resources located in, or transferred to, the region," but that "[g]iven the significant changes and locations anticipated to occur in the resource mix, it is likely that additi onal new transmission, or transmission enhancements, will be necessary, and required to tr ansport the amount of renewable generation coming online, particularly in remote areas." Comme nters stated a typical transmission line requires at least five years or more to site, permi t and construct, particularly if it crosses federal or tribal lands. Commenters stated large-scale tran smission projects, such as high-voltage overlays and those needed for renewable integration can involve even longer lead times. Commenters stated this does not include time requir ed for ESA permitting and mitigation. In addition, the commenters stated, given the likely c hanges in the operational status of many existing fossil-based units, many studies may need to be conducted to identify where new and upgraded transmission will be needed. Commenters ci ted NERC that "[l]ong lead times for transmission development and construction require l ong-term system planning, typically a 10-15 year outlook." Commenters stated the addition of in cremental renewables to the grid (especially if geographically far from load) potentially will c ome at an increasingly higher cost.

In addition, the commenters stated both of EPA's ap proaches are predicated on the assumption that large quantities of new renewable generation c an be integrated into the grid. Commenters
stated EPA has not accounted for the technical chal lenges related to integrating and managing large quantities of renewables into the existing tr ansmission and distribution systems. Commenters stated these challenges grow as the leve l of RE penetration increases. Commenters further stated that this effect has already been ob served in Hawaii and Germany, where these technical challenges recently have slowed the pace of growth of renewables and have limited their cost-effectiveness as additional grid upgrade s are needed to accommodate increasing amounts of RE, and quoted the Hawaii PUC:

"The Commission believes it is unreasonable to expe ct that the high growth in distributed solar PV capacity additions experienced in the 2010-2013 time period can be sustained, in the same technical, economic, and policy manner in which it occurred, particularly when electricity usage is declining, distribution circuit penetration leve ls are increasing, system level challenges are emerging and grid fixed costs are increasingly bein g shifted to non-solar PV customers."

Commenters asserted that, in order to set realistic RE generation goals, EPA must take into account the challenges associated with increased pe netration of renewables when setting RE generation targets under section 111(d). Commenters stated this may entail moderating the growth of state RE goals in the later years of the proposed interim compliance period.259

Commenters claimed that the EPA's proposal is flawe d since is does not consider that the most achievable growth in renewable generation has alrea dy been achieved in Texas. Commenters opined that assuming a large growth of renewable ge neration from the 2012 baseline is flawed
since it does not consider the incremental costs an d constraints of continued growth. Commenters stated that Texas is already utilizing t he sites that offer the best balance of
investment in transmission infrastructure and wind resource area for renewable generation, and Commenters described the EPA's projections as aggre ssive, unreasonable, and unsupported.

Comment 11: Commenters stated that RPSs are not an appropriate mechanism for measuring future potential RE growth.

Response 11: The EPA does not believe that a lower level of RE deployment in the EPA’s illustrative compliance modeling indicates that bui lding block 3 target generation is too costly,
but rather is indicative of lower-cost emission red uction opportunities available for compliance. This point is reinforced by observing that the costof compliance, expressed on a $ per ton basis in the Regulatory Impact Analysis (RIA), is signifi cantly lower than the cost-effectiveness of building block 3, as described in the preamble. The higher cost RE opportunities identified under building block 3 were simply not required to demons trate compliance. This does not mean those opportunities did not exist or were not cost-effect ive, as defined by the EPA in the preamble. The EPA is not finalizing an approach that relies on st ate RPS requirements to set a regional target for RE. The final building block 3 methodology is d escribed in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters noted that RPS requirements have already been established as poor indicators of potential and likely future RE growth targets. Comm enters noted that the EPA's approach assumes that RPS requirements are achievable and th at states have already assessed feasibility and costs of adopting and achieving RPS requirement s. Commenters noted that the state of Tennessee would need to increase its RE generation by a factor of five from 2012 levels to meet the EPA's proposed goal. Commenters stated it appears that the EPA's proposed methodology does not account for progress towards achievability of RPSs that are utilized in regional RE growth calculations. Commenters stated that they di sagree with the EPA's proposed methodology for RE target levels for the above reas ons.

Commenters opined that the methodology of using Nor th Carolina's RPS as a proxy for the entire Southeast and using it to develop and apply a growt h rate to the region is flawed. Commenters noted that this methodology rewards states that hav e been slow to explore renewable energy, and
states that have made considerable investments in r enewables are expected to grow significantly more. Commenters provided an example to display thi s flaw: “States A and B are in the same region and have a growth rate of 1 percent. State A had 10 percent of its generation from renewables in 2012, but State B only had 0.1 percen t. Building block 3 methodologies applies the same growth rate to both states' 2012 renewable levels, so after 10 years, State A will be expected to increase to 25.9 percent of total gener ation coming from renewable, but State B will only need to have 0.259 percent of total generation from renewables.” Commenters stated that260

since State A had already invested in renewables, i t was asked to increase its renewable generation 100 times more than State B. Commenters noted that applying a growth rate to a very small level of renewable generation results in litt le growth, but applying the same growth rate to a large amount results in large growth. Commenters stated that the EPA's methodology is not rational; one expects states to pick the low hangin g fruit first, so states that have already invest i n renewable energy have already utilized the cheapest , most reliable, and most abundant renewable
resources first. Commenters noted that it is theref ore more difficult for this state to grow. However, Commenters noted that states with little t o no investment in renewable have not yet harvested the low hanging fruit, so they can more e asily grow. Commenters further noted that Building Block 3 methodology demands states with si gnificant investments to grow even more rapidly, and states with little to no investment re main close to previous levels. Commenters asserted that this is 'unrealistic, economically in efficient, and truly discriminatory to selected ratepayers.' Commenters stated that proper methodol ogy encourages growth in areas that have not yet picked the low hanging fruit.

Commenters stated that EPA is proposing that states can increase nationwide renewable energy generation from 217,868 GWh in 2012 to 522,723 GWh in 2029, with an annual growth rate from 2020 to 2029 of roughly 7.1 percent. (EPA RIA) Commenters stated that the EPA's own Base Case modeling predicts much less renewable ene rgy growth under status quo conditions, with only about 350,000 GWh in 2029 and an annual g rowth rate of 1.7 percent. Commenters stated that may be able to incrementally increase r enewable energy generation through time, but
it is unreasonable for EPA to assume that states ca n increase renewable energy generation nationwide by nearly 250% by 2029.

Commenters asserted that the EPA's own IPM runs dem onstrate that EPA's Building Block 3 targets are too costly and do not represent realist ic estimates of the renewable energy potential. Commenters stated IPM is able to project least-costcapacity expansion and electricity dispatch while also accounting for constraints due to fuel s upply, transmission, dispatch, and reliability. Commenters stated EPA performed IPM modeling runs t o assess how states would comply with the proposed emission guidelines under both state-f ocused and region-focused compliance approaches. Commenters stated IPM predicts that und er both the state-focused and regionfocused compliance approaches, renewable energy gen eration will only reach 356,063 GWh by 2029, and will grow at an annual rate of 1.1 percen t from 2020 to 2029. Therefore, commenters said, the results of these IPM runs constitute EPA' s estimate of the power sector compliance with the proposed guidelines at the least cost possible, within the constraints EPA imposes on the model. Commenters argued that the IPM results sugge st that aggressive growth in renewable energy generation is so costly that states are only able to achieve modest incremental increases
above business as usual. Commenters stated this mea ns states will need to rely on the other three building blocks in order to comply with the emissio n guidelines, increasing the overall cost of compliance and elevating EPA's cost estimates of al l building blocks in the proposal.

Commenters stated EPA should not use regional RPS t argets as the basis for determining reasonably achievable future renewable energy growt h; EPA should instead use the alternative RE approach that the EPA included in the proposal.261

Comment 12: Commenters commented on the ability of states to m eet the growth rate of renewable energy assumed by the EPA in the proposed rule.

Response 12: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The BSER is forward-looki ng in identifying cost-effective opportunities
for emission reductions from 2012. The EPA addresses considerations related to the tec hnical feasibility and associated grid integration costs o f significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters remarked on the projected growth rate fo r the state of Alabama. Commenters stated that the EPA assumes Alabama's renewable generation in 2017 will be the same as in 2012. In 2012, Alabama's non-hydro renewable generation was 2 percent of total generation, but, by 2017, the state will have 1.5 times more than that because of out-of-state wind generation and planned forays into solar power. Commenters further stated that this indicates that the EPA assumed annual growth rate of 13 percent is not unr easonable and that Alabama is likely to exceed that rate. Commenters noted that continuing cost declines have made renewable investments a great deal for utilities' customers. Commenters stated that the EPA fails to capture cost declines in its assumptions. Commenters furthe r noted that recent wind purchases by Alabama Power help to displace higher-cost energy w hich the company would otherwise produce using other resources.

Commenters stated that the EPA should remove or rel ax artificial limits on growth rates and that the EPA assumes that state renewable generation lev els off after reaching the regional targets. Commenters also stated that the EPA should set grow th rates to what the leading states are achieving. Commenters noted that this way, growth r ate is based on what states are already achieving and not on policy mandates.

Commenters stated the growth of renewable energy atthe rate determined by EPA under its proposed approach is adequately demonstrated. Comme nters stated EPA reasonably relies most heavily on those states that have performed careful studies of their renewable energy potential and, because renewable energy generation capacity g enerally is similar in a given region, EPA reasonably extrapolates from existing state program s. Commenters stated that further, the fact that a state does not have an RPS policy does not m ean it has not or cannot achieve significant growth in the generation of zero-emission renewable energy. Commenters stated one study found
that some states without an RPS have been able to i ncrease their percentage of in-state renewable energy production by 6.1 percent, even more than so me states with ambitious RPS standards. Commenters stated that States with RPSs have, on av erage, set a goal to obtain 20 percent of their 2020 generation from renewable resources. Com menters also stated that studies reveal many readily-accessible renewable energy resources that can be developed at reasonable cost. Commenters stated this is further supported by the ability of some states to achieve their renewable energy targets ahead of the RPS complianc e period. Commenters stated that in fact, Texas met its 2025 goal of 10,000 MWs in 2009. Comm enters stated that the general compliance with RPS targets has also been consistently high at well above 90 percent.262

Comment 13: Commenters stated that the EPA should reformulate Building Block 3 in accordance with the Union of Concerned Scientists ( UCS) approach.

Response 13: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters commented on the RE growth in the state of Wisconsin. Commenters cited a July 2012 NREL report found that there is enormous techn ical potential for renewable energy in the state of Wisconsin. Commenters noted that the repor t found that Wisconsin has the potential for approximately 3,523 GW of installed capacity and 6, 347 TWh of generation capacity. Commenters stated that it is possible for Wisconsin to expand renewable generation to 11 percent of total generation by only relying on in-s tate resources. Commenters stated that Clean Wisconsin argues that Wisconsin can achieve energy growth greater than what the UCS "Demonstrated Growth Approach" projected. Commenter s stated that by calculating the average incremental growth in renewable energy generation b etween 2009 and 2013 for each state, a true account of the renewable energy growth for that sta te could be used in goal setting for that state. Commenters noted that Wisconsin experienced RE grow th rate of 10.85 percent between 2009 and 2013; if Wisconsin maintained this growth rate starting in 2020, then Wisconsin could achieve RE generation levels of 9.873,881 MWh by 20 29, which is higher than the EPA calculated growth rate. Commenters further stated t hat the average growth rate is based on historical, demonstrated practice, and in the absen ce of RE generation growth for a state, a regional average could be used. Commenters asserted that a minimum renewable energy growth rate similar to the UCS rate would be appropriate f or states that have not invested in renewable

energy.

Commenters stated that the EPA should consider a pr oposal by the UCS that reformulates RE components of building block 3. Commenters stated t hat the UCS approach approximately doubles the amount of generation nationwide by 2030 without incurring significantly greater costs. Commenters stated that they believe that the reformulation of building block 3 is superior to either of EPA's approaches, that it corrects fla ws in the EPA's proposal for building block 3, and that they support UCS's demonstrated growth app roach. Commenters stated that the UCS approach reflects BSER.

Commenters noted that the UCS's Demonstrated Growth Approach has three key features. First, Commenters stated, it is consistent with the EPA's methodology for energy efficiency targets under building block 4 by setting benchmarks for in cremental RE growth in each state (1.0 to 1.5 percent annually of total electricity sales); the b enchmarks are based on demonstrated RE growth from 2009 to 2013, and states are expected to begin meeting their annual growth targets in 2017. The second point noted by the commenters was that t he demonstrated growth approach assumes full compliance with enforceable RPS requirements i n states that have them; states will be required to meet either its benchmark or the requir ement in its RPS program, whichever is greater. The third point noted by the commenters wa s that the UCS proposal accounts for actual and expected RE development in states between 2013 and 2017, so the annual benchmark for a state in 2017 applies the 1.0 to 1.5 percent increm ental growth to the projected 2017 RE263

generation in that state. Commenters stated RE gene ration is expected to reach 23 percent of total electricity sales nationwide by 2030 (excepting hyd ropower), compared to 10 under business as usual and 12 percent under the EPA's building block 3 formulations. Commenters stated that the UCS approach predicts that nine states will reach 4 0 percent and 11 states will meet or exceed 35 percent of RE generation, and they noted that RE ge neration under the EPA's plan will not approach 40 percent. Commenters stated that states with strong renewable resource profiles can meet and exceed 40 percent by 2030, which is back b y evaluations by grid operators which show that they can already manage this level of RE gener ation.

Commenters referenced a PJM study that indicates th at "with adequate transmission expansion and addition regulating reserves," there will not b e "any significant issues operating with up to 30% of its energy provided by wind and solar genera tion." Commenters also referenced a NREL study that found that up to 35 percent of renewable energy can be integrated into the Western Interconnection without requiring extensive infrast ructure changes. Commenters stated that the 40 percent proposed by UCS is not unreasonable, butit may be unnecessary. Commenters stated that the 40 percent issue becomes moot if the EPA c hooses to use a shorter compliance period.

Commenters described how UCS derived the annual gro wth targets for each state. Commenters
stated that the UCS examined EIA data for 2009 to 2 013 to determine the average growth rate of RE among the states; they found that most states in creased their renewable share of electricity sales by 1.0 percent annually. Commenters stated th at the years between 2009 and 2013 are appropriate for use as a benchmark since they repre sent the most recent demonstrated performance of renewable penetrations in the electr icity market thus providing a reasonable set of expectation for continued development, and the i nterval captures much of the historic development spurred by states RPS policies, which i s a key driver of RE growth as identified by the EPA. Commenters stated that the UCS proposal wo uld expect states with annual RE growth less than 1.0 percent during the benchmark period t o begin scaling up their renewable development in 2017 until they meet the 1.0 percentannual growth rate by 2020 and continuing to meet that target each year until 2030. Commenter s stated that the 15 states that met or exceeded that 1.0 percent RE growth between 2009 an d 2013 are expected to maintain their 2009-2013 average growth rate each year between 201 7 and 2030 (or 2025 should a shorter compliance period be adopted). Commenters also stat ed that no state would be expected to sustain a growth rate above 1.5 percent. Commenters repeated that any state with RPS policies which require greater RE development than the UCS t arget growth rates would be expected to meet the requirements of the state RPS.

Commenters also stated that the baseline generation from which each state's RE growth begins in its projected 2017 RE generation. Commenters stated that this is determined by adding projected generation from wind and utility-scale solar projec ts that will be under construction by 2016 to that actual RE generation data from 2013. Commenter s noted that this is more realistic than the EPA's method of assuming zero RE generation growth from 2012 to 2017.

Commenters listed examples of advantages that the U CS approach has over the EPA approach. Commenters noted that the UCS approach accounts for distributed generation ("DG"), which has grown since 2008. Commenters also noted that the UC S approach expects states with RPS targets less stringent than the EPA targets to meetthe RPS targets even if they fail to meet the EPA targets. Commenters stated the last example sta ted that the UCS approach is based on what264

states have actually been achieving in recent years . Commenters stated that the EPA's
formulation in is BSER Commenters stated that the U CS approach reflects BSER.

Comment 14: Commenters recommended that the EPA adopt the Unio n of Concerned Scientists (UCS) Demonstrated Growth Approach for applicable U .S. territories and Indian country.

Response 14: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters requested that the EPA strengthen the CP P by adopting the UCS Demonstrated Growth Approach while accounting for the unique cha llenges posed by the U.S. territories and Indian Country. Commenters noted that emission redu ctions achieved by the CPP could be increased from 30 percent to 40 percent below 2005 levels by 2030 by increasing the share of RE generation.

Commenters suggested that the EPA incorporate final emissions reductions for U.S. territories and Indian country consistent with UCS's comments s pecific to the treatment of states.
Commenters stated that the UCS method would result in significantly more RE generation, and that the addition of this RE generation is achievab le. Commenters opined that the UCS method is a logical outgrowth of the EPA's proposed approach, but the UCS approach yields far greater RE generation levels for BSER through the application of several core components. Commenters listed the first core component to be the setting o f a nation RE growth rate benchmark based on demonstrated growth by states from 2009 to 2013. Th e second core component listed by the commenters is the assumption that there will be ful l compliance with current state RES policies that require certain percentages of electricity to come from renewable sources. The final core component listed by the commenters is that the UCS method accounts for actual and expected RE growth between 2013 and 2017.

Commenters recommended that the EPA expand its supp lemental proposal to the CPP to cover applicable U.S. territories and Indian Country. Com menters provided suggestions for implementing the added areas that account for t heir unique electric generation profiles. Commenters noted that none of the areas covered by the supplemental proposal had documented utility-scale non-hydro renewable generation in 201 2, which is why the EPA modified its proposed approach to bring RE generation above zero percent of retail sales by 2030. Commenters stated that this produces BSER values th at are too conservative; the UCS instead proposed the following calculations for U.S. territ ories and Indian country: the ramp up of annual growth of the RE share of electricity sales begin i n 2017 to equal one percent by 2020; a one percent growth rate be maintained from 2020 to 2030 ; assume that there will be no backsliding so covered areas will achieve the greater of the ab ove growth rate or growth rates implied by their existing policies (for example, Puerto Rico w ould be held to the targets detailed in its existing RPS).265

Commenters stated that the UCS method imposes a cap on renewable generation at forty percent of total electricity sales that would be expanded t o all areas would, for example, limit the amount of renewable energy generation under the UCS Demons trated Growth Approach relative to what the EPA calculated for the Navajo Nation.

In the event that the EPA defers to its alternative approach and does not adopt the UCS approach,
the commenters recommended that the EPA refer to th e UCS comments for a discussion of recommended modifications to the EPA methodologies that would carry over to the U.S. territories and Indian country covered by the suppl emental proposal. Commenters noted that one modification would be to adjust the cap over time a s the CPP is revised and updated to account for RE technology advances, grid integration techni que advances, and falling costs.

Comment 15: Commenters stated that the growth rate for each st ate should be based on the necessary rate of progress to achieve state-level r enewable energy (RE) target.

Response 15: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

. The following are summaries of the specific public comments under this comment:

Commenters questioned why states' RE growth rates are determined by historical 2012 RE generation from other states. Commenters stated the growth rate for each state should be based on the needed rate of progress for that state to ac hieve its state-level RE target rather than the rat e of progress needed for the region to achieve its re gional RE target.

Comment 16: Commenters stated that affected utilities have a r ange of RE options and the
establishment of an RE floor alters the selection o f the most cost-effective generation option

Response 16: The information provided in this comment were valu able in finalizing the building block 3 methodology. There is no RE floor in the fi nal building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated if Building Block 3 remains a com pliance option, affected utilities have within their purview a range of renewable energy (R E) options - utility scale, distributed, or imported resources. Commenters stated all three of these renewable options present a unique set
of issues in order to maximize the benefits of rene wable electricity generation while ensuring state flexibility. Commenters recognized that estab lishing an RE "floor" is one tool to preserve existing RE capacity and advancing technology devel opment, while not inadvertently creating backsliding on RE deployment. Commenters stated how ever, this should not be done at the expense of eliminating the use of cost-effective fo ssil fuel sources. Commenters stated, for example, it is plausible that the renewable capacit y in the state could decrease as aging renewable capacity is replaced with future low-emit ting and cost-effective fossil generation.266

Commenters stated establishment of an RE floor alte rs the selection of the most cost-effective generation option.

Comment 17: Commenters stated that the EPA should take into ac count different renewable generation mixes within states by looking at state historic RE growth and acknowledging growth
limitations.

Response 17: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE at an interconnection level. The
EPA addresses considerations related to the technic al feasibility and availability of regional RE resources in both the preamble (section V.E) and GH G Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated EPA's application of an RPS from a state with a rapidly increasing renewable energy source to a state in which its primary renew able energy source has remained almost flat can result in a significant overestimation of renew able generation capability in the latter state. Commenters suggested EPA take into account differen t renewable generation mixes within states by looking at state historic renewable energy (RE) growth and acknowledging the growth limitations for various types of RE, such as biomas s and wood and wood-derived fuels.
Commenters referenced a letter to EPA from the Arka nsas Attorney General discussing how the state has limited wind potential. Commenters stated that nearly all of the non-hydro renewable energy that Arkansas consumes originates in nearby states. Therefore, commenters stated, EPA's goal setting methodology related to Building Block 3 would require states like Arkansas to invest in renewable energy resources within the state no m atter how inefficient and costly they might be. Commenters stated this is a very expensive prop osed method for compliance, and unless adjusted to reflect state circumstances, does not c onstitute BSER.

Commenters stated that in the Southeast Region, the Agency computed a regional annual growth rate of approximately 13 percent, with a 10 percentrenewable target. Commenters stated based upon these assumptions, Georgia would be able to ac hieve its target of 12,230 GWh of renewable generation by 2027 and Alabama would not achieve its renewable target before 2030; however, both Alabama and Georgia's renewable gener ation is dominated by industrial CHP sources burning wood or wood-derived products, such as pulp and paper mills (in excess of 90 percent of each states' total renewable generation) . Commenters stated that between 2008 and 2012, these Industrial CHP sources grew at an annua l rate of 2.1 percent annually in Georgia, while in Alabama these same types of facilities dec lined by 5.1 percent annually. Commenters stated it is highly unlikely these types of industr ial CHP facilities will add the levels of renewable generation predicted by EPA in Building B lock 3. Commenters stated that for Georgia to achieve its state target, other non-hydro source s (e.g., wind, solar) would have to increase their output at an astounding 44.5 percent per year. Comm enters opined that the lack of any detailed evaluation of a state's renewable energy mix has re sulted in a significant overestimation of the renewable generation that is included in each state 's Building Block 3 projections, and EPA must
correct these overestimations for its method to rem ain valid.267

Comment 18: Commenters stated that the glide path is too shortand supported the glide path being determined by the state.

Response 18: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. Under the final methodolo gy, building block 3 target generation is not assumed to increase beyond expected baseline perfor mance until the first year of compliance in 2022. Further, the phasing in of the building block 3 target generation level over time ensures adequate lead time for investments and planning nec essary to begin to integrate higher levels of
RE. The EPA addresses this and other considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters expressed that the glide path requires a large amount of the mandated reductions in too short of time and that a better approach would be to allow a "glide path" determined by the
state based on individual state circumstances.

Commenters stated that the glide path would require Minnesota to achieve 84 percent of its total mandated reductions by January 1, 2020, which is a large reduction in a short amount of time. Commenters noted that Iowa (61%), North Dakota (67% ), South Dakota (67%), and Wyoming (53%) would need to make similar reductions by 2020 . Commenters stated it is not possible for states to meet these goals in less than four years given the limitations of natural gas capacity, renewable energy intermittency, the need for more t ransmission, and the lack of planning and permitting time for new renewables, new pipelines o r transmission, for natural gas ramp-ups at existing plants (if feasible), or for new natural g as plants.

Commenters also noted that the glide path fails to anticipate the time it would take to implement any state policies to create incentives or mandates for construction pertaining to Block 3. Commenters noted that Iowa, Minnesota, North Dakota , and South Dakota have abundant wind resources as well as well-priced generation equipme nt and transmission capacity, but, as more renewable are added, the transmission and the distr ibution grid will need to be expanded and updated to reliably meet demand. Commenters stated that the glide path fails to provide sufficient time to plan, finance, permit, and const ruct sufficient renewable generation, as well as NGCC to support intermittent resources, electric tr ansmission, and natural gas infrastructure. Commenters stated that the states are in the best p osition to know what non-emitting resources can be constructed to ramp-up to the 2030 goal and can be entrusted to develop viable glide paths that demonstrate progress toward the achievem ent of that goal.

Commenters stated the USEPA developed the RE goals by regions without regard to potential RE opportunities or electric grid interconnections between states with higher RE potential and states with lesser RE potential. Commenters stated the front-loading of RE prior to 2020 presents timing challenges that may be insurmountable. Comme nters suggested a better approach would be to allow a "glide path" determined by the state with reports to the USEPA on progress beginning in 2020. Commenters stated this approach would allow states more flexibility and control of development costs to minimize ratepayer impact, while still attaining the final goal.268

Comment 19: Commenters stated that it is improbable that Wyomi ng or other states can achieve the EPA's proposed growth rate.

Response 19: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE at an interconnection level. The
EPA addresses considerations related to the technic al feasibility and availability of regional RE resources in both the preamble (section V.E) and GH G Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated it is improbable for Wyoming or a nyone else to achieve this growth rate.
Commenters stated EPA's focus on a cocktail of stat e RPS goals ignores the forces that have both driven Wyoming wind development and stopped it s growth. Commenters suggested EPA consider the EIA data for wind production from 2008 through 2013 and provided a table of MWh produced each year. Referring to a table in the ir comment letter, commenters stated that there is not a pattern of steady growth, but instea d a pattern of dramatic growth, followed by ongoing stasis. Commenters stated the reasons are n ot obscure and the growth was principally the result of resource acquisitions for the PacifiC orp system and the plateau from 2011 on was principally due to reaching the limits of transmiss ion capacity in Wyoming.

Commenters stated that going forward, a reduced rat e of PacifiCorp system growth and ratepayer resistance may limit investor interest in new renew ables and necessary transmission. Commenters stated that they described this history of rate increases in the letter of December 16,
2013 and stated that the increases are not over. Co mmenters further stated that decisions are currently pending in a 2014 general rate case seeki ng an increase of more than 5% and a 2014 case to pass on increased energy costs. Commenters reported that, as of the fall of 2014, PacifiCorp anticipates completion of significant ne w transmission, known as Gateway West, in 2024. Commenters stated that the company has pursue d Gateway West through many years of delays, most of which were due to federal constrain ts on routing and permitting of the transmission line. Commenters stated the Departmentof Environmental Quality describes these planning concerns and development constraints in se parate comments, as well as EPA's flawed assumption of the land available in Wyoming for win d development.

Commenters asserted that they agree with the DEQ th at the correct growth rate for Wyoming is no more than 1%. Commenters stated the Department o f Environmental Quality has shown that this is a fair composite of the growth rates embedd ed in the RPSs of the western states. Commenters stated EPA has simply considered state t argets without paying attention to the rates at which the RPS states proposed to progress to tho se targets. Commenters stated the DEQ approach is more consistent with the EPA's stated o bjective of determining an appropriate rate, and more consistent with the practical impediments to renewables development. Commenters stated that assuming EPA's construct, EPA could rea ch the correct goal by substituting 666,212 MWh for 4,369,107 MWh, and 1% for 6.095%, and re-ca lculating Block 3.

Comment 20: Commenters stated that Texas's 20 percent renewabl e target (a 153 Percent increase above 2012 levels) exceeds the 2012 genera tion of all types from generation in 32

states.269

Response 20 : The BSER is forward-looking in identifying cost-e ffective opportunities for emission reductions from 2012; however, the cost an d availability of these emission reduction opportunities is the result of many factors, includ ing previous actions. The final building block 3 methodology does not rely on RPS requirements or st ate-specific deployment estimates, but
rather cost-effective RE at an interconnection leve l. The EPA addresses considerations related to the technical feasibility and associated grid integ ration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measu res TSD.

The following are summaries of the specific public comments under this comment:

Commenters noted that the EPA assumes that Texas ca n increase renewable power to 20 percent of total generation by 2030; this is a 153 percent increase above 2012 levels. Commenters further noted that Texas' 2030 renewable target (86 million MWh) is more than double the amount of renewable generation which the EPA requires for the state with the next highest renewable target (California). Commenters complained that there are ten states whose total power generation
across all fuel sources is less than Texas' currentrenewable performance and that Texas' 20 percent renewable target exceeds the 2012 total gen eration of all types from generation in 32

states.

Comment 21: Commenters stated that the EPA's assumption that A laska's 2002 to 2012 RE generation growth rate could be sustained from 2017 through 2029 is incorrect, and requests that calculation and compliance methodology be consisten t considering Alaska's circumstances.

Response 21: No building block 3 generation level is applied to Alaska, Hawaii, or the U.S.
territories in the final rule.

The following are summaries of the specific public comments under this comment:

Commenters remarked on the annual renewable electri city growth rate calculated for Alaska. Commenters stated that the annual growth rate for A laska was calculated differently than for the
lower 48 states. Commenters stated that the EPA det ermined the difference between 2002 and 2012 RE generation and then assumed that this RE ge neration growth rate could be sustained from 2017 through 2029. Commenters asserted that th is assumption was incorrect since the EPA has no technical basis for assuming that RE generat ion growth will continue; therefore, the EPA should not assume no growth in RE generation unless the EPA can identify RE generation projects that will be constructed or specific requi rements that will lead to the construction of RE generation. Commenters noted that the EPA included RE generation in calculating Alaska's CO2 performance goals regardless of offsets generation from existing affected EGUs. Commenters noted that Alaska has RE generation in remote commu nities which is not connected to the affected EGU electrical grid, but the EPA only allo ws RE generation that offsets generation from existing affected EGUs to be used in determining go al compliance. Commenters asserted that this inconsistency creates artificially low perform ance goals for Alaska. Commenters requested that the calculation and compliance methodology be consistent to increase the likelihood that the calculated goals can be attained.270

Commenters noted that supporting data could not be found in order to replicate the EPA calculations used to determine the Alaska RE genera tion of 39,958 MWh. Commenters noted that the EPA's annual RE generation growth factor o f 11.426 percent is based on the growth rate of RE generation between 2002 and 2012 without addi tional details being provided. Commenters requested that the supporting data used in this cal culation to be clearly identified so that EPA
calculations can be verified. Commenters noted thatit is not likely that Alaska will be able to sustain the high level of RE generation growth thro ugh 2030 as the EPA assumes. Commenters stated that the 11.426 percent growth factor was co nservatively included in the corrected Alaska CO2 performance goals calculations, and retaining t his conservative growth rate results in lower goals than a more realistic RE generation growth ra te. Commenters stated that the EPA should identify a more representative RE generation growth rate in correcting the Alaska CO2 performance goal calculations.

Commenters noted that Alaska is fundamentally diffe rent than the lower 48 states since RE opportunities and grid infrastructures are limited. Commenters further noted that the Alaska annual RE growth factor should be assumed to be zer o; the Alaska utilities cannot sacrifice electric reliability in an attempt to meet an arbit rarily defined goal. Commenters concluded that reliability is paramount since it can mean the diff erence between life and death due to the
extreme climatic conditions in Alaska.

Comment 22: Commenters discussed the anticipated growth of sol ar energy in South Carolina.

Response 22: The information provided in this comment was valuable in evaluating the impact of non-BSER resources on achieving building block 3 target generation levels. The final building block 3 methodology is described in section V.E of the preamble and in the GHG Mitigation
Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters described the Distributed Energy Resourc e Program Act, which is a bill that was passed in the State of South Carolina on June 2, 20 14. Commenters noted that the bill is designed to lessen restrictions on solar energy, and the bil l would allow solar leasing statewide through investor-owned utilities. Commenters anticipated th at solar energy would grow in South Carolina, and it will result in further reduction o f South Carolina's CO2 emissions.

Comment 23: Commenters stated that in the West, the federal go vernment owns vast portions of many states. Commenters said the use of these lands will be paramount to increasing renewable generation and siting gas and electric transmission structures and EPA must allow ample time for states to work with other federal agencies.

Response 23: The phasing in of the building block 3 target gene ration level over time ensures adequate lead time for investments and planning nec essary to begin to integrate higher levels of
RE. The EPA addresses this and other considerations in both the preamble (section V.E) and GHG Mitigation Measures TSD.271

3.3.6 RE targets for interim and final state goals

This section discusses issues raised by commenters related to RE targets for interim and final state goals. Many of the issues are related to the specific calculation of the goals and the exclusion of current renewable energy sources.

Commenters have raised a number of issues related t o this subsection which are organized by topics (comments) below. Responses are provided for these topics.

Comment 1: The EPA's analysis of state RPS goals is oversimpl ified and reflects EPA's limited understanding of these goals.

Response 1: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.

The following are summaries of the specific comment s under this comment:

Commenters said that some state RPS goals are volun tary, while others establish requirements only for large, investor-owned electric utilities o r apply less stringent "secondary" or "tertiary" RPS goals to smaller utilities, municipal utilities , or cooperative utilities. But the EPA applies the more stringent primary RPS goals to all in-state ge neration and treats all goals as mandatory, artificially leading to more aggressive RE generati on targets, the commenters said. Many state RPS goals include hydroelectric power generation, b ut the EPA does not include existing hydroelectric power towards compliance with its Pro posed Guidelines, the commenters added. For example, New York counts hydroelectric power to wards its 29 percent RPS target, and this source accounted for 83 percent of the state's rene wable generation in 2012, the commenters noted. Commenters stated including this component o f the RPS in the Building Block 3 goals without allowing states to rely on existing hydropo wer for compliance will substantially increase the amount of new renewables required in each state , even in states that have already reached their own RPS goals.

Commenters stated that the EPA's analysis reflects an oversimplified understanding of the nature of state RPS goals. Moreover, commenters added thatsome state RPS goals allow utilities to comply through mechanisms other than actually devel oping in-state RE generation. For example, North Carolina's RPS goal allows utilities to meet 25 percent of their requirements by reducing energy consumption through energy efficiency measur es, and another 25 percent of their requirements by purchasing RE certificates from out -of-state facilities, the commenters continued. Thus, the 10 percent RPS target the EPA assumed for North Carolina effectively requires in-state RE generation to reach only 5 per cent by 2020, the commenters noted. Because North Carolina's RPS alone sets the regional target for the entire Southeast region, the EPA's target is roughly 100 percent too high for eight st ates, including Florida, the commenters said.272

Commenters stated NERC has also expressed concern w ith EPA's flawed assumptions regarding RE potential in the Southeast region. Commenters st ated this is not a minor error. Commenters
stated North Carolina and other states have built c ost-control mechanisms into their RPS goals in order to reduce the requirements for utilities if c ompliance becomes too burdensome. The EPA did not account for any of these flexible complianc e mechanisms when dictating regional RE generation targets, the commenters said.

Similarly, commenters also said that the EPA has no t been consistent in how it has developed the RE goal and how it has proposed to allow a state to demonstrate compliance. For example, commenters made the following points specific to No rth Dakota:

• First, the goal is based on total generation of ele ctricity (including existing hydro, wind, and coal) in North Dakota yet allows other st ates to claim part or all of the RE that is generated in North Dakota, including exi sting wind power that is included in North Dakota's goal calculation. In add ition, allowing other states to take credit for RE generated in North Dakota could be construed as taking a property right from the utility that generated the renewable electricity.

• Second (and as commenters also pointed out), the ca lculation of the goal included existing hydroelectric power, but does not let Nort h Dakota take credit for that RE, commenters noted.

• Third, the calculation of the goal is based on tota l generation in North Dakota and a regional RE standard; however, many of the RPS us ed to determine the regional standard are based on sales of electricity. Since N orth Dakota exports 60% of the electricity generated, there is huge difference bet ween total generation and instate sales of electricity. The North Dakota electr icity market can only support so much RE because it is intermittent. Base load power is required for most of the
annual load.

Commenters asserted there are alternatives that wil l correct the inequities in the Proposed Rule regarding RE which include the following:

• The state where the RE is generated gets full credi t for that energy (this would be consistent with the goal setting and provides for e asy accounting of the RE); or

• The utility that supplies the RE to their retail cu stomers can dictate which state gets credit for the RE (this option would resolve a ny issues of EPA taking property rights from the utility); or

• The renewable goal is recalculated for each state b ased on the sales of electricity
in that state. This is consistent with most state r enewable portfolio standards and the method used in Building Block 4. It would also allow the EPA to use the proposed method for crediting RE; or

• The EPA does not provide any guidance on the credit ing of RE and allows states to come up with an agreement amongst themselves on who gets credit.273

In any event, this is a complex issue that requires further dialogue and discussion between the EPA and the states, commenters asserted.

Commenters asserted that the EPA's use of the state RPS requirements in a region to calculate regional goals is illogical and flawed. Commenters added that the EPA's use of a simple numerical average is faulty and that it should at l east weight the average by the amount of generation in each state. For example, commenters s aid that the EPA averages Delaware (20 percent RPS requirement, 9 TWh net generation, 2012 ) with the same weight as Pennsylvania (8 percent RPS, 223 TWh generation). Moreover, the EPA should recognize and include zero
values for states that have determined that no mand atory RPS is appropriate for circumstances existing in that state, the commenters expressed.

Commenters said that the EPA places each state into one of six regions and establishes a RE target for each region based on an average of exist ing RPS in the relevant region. The underlying rule calculates an annual growth rate that would al low each region to reach its specific target by
2030 and the commenters indicated that it has sever al observations about this approach.

First, the commenters explained that state RPSs dif fer on compliance levels (percentages), types of eligible resources, and nuances in the laws thatcould result in less renewable penetration than the stated compliance percentage - for example, Was hington State's Energy Independence Act does not apply to all utilities, cost caps, etc. Al so, the commenters added that Washington State's RPS is different than those of neighboring states - the State of Oregon's RPS allowed certain existing hydroelectric projects, such as low-impacthydropower capped at 50 aMW per year generated by an Oregon utility and energy efficienc y upgrades made to Bonneville Power Administration hydroelectric projects located in Or egon, to be used at enactment. Commenters stated Washington State's RPS only allows increment al hydro to be used for compliance. Oregon also allows utilities with surplus resources to del ay compliance until the time when utilities need
to add resources to serve retail customers - Washin gton State does not, the commenters said.

Commenters also added (similar to other commenters) that the underlying rule states that, "existing hydroelectric facilities are often exclud ed from RPS accounting." Disadvantaging renewable, carbon-emission free hydropower seems to run contrary to the stated objectives of Federal policymakers, the commenters said, includin g Energy Secretary Ernest Moniz, who said earlier this year, "... We have to pick up the cove rs off of this hidden renewable that's right in front of our eyes and continues to have significant potential. "

Commenters asserted that it is important to note th at in its calculation of Building Block 3B for target setting, the EPA bases its target percentage s on regional average RPS objectives, which may include both in state renewable generation and out-of-state REC purchases. Commenters said that the EPA has requested comments on how to measure a state's renewables for compliance purposes: include in-state generation on ly, or any generation for which entities within the state have purchased RECs. Of course, th e commenters said, under this latter definition, if RECs associated with part of a state 's renewable generation are purchased out-ofstate, then the emission reduction resulting from t hose renewables displacing fossil generation will not be counted in the generating states 111(d) emission formula, but rather would displace generation in the purchasing state's formula.274

Commenters stated they are small not-for-profit mun icipal utilities whose "affected units" emit
less than 2.6% of Illinois' total carbon emissions from fossil-fuel fired EGUs, and are outside the jurisdiction of the state's public utility commissi on. Commenters provided electric power to approximately 68,000 customers, the residents and c ommercial businesses. Commenters said the costs for this electric power, and our environmenta l controls, are borne by our citizens, the ratepayers. Commenters said the city council invest ed early in transmission upgrades, including "smart" technologies. Commenters were vertically in tegrated utilities, exempt from the jurisdiction of the state's public utilities commis sion, the Illinois Commerce Commission (ICC). As a municipal utility, commenters generated or pur chased its energy outside of the Illinois Power Agency (IPA). Commenters were also exempt fro m the state Renewable Portfolio Standard (RPS) goals, as established by state statu te, and even though outside Illinois' RPS, Commenters had acquired renewable energy that far o utpaces the percentage of renewables within Illinois' RPS. Accordingly, commenters were not subject to state RPS laws that are likely to serve as the basis of Illinois' plan to meet the GHG Rule being prepared by the ICC and the IL EPA. Commenters’ municipal ownership, their vertica lly integrated structure, and their ownership of generation assets make them unique in Illinois. Commenters stated, an early mover in the deregulation era, Illinois required electric generators to divest generation assets leaving the bulk of the citizens of the state subject to compet itive electric market providers that are separate from the transmission and distribution service prov iders. Commenters said Illinois' pathway to compliance with the Clean Power Plan (CPP) is furth er complicated by the existence of two Regional Transmission Organization (RTO) markets, M idcontinent Independent System Operator (MISO) and PJM Interconnection(PJM), that affect generation dispatch and pricing in different ways.

Comment 2: Commenters asserted the EPA should strengthen RE t argets.

Response 2: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of onshore wind and solar cost and performance assumptions. The final building blo ck 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measu res TSD.

The following are summaries of the specific comment s under this comment:

Commenters stated that the proposed regulations fai l to advance the most promising solution to the climate crisis: renewable energy. Significant t echnological and economic improvements have been made in both wind and solar technology, the co mmenters expressed. Instead of challenging states to maximize the development of renewables, t he rule establishes extremely weak goals for each state, the commenters said, woefully for the a mount of power each state should derive from RE based on an averaging of existing programs. Comm enters said that many of those suggested goals are even weaker than what several states have planned, and in some cases already have achieved. For example, Missouri's own RE goal is fi ve times greater than the rule's suggested goal for the state, and Minnesota is producing 18% of its energy from renewables today, already exceeding the meager 15% goal suggested by the rule , the commenters pointed out. Similarly, the commenters said that Kansas, which has far more wind potential than necessary to accommodate its own needs is given a suggested goal of only 20%; and many states, including275

those which are the worst power plant polluters, li ke Kentucky, are presented with negligible renewable goals of 1% or 2%.

In fact, the commenters noted that the EPA predicts that the rule as proposed would have virtually no effect on the amount of renewables in 2030 compared to forecasts without the rule. Commenters indicated that if fully implemented, the rule would result in less than 16% of the country's electricity needs being met with renewabl es (including hydropower) by 2030.

An effective response to the climate crisis demands a rapid transition away from fossil fuels, clear regulatory signals, and robust governmental s upport, the commenters added. The rule should do everything possible to speed the needed s hift to RE by setting technology-forcing targets for 2030 that reflect the maximum level of renewable generation achievable in each state, the commenters recommended. From a policy perspecti ve, the CPP must recognize and encourage RE as the most effective means of tacklin g climate change and achieving true longterm energy independence, the commenters also said. Commenters said that in their opinion to do anything less would fly in the face of the oft-r epeated pledge to "base decisions on science."

Commenters said the EPA asks whether an alternative approach should be considered involving the evaluation of RE potential; however, this too a pplies overly conservative technical and market constraints which limit the true capacity of renewables. The commenters said that for example, the rule completely ignores the significan t potential of offshore wind simply because no offshore facilities have been built yet in the U .S. A rule that fails to "move the needle" on renewables, lacks any proactive policies or incenti ves to augment market forces, and remains stagnant with respect to technology that has been s uccessfully implemented in other countries is
of little value.

Commenters asserted that responding to the threat o f climate change requires that the EPA challenge states to maximize sources of energy thatdo not burn fossil fuel. Commenters said the rule's extremely weak set of suggested renewable go als should be replaced with ambitious requirements based on the technical potential for r enewable power in each state, also recognizing the capacity of some states to become net exporters of electricity from renewable sources. Commenters said that NREL offers significant data, mapping, and analysis to support this, and significantly, in its comprehensive 2012 Renewable Electricity Future Study, the NREL
determined:

"Renewable electricity generation from technologies that are commercially available today, in combination with a more flexible electric system, i s more than adequate to supply 80% of total U.S. electricity generation in 2050 while meeting e lectricity demand on an hourly basis in every region of the country."

Commenters added that important research is also pr esented in the 2013 report titled Examining the Feasibility of Converting New York State's All- Purpose Energy Infrastructure to One Using Wind, Water, and Sunlight (Jacobson, et al.) which describes a strategy to replace New York's current energy portfolio-presently dominated by fos sil fuels-with one relying entirely on renewables generated in state. Expanding on this, t he "Solutions Project" advocates a plan for each state in the country to achieve independence f rom fossil fuels by the year 2050, the commenters expressed.276

In conclusion, the commenters asserted that the bot tom line is that climate catastrophe cannot be avoided if the U.S. continues to rely on fossil fue ls to supply most of its energy. Commenters stated the rule should work toward a goal of transi tioning to 100% RE and set aggressive targetslike those demonstrated in the aforementioned repor ts-to require that each state meet the greatest achievable portion of its electricity with zero-emi ssion renewables. To this end, the commenters urged the EPA to set targets that will result in th e United States meeting at least half of its electricity needs with zero-emission sources of ene rgy by 2030.

Commenters indicated that a great weakness of this rule proposal is an over-estimate of the market viability for climate polluting power genera tion, versus wind and solar. Commenters stated the EPA projects coal and natural gas each w ill still provide about 30% (60% total) of power supply by 2030. The EPA analysis neglects roo ftop solar and offshore wind, which in a decade or two could provide the majority of renewab le power in the U.S., the commenters said. Many analyses have demonstrated this, the commenter s noted. Commenters indicated that the Greenpeace report, "Energy [R]evolution: A Sustainable USA Energy Outlook" includes reference to these analyses to compare with our own (http://www.greenpeace.org/usa/en/mediacenter/reports/energy-revolution-2014/). Previous v ersions of the report under-estimated renewables growth, the commenters noted.

In the Energy [R]evolution (E[R]), the commenters s howed that by 2030 power generation is comprised of only 20% NG and 7% coal. Commenters sa id that the Energy [R]evolution report
estimates what can achieved in terms of CO2 reducti on from the power sector:

• By 2020, the commenters said they can do about twic e what the proposed rule achieves. The E[R] shows that, based on 2012 levels , they could achieve a 23.34% CO2 cut from power by 2020 versus only 12.12 % for the EPA proposal,
the commenters noted.

• By 2030, the commenters said they can achieve more than four times the CO2 cuts in the EPA proposal. The E[R] shows 64.54% cutfrom 2012, versus only 15.88% for EPA, the commenters noted.

Commenters continued and said that the EPA estimate s the proposed rule will have little effect
between 2025 and 2030. Commenters stated the EPA's proposal has four options for states to consider for implementation: a weak and a weaker op tion with regional cooperation, as well as a weak and weaker option without regional cooperation . Thus, there are four different estimates for what the rule would achieve by 2020 and 2025, and there is no worst case estimate for 2030,
the commenters said. For the worst case scenario fo r 2025, the EPA estimates a less than 8% cut from power sector CO2 by 2025, whereas the Greenpea ce E[R] estimates the U.S. could cut emissions by almost 23% under 2012 levels by 2020, the commenters said.

Commenters pointed to the attached graph and chart which showed how these estimates translate into emissions reductions, with the various base ye ars, end years, and four options in the rule proposal. This is based on data in documents the EP A provided with the rule, as well as the most recent EPA GHG inventory, the commenters concluded.277

Comment 3: Commenters said the methodologies used by EPA for the Proposed Approaches are overly conservative

Response 3: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.

The following are summaries of the specific comment s under this comment:

Commenters indicated that under the EPA's Proposed Approach, the Southeast region's RE target (10% of 2012 generation levels by 2030) is based on North Carolina's RPS target, which is one of the weakest (lowest) in the United States. Comme nters stated its relatively weak goals should not be viewed as a useful perspective on the potent ial for regional development of RE. For example, commenters said that North Carolina utilit ies have already gone beyond the state goals for on-system solar energy development. Relying on the North Carolina standard limits the Southeast to arbitrarily conservative RE generation targets and fails to recognize utility and regulator engagement in other strategies (i.e. not mandates) to accelerate market trends in Southeastern states, the commenters expressed.

Further, commenters said that the Proposed Approach relies on "regional growth factors" for determining target RE generation levels for each st ate. There is no floor to each state's RE generation level, which in part causes several stat es to have 2030 RE targets below the regional target level, the commenters added. For example, de spite the southeast having a 10% regional target for RE, Alabama (9.3%), Kentucky (1.9%), and Tennessee (5%) all have state-level targets below the regional level, the commenters pointed ou t. Commenters stated the RE target generation level is a misnomer, because it is a cap , and therefore once achieved the RE generation level is assumed to remain flat through 2030. Applying such a cap is an arbitrary step that fails to capitalize on the momentum of a parti cular industry, and particularly ironic given that North Carolina has already exceeded the solar portion of its standard that serves as the basis for this cap, the commenters argued. Commenters sai d if this cap is used, based on the EPA calculations, Georgia and Mississippi reach the 10% RE generation level by 2027, North Carolina and South Carolina do so by 2028, and Virg inia does so by 2026. After meeting the 10% RE generation target, the EPA's target calculat ion assumes that none of these states increase RE generation any further, the commenters concluded

.

Comment 4: Commenters stated that a 30 percent reduction in C O2 is aggressive, but
reasonable

Response 4: The information provided in this comment was valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters indicated that it has identified several concerns with the NODA proposal, and support the approach taken in the Proposed Rule, wh ich the EPA expects to result in about a 30278

percent reduction in CO2 emissions from existing af fected EGUs. Commenters asserted that this level of emission reduction is an aggressive, but r easonable target for 2030, and did not support significantly stricter emission performance levels.

Comment 5: Commenters stated that the CPP will have the effec t of locking in natural gas infrastructure at the expense of RE generation.

Response 5: The EPA disagrees with this comment. The final ru le phases in the BSER goal rates over the interim compliance period that does not require significant near-term infrastructure development.

The following are summaries of the specific comment s under this comment:

Commenters stated several recent studies have raise d new questions about whether natural gas
can form the cornerstone of a carbon-emissions redu ction strategy. In October, the Joint Global Change Research Institute's collaboration between t he Department of Energy's Pacific Northwest National Laboratory and the University of Maryland published the results of work completed by five separate research teams from the United States , Australia, Austria, Germany, and Italy, the commenters said. These teams independently conclude d that abundant natural gas use displaces not only higher carbon coal-fired generation but al so generation from renewable sources and nuclear power, the commenters added. Commenters sta ted that as a result, the abundance of natural gas from unconventional sources could subst antially change the global energy system over the decades ahead without producing commensura te changes in emissions or climate forcing.

Similarly, commenters added, this September, resear chers at the University of California, Irvine, published a study that concluded that abundant natu ral gas supplies could slow the process of decarbonization by delaying the deployment of renewab le energy technologies unless the U.S. government enacts strong limits on greenhouse gas e missions or policies to drive electricity generation that comes from renewable sources. Comme nters stated that in April, researchers at Duke University concluded that natural gas can help reduce greenhouse gas emissions but will not offer the significant pollution reductions need ed to change the global emissions trajectory. In this context, the commenters asserted it is importa nt to examine whether the CPP encourages states to move quickly enough to adopt renewable en ergy and energy-efficiency technologies. It is also necessary to look at the extent to which ot her state and Federal policies may be needed to incentivize the deployment of these technologies, t he commenters expressed.

Commenters also suggested that the CPP could accele rate the "lock-in" of large amounts of new natural gas generation, particularly in some region s, while generally delaying the deployment of tomorrow's cleaner and cheaper renewable energy and emerging competitive distributed energy
resources. Commenters warned that this could resultin the overbuilding of new natural gas plants, which would reduce the incentive to add new renewable generation capacity to the grid, locking out energy resources that are truly clean.

This is just one company's perspective on the EPA's CPP, commenters said, but it is an interesting and important one to consider, given th e need to rapidly deploy zero-carbon279

technologies to mitigate climate change and avoid a ll unnecessary commitment to new fossilfuel-fired infrastructure.

Comment 6: Commenters stated that the EPA used unrealisticall y low RE annual growth estimates to develop the RE goals.

Response 6: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of onshore wind and solar cost and performance assumptions. The final building blo ck 3 methodology is described in detail in V.E.6 of the preamble and in the GHG Mitigation Mea sures TSD.

The following are summaries of the specific comment s under this comment:

Commenters asserted that the rule incorporates unre alistically low estimates both for the annual rate of growth in renewable generation, and in the renewable generation target maxima. In recent years renewable generation technologies - particularly wind turbines and solar photovoltaic panels - have been deployed at accelerating rates a s prices for these technologies have declined, the commenters said. As is noted in the preamble to the Proposed Rule, for several states the proposed renewable generation target percentage for 2030 is set below the percentage of generation attributable to renewable generation in those states in 2012. In addition, the commenters noted that for 17 states the Proposed Ru le sets renewable generation targets for 2030 at a level that is lower than that required under s tate law. Irrespective of whether the EPA adopts the regional approach or the alternative, state-by- state approach, the commenters stated they do not believe there is a rational basis for assuming that renewable generation in any state will comprise a smaller percentage of the total generati on mix in any future year than it did in 2012. Accordingly, the commenters asserted that the EPA s hould establish a "floor" for the renewable generation targets at the higher of the percentage of generation attributable to renewable sources in the relevant state in 2012, or the percentage re quired in 2030 under the relevant state's laws.

Comment 7: Commenters stated that the EPA’s proposed RE goals are not pushing states toward an unprecedented level of RE development, bu t rather toward the level of RE generation that grid operators should already be forecasting a nd planning for.

Response 7: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of onshore wind and solar cost and performance assumptions. The final building blo ck 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measu res TSD.

The following are summaries of the specific comment s under this comment:

Commenters indicated that the EPA notes in the prea mble to the proposed rule that as coal-fired plants retire, current power sector economics sugge st that they will likely be replaced with new renewable projects, energy efficiency savings, and combined cycle gas generation. Commenters stated most of these new lower emitting electricity sources currently have much lower280

construction and operating costs than coal-fired EG Us, and this trend is also likely to continue in the coming years. As a result of these cost dispari ties, EIA's latest Annual Energy Outlook forecasts only 2.5 GW of additional planned coal-fi red generating capacity through 2040, with nearly 90 percent of this capacity consisting of pr ojects that are already under way, the commenters said. Similarly, the International Energ y Agency ("IEA") World Energy Outlook 2013 predicts that over three-quarters of the capac ity replacements for retired units in the U.S. will come from wind, solar, or NGCC units, accordin g to the commenters. In addition, the commenters said that EIA also expects generation fr om renewables to be higher than was estimated in 2013 across most of the projection per iod, with renewable sources accounting for almost a third of the growth in generation resource s from 2012 to 2040 as they become more cost-competitive with other fuels. Indeed, the comm enters indicated that EIA projects that renewables will remain the fastest-growing source o f electric generation through 2040.

Commenters said that in sum, the shift in the elect ricity generating sector from coal to loweremitting resources has continued at a rapid pace in recent years, and forecasts of fuel costs, capital costs, and other power sector trends contin ue to indicate that conventional coal-fired power plants will represent a shrinking percentage of generation over the foreseeable future. In this sense, the commenters asserted the CPP largely reflects changes that are already happening in the electric sector, as do the individual state targets included in the proposal. For instance, the commenters noted that Washington's emission target for 2030 is 215 lbs CO2/MWh - ostensibly, a very low number-but this simply represents the fa ct that all but one of Washington's coal plants have already retired, with the remaining facility a nnounced for retirement. Commenters stated the EPA's proposal will therefore advance the pace at which the electric sector is changing, but will not fundamentally alter the direct of that cha nge.

Commenters indicated that one of NERC's two main ar guments challenging the EPA's expectations for build-out of renewable power facil ities is that the EPA's RPS-based formula overestimates states' ability to build renewable ge neration. While the commenters said NERC is correct that the use of existing RPSs to establish renewables obligations does not perfectly correspond to states' actual capacity to install wi nd and solar plants, the commenters asserted NERC understates the potential for renewable genera tion build-out, thus artificially lowering states' renewables obligations. In fact, EPA's RPS- based Building Block 3 target barely exceeds
the "business as usual" forecasts for renewable ene rgy development by 2030, the commenters said. Thus, the commenters concluded the EPA's targ et is not pushing states toward an unprecedented level of renewable energy development , but rather toward the level of renewable energy generation that grid operators should alread y be forecasting and planning for. Commenters stated 29 states (including the Districtof Columbia) have passed mandatory RPS goals, and another 7 states have voluntary goals. O ne study looking at states' compliance with their own goals found that 21 of 24 states for whic h data was available had virtually achieved or exceeded their intermediate RPS goals, the commente rs noted. (A few states have even exceeded their ultimate RPS goals, the commenters said.)

Commenters continued and stated that critically, st ates have historically found it easier to comply with RPS goals over time as they develop in-state m arkets and build local expertise in siting and connecting renewable electricity. Commenters stated this trend should only continue as renewable energy becomes more and more affordable: in 2013, average prices for utility-scale wind and solar power purchase agreements dropped to all-time lows of $21 and $50 per MWh281

respectively, compared to average whole sale power prices of between $22 and $55 overall. Similarly, the commenters said that the EIA's estim ate of the total levelized cost of energy by resource, including installation and other costs, p redicts that wind will be over $15 cheaper than coal per MWh by 2019, and $8 cheaper than conventio nal natural gas by 2040. Commenters cited to a projection done by Lazard Ltd., a financ ial advisory and asset management firm, who has concluded that already today wind energy is at least cost-competitive with, if not cheaper than, both natural gas and coal facilities, with so lar not far behind (within $10/MWh of both gas and coal). Commenters said the consensus expectatio n in all of these reports is that renewable energy prices will continue to drop as renewable te chnologies continue to be mainstreamed. Commenters stated that in short, the market for ren ewable energy has surged in a way that was not fully anticipated when states set their RPS goa ls, so they are no longer an accurate reflection of what can be accomplished in individual states.

Commenters stated that even ignoring the growing st rength and competitiveness of the renewable generation market, the EPA should not be overly concerned about replacing retiring coal plants because regions with excess (largely cl eaner) electricity production will likely end up transmitting that electricity to regions that find themselves less able to replace retiring dirty power plants (see transmission discussion below). M oreover, no state is required to achieve the level of renewable energy development that the EPA used in setting its target states have flexibility to use a combination of any of the buil ding blocks as compliance measures, the commenters noted. The EPA is also not requiring RE to be built within a state for that state to take credit under the CPP, the commenters pointed o ut, and highlighted that this means that
RE can be built wherever it is most economic and th ere is available transmission capacity.

Comment 8: The Final Rule must adequately value and incentivi ze renewable generation and energy efficiency.

Response 8: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of onshore wind and solar cost and performance assumptions. The final building blo ck 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measu res TSD.

The following are summaries of the specific comment s under this comment:

Commenters stated, the least cost pathway to compli ance with the rule will be increased deployment of renewable generation and energy effic iency, including demand response. Commenters stated Building Blocks 3 and 4 are criti cal to the EPA's approach under either alternate structure, in order to properly incentivi ze development and use of renewable energy sources and energy efficiency resources.

However, commenters said that the EPA's analysis of wind and solar generation for BB3 (using either alternate proposed framework) dramatically o verstates the current costs associated with these resources and is overly conservative in estim ating states ability to increase their renewable portfolios. Commenters expressed that the final rul e must reflect current cost data (and deployment rate data) for renewable generation and more aggressive targets on a state-by-state
basis.282

Commenters supported the approach put forth by the EPA regarding crediting states under building block 3. Commenters stated in order to aid state compliance with section 111(d) obligations, it would be most efficient and equitab le for the EPA to model its approach after the best practices of existing state RPSs. Relying upon existing best practices and infrastructure will aid states in efficiently meeting their obligations , while making double counting structurally impossible, thereby maintaining the integrity of th e emissions reductions which will be achieved,
the commenters said.

Comment 9: The EPA has underestimated RE opportunities

Response 9: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of onshore wind and solar cost and performance assumptions. The final building blo ck 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measu res TSD.

The following are summaries of the specific comment s under this comment:

Some commenters asserted the renewable energy goals in the final rule should better account for the full range of renewable energy opportunities in states and be more stringent

Commenters expressed that nationwide, the RPS-based approach and the Alternative RE Approach result in a very similar level of renewabl e generation. However, commenters stated that neither approach fully capture the past and li kely future dynamic growth in RE, including
the dramatic decrease in costs.

For all of these reasons, commenters asserted the E PA underestimated the demand and the opportunity presented by renewable energy over the next 10-20 years. Accordingly, the commenters argued, the renewable energy goals in th e final rule should better account for the full range of renewable energy opportunities in states a nd, at the least, should certainly be no less stringent than the additions of generation already required.

Commenters expressed that it is pleased the EPA has included "outside the fence" compliance options such as energy efficiency and RE in its CPP . However, the commenters asserted the CPP has underestimated the potential of RE as a complia nce strategy for states. To seize the opportunity renewable energy presents, the commente rs said that the EPA should strengthen state RE targets appropriately. Commenters stated r enewable energy technology is no longer "five years away" it is here, cheap, abundant, and available for use immediately. A recent UCS report found that seven states are already producin g more renewable energy than the 2030 targets the EPA set for them, and an additional 17 states h ave laws in place that will require them to develop more renewable energy than the EPA mandates , the commenters added. Fixing state renewable energy targets to account for progress al ready made, and future progress already baked into state law, is just the first step, the c ommenters noted.

Commenters continued by stating that renewable ener gy creates jobs that cannot be shipped overseas, ensures price stability as it generates p ower without having to pay for fuel year after year. Best of all, the commenters said, it generate s power without releasing greenhouse gases or283

other pollution. Commenters expressed that it is th e right choice for our wallets, for our climate, for our health and for the long-term prosperity and competitiveness of our country-and for leading the clean carbon economy globally.

Commenters asserted that the EPA proposal can and s hould be strengthened to better and more realistically recognize the tremendous potential fo r renewable energy and energy conservation in cutting carbon emissions.

Commenters asserted that Building Block 3 can and s hould provide more ambitious emission reduction estimates from renewables. For example, c ommenters stated the rule should be revised to reflect recalculating GHG reductions from renewables to include their role in reducing coalfired generation.

Comment 10: Some commenters questioned the methodology of usin g a regional approach and believe the EPA should revise the RE targets under Building Block 3.

Response 10: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.
The following are summaries of the specific comment s under this comment:

Commenters stated that for RE, the Proposal sets targets based on regional averages of existing state policies, then applies the 2020 averages as s tate targets for 2030. In its comments on the CPP, the commenters indicated that AEE lists severa l limitations of this methodology, including (1) that it uses state RPS levels which may not ful ly capture the levels of cost-effective RE potential, (and in the unique case of New York, the current RPS will be expired by then, although it is likely to be increased and extended) ; (2) it only expects a state to meet a regional average rate of RE generation, even if the state's renewable generation is already above that average, (3) it assumes no RE growth between 2012 a nd 2017, even though deployment continues to rise, (4) it expects each state to ach ieve by 2030 only the average RE targets set for 2020. For all these reasons, the commenters said th at the primary methodology represents a significant understatement of the RE potential avai lable to states for carbon emissions reductions, and the resulting targets are overly co nservative.

Commenters said that the EPA's proposed renewables approach presents many challenges that
will be difficult to resolve in the final rule. Com menters stated the EPA's methodology fails to sufficiently recognize early action for states thathave already supported renewables independently or through RES programs. Commenters s tated complicated issues, such as accounting for out-of-state renewables, would be be tter addressed as part of the state plan processes. A case-by-case evaluation of the potenti al for renewables for each state should be included in the final guidelines, the commenters al so said. Commenters added that the EPA should allow states to provide input to this assess ment for the final goal computation, based on data and specific circumstances applicable to indiv idual affected utility companies.284

Commenters said that under the first approach, EPA' s assessment of the potential for RE to contribute to CO2 emissions targets is based on sev eral incorrect assumptions. Commenters stated EPA's approach is arbitrary and unreasonable for at least three reasons. First, the commenters stated, EPA ignored the details of state RPS that would limit the overall RE potential calculated by EPA. Second, the commenters added, EPA arbitrarily applied regional averages based on state RPS to states without renew able targets, ignoring the different resource potentials in each state. Third, commenters conclud ed, EPA ignores costs and other technical limitations that reduce the potential for RE growth

.
Commenters asserted that the EPA's approach to sett ing the RE goals for each state by dividing the states into contiguous regions is illogical and inequitable. For example, the commenters said that according to a DOE study (cited below) relied on by the EPA, Arizona has 5.8 percent of the total national RE potential, but Arizona has a RE g oal based on only 3.9 percent of its 2012 generation. By contrast, the commenters indicated t hat West Virginia, which has 0.07 percent of the national RE potential (1.2 percent of Arizona's ) has an RE goal based on 14 percent of its 2012 generation, almost 4 times as great as Arizona 's.

Commenters stated the EPA contends that the state R PS requirements reflect expert assessments of RE technical and economic potential that can be cost-effectively developed for that state's electricity consumers. Therefore, the EPA must rely solely on those estimates for each state that has an RPS as being the best estimate of its RE pot ential, the commenters said. For example, the commenters stated, if Pennsylvania's expert assessm ent is that it can achieve an 8 percent RE level by 2020, and Delaware determines that it can achieve a 22 percent RE level, it is illogical for the EPA to impose an average regional value of 16 percent on both states without showing that their expert assessments are in error.

Commenters said that the EPA's RE calculations are unrealistic. Commenters said that in the CPP, the EPA assumes that qualifying RE generation will increase from 213 TWh/year in 2012 to 281 TWh/year by 2020 and 523 TWh/year by 2030.96 This substantial increase far exceeds the EIA's RE forecast for growth from 202 TWh/year in 2012 to 275 TWh/year in 2020 to 317 TWh/year in 2030,97 and is also much greater than t he projection of 356 TWh/year by 2030 included in EPA's own RIA, the commenters said. Com menters similarly explained that in the CPP, the EPA assumes qualifying RE generation will increase from 213 TWh/year in 2012 to 281 TWh/year by 2020, and 523 TWh/year by 2030. Thi s substantial increase far exceeds EIA's RE forecast for growth from 202 TWh/year in 2012, t o 275 TWh/year in 2020, to 317 TWh/year in 2030, and is much greater than the projection of 356 TWh/year by 2030 included in EPA's own Regulatory Impacts Assessment, the commenters s aid.

Commenters said that as proposed, the EPA's RE goal s do not allow the inclusion of new biomass, new landfill gas, new coal-bed methane and new hydro as options in the portfolio approach. Commenters said that the EPA's RE calcula tions are not an accurate representation of the existing RE options because these sources are n ot included. Existing RPS at the state level, on which the EPA based its RE goals, include these options, commenters said. Commenters said that the EPA must include all these RE options in t he portfolio approach as states employ more than just wind and solar in their RPSs. Commenters said that it should also be allowed to count new and existing combustion turbines in the portfol io compliance plans as well as its landfill gas to energy projects.285

Commenters said that when calculating RE potential, the EPA relied in part on a regional RE growth factor calculated using the RPS of states wi thin that region, which was then applied to each state in that region, whether that state had a n RPS in place or not. Commenters stated this has the potential to make RE targets very aggressiv e in some states that have less RE potential, as well as no enforceability, and could result in u nattainable RE targets in those states. For instance, the commenters indicated that in the prop osed rule, Indiana is a member of the North Central region, along with eight other states in th e upper Midwest. Of these nine states, three (Indiana, North Dakota, and South Dakota) have non- binding renewable portfolio goals, while the rest have binding RPS, the commenters added. Th erefore, the commenters noted, the regional growth rate applied to Indiana was largely based on the renewable potential of other states. Further, the commenters added that within the North Central region, states like North Dakota, South Dakota, and Minnesota have substantially larg er wind speed potential than Indiana, as shown in the NREL's Annual Average Wind Speed map, yet these states are still grouped together in the same region for RE potential. Howev er, the commenters said that the RE potential from wind speed is very different. At 80 meters hig h, around half of Indiana has an annual average wind speed of 6.5 meters per second (m/s), whereas the majority of areas within both North and South Dakota show an annual average wind speed of 8.5 m/s, according to the commenters. Because these states are grouped togeth er for part of the RE calculation, it results in a higher calculated RE target for Indiana than is a ctually achievable, which in turn makes the state CO2/MWh goal rate lower than what is actually achievable, the commenters asserted. Further, each state with an RPS in place defines el ements within their programs very differently,
the commenters also said. Commenters noted that acc ording to the EIA's Annual Energy Outlook 2013, "Under [RPS], each state determines its own l evels of renewable generation, eligible technologies, and noncompliance penalties." Therefo re, commenters stated that using a regional approach, without taking into account the considera tions detailed above that relies in part on an average of RPS goals within those regions in order to calculate RE targets for states, is
unreasonable and untenable.

Commenters stated the EPA's North Central grouping regard to geography and renewable energy potential can be classified as unusual at best. Sta tes such as Minnesota, North Dakota, and South Dakota have vast potential for wind energy developm ent while mid-western states such as Indiana, Illinois and Michigan have limited potenti al for the same resource, the commenters said. Commenters stated to compare Indiana to the Dakotas would require the Dakotas to limit the value of their potential or make potentially unreal istic demands on Indiana. Unlike most of the other states in the EPA's North Central grouping, I ndiana's economy relies heavily on energyintensive heavy industry which requires low energy costs and reliable power sources to survive,
the commenters said. Commenters stated that examini ng the RPS standards for the states contained in EPA's North Central grouping does not provide a reasonable basis for logical comparison. Commenters stated over 44% of the state s contained in EPA's North Central grouping will have an RPS which expires in 2015 and one state has a megawatt goal rather than an RPS. The remaining 44% of the states have RPS targets which extend into 2025 (except Missouri, which expires in 2021), the commenters sa id. Also, commenters stated, those states which have RPS targets expiring in 2015 have targetgoals of 10%, while the states with RPS goals extending beyond 2020 have RPS goals between 15% and 25% (except Indiana which has set a voluntary goal of 10%).286

Commenters said that should the EPA move forward wi th this rulemaking, to create a more equitable and appropriate evaluation of regional re newable potential and allow for the establishment of realistic regional goals, the EPA must re-evaluate the existing groups as they now stand and re-align them.

Commenters indicated that basing renewable generati on targets on regional benchmarks leads to states being expected to make significantly varying investments in new projects. Three states, Iowa, Minnesota, and South Dakota, have already mettheir renewables targets in terms of percentage of total generation, the commenters poin ted out. Some states that have already made major investments in renewable generation, such as California and Colorado, still have a relatively long way to go to hit their projections, the commenters noted. In several cases, the commenters explained that neighboring states are pr ojected to have significantly different levels of renewable generation in 2030 despite similar starting points. For example, West Virginia has a 2030 projection of 12.5 percent, from a starting po int of 1.8 percent renewable generation, the commenters noted and neighboring Kentucky is starti ng from 0.4 percent, but its 2030 target is only 1.9 percent. It is difficult to understand why neighboring states would be expected to achieve renewable percentages that differ by a fact or of over six, the commenters questioned.

Comment 11: Commenters stated only incremental growth in renew able energy should be considered eligible in meeting goals.

Response 11: The information provided in this comment were valu able in finalizing the building block 3 methodology, particularly in expressing bui lding block 3 target generation in terms of incremental RE. The final methodology is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters said that the EPA proposes excluding exi sting hydropower resources from consideration under its BB3 proposal while only inc luding incremental hydropower resources prospectively. Commenters agreed with this approach insofar as only generation from incrementally new renewable resources can result in a net decrease of CO2 emissions from the baseline. Commenters noted that crediting existing renewable resources that are part of the baseline with lowering CO2 emissions above the base line is a fallacy; this can only result from incremental generation. Commenters stated this inco nsistency suggests that the goals for BB3 should be examined and adjusted accordingly. Commen ters stated only incremental growth in renewable energy, from the baseline year forward, s hould be considered eligible in meeting the CAA 111(d) goals. Commenters asserted that includin g existing renewable energy that is already "baked in" to the baseline does absolutely nothing towards reducing CO2 emissions below the
baseline.

Comment 12: Commenters recommended that the EPA consider speci fic resource profile and capabilities of each state in determining RE potent ials287

Response 12: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE at an interconnection level. The
EPA addresses considerations related to the technic al feasibility and availability of regional RE resources in both the preamble (section V.E) and GH G Mitigation Measures TSD. The BSER is forward-looking in identifying cost-effective oppor tunities for emission reductions from 2012; however, the cost and availability of these emissio n reduction opportunities is the result of many factors, including previous actions. The final buil ding block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Me asures TSD.

The following are summaries of the specific comment s under this comment:

Commenters said that the EPA does not adequately ju stify the grouping of the states into given regions, other than to aver that states within each region exhibit similar profiles of RE potential or have similar levels of renewable resources, as i nferred from a DOE study. However, Commenters stated, the DOE study is of technical RE potential, and the executive summary of the study states that "(t)he estimates do not consi der (in most cases) economic or market constraints, and therefore do not represent a level of renewable generation that might actually be deployed." Even were the technical potentials to be reliable indicators of relative commercial RE potential, they do not support the regional RE goal s that the EPA calculates. For example, commenters stated, the East Central region has only2.4 percent of the national RE potential in the DOE study, but has an RE goal of 16 percent of generation, while the Southeast region, which has 23 percent of the national technical RE p otential, ten times that of the East Central Region, has an RE goal of 10 percent, or one-third less.

Commenters further indicated that the EPA determine d state RE goals by setting regional goals and then calculating a RE growth rate for the regio n. It then applied that regional RE growth rate to each state's 2012 actual RE (MWh) from 2017 thro ugh 2029, the commenters added who further said that if a state reached the regional t arget before 2029, it made no further increases; this happened for 20 states. Commenters stated thatif a state fell short of the regional target by 2029, the lower value became its target; this happe ned for 24 states. As a result of these two factors, the final RE goals for each of the regions are less than the regional target originally derived to calculate the growth rate, the commenter s said. Commenters stated the differences are large and highly variable among the regions, rangin g from 9 percent below the putative regional goal for the East Central Region to 40 percent belo w the regional goal for the North Central region. Commenters stated this is favorable to a st ate like Arizona which had little RE in 2012 and is in the West region, which has only a 6 perce nt regional RE growth rate. Commenters said that as a result, the RE level used to calculate Ar izona's final overall emission rate goal is only 3.9 percent of its 2012 generation, compared to a n ominal regional goal of 21 percent. Commenters stated this is highly inequitable becaus e, according to the DOE study relied on by the EPA, Arizona has 5.8 percent of the total natio nal RE potential. By contrast, West Virginia, which has 0.07 percent of the national RE potential (1.2 percent of Arizona's potential) has an RE goal based on 14 percent of its 2012 generation, almost four times as great as Arizona's, the
commenters added.

Commenters argued that the overarching logic the EP A employed to derive RE goals is inconsistent with that used to derive the EE goals. For EE, the commenters indicated that the EPA based the goals on the 11 most aggressive state EE targets in the U.S and for RE, the EPA288

based the goals on average RE targets by region. Co mmenters stated if existing state practices
are considered indicators of "reasonableness" then the same approach should be used for both EE and RE. However, neither the regional approach used to set the RE goals nor the "11 best" approach used to set the EE goals adequately accoun ts for the unique situation in each state that determines its EE and RE potential, the commenters said. Commenters asserted the EPA should have done state-specific assessments of EE and RE t o reflect these differences.

Commenters expressed that because of EPA's methodol ogy, the final RE goals for each region are less than the original RE goals the EPA calcula ted by averaging state RPS goals. Commenters stated the differences are large and hig hly variable among the regions, ranging from 9 percent below the original regional goal for the East Central Region to 40 percent below the regional goal for the North Central region. Comment ers stated this results again from a failure to determine RE potentials on a state by state basis.

Commenters questioned the EPA's goals which are bas ed on compound annual increases in RE of more than 10 percent in 18 states, and 16 percen t or more in seven contiguous states in the East Central region (DE, NJ, PA, MD, WV, VA, and OH ) and asked if these increases are reasonable. Commenters also asked if the existing g rid could reliably handle that much intermittent electricity flow, particularly if the new RE generation sources are not near existing fossil generation units and distribution lines. Com menters stated in a number of states, biomass, which can be used as an on-demand resource, compris es a large percentage of the current RE portfolio (e.g., in Virginia is 100 percent). If growth in a particular RE source, such as biomass, is limited that makes the relative amount of intermittent renewable growth even larger than the rates cited above, the commenters noted.

Commenters indicated that the EPA has asked for com ment on how far back in time it should
consider CO2 reductions that would be considered as fulfilling the targets mandated in the proposed Existing Source NSPS. The EPA is asking fo r input for crediting such programs before the 2020 glide path and even before the baseline of 2012, the commenters said, but added that clearly the EPA has not, but needs to account for t he RE progress that has been made in Texas.

Commenters suggested that the question of timing an d credit should be asked another way and for Texas the question should be: given the RE capa city increases that have occurred in Texas what is the justification for requiring more; this is the question EPA must answer, the commenters said. Further, commenters said that the CAA requires the EPA to set BSER based on a "degree of emission limitation that is achievable" "taking into account the cost of achieving such reduction and any non-air quality health and e nvironmental impact and energy requirements." Commenters stated the foregoing establishes that the EPA has not determined
what is achievable in Texas or for other states in the region. Commenters stated that due to the differences in RE potential from state to state the determination of a target should be based on the what is achievable for each state taking into a ccount cost and energy requirements as set forth in the CAA. Commenters asked that the Agency obtain information from the states, through a NODA or otherwise, and re-publish targets on a stat e-specific basis.

Commenters asserted that there are fundamental erro rs in how the EPA developed Building Block 3 and applied it to Pennsylvania. Commenters stated the EPA's projections of RE savings289

under Building Block 3 for Pennsylvania are based o n an inaccurate calculation of regional RE generation and bear little resemblance to the state 's true renewable resource potential.

Commenters stated the formula used to calculate eac h state's RE goals is unsupported and misinterprets the nature of state RPS mandates. Fir st, the EPA assumes without basis that current state RPS mandates will be maintained at existing r amp rates rather than be revised (upward or downward) by state legislatures or public commissio ns, the commenters said. More importantly,
the commenters asserted the EPA confused the focal point of regulation for state RPSs. Commenters stated that in most states, including Pe nnsylvania, the state RPS sets mandatory minimum RE targets for load-serving entities as a p ercentage of their total retail sales. Most state RPSs do not provide mandatory minimum targets for R E generation, as the EPA incorrectly assumes, the commenters said.

Commenters stated that this distinction is importan t. A generation-based RPS target, such as that contemplated in Building Block 3, would effectively require a state to ensure the generation or purchase of a target percentage of RE at the wholes ale level (as measured against its total generation and purchased power portfolio), the comm enters said. But in reality, the commenters stated, a state RPS requires only that load-serving entities (i.e. public utilities selling and distributing power to retail customers) ensure thatthe target percentage mandate of RE capacity is delivered at the retail level (as measured again st its total amount of MWhs of energy sold). Thus, the commenters asserted there is a mismatch b etween how the EPA structured Building Block 3 and how most state RPSs actually work.

While EPA acknowledges that many state RPSs allow R E and RECs generated in other states to be purchased and used by in-state load-serving enti ties for compliance, commenters asserted the Agency fails to adequately account for such implica tions in quantifying its state RE goals. Indeed, the EPA provides no meaningful guidance on whether RE exporting or importing states
should count out-of-state bundled and unbundled RE toward achieving their emission targets, the commenters added. There are many reasons, including natural resource availability and geography, why states have taken different approach es to RE generation, but the primary reasons are cost and reliability concerns, the commenters e xplained.

The EPA's failure to account for the variety of sta te RPS approaches and the interplay of out-ofstate renewables ultimately causes EPA to overstate the RE potential of states like Pennsylvania, the commenters said. In particular, the commenters stated that states with high RE generation will be able to claim such generation for purposes of their state plans, even though a neighboring state like Pennsylvania, whose load-serving entitie s actually buy the RE and RECs from these states, cannot claim such generation for purposes o f meeting its state emission goal. Commenters stated such circumstances fail to support a showing that Pennsylvania can actually meet its RE targets under Building Block 3.

Specifically, under the Proposed Rule, Pennsylvania is included in a region for calculation of
available RE that includes three coastal states: Ma ryland, New Jersey and Delaware, the
commenters said. These coastal states have the abil ity to exploit offshore wind resources, while Pennsylvania as a "land locked" state cannot, the c ommenters said. Moreover, the region includes the District of Columbia, which, however, does not have any electric generation within its boundaries, the commenters added. Nonetheless, the EPA's methodology considers a purchase290

requirement of 20% for imported RE in the District as part of the basis of calculating what RE is available in Pennsylvania, the commenters noted.

In addition, the commenters said that the EPA has i ncluded two states in the region that do not have any current RE policies: Virginia and West Vir ginia. But instead of using the actual RPS level in each state (0%) for calculating the averag e RE available for all states, the EPA simply excludes these states for purposes of calculating t he average RE available for all the states in the region, the commenters added. Commenters said if t he EPA instead excluded these "zero RPS" states, the RE target for the region would decrease from 15.8% to 11.9%.

Commenters stated the proposed rule's various flaws in its calculation of RE emission reductions have significant impact on Pennsylvania. Commenters said the EPA calculated Pennsylvania's RE based on total electric generation in the State and did not account for the fact that Pennsylvania supplies a number of other states with electricity. Commenters presented a chart, which depicts that Pennsylvania is a net exporter o f electricity. Commenters stated the EPA projects that Pennsylvania will export approximatel y 42% of its generation, a rate exceeded by only 4 other states. This results in an inflated ca lculation of Pennsylvania's available RE, the commenters said. Commenters stated the EPA's projec ted 15.8% generation-based RE target is the equivalent of a 25.1% sales-based standard-an e specially aggressive standard considering the state's limited renewable options. Other factors fu rther inflate the EPA's projection of RE savings achievable in Pennsylvania, the commenters said, e. g., the EPA's RE calculations fail to account for load reductions contemplated under Building Blo ck 4 (demand-side energy efficiency savings). Commenters stated this omission effective ly raises the EPA's proposed RE savings target another 3%.

Commenters concluded by stating that in short, the EPA's formula and state plan methodology eliminate a low capacity RE state's ability to clai m CO2 emissions displacement from out-ofstate RE, yet impose an inflated RPS target on such states based on such generation. This leaves few alternatives for meeting the CO2 emission reduc tions achievable through increased RE generation, the commenters expressed. The EPA is es sentially mandating an inflated RE target reflective of a high RE capacity state on low RE capacity states, irrespective of how inefficient or exorbitantly costly it would be for that state t o build additional RE, and without any regard for the wide variation in state generation fleets and e nergy characteristics, the commenters said. Commenters stated with regard to Pennsylvania, this effectively serves to double the state's current 8% RPS to 16% (if the state decides to file a state plan on its own). Commenters asserted that such an unprecedented jump is unsupported in t he record and ultimately forces ratepayers to bear the increased costs. Thus, commenters stated, should the EPA proceed with its analysis under Building Block 3, it must revise its calculat ions and emission targets to ensure that all relevant factors are accounted for such that projec ted savings from renewable generation can actually be achieved. More specifically, commenters asserted the EPA should adopt an alternate state-specific approach in which threshold calculat ions of baseline RE and RE potential are measured against the specific resource profile and capabilities of each state.

Commenters said that the EPA has established targetlevels of RE goals by examining current mandatory state renewable portfolio standards (RPS) . In the plan, the country (excluding Alaska and Hawaii) was divided into six regions, the comme nters explained. Commenters added eight states constitute the southeast region, yet there i s only one state (North Carolina) in that group291

with a state mandatory RPS. Commenters stated the w holesale acceptance of this state's RPS and applying it to the RE goals of each state in the so utheast region, without consideration of specific components of North Carolina's RPS or the other sev en states renewable resource environment, yield untenable RE goals. It is no wonder that the CPP's non-hydro RE goals of 281 Twh/year by 2020 (from a base of 213 Twh/year in 2012) and 523 Twh/year by 2030 far exceed the EIA's forecast of nonrenewable energy of 275 Twh/year (20 20) and 317 Twh/year (2030) in the EIA's Annual Energy Outlook 2013, the commenters noted. I n fact, the commenters stated that the CPP's untenable RE goals far outweigh the EPA's own forecast of non-hydro RE of 356 Twh/year in 2030 as prepared in the June 2014 RIA.

Commenters proposed the following recommendations t o the EPA as EPA considers all of the comments received and revises the proposed rule acc ordingly. Specifically, commenters recommended that the EPA fix the regional averaging assumptions in the development of state RE goals in the CPP and develop state-specific goal s based on state-specific renewable

resources.

Commenters recommended that the EPA use the RE goal established in a state's REPS, if one has been adopted, rather than make arbitrary adjust ments to such REPS in the setting of a state's goal. For those states that have not adopted an REP S, the commenters recommended that the EPA allow states to choose between the RE goal as p roposed or the alternative RE goal as outlined in the proposal. The states can determine which calculation approach is most appropriate for their given situation, the commente rs suggested.

Commenters indicated that Michigan is poised to mee t its 2015 RE target of 10 percent of total electricity sales provided from RE sources. Comment ers stated Michigan will be evaluating opportunities for increased utilization of RE sourc es as a component of its section 111(d) compliance plan. Incentives to pursue a renewable p ortfolio standard that go beyond 10 percent for Michigan would be strengthened if the EPA provi des the opportunity for early reduction credits (as discussed in Section II.D), the comment ers reasoned, especially around RE generation installed between the baseline year (e.g. 2012) and 2020. In addition, commenters asserted the EPA should allow states to set state-specific renew able targets that are based on qualifying RE as
it is defined in that state. Commenters said states should be given the flexibility to utilize a number of options to demonstrate compliance with th e RE standards that are included in a 111(d) compliance plan and not just rely on RE certificate s (RECs) to demonstrate compliance.

Commenters said that the EPA is proposing to set a "best practices" scenario based on RPS already established by a "majority" of states ackno wledging "renewable resource development potential varies by regions." [79 FR 34866] Comment ers stated the EPA attempts to define BSER for this building block without using national averages and accounting for regional variation by comparing each state to a set of neigh bors rather than to a single national standard. [79 FR 34867] Commenters asserted it not only varie s by region, but by state, and the only appropriate analysis method would be to take into c onsideration what is technically feasible and
cost-effective within individual states.

Commenters asserted that the EPA did not adequately examine or characterize existing state RPS programs prior to regionalizing and averaging to de termine state goals. Commenters indicated that it understands that RE goals are based on a pe rcentage of total in-state generation. Thus, in292

2012, Ohio's total net generation was 129,745,731 M W-h, and the 2020 RE target for Ohio is 0.025%, or 3,286,937 MWh, commenters said, which ar e reflected in the GHG Abatement Measures TSD. However, Ohio's existing RPSs call fo r an incremental percentage of total retail sales occurring in the state, inclusive of out of s tate generation, the commenters added. This quantification varies amongst state RPSs, based on what each particular state felt was technically and economically feasible at the time with consider ation given to the best quantification method,
the commenters added. In combination with what the commenters asserted is an incorrect approach in setting renewable growth rates based on regional averages, differences in RE portfolios amongst the states call into question th e validity, representativeness, and feasibility of the RE goals.

Commenters continued stating that in a practical se nse, it appears that the EPA compiled RPS targets with little regard for the variations betwe en individual state RPS language and calculations. These variations provide the flexibil ity necessary for respective states to design RPS targets with the highest chance of success, the commenters said. Commenters presented examples of unique elements of Ohio's RPS, which in clude: providing the Ohio PUC with authority to classify any new technology as a quali fying RE resource; allowable non-compliance with the benchmark if the reasonably expected cost of electricity exceeds 3%; approvable adjustments to benchmarks due to availability of qu alifying RE resources both instate and within the PJM interconnection; the Ohio PUC may amend the benchmarks if they are not reasonably achievable due to "regulatory, economic, or technol ogical reasons" beyond reasonable control; banking of RE credits are allowed from year-to-year

.
Commenters added that the EPA has taken the targets and benchmarks from individual state RPS as a demonstration of RE potential, however, withou t consideration for state specific variables, the RE goal becomes more difficult to reach and mor e of a burden to Ohioans. To ignore these nuances embedded within state plans and force a one -size-fits-all approach is enacting arbitrary, capricious and inflexible mandates on states, the c ommenters asserted.

Commenters said Block 3, regarding low-carbon gener ation, should be revised to better reflect the economic potential within each state, along the lines proposed by the USC, rather than being based on averages of state policies that reflect a variety of other considerations. Commenters said that the EPA's primary proposal for determining how much each State might reduce its carbon emissions through increased use of low-carbon gener ation technologies such as renewable generation resources is based on regional averages of RE standards adopted by the states. These standards are based on a variety of considerations other than the technical and economic potential for a state to generate power using these technologies and consequently a number of perverse results follow, the commenters indicated, such as states, including Michigan, being expected by the EPA to do less by 2030 than they ha ve already done or already require to be done by some time earlier than 2030.

Commenters explained that the EPA's alternate propo sal bases its assessment of the potential contributions of renewable generation in proportion to the NREL's inventory of RE resources by state. However, commenters indicated that the pace at which RE resources can be deployed does not depend on the potential; rather the potential i n a state speaks to the ultimate limits of renewable deployment in that state. Further, the co mmenters stated that the EPA proposes to293

accept transfers of RE credits between states, maki ng the availability of resources within a state even less relevant to the pace at which a state can increase its use of renewable power generation.

Commenters therefore recommended that the final rul e base Block 3 on the historical experience of RE deployment by exemplary states, much as the E PA has done in the draft rule with respect to energy efficiency in Block 4. The recent proposa l by the UCS, "Strengthening the EPA's Clean Power Plan", provides an excellent example of this approach. UCS' proposal should be eminently achievable as it only proposes that the r enewables block for Michigan be about 20% renewables as a proportion of load by 2030 and Gove rnor Snyder's administration reported in 2013 that 30% renewables by 2035 was technically an d economically feasible without creating power reliability issues, the commenters concluded.

Commenters said that the EPA state emission rates i n the East Central Region must be recalculated due to the passage of SB310 in Ohio justprior to the publication of the EPA's proposed 111(d) rule. Commenters indicated Ohio SB3 10 amended energy efficiency and alternative energy resource mandates (including ren ewable mandates) by imposing a two-year pause on energy efficiency, peak demand reduction a nd RE resource requirements. Commenters
said it also eliminated both the RE resource in-sta te requirements and the advanced energy resource requirements, thereby reducing the former alternative energy resource mandate by half. Due to the timing of Ohio SB 310, the EPA did not r eflect the impact of this new state law in the BSER Building Block #3 calculations for the East Ce ntral Region, the commenters noted and therefore said the EPA must recalculate state goals within the region based on Ohio's SB310.

Commenters continued indicating that Ohio SB310 sta ted that "because the energy mandates in current law may be unrealistic and unattainable, itis the intent of the General Assembly to review all energy resources as part of its efforts to address energy pricing issues. Therefore, it is the intent of the General Assembly to enact legisla tion in the future, after taking into account the recommendations of the Energy Mandates Study Commit tee that will reduce the mandates in
sections 4928.64 and 4928.66 of the Revised Code an d provide greater transparency to electric customers on the costs of future energy mandates, i f there are to be any." Therefore, commenters expressed that the EPA's final 111(d) rule should p rovide a mechanism for re-calculating state target rates following future Ohio legislation base d on the recommendations of the Energy Mandates Study Committee.

In developing the target RE generation levels, comm enters indicated that the EPA calculated a hypothetical RES requirement for each region by ave raging the RES requirement of each state that currently has an RES requirement within the re gion. Commenters added that the EPA recognizes state expertise in developing RE goals, thus justifying the use of these goals in calculating BSER goals, and cited the following fro m the GHG Abatement Measures TSD:

"These state goals and requirements have been devel oped and implemented with technical assistance from state-level regulatory agencies and utility commissions such that they reflect expert assessments of RE technical and economic pot ential that can be cost-effectively developed for that state's electricity consumer"

However, commenters said that the EPA chose to excl ude that same expertise by the state of West Virginia simply because after an exhaustive ve tting and legislative process, the state294

determined that it could not support a mandatory RE goal. It was the state's informed decision, developed and implemented with technical assistance from state-level regulatory agencies, the utility commission, and interested public and priva te parties, no different from any other state that the EPA used in the calculation of a region's renewable potential, the commenters said. By excluding states like West Virginia that have deter mined their renewable mandate to be zero, whether through affirmative action or through a dec ision not to act on a legislative mandate, the commenters asserted the EPA disregards its own tech nical justification document. Commenters stated the EPA cannot and should not pick only thos e states that have concluded a specific outcome after study. Commenters thought the EPA sho uld accept all states' expert assessment of RE technical and economic potential that can be cos t-effectively developed for the state's electricity consumer-regardless of what conclusion that expertise leads to. Commenters said that to cherry pick a few states in order to produce a c ertain outcome undermines the credibility of EPA's technical support for this proposal, and stat ed either all states are experts or all states are
not. Commenters stated that the EPA should recalcul ate the target RE generation levels under Building Block #3 by including every state in the c alculation, incorporating states such as West Virginia as a zero since it imposes no RE mandate.

Commenters said that the EPA's approach also assume s that renewable programs are emission reduction programs, but the vast majority include a lternative compliance methods or "safety
valves" that do not result in emission reductions. In fact, commenters pointed out that environmental groups have consistently opposed the use of safety-valves under the logic that it
reduces investment in RE and allows for emissions t hat would otherwise not occur without such a mechanism. However, commenters noted, the EPA ass umes, for the purpose of setting BSER that a state will achieve its entire renewable requ irement through the procurement of allowed RE and actually achieve the emission reduct ion used to calculate BSER goals for individual states. Commenters stated this approach is simply not accurate and results in artificial inflation of RE assumptions and thus emission reduc tion assumptions. Commenters stated the
EPA must recalculate BSER in a manner that reflects the true emissions impact of all state RE requirements including calculating the impact of ea ch safety-valve mechanism (or alternative compliance mechanism). Additionally, within the NOD A the EPA requests feedback on ways that state-level RE targets could be set based on r egional potential for RE, the commenters said.

Commenters added that the EPA relied on historic RE development from the top 16 states. This approach overstates the RE development rate by rely ing only on data from those states that have been most successful in developing their renewable generation, the commenters asserted. Commenters stated that historic RE development shou ld be based on the experience of all states.

Commenters recommended, at a minimum, that the EPA review each state's RPS requirements
and determine if the state's definition of RE is th e same as the EPA's and adjust the state RE goals accordingly.

Commenters said that establishing BSER from impleme ntation of RE based on a state's existing fossil fuel generation is arbitrary. Commenters did not recommend this approach and recommended that to the extent Building Block 3 is determined to be a legal application of BSER, each state assess its own RE potential using appropriate technical and economic analysis to develop state-specific goals that are cost effec tive and practical. Commenters indicated that in295

North Carolina's case, the state's REPS represents the product of this analysis and the resulting RE target of 3.75% be used as the standard for Nort h Carolina.

Comment 13: The EPA has failed to actually analyze the Ohio pr ogram

Response 13: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.
The following are summaries of the specific comment s under this comment:

Commenters said that the state of Ohio is one of ma ny across the nation to have RPS developed. The EPA has used this fact on multiple occasions as justification for including RE targets. However, commenters stated that it appears that the EPA has failed to actually analyze the Ohio program. Recognizing the challenges of Ohio entitie s, commenters said that Ohio state legislation included provisions in their RPS that t ailor the requirements such that it is feasible, economical and workable in Ohio. For example, comme nters indicated that Ohio's RPS includes provisions which "electric utility or electric serv ices company may seek a force majeure determination from the commission for all or part o f a minimum renewable-or solar energy benchmark" (OAC rule 4901:1-40-06). This chapter se ts up detailed criteria a source would need
to submit to demonstrate a dire need to end their l egal requirement to meet compliance obligations, the commenters noted. The conditions t o qualify for force majeure are not effortlessly met nor are they readily given; but th e state of Ohio determined them necessary for cases of extreme need when developing Ohio's RPS, c ommenters added. Furthermore,
commenters said that under OAC rule 4901:1-40-07 el ectric utilities or service companies "may file an application requesting a determination from the commission that its reasonably expected cost of compliance with an advance energy resource benchmark would exceed its reasonably expected cost of generation to customers by three p ercent or more."

Commenters indicted that provisions such as force m ajeure and cost cap have not been accounted for in the EPA's rule. Federally enforceable RE wou ld not allow states the flexibility to apply such measures in cases when it is needed, the comme nters said. States would be locked into goals that do not account for real world changes an d do not allow state agencies to fully utilize their knowledge regarding these measures and what i s the most beneficial for the state, the
commenters noted. Commenters stated this further st rengthens Ohio EPA's desire to keep measures like RE and EE as state-only programs. Com menters also said states should have control over what programs are used to achieve stat e RE and EE goals and if a program becomes no longer economically beneficial or technically fe asible, the state can freely chose to take appropriate action without a lengthy SIP revision o r enforcement by the EPA or a citizen's suit.

Commenters concluded that in regards to implementin g EE programs in the state, Ohio has the following language in ORC 4928.66 (2)(b) [Appendix N]: "The commission may amend the benchmarks set forth in division (A)(1)(a) or (b) o f this section if, after application by the electri c distribution utility, the commission determines tha t the amendment is necessary because the utility cannot reasonably achieve the benchmarks du e to regulatory, economic, or technological reasons beyond its reasonable control." Commenters stated the EPA has afforded no similar296

opportunity for states to make adjustments that are warranted, yet used these very state programs to develop the goals. Commenters urged the EPA to r e-evaluate the RE and EE goals, base them on all provisions provided in the individual state RPS programs and provide needed flexibility for goals and state plans to be adjusted when warra nted, without the need for anti-backsliding provisions.

Comment 14: Technical and economic limitations to potential gr owth of RE in states has not
been considered.

Response 14: The final building block 3 methodology is based on historical deployment of RE resources and validated by modeling the economic po tential of incremental RE at a reduced cost.
The EPA addresses considerations related to the tec hnical feasibility and availability of regional RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters stated that the EPA failed to consider a ny technical or economic consideration which would limit the potential growth of RE in sta tes. For example, commenters said, the EPA
did not conduct a renewable resource assessment for any state. Similarly, commenters stated
EPA did not consider the infrastructure constraints that would inhibit significant increases in RE, and expressed one limitation is the need for additi onal transmission capacity needed to incorporate new intermittent resources and the EPA also failed to assess the practical limitations
associated with the construction of RE facilities. As a result of these flaws in the EPA's analysis, the EPA set RE targets for each state that are arbi trary and unreasonable estimations of renewable energy resources available in each state, the commenters concluded.

Comment 15: The EPA's proposal does not adequately consider in frastructure barriers.

Response 15: Building block 3 target generation is not assumed to increase beyond expected baseline performance until the first year of compli ance in 2022. Further, the phasing in of the building block 3 target generation level over time ensures adequate lead time for investments and planning necessary to begin to integrate higher lev els of RE. The EPA addresses this and other considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (se ction V.E) and GHG Mitigation Measures
TSD.

The following are summaries of the specific comment s under this comment:

Commenters said that the EPA's proposed action fail s to appreciate the difficulty in time and expense associated with developing new RE resources and associated transmission capacity. Commenters asserted, based upon its own experience, that many states will be unable to meet the EPA's interim 2020 goals because of the time it wil l take to develop the necessary generation and
transmission infrastructure.297

Comment 16: Deployment of solar and wind facilities and mini-g rids are expanding rapidly in
the U.S.

Response 16: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters indicated that the accelerated pace and expansion of investments in the Green Alternative Non-Hydro Electric Zero-Emissions Indus try Infrastructure (GANHEZII) will overlap improvements to existing grid infrastructur e under the CPP. The compliance phase-in period begins in 2020 and last 9 years, the comment ers noted. Deployment of solar and wind facilities and mini-grids are expanding rapidly in the U.S., employing a skilled workforce, and in the case of wind power, it's Made IN America too, t he commenters said. Commenters stated that by 2030, the compliance period start date, non-hydr o renewable energy generation will likely outpace fossil fueled EGU in the collective output- weighted-average of generating capacity vs
zero-emissions.

Comment 17: Commenters questioned the EPA's proposed treatment of biomass.

Response 17: Commenters in this section focused on the role of biomass-burning sources in RE target setting. Some commenters stated that EPA's p roposed goal-setting calculation assumes without justification that biomass burning EGUs do not emit CO2. Other commenters stated that the RE goals would be strengthened if EPA explicitl y excluded new biomass-burning EGUs from the justification for its new targets due to t he lack of guidance on accounting for biomass; the commenters noted that the EPA can justify its r eduction targets without assuming that
biomass is available and that it will reduce net GH G emissions. In contrast, some commenters stated that the RE goals are weakened due to the fa ct that EPA has omitted biomass power from its goal-setting IPM projections.

Biomass is included in the IPM baseline projection. Biomass is not considered part of the best system of emission reduction in this rule and there fore it is not included in goal-setting or compliance evaluations. However, similar to other t echnologies outside of BSER, biomass may be considered as a part of a state’s plan to meet t he emission guidelines.

For more information regarding Building Block 3, re fer to Section V.E of the preamble.

For more information regarding biomass in the IPM b aseline projection, refer to EPA v5.13 Base Case Documentation Supplement to Support EPA’s Prop osed Carbon Pollution Guidelines for Existing Electric Generating Units in the docket.

A discussion regarding the use of some biomass feed stocks for compliance purposes can be found in Section VIII.I and Section VIII.K of the p reamble.298

EPA developed the revised draft report, Framework for Assessing Biogenic CO 2 Emissions from Stationary Sources , to continue advancing our understanding of the ro le the use of biomass can play in strategies to address greenhouse gas emissi ons. Specifically, the Framework was developed as a policy-neutral framework for assessi ng biogenic CO 2 emissions from stationary sources—it was not developed as technical guidance in conjunction with any specific policy or program. The EPA is engaging in a second round of t argeted peer review of the revised draft
Framework

with the SAB in 2015.

A discussion regarding the current status of the de velopment of the revised Framework and how
information from the revised Framework and the related peer review processes could be use d to inform how states and EPA assess biogenic CO 2 can be found in Section VIII.I and Section VIII.K For more information regarding the Framework , see: http://epa.gov/climatechange/ghgemissions/biogenic- emissions.html

The following are summaries of the specific comment s under this comment:

Commenters said that the EPA incorporates projectio ns about future biomass-based power generation when setting emission reduction targets under the ESPS. Commenters added that state emission reduction targets are based on several fac tors, including an estimate about the extent to
which states will increase their reliance on renewable energy. In the proposed RE approach
described in the "GHG Abatement Measures Technical Support Document," the EPA establishes each state's RE baseline level using a dataset thatincludes electricity generated from biomass combustion, the commenters noted. Commenters explai ned that the Agency then extrapolates each state's renewable generation target, i.e., the amount of nominally zero-carbon RE that the EPA estimates the state can produce on an annual ba sis by 2030 from those baselines. The renewable generation targets are used to determine each state's overall CO2 reduction targets, the commenters said. Commenters also said the EPA's pr oposed approach sets targets based on renewable portfolio standards averaged across regio ns and assumes that the use of all RE technologies will grow at the same rate. Importantl y, commenters stated that the EPA's proposed calculation includes biomass-burning EGUs and assum es without justification that biomassburning EGUs do not emit CO2.

Commenters expressed that the EPA should explicitly exclude new biomass-burning EGUs from the justification for its proposed targets. Comment ers stated the EPA currently has no accounting system to distinguish biomass that will result in l ow-carbon pollution from that which will result in high pollution. Commenters stated the EPA recent ly started to outline an approach for exempting certain categories, but the approach is s till undefined and contains elements that are unlawful. Furthermore, the EPA can justify its redu ction targets without assuming that biomass
is both available and will reduce net GHG emissions , the commenters further noted. Commenters
asserted that as detailed in broader comments on th e ESPS being submitted by several of the undersigned organizations separately, there is ampl e evidence to support much stronger RE targets and that the EPA's targets will be stronger if they explicitly exclude new biomass.

Commenters stated that in their understanding of th e science relating to biomass for energy, there are clearly both good and bad forms of bioenergy. C ommenters focused their attention mainly on
those forms of biomass and beneficial use of methan e that are widely agreed to be beneficial to climate mitigation in the near term and long term. The CPP, commenters said, as written,299

profoundly underappreciates the potential of divers e bioenergy resources to mitigate climate change. Commenters acknowledged that the proposed rules clearly support smart bioenergy, as noted in the Preamble where the EPA states, "broadl y speaking, burning biomass-derived fuels for energy recovery can yield climate benefits as c ompared to burning conventional fossil fuels." Yet, commenters said the EPA failed to include new bioenergy in its IPM computer model of renewable energy growth, saying:

"The analysis in this TSD does not consider biomass renewables in its evaluation of renewable development potential for BSER (Best System of Emis sion Reduction), but the preamble discusses the possibility of a path for states to c onsider it in their plans."

Commenters stated that by omitting biomass power fr om IPM projections of new renewable energy generation potential, the EPA weakens the re newable energy goals for states. Commenters thought it also could result in some opp ortunities for bioenergy to be overlooked by states. Commenters added that this is especially od d because in the EPA's modeling for the proposed rule, existing biomass electricity (mainly standalone biopower and some cofiring) is included, and has zero associated carbon emissions. In other words, existing biopower in the IPM is assumed to be a priori carbon neutral, the c ommenters said. Although the EPA does not offer any rationale for this omission, nor for the inconsistent treatment of existing biopower emissions, this occurs in the context of the ongoin g debate over the accounting of biogenic carbon emissions from biopower, the commenters adde d. Commenters stated in the preamble to the Clean Power Plan, EPA states that "while biomas s and other biogenic feedstocks have the potential to reduce the overall level of CO2 emissi ons resulting from electricity generation, the contribution of biomass-derived fuels to atmospheri c CO2 is sensitive to the type of biomass feedstock used, and the way in which the feedstock is grown, processed, and ultimately combusted as a fuel for energy production." Comment ers concluded by noting that this debate has not been resolved by the EPA having issued Seco nd Draft Biogenic Carbon Assessment
Framework on November 19.

In contrast to commenters who largely believe that biomass should be considered carbon neutral, commenters noted that the Proposed Rule improperly treats biomass combustion as "zerocarbon" renewable energy in calculating state targe ts. Commenters said that this is contrary to the scientific literature, is not supported by any adequate explanation or justification and is inconsistent with the EPA's own modeling assumption s considering that the EPA's IPM model runs incorporate a non-zero emissions factor for CO 2 from biomass combustion. In this modeling, commenters said that generation and emiss ions from "[n]ew and existing non-hydro renewable capacity" are explicitly "included in the average emissions rates that are evaluated against the state goals for compliance." Moreover, commenters said, CO2 emissions from biomass consumption are included in the average emi ssions rate subject to the CO2 constraints. Commenters stated that it does not appear that the EPA used its own modeling assumptions in setting emissions targets for individual states. Co mmenters said that the Proposed Rule, as set forth in the GHG Abatement TSD, includes biomass ge neration as "renewable energy," while the Goal Computation TSD includes all renewable generat ion in the denominator of the targetsetting equation, but does not include any associat ed emissions in the numerator. Commenters stated this means that all renewable generation, in cluding biomass generation, is effectively considered "zero-carbon" in setting state targets. Commenters concluded that the Proposed Rule neither explains nor justifies this treatment, whic h contradicts both the IPM model assumptions300

and EPA's acknowledgments elsewhere in the Proposed Rule that the net atmospheric effects of bioenergy generation may vary considerably dependin g on feedstocks and generation methods.

Comment 18: Many states have less stringent RPS goals for co-o ps and municipal utilities

Response 18: State RPS requirements are not a factor in quantif ying the amount of cost-effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters indicated that many states have less str ingent RPS goals for co-ops and municipal utilities, but the EPA only applied the more string ent primary RPS goals for these states. Commenters asked why the EPA claims that doing so i s "inherently conservative" and further asked if this does not make state goals more string ent.

Comment 19: States with geographical locations where natural r esources are available have an advantage over other states; this creates inequitie s

Response 19: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE at an interconnection level. The
EPA addresses considerations related to the technic al feasibility and availability of regional RE resources in both the preamble (section V.E) and GH G Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters said that there are a few issues of conc ern in EPA's inclusion of renewable energy in the state goal calculation. The EPA includes ren ewable energy in the state goal calculation by calculating a baseline level of RE generation in ea ch state and setting a target level of performance, the commenters explained. Renewable en ergy is largely dependent on the availability of natural resources such as sun, wind , and water, the commenters continued, adding that states with geographical locations where these natural resources are available have an advantage over other states that lack the same reso urces. Commenters stated this introduces yet another inequity amongst the states since renewable are included in the state goal calculation. For instance, commenters asserted states with wind power will potentially meet their state RE goal much sooner than other states that do not have this same natural resource as readily
available.

Comment 20: Integrating new wind and solar resources will incr ease the challenges of reliably operating the ERCOT grid.301

Response 20: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the i mposition of intermittent RE limits at the IPM region level, as described in section V.E.6 of the preamble and in the GHG Mitigation Measures
TSD. The EPA addresses this and other consideration s related to the technical feasibility and availability of RE resources in both the preamble ( section V.E) and GHG Mitigation Measures
TSD.

The following are summaries of the specific comment s under this comment:

Commenters said that integrating new wind and solar resources will increase the challenges of reliably operating the ERCOT grid. In 2013, almost 10% of the ERCOT region's annual generation came from wind resources. To accommodate this level of intermittent generation, commenters explained that ERCOT has needed to evalu ate impacts on operational reliability and improve wind output forecasting capabilities. The i ncreased penetration of intermittent renewable generation, as projected by the modeling results, will increase the challenges of reliably operating all generation resources, the co mmenters continued. Commenters stated if there is not sufficient ramping capability and oper ational reserves during periods of high renewable penetration, the need to maintain operati onal reliability could require the curtailment of renewable generation resources. Commenters antic ipated this would reduce production from renewable resources, leading to possible non-compli ance with the proposed rule deadlines.

Commenters added that based on the CSAPR and $25/to n CO2 scenario, intermittent renewable generation sources will contribute 22% of energy on an annual basis in 2029. Commenters stated that however, during 628 hours of the year intermit tent generation will serve more than 40% of system load. During 128 hours, instantaneous renewable penetration will be higher than 50%, and the peak instantaneous renewable penetration fr om the model results is 61%, the commenters added. Commenters added that the significant change from present experience is that the highest renewable penetration hours will be driven by maxim um solar production during relatively high wind periods. These periods occur during the day (8 a.m. to 5 p.m.), as opposed to early morning hours (usually 2 to 4 AM), as currently experienced in the ERCOT region, the commenters said. Commenters stated the high instantaneous renewable penetration hours in 2029 occur year round except for the July-September period. Commenters sa id that Figure 11 (titled: "Days with Highest Instantaneous Penetration of Renewables") s hows generation output by fuel type for the days with the highest instantaneous penetration of renewables in 2029 in the $25/ton CO2
scenario.

Commenters explained that due to load growth, the l owest net load (defined as total load minus generation from intermittent energy resources) in 2 029 is higher than the current record (14,809 MW in 2014 and 17,611 MW in 2029). Therefore, durin g low net load hours there will be no significant change compared to current operating co nditions in terms of MW of thermal generation online, inertial response and frequency response available during generation trip events, the commenters further explained.

Commenters stated significant increase can be seen in net load ramps compared to current experience. Commenters stated while the net load do wn ramps in 2029 are still largely defined by decreases in load at night, as is the case curre ntly, the highest net load up ramps are defined by rapid solar production decline at sunset and sim ultaneous decline in wind production during302

evening load pick-up. Commenters presented Table 19 (titled: "Maximum Ramp-up and RampDown"), which displays the maximum ramp-up and ramp -down in 202.9 in the $25/ton CO2 scenario. Commenters also presented Figure 12 (titl ed: "Highest Three Hour Net Load Ramping Day"), which shows wind and solar generation outputand customer demand (load) on the day with the highest three hour net load ramp in 2029 f rom the CSAPR and $25/ton CO2 scenario.

Commenters stated that the simulation model assumes perfect foresight and ensures that there is a sufficient amount of thermal generation with suff icient ramping capability committed to follow such rapid net load ramps. In real time operation, however, the commenters said that accommodating the maximum ramps resulting from simu ltaneous solar and wind generation decline would be more challenging. Commenters state d that at times, the existing and planned generation fleet will likely need to operate for mo re hours at lower minimum operating levels and provide more frequent starts, stops, and cyclin g over the operating day. Commenters stated it is important that market mechanisms are adopted so that the need for flexible generation (with short start-up times and high ramping capability) i s reflected in real-time energy prices. Market mechanisms to include dispatchable load resources c ould also help to address flexibility needs, the commenters thought. Enhancing wind and solar fo recasting systems to provide more accurate wind and solar generation projections will become i ncreasingly important, the commenters also said. Commenters stated regulation and Non-Spinning reserves will need to be increased to address increased intra-hour variability and uncert ainty of power production from wind and solar. Also, commenters added that tools available to system operators must be enhanced to include short-term (10-min, 30-min, 60-min, 180-min ) net-load ramp forecasts and simultaneous assessment of real time ramping capability of the c ommitted thermal generation to assist operators in maintaining grid reliability.

Commenters asserted that though all solar capacity additions predicted by the model were utilityscale, it is likely that a significant portion of f uture solar generation capacity will be embedded in the distribution grid (e.g., rooftop solar and smal l scale utility solar connected at lower voltage levels). Commenters stated ERCOT does not currently have visibility of these resources. To produce accurate solar production forecasts, the co mmenters said that ERCOT would need to have improved information regarding the size and lo cation of distributed solar installations. Additionally, to ensure grid reliability, there wou ld need to be increased consideration of operational activities on the distribution and tran smission systems, the commenters added. Commenters stated they are currently pursuing a rul emaking to improve and expand the data submitted annually to the PUCT on distributed gener ation facilities.

Based on ERCOT's modeling, the majority of new rene wable generation resource additions are anticipated to be solar, the commenters said. Howev er, if instead ERCOT sees a large amount of wind resource capacity additions, then the reliabil ity impacts may be more severe, the commenters predicted. Commenters stated wind produc tion in West Texas results in high renewable penetration during early morning hours, w hen load is lowest. Commenters further added that a larger expansion in wind production re lative to solar may result in lower net loads and significant reliability issues. Commenters said that if ERCOT cannot reliably operate the grid with these high renewable penetration levels, then production from these resources will be curtailed to maintain operational reliability. Shou ld this occur, commenters said, it would reduce production from renewable resources, leading to pos sible non-compliance with the proposed rule
deadlines.303

Comment 21: Believe that 2030 RPS targets should be used over 2020 RPS targets

Response 21: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.

The following are summaries of the specific comment s under this comment:

Although commenters support the Alternative Approac h, commenters were compelled to point out a number of opportunities to improve the calcul ations under the Proposed RPS Regional Approach. Commenters said that should the Proposed Approach be utilized, the EPA should use 2030 RPS averages for 2030 targets rather than 2020 targets. Commenters thought that utilizing the average 2020 RPS as a target for 2030 within a region underestimates the ability of renewable energy to deliver achievable and cost eff ective emissions reductions. This simple change impacts the regional RE targets, the annual regional growth factors, and thus the proposed goals in 41 states, resulting in a total i ncreased RE target of 64,316 GWh in 2030, the
commenters said.

Commenters stated should the EPA default to the current approach (RPS approach) in setting state targets, several key changes must be made. Co mmenters stated that while they are not in favor of the current approach (RPS approach), shoul d the EPA default to this, there are two key changes that must be made: use the highest RPS in a region, and use 2030 RPS targets.

First, commenters said that the EPA should use the highest RPS in a region to set the state targets, not the average RPS. The current approach groups states into 6 different regions and takes the average of the 2020 RPS goals for those s tates in that region and multiplies this by the total 2012 generation for the region, the commenter s explained. The EPA chose this RPS approach for two principal reasons, the commenters indicated: First, in establishing the requirements, states have already had the opportuni ty to assess those requirements against a range of policy objectives including both feasibili ty and costs. Second, commenters said, that renewable resource development potential varies by region, and the RPS requirements developed by the states necessarily reflect consideration of the states' own respective regional contexts. The highest RPS goal in the region still fits within th e principal reasons the EPA used, as the state will have weighed the feasibility and cost of the R PS policy against other policy objectives, yet still arrived at the aggressive RPS goal, the comme nters continued.

Furthermore, commenters noted that there are many i nstances where solar deployment has exceeded RPS deployment schedules, indicating that the RPS goal could have been more aggressive. For example, in New Jersey, Pennsylvani a, Arizona, California and Massachusetts, solar has already exceeded the RPS goals, the comme nters pointed out. These aggressive goals are an indication that higher levels of renewable e nergy deployment are viewed as possible in each respective region, the commenters thought. Als o, a recent report from former Senator Jeff Bingaman notes that only five of twenty-nine states have fallen below 90 percent of expected annual progress toward RPS targets, the commenters said.304

Secondly, commenters recommended that the EPA shoul d use 2030 RPS targets, not 2020 targets in setting the state goals. As the complian ce period for the CPP rule extends out to 2030, not 2020, commenters asserted that selecting the RP S goals for 2020 severely limits the renewable energy potential for an entire decade. Fo r example, commenters stated that the RPS goal for HI is set for 40 percent by 2030, compared to just 25 percent by 2020. Minnesota also has a 10 percent solar target by 2030, in addition to other RPS goals. Today, 2020 RPS goals are less than 6 years away, and by the time the rule is made final, less than 5 years away,
commenters noted. Commenters added that utilities are already planning for these RPS requirements in 2020 as part of their short term pl anning processes. Selecting a 2030 RPS goal sends a clear message on the potential for a state to include renewables as part of a balanced state energy portfolio by 2030.

Comment 22: The EPA should solely rely on the IPM model for se tting the state targets.

Response 22: The information provided in this comment was valuable in finalizing the building block 3 methodology, particularly in relying on IPM projections to validate building block 3 target generation levels from both a cost and techn ical feasibility perspective. The final building block 3 methodology is described in section V.E of the preamble and in the GHG Mitigation
Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters said that the EPA should solely rely on the IPM model for setting the state targets. Unlike the technical potential, the IPM model takes into account the cost of building renewable generation, as well as grid conditions in a state a nd a number of other factors, the commenters explained. In addition, commenters noted that the I PM model considers the resource potential that is considered by NREL's technical potential. C ommenters asserted that with the correct solar data inputs, the IPM model provides a realistic pro jection of solar energy potential at the state level that can be relied upon for setting state goa ls.

Further, commenters indicated there is precedent to rely solely on the IPM model for setting the renewable targets in each state under the alternati ve approach. Commenters said that the EPA currently uses the IPM model to analyze the impact of air emissions policies on the U.S. electric power sector such as the Clean Air Interstate Rule, Cross State Air Pollution Rule (CSAPR), the Mercury and Air Toxics Standards (MATS), and the pr oposed Carbon Pollution Standards for New Power Plants. Further, the commenters said thatthe EPA also notes that for the development of its latest power sector modeling pla tform, the EPA has increased its external engagement with state air quality planning official s, power company representatives, regional transmission organizations, and others who have pro vided input on the data, assumptions, and structure of EPA's Power Sector Modeling Platform v .5.1, which shows that the model includes feedback from a variety of stakeholders, and can be used reliably to set the state targets for compliance.305

Comment 23: Other approaches to setting the renewables portion to the state targets, such as the UCS' demonstrated renewables growth approach, show double the amount of RE potential

Response 23: The methodological elements provided in this comme nt were valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters said that other approaches to setting th e renewables portion to the state targets show double the amount of RE potential using the correctdata for renewable energy. Other approaches to setting the renewables portion to the state targ ets, such as the UCS' demonstrated renewables growth approach, show double the amount of RE poten tial using the correct data for renewable energy, the commenters stated. Commenters stated th e UCS demonstrated growth approach would improve on the EPA's proposed approach by inc orporating the following core
components:

"Setting a national renewable energy growth rate be nchmark based on demonstrated growth in
the states from 2009 to 2013.

Assuming full compliance with current state RES pol icies, as set by law that require certain percentages of electricity to come from renewable s ources.

Accounting for actual and expected renewable energy growth between 2013 and 2017."

Commenters added that the UCS state level RE target s begin in 2017, the proposed start date for state implementation plans, and ramp up through 203 0. To determine each state's 2017 generation levels, the UCS uses actual generation d ata from 2013 (the EPA's approach uses 2012 data) and adds projected generation from wind and u tility scale solar projects known to be under construction through 2016, the commenters said.

Comment 24: Has not been adequately demonstrated that non-comb ustion renewable sources can serve as providers of base load power.

Response 24: The EPA addresses considerations related to the te chnical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters did not believe that it has been adequat ely demonstrated that non-combustion renewable sources can serve as providers of base lo ad power. Commenters did not believe that the differences in generation dispatched to serve v arious demand levels were considered fully in either the RE goal setting calculations or the IPM model. Thus, commenters stated, there are significant grid reliability concerns that have notbeen adequately addressed. Commenters strongly encouraged the EPA to take into account ho w those renewable sources, available to each individual state at reasonable cost, fit into the generation mix and how those units would306

serve on the grid, in both vertically integrated an d deregulated power markets. A clear distinction between base load and non-base load capable renewab le sources must be made in both the goal setting and IPM projections, the commenters said.

Comment 25: Commenters asserted that the EPA can increase the RE targets and should reevaluate its methodology and inputs.

Response 25: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Some commenters asserted that EPA can increase the RE targets and should reevaluate its methodology and inputs.

Commenters stated the EPA should assume greater ann ual growth rate for renewable energy initiatives, which is more accurate and realistic. The EPA's assumed average annual RE growth
rate of 0.65% results in 12% national renewable ene rgy production by 2030, the commenters said
and recommended the EPA increase this assumed annua l rate and national renewable energy production potential.

Commenters continued by stating that in order to ca lculate state goals for renewable energy production in its proposal, the EPA divides the nat ion into six regions and establishes conservative regional targets for renewable energy by averaging the 2020 targets of existing state-level RPS within each region. RPSs set a prop ortion of renewable electricity that utilities are required to supply over time, the commenters sa id. The EPA then calculates the annual growth rate needed to achieve the regional target i n 2029, using state renewable energy generation levels in 2012 as the baseline, the comm enters continued. Under the EPA's assumptions, the commenters indicated that the CPP would result in 12% renewable energy production on a national level by 2030. However, th e commenters asserted the EPA's assumptions do not accurately reflect current state policies and RPS targets as noted below.

While commenters did not recommend specific nationa l or state targets, the EPA's estimates clearly do not reflect the reality of state renewab le energy policies. As such, commenters stated that the EPA should reevaluate its methodology for calculating state's RE potential and adjust its targets. For example, the EPA may want to consider the methodology outlined in the paper titled Strengthening the EPA's CPP by the UCS, the comment ers recommended, which more accurately reflects current RPS policies and result s in national renewable energy production of 23% by 2030 (see Attachment A). Commenters describe d their methodology:

• First, commenters used EIA data to calculate each s tate's average renewable energy growth rate over the five-year period from 2 009 to 2013. Commenters found that, on average, states increased their rene wable share of electricity sales by 1 percent annually (EIA 2014). This growth rate serves as our national benchmark, the commenters noted. The 2009-2013 benc hmark period accounts307 for the recent rapid growth in wind and solar techn ologies; it eases fluctuations in development due to uncertainty around federal tax c redit expirations and extensions and captures much of the historic develo pment spurred by state RES [Renewable Electricity Standard] policies-a key dri ver of renewables growth, commenters said. Further, commenters stated that 11 of the 15 leading states that have achieved growth rates at or above the national benchmark from 2009 to 2013 have also achieved a 1 percent or higher average an nual growth rate over a 10- year period from 2004 to 2013.

• For states below the 1 percent national benchmark, commenters assumed that they gradually ramp up to that rate from 2017 to 2020. C ommenters explained that this period therefore serves as an opportunity for state s that have not been as active in deploying new renewable energy sources to catch up to the national benchmark. Further, commenters said that the renewable energy is assumed to grow after 2020 in these states at an annual rate of 1 percentof total sales through 2030.

• For the 15 leading states among those that have bee n deploying renewable energy at or above the national benchmark, commenters incr eased their respective renewable energy targets from 2017 to 2030 at each state's average annual growth rate during the five-year benchmark period, up to a maximum of 1.5 percent per year. Commenters viewed this as a reasonable upper limit that can be sustained over time in states with strong renewable energy po tential. Moreover, a 1.5 percent growth rate is consistent with renewable en ergy targets set by leading RES states, the commenters noted.

• Commenters finally stated that to account for full compliance with mandatory state RES laws, it assumed that states achieve the greater of two measures: the generation projected by our growth rate approach; o r the level needed to meet states' respective RES targets for each year from 2 017 to 2030, as projected by the Department of Energy's Lawrence Berkeley National L aboratory (LBNL 2013). To ensure reasonably achievable renewable energy pe netration rates during the compliance period, commenters also capped the total share of renewable generation for any state at 40 percent of total sta te electricity sales, a level that several studies by grid operators, utilities, and g overnment agencies have shown can be achieved at the state and regional level in this timeframe while maintaining reliability. Only seven states hit this cap prior t o 2030.

Commenters expressed that the EPA should significan tly increase its targets for renewable energy. Commenters cited to a 2014 analysis by the Union of Concerned Scientists (UCS) found that states can increase their share of electricity generation from renewable energy sources by nearly double the EPA targets-23 percent rather tha n 12 percent. The UCS analysis is based on reasonable, even modest assumptions, involving pastgrowth in renewables and state-law renewable-energy targets, the commenters said. For states performing below the national average of 1 percent annual growth in renewables, UCS assum es the states can merely bring their growth up to average, the commenters noted. Commenters add ed that it then projects that highperforming states can achieve growth of 1.5 percent , a figure consistent with the targets set by308

the laws of leading states. Commenters said that fo r each state, UCS then assumes that the state will meet the greater of UCS's projected growth rat e or the state's legally required rate.

Commenters asserted that the EPA should apply a rec ent renewable energy annual growth rate based on 2013 renewable energy generation values. T he EPA should set the renewable energy target as the higher of the two methodologies, eith er a flat regional renewable energy level applied to a state, or the annual growth rate based on 2012 renewable energy generation levels,
the commenters said. Commenters stated the EPA shou ld ensure that renewable energy generation targets do not act as ceilings.

Commenters asserted that if the EPA raised its proj ections for building blocks three and four, which are the renewable energy and energy efficienc y blocks, that we would see a higher carbon emissions reduction level and create unprecedented economic development for the state and job growth through increased energy efficiency to annua l savings of 1.5 percent, increasing renewable energy up to 15 percent of the state's ge neration, and full deployment of combined heat-power systems.

Comment 26: There may be boundary issues associated state emis sion rate goals.

Response 26: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE at an interconnection level. The
EPA addresses considerations related to the technic al feasibility and availability of regional RE resources in both the preamble (section V.E) and GH G Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Some commenters expressed that there may be boundar y Issues associated state emission rate goals.

Commenters stated that if the EPA finalizes guideli nes that allow a state to include in its compliance plan any renewable, regardless of where it is generated (which commenters support), then it may be necessary for the EPA to revise stat e-specific goals to reflect the renewable power produced in 2012 that was assigned to another state . Commenters stated this would result in a decrease in the stringency of the emission rate goa ls for states that exported renewables in 2012.

Commenters indicated that the EPA's assumptions reg arding RE are unrealistic and do not recognize the fact that many utilities build RE gen eration into their portfolio by purchasing energy from outside the state. Commenters said thatit is unclear in the proposal how that impacts the targets that the EPA has set for each s tate.

Commenters said that in determining the emission re ductions possible from renewable resources, the EPA establishes annual RE targets based on the physical location of renewable power plants. Commenters stated this approach is problematic beca use it does not correspond with the way most existing RPS work. While existing renewable po wer projects are used to set targets for the state where they are located, those same projects m ay not be available to that state for CPP compliance because they are used by other states to meet RPS goals, the commenters explained.309

For instance, commenters said, 55% of the renewable power generated in Oregon in 2012 - and used to set Oregon's target - is used to meet other states' RPS goals. Further, the commenters stated that the EPA's proposed approach also create s a mismatch between CPP renewable power targets and equivalent RPS goals for individual sta tes, because the EPA bases its targets on the states' generating capacity while most RPS obligati ons are based on retail electric power sales. Commenters provided a solution which was for the EP A to improve its proposed approach to renewable energy by applying regional renewable tar gets to retail electric sales rather than total electric generation, which would solve compliance i ssues and more closely align with the RPS policies that help justify EPA's approach.

Commenters asserted the Proposed Rule is inconsiste nt in how it calculates the Building Block 3 goals and how it would allow states to demonstrate compliance with those goals. The EPA calculated state emission rate goals based on the a mount of non-hydroelectric RE generated in a state, even if some or all of that RE generation is being used to meet out-of-state RPS, voluntary corporate goals, or other commitments, the commente rs said. At the same time, the EPA proposes to allow the end-user to count that RE tow ards compliance with the end-user's target,
even if that user serves load in a different state from where the RE was generated, the commenters said. See 79 Fed. Reg. at 34,922. Commen ters asserted the EPA must be consistent in how it accounts for RE that is generated in one state and purchased by an entity in another state. Commenters expressed that if the EPA allows the purchasing state to count the RE towards compliance with its state goal, then that energy sh ould not be included in the calculation of the generating state's goal. To address this problem, c ommenters suggested that the EPA remove all RE from the calculation of BSER, but continue to al low its use for compliance by the end-user.

Commenters indicated that the EPA bases its RE goal s on generation in a state, but state RPS programs are based on consumption in the state; a c ertain percentage of electricity sales, not generation, must come from RE sources. For a state that is a net exporter of electricity, its RPS reflects at most the amount of in-state consumption that must be supplied by RE, the commenters said. Therefore, commenters asserted that basing th e RE goal on in state generation has a profound adverse effect in states like West Virgini a or Wyoming which consume in-state less than half of their generation.

Commenters indicated that existing renewable energy resources have been significantly financed and used by out of state customers. Commenters stat ed the EPA, which generally ignores interstate electricity trade in the proposed rule, gives no consideration to this fact and gives state s where the physical asset is located 100 percent of the credit in their goal calculation.

Comment 27 : The Agency has not provided a workable coordinati ng mechanism for implementing BB3, which requires extensive coordina tion between states.

Response 27: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE at an interconnection level. Additionally, building block 3 target generation le vels do not exceed baseline projections until 2022, providing ample time for state coordination a nd planning. For additional resources and guidance related to incorporating CO2 emission redu ction measures in both single state and multi-state plans, refer to section VIII of the pre amble. The EPA addresses considerations related310

to the technical feasibility and availability of re gional RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters said that the EPA's Building Block 3 wou ld require extensive coordination between States, yet the Proposed Rule does not provide for any workable coordinating mechanism. For example, commenters indicated that PowerSouth is participating in a variety of renewable energy projects, including funding, in part, the construct ion of the Vogtle nuclear power plant in Georgia and a wind energy project development in Io wa. Commenters stated that although these projects will generate power in other States, some of it will be consumed in Alabama and Florida. Commenters asserted the EPA must provide a workable method for the inclusion of energy generated in one State, but consumed in anot her state into state goal calculations and compliance. In doing so, commenters encouraged the EPA to allow States consuming out-ofstate renewable energy to include that generation a s a credit towards their compliance with Building Block 3 goals. The EPA's current proposal for state-by-state regulation with no workable coordination among States is a salient exa mple of how this Proposed Rule is untenable on its face, the commenters said. The unworkable na ture of EPA's proposal cannot be addressed by a simple fix and the EPA must withdraw its Propo sed Rule and address these issues, the commenters said. Commenters stated as currently wri tten, EPA's proposed Building Block 3 is arbitrary and capricious.

Comment 28: The EPA should address the fundamental inconsisten cy between goal setting and state plan compliance options regarding renewable e nergy

Response 28: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE generation at an interconnection level. Building block 3 is comprised of incrementa l RE and all BSER RE technologies are fully creditable in compliance. The EPA believes these ad justments from the proposed rule address the commenters’ concerns regarding a disparity between goal-setting and compliance. The final building block 3 methodology is detailed in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters indicated that in the proposed rule, goa l setting is based on net generation within a state's boundaries. All of a state's RE generation (except hydropower) was used to determine the starting point, ramp-up rate, and final RE goal for Building Block 3, regardless of whether that energy is exported and used for compliance with an RPS in another state, the commenters said. For states that are net exporters of RE, this creat es a more stringent goal than would exist if the methodology relied on consumer sales, the commenter s added. In addition, the commenters also said, compliance options for state plans seem to fa vor giving credit for RE to consuming states through the use of renewable energy certificates (R ECs) or other purchases. Commenters said that importing states are allowed to claim the cred it for RE without a downward adjustment to their goals (related to in-state RE generation) whi le exporting states would not be allowed to claim credit, even though their goals were made mor e stringent. Commenters stated this favors311

consuming states at the expense of producing states , and that the exporting state is, in effect, paying for the RE credit options of importing state s.

Commenters asserted that two options exist for addr essing this fundamental inconsistency. Each option offers both advantages and disadvantages whi le addressing the disparity between goal setting and plan compliance options, the commenters noted.

Option 1-Commenters recommended adjusting the goal setting methodology to be based on consumption rather than production. This aligns mor e closely with RPSs, the commenters said, which are also based on consumption. This has the d isadvantage of ignoring the other drivers of RE, such as tax incentives, the commenters also sai d. Currently, commenters indicated that tax incentives are important for attracting developmentof RE resources, but those incentives will become less attractive to states if they are not co nsidered in the CPP.

Commenters expressed that the Final Rule should rec ognize that exporting states may have made a significant investment in RE development (e.g., P roduction Tax Credits and other tax incentives) and that importing states are only maki ng an investment to the extent that the purchase price exceeds the cost of other available electricity generation. If so, the commenters stated, an allocation agreement may be necessary to give CPP credit to both the exporting and the importing states. This allocation could be base d on dollars spent or it could be based on other criteria agreed to by participating states, the com menters suggested. This eventuality should be stated explicitly in the Final Rule language, the c ommenters said, and added that as it currently reads, the importing state is favored.

Option 2-Commenters recommended changing the requir ements for claiming credit for RE generation to align with the goal setting methodolo gy by allowing producing states to claim credit for all in-state RE generation. Commenters a sserted that this has the advantage of being simpler and reducing the possibilities of double co unting. However, commenters said, it has the disadvantage of overlooking the contribution that R PSs have historically made as significant drivers for RE development. (Note, however, that as RE resources reach cost parity with fossil fuel resources, the RPSs will have less significanc e, the commenters said.) It may also have the unintended consequence of dis-incentivizing RE deve lopment in states where consumption is low, the commenters concluded.

Comment 29: Renewable Energy Resources Need to be Allocated to the Correct Utilities (States)

Response 29: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE generation at an interconnection level. The process for incorporating CO2 emission r eductions in state plans is provided in section VIII.G of the preamble. The final building block 3 methodology is detailed in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:312

Commenters stated to have a significant portion of their renewable energy assets located outside
of Wisconsin where the renewable resources are more efficient and cost effective. Commenters stated that for example, their Top of Iowa III faci lity is located in Iowa, but connected to Wisconsin through the regional transmission grid. S ince the commenters' customers pay for this renewable generation, commenters stated that they s hould receive credit for those resources in both state and Federal compliance programs. Comment ers stated that the EPA should correct the accounting for renewable resources in the state goa l calculation by including resources owned or contracted by an entity in a state which are locate d outside of their physical boundaries.

Comment 30: There should be symmetry between goal calculation and compliance calculation.

Response 30: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE generation at an interconnection level. Building block 3 is comprised of incremental RE and all BSER RE technologies are fully creditable in compliance. The EPA believes these ad justments from the proposed rule address commenters concerns regarding a disparity between g oal-setting and compliance. The process for incorporating CO2 emission reductions in state plans is provided in section VIII.G of the preamble. The final building block 3 methodology is detailed in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters asserted there should be symmetry betwee n goal calculation and compliance calculation. In the case of RE, the EPA has include d all of the RE generated within each state for
the 2012 baseline from which it has calculated the RE building block, the commenters said. Yet, commenters stated, the EPA is proposing another app roach for crediting renewable generation for compliance with the goals. In the preamble, the EPA states:

"The EPA is proposing that, for renewable energy me asures, consistent with existing state RPS policies, a state could take into account all of th e CO2 emission reductions from renewable energy measures implemented by the state, whether t hey occur in the state or in other states. This proposed approach for RE acknowledges the existence of renewable energy certificates (REC) that allow for interstate trading of RE attributes and the fact that a given state's RPS requirements often allow for the use of qualifying RE located in another state to be used to comply with that
state's RPS." 79 FR at 34922.

While commenters supported the flexibility afforded to states to follow the REC market for RE having interstate characteristics, there should be symmetry between goal computation and compliance demonstration. If the EPA's proposed sol ution is promulgated, Nevada would not receive the benefit of the RE that is exported out- of-state for its compliance, even though that RE was used to calculate Nevada's Building Block 3, th e commenters argued. In addition, commenters were concerned that Nevada may not be al lowed to receive the benefit of RE generated on Tribal Lands for export out of state o r for in-state generation without the benefit of a multijurisdictional agreement regardless of wheth er the tribe is subject to its own emissions reduction goal. Commenters recommended that if RECs are used for compliance purposes, then the RE Building Block should be recalculated to rem ove the portion of RE that is exported to313

other states. Commenters stated the same logic shou ld apply to fossil fuel generated for out-ofstate usage.

In order to determine Nevada's new RE goal assuming RECs can be used for compliance, the EPA's methodology for calculating Nevada's RE goal was reviewed by the commenters.
Commenters found that the EPA used the 2012 total R E generation reported under EIA Form923 to calculate Nevada's RE goal. Commenters state d the RE generation reported on this form is not accurate, and based on publicly available in formation on the power purchase agreements (PPAs) for a number of facilities in Nevada, 800,52 3 MWh of RE in 2012 was generated for outof-state use. Commenters pointed to Attachment 2. C ommenters concluded this constitutes 27% of the 2,968,630 MWh (Nevada's total RE generation) used to calculate Nevada's final (2029) RE and emission rate goals.

Commenters referred to a letter submitted on Septem ber 18th in response to the proposed rule and prior to the issuance of this proposed suppleme ntal rule. In that letter commenters requested that there be a clarification for the part of that rule that has created an obstacle for renewable energy development on the Navajo Nation. Commenter s stated that Page 34922 of the proposed rule, not the proposed supplemental rule, the propo sed rule, opens up for comment whether renewable energy generated on the Navajo Nation can be used to meet the goals of the state 111(d) plan. Commenters thought that needs to be c larified because right now the experience has been since this proposed rule was issued this p ast June that it has stifled renewable energy development on the Navajo Nation, and they hope tha t this can be fixed immediately within this

process.

Comment 31: The EPA has misinterpreted North Carolina REPS

Response 31: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD

.
The following are summaries of the specific comment s under this comment:

Commenters expressed that the methodology relies on the EPA's interpretation that the North Carolina REPS will result in RE accounting for 10% of North Carolina's electric generation in 2020. Commenters stated the 10% figure used by the EPA is not an accurate reflection of the actual renewable generation that will result from t he REPS in North Carolina for several technical reasons. The attached Tables A through C provide the EPA with an appropriate
estimate of the actual amount of RE the State antic ipates to generate (or produce) as a result of the REPS, the commenters said.

Comment 32: Commenters do not support increasing the percentage of renewables (excluding large hydro) used in Wyoming to between 2% and 25%.314

Response 32: The information provided in this comment were valu able in finalizing the building block 3 methodology, in which incremental hydropowe r is included as a contributing RE technology. The final building block 3 methodology is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters stated they do not support increasing th e percentage of renewables (excluding large hydro) used in Wyoming to between 2% and 25%.

Commenters asserted that excluding hydroelectricity as a renewable resource is counter-intuitive. Commenters stated hydroelectric power does not resu lt in carbon emissions, utilizes a replenished natural resource (water), and can provi de reliable and planned production of electricity. Commenters also stated hydroelectric p ower is one of the most renewable resources and should fundamentally be included in your analys is and part of the goal going forward. Solar and wind renewable resources are, and should be, part of the overall generation portfolio and as such should be supported, the commenters stated. Ho wever, they are more costly and intermittent (i.e., electrical production from solar projects do es not occur between sundown and sunrise) and must be firmed with peaking resources such as natur al-gas fired generation, the commenters added. Commenters explained this increases the inte gration costs on the overall system and strains not only resources but relationships in the broader multi-state, multi-user consortium.

Comment 33: Specific utility's status in Colorado, South Dakot a and Wyoming

Response 33: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE generation at an interconnection level. The process for incorporating CO2 emission r eductions in state plans is provided in section VIII.G of the preamble. The EPA addresses considera tions related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters provided a table with the renewable ener gy (RE) targets in the proposed rule for the states of Colorado, South Dakota, and Wyoming, alon g with the current state RE policy, the compliance status for each of our utilities.

Commenters said that Colorado's statutes include a Renewable Energy Standard (RES). Commenters stated the RES, and associated commissio n rules, require the Black Hills to meet specific percentages of its retail sales with renew able energy. The RES in 2014 is 12 percent of retail sales; 20 percent for 2015-2019; and 30 perc ent for 2020 and beyond, the commenters said. Commenters stated the statutes also provide that th e retail rate impact on customers not exceed 2 percent annually. Commenters said utilities comply with the RES in Colorado using Renewable Energy Certificates (RECs), where one REC is create d when one MW of eligible energy resource generates energy for one hour. Commenters stated Black Hills Colorado Electric is complying with the RES using a combination of RECs generated from an expired purchased315

power agreement, small distributed generation proje cts, and small wholesale renewable (wind) generation.

Commenters said that currently, the largest wind en ergy project attached to Black Hills Colorado's system is the Busch Ranch Project. Black Hills co-owns with a third party this 29 MW generation project and the company is currently evaluating proposals in response to a competitive solicitation for up to 60 MW of eligibl e energy resources in accordance with Colorado's Electric Resource Planning rules, the co mmenters noted. Commenters said that as a result of this solicitation, the Company may acquir e the energy and associated RECs from an additional 60 MW of eligible energy resources begin ning as early as 2015.

Commenters indicated that the Colorado Commission's Electric Resource Planning and Renewable Energy Standard Rules authorize the Color ado Public Utilities Commission to approve the recovery of the cost of all renewable r esources while ensuring the annual cost impact on customers does not exceed 2 percent annually. Co mmenters said the most recent modeling of Black Hills' renewable portfolio indicates that thr ough 2020 the Company will spend approximately $59 million more for renewables than for equivalent energy generated with
conventional resources.

Commenters continued and stated that Black Hills Po wer has purchase power agreements for hydropower and wind energy. Commenters explained th at the Happy Jack and Silver Sage purchase power agreements provide Black Hills Power (South Dakota) with 35 MW of wind power. Commenters stated that in 2013, renewable re sources served approximately 5.04% of the total retail sales for Black Hills Power. Cheyenne Light Fuel and Power (Wyoming) has purchase power agreements for 25 MW of wind energy from the Happy Jack and Silver Sage wind facilities, the commenters said. Commenters n oted that in 2013, these renewable resources served approximately 5.8% of the total retail sales for Cheyenne Light.

Commenters stated Black Hills Power and Cheyenne Li ght will continue to pursue prudent renewable energy generation and purchase opportunit ies that will achieve environmental improvements at the lowest reasonable cost to custo mers. Commenters described that the major barrier of renewable energy generation at a reasonable cost to customers, for both Black Hills Power and Cheyenne Light, is the ability to dispatc h the energy. Commenters said because renewable energy is intermittent, the cost of regul ating this energy becomes a significant barrier.
Commenters stated some of Black Hills Power's addit ional challenges are due to the physical location of their system and quality of renewable o pportunities. In addition, commenters added, if renewable energy generation is not connected to their transmission system, the price to deliver energy becomes difficult to overcome.

Commenters questioned the approach in establishing Building Block 3 state RE goals that do not consider the reality of the current generation port folio or the economics of selecting additional generation. Commenters supported state flexibility in meeting the state goals with the most economic generation considering other reliability c onstraints.

Comment 34: Feasibility of Renewable Energy Goal in Florida316

Response 34: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE generation at an interconnection level. The process for incorporating CO2 emission r eductions in state plans is provided in section VIII.G of the preamble. The EPA addresses considera tions related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters expressed that the renewable energy gene ration goal that the EPA has calculated for
Florida is unachievable. Commenters stated the EPA' s methodology for determining the goal is fatally flawed because it arbitrarily ties the stat e's goal to the RPS goals of other nearby states, which often do not actually require as much renewab le energy generation as they appear to and reflect each state's highly unique mix of renewable energy potential. As a result, commenters said, the state renewable energy generation targets , including that for Florida, are unreasonably aggressive and do not take into account factors aff ecting the actual renewable energy growth potential in each state. Commenters stated the EPA' s own IPM modeling results indicate that predicted renewable energy generation by the end of the compliance period cannot even come close to the renewable energy targets the EPA used in its goal calculation. Accordingly, commenters urged the EPA to withdraw the proposed s tate goals and reduce its renewable energy generation targets.

On the other hand, commenters said that under the E PA's proposed method of determining the potential for renewable energy development in each state, Florida's final renewable energy target is 10 percent of total 2012 generation by 2029. The 10 percent goal is aggressive the commenters said, but they believe is achievable considering th e time frame established for compliance. Commenters stated they have successfully built larg e utility scale solar projects in Florida and are prepared to extend this experience and construc t additional renewable energy in Florida to achieve compliance with the CPP and grow additional jobs in the state. Working in partnership with state and Federal agencies, the commenters ass erted, they can overcome any reliability or other impediments given the long lead time to achie ve the 2030 emissions target.

Commenters appreciated the effort the EPA has taken in an attempt to create what they believe is an achievable, yet challenging, requirement to redu ce carbon intensity from the nation's power sector. However, commenters asserted the EPA's inte rim and final budget goals need to be adjusted to reflect the corrections in the technica l data to reflect the achievable CO2 emission goals while still having a reliable electric network. These adjustments also need to take into account the timing required to implement the signif icant changes that would be required by the electric industry, the commenters said. Commenters expressed the interim and final budget is unachievable for the City of Tallahassee utilities as a key component of the State of Florida's goal.

Commenters said that the EPA's building blocks 3 an d 4 assume about 10 percent of Florida's generation will come from renewable energy by 2030, as well as a 10 percent reduction in electric demand. However, commenters indicated thatFlorida's projected growth rate and lack of cost effective RE resources make the 10 percent ass umption unrealistic.317

Comment 35: The EPA's RPS-Based Approach to Setting Renewable E nergy Best Practice Targets Is Arbitrary in Light of EPA's Own Assessme nt of South Carolina's Available RE

Resources.

Response 35: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The regional targets are based on observed patterns of historical deployment for each of the BSER RE technologies and the target generation levels are validated through modeling projections to be technically feas ible at reasonable cost. The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (se ction V.E) and GHG Mitigation Measures
TSD.

In regards to biomass, it is not considered part of the best system of emission reduction in this rule and therefore it is not included in goal-setti ng or compliance evaluations. However, similar to other technologies outside of BSER, biomass may be considered as a part of a state’s plan to meet the emission guidelines.

For more information regarding Building Block 3, re fer to Section V.E of the preamble.

A discussion regarding the use of some biomass feed stocks for compliance purposes can be
found in Section VIII.I.2.c and Section VIII.K.1 of the preamble.

The following are summaries of the specific comment s under this comment:

Commenters believed the EPA's approach to setting s tate goals is arbitrary and capricious and the EPA should adjust South Carolina's goal to reward rather than punish the state for making significant investments in zero-carbon generation.

Commenters said that under the Proposed Rule, the E PA has calculated the RE component of South Carolina's emission goal under building block 3 by grouping it into a region (the Southeast Region) with eight other states and assuming that t he "average" level of RPS commitment across those states constitutes the "best practice" for re newable generation in South Carolina. Commenters asserted the EPA's approach is arbitrary and capricious for a number of reasons. First, commenters said that the EPA's assertion tha t South Carolina's RE "best practice" target is achievable is contradicted by EPA's own analysis of the available renewable energy resources in the state. Second, commenters said that the EPA's m ethod for setting regional standards based on individual states' RPS levels, with no consideratio n given to those states without an RPS, is arbitrary and capricious. Commenters recommended th at if the EPA persists in setting state goals based on projected renewable energy development in South Carolina, it should use the proposed "Alternative" resource-adequacy based RE approach, rather than the policy-based RPS approach. In the alternative, commenters suggested that the E PA should average the RPS levels from all states in each "best practice" region to determine the appropriate regional average including those states that have decided not to impose any RP S obligation on their utilities.

Commenters said that under the Proposed Rule, the E PA has calculated South Carolina's emission goal using the assumption that by 2030, 10 % of South Carolina's in-state generation318

will be provided by RE. This level equates to the r egional "best practice" scenario that the EPA developed for the eight states in the Southeast Reg ion, the commenters explained. The EPA asserts that this level of renewable energy reflect s the "resource development potential" of the Southeast Region, the commenters added. The EPA has also made available an "Alternative RE Approach" that does attempt to evaluate states' tec hnical and economic potential for increasing states' RE generation, the commenters said.

Commenters stated as a general matter, the EPA's de cision to set each state's renewable energy target based solely on the political decisions of a handful of neighboring states is arbitrary and capricious because the Agency has made assumptions about each state's potential for developing its RE resources without any evidence in the record to support those assumptions. Commenters stated the EPA's RPS-based approach is particularly arbitrary in South Carolina's case.

Commenters asserted that the arbitrariness of the E PA approach is evidenced by the fact that the RE goal is not based on South Carolina's RE resourc e development potential and is contrary to
EPA's own assessment of the state's technical and e conomic potential for increasing its in-state RE generation. Commenters stated that the EPA's fai lure to base South Carolina's RPS-based RE target on any actual data or projections about what might be achievable in the state fails to satisfy the statutory criteria that emission limits under s ection 111 must reflect the degree of emission reduction that is achievable" through application o f "adequately demonstrated" systems of
emission reduction.

Moreover, commenters said that the EPA's proposed R E target is clearly not achievable when viewed in light of the RE deployment that the EPA's Alternative RE Approach projects South Carolina could achieve in light of technical and market constraints. Commenters stated the EPA's Alternative RE Approach is based on two criteria, b oth of which are logically necessary to making a finding that any particular level of RE ge neration is achievable or adequately demonstrated in light of costs, energy requirements , and other statutory factors. The first criterion, commenters said, is the "technical poten tial benchmark," which the EPA determines by scaling each state's theoretical technical potentia l for each type of RE generation to the average development rate for that technology among the top 16 states nationwide. As the EPA correctly notes, commenters indicated that this "technical po tential" criterion is insufficient in and of itself to demonstrate that any particular level of RE deve lopment is adequately demonstrated because data about theoretical technical potential ignores restrictions such as "grid limitations, costs associated with development, [and] quality of resou rce." Because of the constraints of the National Renewable Energy Laboratory study on which EPA's technical potential estimates are based, commenters asserted the EPA's projections al so likely "overstate electricity production potential because a given site cannot produce RE si multaneously from multiple technology types."

Commenters continued and referred to the second nec essary criterion, which the EPA calls the "market potential" for deployment of each RE techno logy, represents the "market potential for RE generation that can be developed in each state." Commenters stated although the EPA's approach to developing the market potential figures is seriously flawed, the Agency has at least attempted to estimate the amount of generation thata state could deploy in light of cost
constraints.319

Commenters stated the EPA's alternative approach-th ough flawed-clearly demonstrates that the proposed RPS-based approach to setting state "best practice" targets for RE is completely out of proportion to South Carolina's true potential for d eveloping additional RE generation. Whereas the RPS-based approach would set South Carolina's R E target at 10% of its in-state generation in 2030, the EPA's own technical and market potential approach projects that the amount of RE that is realistically achievable for South Carolina by t hat date amounts to only 1% of South Carolina's in-state generation, the commenters said. Commenter s stated that in other words, the EPA's arbitrary RPS-based regional approach to determinin g the RE component of BSER overestimates the amount of RE South Carolina could rea sonably deploy by an order of magnitude. For this reason alone, commenters stated, EPA's det ermination of the RE component of state goals is extremely arbitrary in South Carolina's ca se. Clearly, commenters said, according to EPA's own analysis of resource potential, South Car olina's proposed level of RE is neither achievable nor adequately demonstrated.

Commenters concluded with although the EPA may not include beyond-the-unit measures in the BSER because such measures cannot legally form the basis for guidelines or performance standards under section 111, the Proposed Rule's "A lternative RE" approach to quantifying instate RE potential appears to be a more sound app roach than EPA's RPS-based regional best practices approach. If the EPA finalizes its propos al to include RE in the BSER, commenters urged the EPA that it should, at the very least, ad opt an approach that evaluates RE development potential by reference to the resources and costs o f implementing designated levels of RE generation in each state, rather than to a handful of states' political decisions to impose an RPS.

Commenters indicated that the EPA proposes a 10 per cent renewable energy goal for South Carolina based on the renewable portfolio standard in North Carolina without any analysis or justification. In doing so, the commenters said, th e EPA has excluded biomass production, despite the fact that it is included in North Carol ina. Since South Carolina has significant biomass production, this is especially damaging to South Carolina, the commenters explained. Finally, while commenters expressed that they are v ery committed to energy efficiency, they are extremely concerned that the EPA applies its assume d 1.5 percent annual energy savings rate evenly to all states. Commenters stated South Carol ina's population demographics, as well as its high industrial load percentage, suggest that its t arget should be different from Colorado or Washington.

Comment 36: Nebraska targets may be unachievable

Response 36: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE at an interconnection level. Building block 3 target generation levels do not in crease beyond projected baseline levels until
2022. The EPA addresses this and other consideratio ns related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:320

Commenters said that in Nebraska, Building Block 3 calls for increasing RE generation from 4% in 2012 to an annual average of 8% from 2020 to 202 9, with a final target of 11% renewable energy generation by 2030. Commenters stated that w hile Nebraska has significant wind generation potential, it also faces significant cha llenges in transmitting this generation from areas of high wind potential to areas of high electricity demand. Building or upgrading transmission lines is a complicated, time-intensive process thatcan take up to 8.5 years, and much of Nebraska's wind potential resides in ecologically s ensitive areas, including the Nebraska Sandhills and Central Flyway, requiring additional considerations, the commenters added. Commenters indicated that given that the proposed C PP's interim compliance period begins in 2020, Nebraska may not have sufficient time to stud y, plan, and install the necessary infrastructure to achieve enough emission reduction s under Building Block 3 to comply with the state emission goal.

Comment 37: Utility Plans Regarding Renewable Energy Resources

. Response 37: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which no longer rely on state RPS requirements to set a regional target for RE. The final methodology is described i n section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters indicated that in 2012, Tennessee's exis ting non-hydro power renewable generation constituted 1 percent of all generation, equivalentto 836,458 MWh. Commenters stated this existing generation together with the expected grow th in renewables under Building Block 3b accounts for 4 million MWh of zero-emission generat ion. Due to Tennessee's low starting point in 2017, when the regional annual growth factor of 13 percent is applied, the commenters said that Tennessee does not reach the regional 10 perce nt target, but rather only achieves 6 percent renewable generation by 2030.

However, commenters indicated that Tennessee has ma de significant new investments in renewable energy since 2012, the year the EPA chose as a baseline year for compliance purposes. Commenters stated these additions will he lp propel Tennessee toward meeting EPA's proposed target. Commenters stated TVA invested in 120 MW of new solar capacity in 2013. In 2014, commenters added, that TVA made a similar inv estment of 126 MW, consisting of 10 MW for smaller-scale, rooftop solar under its Green Po wer Providers program; 16 MW for mid-size projects under the Solar Solutions Initiative; and 100 MW under the utility scale-size Renewable
Standard Offer. Commenters stated TVA has announced its 2015 solar programs, which total 130 MW - 10 MW Green Power Providers, 20 MW Solar S olutions Initiative, and 100 MW
Renewable Standard Offer. Commenters added that acc ording to Patty West, Director of TVA's Renewable Energy Programs, "These programs balance low-cost and cleaner energy resulting in a renewable portfolio that is good for all 9 millio n consumers in the Valley."

Commenters noted that TVA has also been very bullis h on wind power and TVA is currently sixth in the nation among all utilities in terms of wind power capacity. The utility currently contracts for over 1,500 MW of wind from wind farms in the Midwest, according to the321

commenter. This wind power avoids 818,000 metric to ns of CO2 a year, the equivalent of taking 144,000 cars off the road, the commenters noted. Th ese 1,542 MW of wind power are comprised of nine power purchase agreements from wind farms i n Iowa, Kansas, Illinois, the majority of which are the result of a TVA request for proposals in December 2008, the commenters said. At
the time these PPAs were announced in December 2012 , commenters said that Ms. West stated, "We're confident that wind power will continue to d emonstrate its value, effectiveness and potential in the years to come." Commenters continu ed and in terms of in-state wind capacity, TVA has 29 MW installed, and said that 27 MW are be ing procured through a contract with Invenergy to purchase power from the Buffalo Mounta in wind farm near Oak Ridge, Tennessee.

Commenters said that taking into account the 376 MW of solar capacity and 27 MW of landbased wind capacity that has or will be added since 2012, Tennessee's emission rate decreases from 1,293 lbs/MWh to 1,271 lbs/MWh, a reduction of 22 lbs/MWh.

Comment 38: Adjust South Dakota Goal

Response 38: The CO2 Emission Performance Rate and Goal Computa tion TSD for CPP Final Rule provides analysis and explains the adjustment that the EPA made to the state-level 2012 data for South Dakota to better reflect fossil gene ration in an average year over a 1990-2012
baseline.

The following are summaries of the specific comment s under this comment:

Commenters stated if the EPA does not adjust the em ission rate goal for South Dakota to correct the capacity factor for Deer Creek, Big Stone likel y would be required to reduce generation beginning in 2020 in order for South Dakota to meetits proposed interim emission rate goal. This would cause a generation gap in the MISO regio n, which could not be mitigated by redispatch to units in SPP like Deer Creek, the com menters asserted. It is unlikely, commenters said, that the owners of their facility and the oth er owners of the Big Stone Plant would have sufficient time to construct new generation to repl ace the shortfall from Big Stone. Thus, commenters stated that the generation gap that woul d be caused by the premature retirement of Big Stone would raise reliability concerns for Nort h Dakota, Montana, South Dakota, and possibly other states within the MISO region.

Comment 39: South Dakota and Montana annual RE targets.

Response 39: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. Consequently, the amount of baseline RE has no impact on regional target generation levels or growth rates. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitiga tion Measures TSD.

The following are summaries of the specific comment s under this comment:322

Commenters said that in South Dakota, where 50% of energy production is from hydropower, the EPA calculated an annual RE target of 1,818,150 MWh, twice what the target would have been by excluding hydropower to quantify BSER relat ed RE generation potential. Due to the way the EPA determined the RE targets, South Dakota 's 2020 RE goal is the same as its 2029 RE goal, and South Dakota must meet its 2029 RE goal b eginning in 2020 with no ramp up period, the commenters stated. Commenters noted in Montana, where 41% of energy production is from hydropower, the EPA calculated an annual RE target of 2,722,706 MWh. Commenters stated if hydropower were excluded in order to quantify BSER related RE, the annual RE target would have been 1,652,132 MWh. For South Dakota, the EPA' s proposed methodology results in a
35% reduction in CO2 emission levels in a state tha t contributes just .15% of the total U.S. power sector CO2 emissions, the commenters noted, w hich equates to about a .05% reduction in U.S. power sector CO2.

Comment 40: Concerns with the levels of renewable generation p rojected by the EPA both in
Ohio and nationwide-short timeframe

Response 40: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE at an interconnection level. The
EPA addresses considerations related to the technic al feasibility and associated grid integration costs of significant RE penetration in both the pre amble (section V.E) and GHG Mitigation
Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters said that the EPA states RE in 2012 repr esented 12% electricity generation nationally (including hydropower) which is up from 9% in 2005. [79 FR 34866] In addition, the
EPA found more than half of the states have establi shed state-level RE with an average of almost 20% of 2020 generation supplied by renewables, the commenters said. [79 FR 34858] However, commenters stated, in Ohio, 2012 RE represented onl y 2% of generation (including hydropower) and Ohio is expected to have 9% of 2020 generation from renewables.

Commenters were concerned with the levels of renewable generation projected by the EPA both in Ohio and nationwide, in particular the amount of generation from renewable sources projected to come online in a relatively short timeframe. Und er the proposed rule, 11 states are projected to have 20% or more of their net generation coming fro m RE by 2030, commenters said. [GHG Abatement Measures TSD, Page 4-24] Commenters said this number seems overly optimistic, when it is considered that the growth of renewable and carbon neutral generation is a relatively recent phenomenon, and stated that even Ohio's RPS did not take effect until 2008.

Commenters recounted the EPA's methodology for calc ulating the building block 3 targets, and noted the values obtained for Ohio at each step. Co mmenters said that Ohio's interim goal is 6% and the final goal is 11% of RE generation in the s tate. [79 FR 34867, Section 4 GHG Abatement Measures TSD]323

Commenters stated that Ohio is to grow RE within th e state from 1% to 11% under this proposal, and because Ohio is a large generator of electricit y this represents 13,776 GW-hs. Commenters pointed out that states in the commenters’ region t hat are small generators, such as Delaware, will only be required to achieve 1,038 GW-hs. Comme nters found this expectation unreasonable. Commenters stated the only way to accurately determ ine RE potential that is technically and economically feasible is to determine it based upon the specific state's ability.

Comment 41: Provisions used to avoid double counting of the sa me MWhs of renewable energy in more than one state's compliance calculations.

Response 41: The final building block 3 methodology does not re ly on RPS requirements or state-specific deployment estimates, but rather cos t-effective RE generation at an interconnection level. The process for incorporating CO2 emission r eductions in state plans is provided in section VIII.G of the preamble. The EPA addresses considera tions related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters said that the EPA is proposing language in the CPP that allows states to count outof-state renewable energy towards their compliance obligations provided provisions are made to avoid double counting of the same MWhs of renewable energy in more than one state's compliance calculations.

Commenters indicated that the inconsistency in this position is that the EPA has established a 2030 emissions target for Utah by including all in- state renewable energy in calculating the goal for the state and then proposes to require the stat e to remove those renewable energy sources that are under a PPA and exported out-of-state from the calculation of its post-2012 emissions rate. The effect of this language is to increase the 2030 compliance obligation beyond what the EPA has proposed in the rule, the commenters asserted. To rectify this inconsistency the EPA should either eliminate exported renewable energy from Uta h's goal calculation or allow Utah to account for these resources in its post-2012 emissi ons rate calculation, the commenters suggested.

Commenters indicated that this scenario evaluated h ow the stringency of Utah's 2030 emissions rate target would change if exported renewable ener gy sources were not included in the calculation of the state's emissions goal. (Note: T he effect of allowing Utah to account for imported renewable energy in its 2013-2030 emission s rate calculation and goal calculation is addressed under item 5, Treatment of Exported Renew able Energy, in the Compliance Scenario section of this memorandum, the commenters noted.) Commenters concluded that when exported renewable energy is removed from the calculation of Utah's 2030 emissions rate goal, the goal increases 56 lbs/MWH to 1,378 and the state's compl iance gap drops from 391 lbs/MWH to 335
lbs/MWH.324

Comment 42: Concern over the targets proposed for the State of Oklahoma.

Response 42: The EPA has finalized a rule that provides signifi cant flexibility over the interim compliance period, including the phasing in of both building 2 and 3 requirements.

The following are summaries of the specific comment s under this comment:

Commenters called attention to the Interim Goal an d the "Cliff Effect". Commenters asked the EPA to consider removing the interim goal and allow the states to determine appropriate mile stones to ensure compliance with final goal. Commen ters stated that it has approximately $250M in debt that would be at risk. Commenters stated [this] does not include new debt associated with adding new generation and transmission resources. [ In summary, commenters noted that] the interim goal and timelines will put severe conseque nces on Oklahoma rate payers.

Commenters indicated that in Oklahoma, the Block 3 target translates into an 83 percent increase
from the 2012 baseline levels. Commenters stated th at the EPA essentially presumes that all generation growth during this timeframe will be pro vided by RE sources. Commenters asserted
this is both unrealistic and underestimates the nee d to shore up variable renewable resources with new, reactive fossil generation - a dynamic which i s exacerbated by the NODA's proposal to further force coal-based reductions, already margin alized due to the Block 2 increase in NGCC utilization, in order to accommodate yet more renew ables (wind) generation-based gains. In addition to problems inherent in the terms of Block 3, its application highlights the precarious position States may find themselves in with respectto energy reliability, the commenters
concluded.

Comment 43: Targets set for Texas are unreasonable.

Response 43: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The BSER is forward-look ing in identifying cost-effective opportunities for emission reductions from 2012; ho wever, the cost and availability of these emission reduction opportunities is the result of m any factors, including previous actions. The
EPA addresses considerations related to the technic al feasibility and associated grid integration costs of significant RE penetration in both the pre amble (section V.E) and GHG Mitigation
Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters stated the proposed rule's methods of de signating renewable regions and calculating renewable energy goals is unrealistic and misguided . Commenters said that specific to Texas, ERCOT anticipates that by 2029, variable energy ren ewables will comprise 22% of the energy production in the region. Commenters stated the ass umptions about the level of renewable energy that can be achieved in Texas under the Prop osed Rule are completely unrealistic, as they are based on a single state-Kansas. Commenters adde d that as NERC points out, Kansas accounts for only 6% percent of retail power sales and has t he third-best wind resource availability in the country. Yet, commenters said, the Proposed Rule im poses a renewable standard designed for
Kansas on states like Louisiana that have double th e retail sales and rank 48th in wind resource325

availability. The Proposed Rule also ignores that t he Kansas Renewable Portfolio Standard is a capacity based standard, not an energy production s tandard as envisioned under the Proposed Rule, the commenters added. The Proposed Rule simpl y translates the Kansas 20% capacity goal into a goal that 20% of the energy produced in Texa s (i.e., consumed kWh, not installed kW) come from renewable resources, commenters said. Fin ally, commenters concluded that the Proposed Rule fails to consider that Kansas allows the use of crops for biofuels to count as renewable electricity and allows alternative compli ance payments (payments made in lieu of actually installing the required renewable capacity , which effectively act as a cost cap) such that Kansas may not actually be achieving even its more limited 20% installed capacity goal. Taken together, commenters stated it's their opinion thatthe Proposed Rule sets an unattainable renewable target for Texas (and other states like L ouisiana).

Commenters indicated that Texas's current generatio n from renewables is already substantially higher than the U.S. average, yet EPA's proposal wo uld penalize Texas for this early progress. Commenters stated the amount of wind generation tha t the EPA proposes for Texas is simply massive. Texas is already first in the nation at 34 million MWh of renewable generation, or nearly 8% of the state's total 2012 generation. The EPA's analysis assumes Texas' reliance on renewable power will increase 153% by 2030 to 86 mi llion MWh-more than double the amount of 2030 renewable generation as the EPA assumes wil l exist by 2030 in California, the state with the next highest increase, the commenters added. Co mmenters stated at the 20% renewable target in the rule, Texas renewables would exceed the 2012 total power generation across all fuel
sources of 32 other states. Commenters stated it is unreasonable, arbitrary, and capricious for the EPA to require Texas to meet the lion's share of bu ilding block 3's renewable goals for the entire
U.S.

Commenters presented Table 4 (titled: "Texas Renewable Generation (2008-2012)"), which shows that production from renewable generation in Texas essentially doubled in the four years
from 2008 to 2012.

Comment 46: RE status in Virginia, including utility plans reg arding RE resources and the possibility of Virginia's estimated renewable gener ation rate.

Response 46: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology. The final building bl ock 3 methodology does not rely on RPS requirements or state-specific deployment estimates , but rather cost-effective RE at an
interconnection level. The EPA addresses considerat ions related to the technical feasibility and availability of regional RE resources in both the p reamble (section V.E) and GHG Mitigation
Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters asserted the prospects for significant a dditional renewable electricity generation in Virginia are not high. Commenters stated Dominion V irginia Power has installed, and continues to look for opportunities to install, solar electri c generating equipment in Virginia. However, commenters said that the scale of these projects is very small compared to the scale of solar generating projects in the "sun belt" states, e.g., California, Nevada and Arizona. Wind turbines326

have been installed and are operating to a limited extent in Virginia, but the prospects for large scale wind generation are totally unknown and specu lative at this time, commenters explained. Commenters stated large scale land-based wind turbi ne farms face significant ecological and aesthetic hurdles in Virginia. Dominion Resources i s evaluating the feasibility of relatively large scale wind turbine facilities off Virginia's shore line, but again, commenters indicated that the prospects for realization of this possibility is un known and speculative at this time. Finally, commenters stated that the prospect for any additio nal hydroelectric generation is Virginia is very low. Commenters added that rather than adding any new dams in Virginia, recent years have seen several existing dams removed to return r ivers to free-run conditions. In short, commenters concluded that the prospects for any sig nificant new solar, wind or hydroelectric generation in Virginia are totally uncertain and sp eculative at this time. Thus, commenters questioned the EPA's assessment that Virginia could achieve a 12 percent annual average renewable generation rate by the year 2029.

Commenters said that another reason the emission ra tes for Virginia are set unreasonably and unlawfully low is the EPA's inclusion of significan t amounts of new renewable generation and energy efficiency in the denominator of its mathema tic formula. Commenters stated although the proposal sets state-specific Mandatory Goals, the c alculation of Virginia's Mandatory Goals disregards real world considerations specific to Vi rginia. In this regard, the Proposed Regulation arbitrarily and capriciously extrapolates renewable and energy efficiency policy requirements of other States that have not been achieved, commenter s asserted. Commenters stated there is no analysis as to how these aspirational levels of ren ewable generation and energy efficiency, derived from other states that have their own parti cular geographies, existing infrastructures, and political considerations, could reasonably be achie ved in Virginia or whether such levels can be achieved in a cost effective manner given Virginia' s particular circumstances. Although the Proposed Regulation purportedly recognizes that "st ates differ in important ways," the EPA's generic approach to this aspect of its calculation ignores geographic differences that cannot be reasonably ignored, commenters noted. Again, the en d-result of this unrealistic approach is that it deprives Virginia of the flexibility needed to achi eve carbon reductions at a reasonable cost while still maintaining reliable service, commenter s concluded.

On the other hand, commenters said that the EPA app lied RPS that have been established by states in the same region to quantify RE potential in states that do not have an RPS. Because Virginia does not have a mandatory RPS, the comment ers indicated that the target is calculated assuming the state will meet the East Central regio n's RE goal of 16 percent by 2030. However, the commenters stated this target is not far from V irginia's voluntary RPS goal of procuring 15 percent of the power sold in Virginia from eligible RE sources by 2025.

Commenters indicated that in 2012, Virginia's exist ing renewable generation made up 3 percent of generation, equivalent to 2.4 million MWh. Comme nters explained this level does not reflect the plans of both Dominion and Appalachian Power to add higher, though still quite modest, levels of renewable generation to their energy port folios. Commenters stated for example, Dominion received approval from the State Corporati on Commission to construct and operate 30 MW of distributed solar resources and to purchase 3 MW of distributed solar from its customers.

Commenters said it referenced filings from Dominion 's 2013 IRP that assume that the 30 MW solar resources would operate at a 15 percent capac ity factor and the 3 MW solar resources327

would operate at a 13.9 percent capacity factor. In addition, commenters said that Dominion received a grant from the DOE to develop two offsho re wind test turbines that will produce a total of 12 MW of generation. Commenters also said it referenced filings in the Dominion 2013 IRP docket that assume that this resource would ope rate at a 40 percent capacity factor.

Commenters concluded by stating that applying the e xisting level of generation that the EPA
assumed in the 2012 baseline as well as the solar a nd offshore wind resources that are under development results in a reduction from 998 lbs/MWh to 952 lbs/MWh, a decrease of 46
lbs/MWh.

Comment 45: Reconsider Idaho's goal and treat Idaho like Vermo nt and the District of
Columbia

Response 45: Vermont and the District of Columbia do not have af fected EGUs, and therefore they are not be required to submit a state plan. Ho wever, Idaho does have affected EGUs and therefore have CO2 emission goals. The CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule provides analysi s and explains the adjustment that the
EPA made to the state-level 2012 data for Idaho to better reflect fossil generation in an average year over a 1990-2012 baseline. See also sections I .A.1 and VI.D of preamble to CPP Final Rule.

The following are summaries of the specific comment s under this comment:

Commenters said that in 2012, 87% of Idaho's in-sta te generation came from zero-carbon emitting sources. Commenters stated Idaho has proje cted that by 2020, 88% of its instate generation will be carbon free due to the continual addition of generation by new zero-carbon emitting sources within the State. Also, commenters indicated that Idaho utilities also operate successful Energy Efficiency programs that are cont inually evaluated by the Idaho PUC and participate regionally in the Northwest Energy Effi ciency Alliance. Commenter provided Table 1: 2012 Idaho generation in MWh provides additional data to support this point.

For these reasons, commenters said that Idaho's current generation mix already meets the Proposed Rule's intent. Commenters added Idaho's ge neration mix exceeds the allocation of zero-carbon emitting energy and NGCC generation tha t the EPA seeks to achieve in the 48 states that have greater carbon intensity than Idaho. Comm enters explained that Idaho's emission profile is much more like Vermont's profile than th at of the other states covered by the proposal. Accordingly, commenters stated Idaho should not be required to further reduce carbon emissions through a state performance goal.

If the EPA requires Idaho to further reduce emissio ns, the EPA may ultimately force Idaho to resort to energy sources that would increase overal l carbon intensity, commenters asserted. Commenters stated as an example, if Idaho is requir ed to comply with the rule as written, at least one Idaho utility would be forced to: (1) operate i ts peaking plants more often, at a higher cost to consumers and with greater emissions than its NGCC units; (2) rely on market purchases which can be costly, unreliable, and have unknown carbon profiles; (3) replace existing zero-carbon emitting generation with new intermittent zero-carb on emitting generation sources at a higher cost; and/or (4) build a new NGCC with a potentiall y higher emission rate under 111(b).328

On October 30, 2014 the EPA released its NODA, whic h acknowledges that Idaho already produces/saves more MWh through RE and EE than it g enerates from affected units,
commenters said. Commenters added this is illustrat ed in the NODA which would adjust the goal-setting equation. Idaho has 2,514,502 MWhs of existing renewable generation, a figure which does not include hydropower and EE, and only 1,639,922 MWhs of affected unit generation, commenters said. Commenters indicated t hat by subtracting the emissions that would be displaced from existing renewable generation, Id aho's calculated goal emissions rate on a lbs/MWh basis would be a negative number. The fact that Idaho has more than mitigated carbon emissions of its affected units by the amount of EE and RE it has currently accumulated, the EPA should reconsider Idaho's goal and treat Idaho like Vermont and the District of Columbia,
commenters concluded.

Comment 46: Commenters indicated that the proposed RE target f or Arkansas is unnecessarily
low.

Response 46: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters stated some parties have complained tha t the EPA based its renewable target for Arkansas on the Kansas RPS, on the grounds that Kan sas has a larger potential for wind energy than does Arkansas (e.g., AECC September 2014 Comme nts at 20). Commenters stated that in fact, the Kansas RPS is 20% in 2020, while the EPA target for Arkansas is only 2.6% in 2020
and 7.2% in 2030. Commenters said the Plan's state goals are modest compared to the renewables targets that have been shown to be feasi ble by many other states that are no better positioned than Arkansas for renewables development .. Commenters presented Table 4, which compared the EPA renewable targets for Arkansas wit h the RPS in other states without particularly large potential for low-cost wind (suc h as Kansas, Nebraska, Oklahoma, and Texas) or solar (such as Nevada, Arizona, and Colorado).

Commenters pointed out that it is important to reca ll that replacing coal and other fossil fuels is an environmental program, and like other pollution controls required by EPA and ADEQ, that program may cost money. Commenters added that the E PA does not require any particular mix of resources to achieve compliance. Commenters note d that SWEPCo expresses its concern that "Without codification of the renewable and EE targe ts EPA might disapprove of mass goal. [EPA] Likely would require state EE and RE legislat ion' (October Presentation 1 at slide 15), but so long as each generator's emissions are limited t o a level that collectively meets the state (or regional) requirement, the EPA's goal will be met. Nothing in the Plan regulates how the reduction in operation of the covered units is achi eved, whether through legislative mandates, Arkansas PSC regulations, or economic decisions mad e by the plant owners to stay within the carbon-emission allowances they are given in the St ate Implementation Plan, commenters
indicated.329

Commenters pointed to a study by NREL, which estima ted that Arkansas had potential of 9,200 MW and about 26,900 GWh of wind resources, using ju st 1.34% of the state's land, and with the following limits:

• -assuming only 80 m hub height, even though new tur bines are increasingly being
built with hubs at 100 m or above.

• -including only sites with capacity factors over 30 %.

• -excluding 60% of the high-wind land area, to refle ct "protected lands (national parks, wilderness, etc.), incompatible land use (ur ban, airports, wetland, and water features), and other considerations."

Commenters said that the EPA goals assume that Arka nsas would add only about 630 GWh of renewables by 2020 and 4,700 GWh by 2029, so Arkans as could meet the entire renewable target with 17.5% of the in-state high-wind potenti al.

Comment 47: The EPA's unsupported building block 3 and 4 calcu lations exacerbate the burdens on coal-fired EGUs, imposing economic and r eliability impacts.

Response 47: See section V.E of the final preamble of the CPP f or the EPA’s response to this

comment.

The following are summaries of the specific comment s under this comment:

Commenters said that the EPA's flawed analyses unde r Building Blocks 3 and 4 cause the rule's proposed emission targets to significantly overstat e the level of reductions that can be reasonably achieved through increased renewables and demand-si de EE measures. Resulting shortfalls in a
state's emission reductions relative to the EPA's e mission target must be made up elsewhere, the commenters noted. Specifically, in Pennsylvania, wh ere EPA's Building Block 3 and 4 emission targets significantly overstate what reductions can be achieved, additional reductions from the State's coal-fired EGUs will be required to make up the deficit, the commenters asserted.

Commenters indicated that this added stress on coal -fired EGUs is made worse in light of the way in which EPA's state emission targets are calcu lated. Commenters stated because emission reductions under Building Blocks 3 and 4 are accoun ted for only in the denominator of EPA's calculations (as compared with Building Blocks 1 an d 2), to make up any shortfall, Pennsylvania must eliminate more coal MWh of generation beyond t he deficit under Building Blocks 3 and 4. In other words, commenters stated EPA's inflation o f the reductions achievable through RE and EE measures has a multiplier effect on what must be achieved by coal-fired EGUs, making already precarious requirements even less achievabl e. The end result for states like Pennsylvania
is even more coal retirements and added detriment t o sources' ability to operate economically,
the commenters noted. Commenters stated EPA must co nsider and mitigate such unintended, unreasonable economic and reliability impacts in an y final rule, as failure to do so would further render it arbitrary and capricious.330

Comment 48: Commenters wanted to ensure that credits could be used to demonstrate compliance.

Response 48: See section V.D of the final preamble of the CPP f or the EPA’s response to this

comment.

The following are summaries of the specific comment s under this comment:

Commenters said that the EPA should ensure that EE measures by water companies and RE installations at their facilities are clearly eligi ble as a source of credits to states developing the ir state plans.

Commenters asked that since the EPA did not remove out-of-state renewables from the state RPS goals used to calculate regional RE goals, if the E PA would allow the use of RE credits for CAA section 111(d) compliance.

Comment 49: Request for clarification if solar/wind/hydro/geot hermal/landfill/biomass can all be used to demonstrate compliance with goal.

Response 49: The RE technologies used to set the building block3 generation level are utilityscale solar PV, CSP, onshore wind, geothermal, and hydropower. Other RE technologies are eligible for compliance credit as non-BSER measures . See sections V.A and V.E of the final preamble of the CPP for the EPA’s response to this comment.

The following are summaries of the specific comment s under this comment:

Commenters said that in footnote 30 to Section II.C of the proposed rule, the EPA refers to the new generating capacity of the following renewable power generating technologies-"solar, wind, hydro, geothermal, landfill gas, and biomass." Comm enters requested further clarification from the EPA on whether actual generation from all six o f these technologies, plus energy generated from wastewater treatment, can be included in the t otal annual generation number the state uses to demonstrate compliance with its emission goal. C ommenters asserted that generation from solar, wind, hydro, geothermal, landfill gas, and b iomass should all be counted as renewable generation in the denominator of the state's compli ance calculations.

Comment 50: Suggested revision to RE goal setting calculation method

Response 50: The EPA has adopted a goal-setting methodology tha t reflects replacement of affected EGU generation with incremental RE. This replacement applies equally to all affected EGUs. Refer to section V and VI of the preamble fo r additional information.

The following are summaries of the specific comment s under this comment:331

Commenters indicated that the EPA introduces an iss ue in the NODA regarding a disparity of treatment between building block 2 and building blo ck 3 in the goal setting formula. Specifically,
commenters stated that the treatment of RE is diffe rent in that the RE generation (MWh) is added to the denominator, but the displacement of emissio ns and generation from affected fossil generation that would result is excluded from the n umerator.

Commenters asserted it is more accurate and consist ent for the EPA to remove displaced emissions from EGUs from the numerator, remove asso ciated generation from those EGUs from the denominator, and then add the RE generation to the denominator as well. Furthermore, commenters expressed that the EPA should assume tha t RE generation will displace the highest emitting resources first in order to achieve the be st system of emissions reductions.

Comment 51: Commenters stated that the NODA's alternative RE an d EE goal calculation will exacerbate the reliability and excessive cost impac ts.

Response 51: See section V.A. of the final preamble of the CPP for the EPA’s response to this

comment.

The following are summaries of the specific comment s under this comment:

Commenters indicated that the NODA proposes that th e state CO2 emissions rate goals be recalculated with the assumption that for every MWh of RE that is generated and every MWh saved by EE that these values would be added to the denominator of the goal calculation and the equivalent CO2 emissions subtracted from the numera tor. The result of this recalculation will be to substantially reduce the state emissions rate be low the current values which are already too low for the grid to safely and reliability operate, commenters asserted. Commenters added the EPA provides no justification for this potential al ternative other than some commenters have asked for it. Clearly, commenters said, these comme nters seek only to eliminate coal generation regardless of the cost to utilities, cooperatives a nd rate-payers. Commenters noted these comments establish the danger of reducing coal oper ation and retiring coal units at the level of the current goals. Commenters said that the costs are too high, the potential benefits too small, and the impact of dramatically higher electricity r ates is too real for the poor in this country.

Comment 52: Commenters provided suggestions regarding how RE sh ould be treated in determining state goals, including in relation to g eneration shift to NCCU units and demand-side
EE.

Response 52: See section V.E of the final rule preamble to the C PP for the EPA’s response to
this comment.

The following are summaries of the specific comment s under this comment:

Commenters contended that EPA should not incorporat e renewable energy into the BSER determination, and instead, renewable energy should be allowed as a compliance option for states. Commenters argued that EPA's attempts to se t renewable energy targets for states rewards332

some states for lesser efforts, while penalizing early leaders in renewable energy. Commenters also questioned if EPA had legal authority to consi der renewable energy in the BSER
determination.

Commenters supported EPA's approach that excludes e xisting hydro in the state goal setting, but allows new and incremental hydro to count toward co mpliance. Commenters asserted that, like existing nuclear generation, existing hydro is a ma ture technology that doesn't need economic support under the CPP in most cases. Commenters su ggested that if the EPA decides to include existing hydro in the state renewable targets, base it on a rolling average of three most recent years of data to smooth year-to-year variability.

Commenters provided comments on how to properly acc ount for emission reductions of BSER as a system. In their statements, commenters argue d that the Proposed Rule treats the increased utilization of lower-emitting existing NGCC differe ntly from increased generation from other low- and zero-carbon sources and from energy saving s. Commenters noted that EPA's description of Building Block 3 showed that EPA int ended to reflect the reduced utilization of affected EGU's and not just the addition of zero carbon generation, and therefore, they suggested that the final Clean Power Plan should treat genera tion from nuclear energy, renewable energy and existing NGCC in the same way. Commenters conti nued by stating the energy savings that constitute Building Block 4 replace MWh that would otherwise be needed from generation sources, these savings should also be treated the s ame as redispatch to existing NGCC.
Commenters stated that in order to calculate the im pacts of Blocks 3 and 4 in a way that is consistent with the approach for Block 2, EPA shoul d remove emissions associated with displaced EGUs from the numerator of each state's c arbon intensity numerator. Commenters
stated affected EGU MWh should also be removed from the denominator, and the equivalent
number of MWh should be added back based on low- an d zero-carbon generation from Block 3 and energy savings from Block 4.

Commenters expanded their discussion by stating, th at to properly evaluate the system-based impacts of Building Blocks 3 and 4, EPA should calc ulate the incremental MWh of nuclear generation, renewable generation, and energy saving s. Commenters clarified that, for nuclear generation, only under-construction nuclear should displace 2012 fossil fuel-fired generation. For renewable generation, the commenters suggested thatEPA should add all MWh representing renewable generation to the denominator in calculat ing each state's rate. However, the commenters clarified, EPA need only displace fossil generation representing the renewable energy that is incremental to that produced in 2012 . Finally, the commenters concluded that all energy savings would be considered incremental to 2 012 generation and so all efficiency MWh would displace existing generation.

Comment 53: The following commenters believe that states which have already implemented carbon-free generation should be given credits for their prior actions.

Response 53: The BSER is forward-looking in identifying cost-ef fective opportunities for emission reductions from 2012; however, the cost an d availability of these emission reduction opportunities is the result of many factors, includ ing previous actions. The final building block 3333

methodology is described in detail in V.E of the pr eamble and in the GHG Abatement Measures
TSD.

The following are summaries of the specific comment s under this comment:

Commenters stated EPA's proposal penalizes states t hat have acted to reduce GHG emission intensity through investment in carbon-free generat ion, including renewable energy and nuclear generation. Commenters said besides ignoring the ac tual proportion of carbon-free resources present within state boundaries through its failure to include existing nuclear and hydroelectric generation, EPA requires early acting states to mee t more stringent interim and final performance standards. Commenters said EPA must recognize the s ignificant efforts that states have made to reduce GHG emissions in the absence of a proposal s uch as that being contemplated by EPA. Commenters said meeting these goals comes at a cost , since renewable energy generation can be more expensive than traditional fossil fuel-fired g eneration. Commenters said these added expenses result in the imposition of greater costs to the customer, which they have already been saddled with for several years. Commenters said EPA seeks to increase the renewable goals of states that have already achieved real GHG reductio ns while asking less of states where such opportunities still exist, and this is neither equi table nor cost-effective. Commenters said some argue that providing credit will enable states to g et by without doing anything, but the real story is that these states have been generating real redu ctions for years without a rule in place.

Comment 54 : Long-term implications of EPA’s treatment of RE

Response 54 : The BSER is forward-looking in identifying cost-e ffective opportunities for emission reductions from 2012; however, the cost an d availability of these emission reduction opportunities is the result of many factors, includ ing previous actions. The final building block 3 methodology is described in detail in V.E.6 of the preamble and in the GHG Abatement
Measures TSD.

The following are summaries of the specific comment s under this comment:

Commenters stated EPA's treatment of renewable ener gy also has long-term policy implications. Commenters explained that the Proposed Rule affirma tively penalizes states and companies -
like Western Farmers - that have been at the forefr ont of renewable energy development and creates unworkable conflicts and potential legal di sputes between and among states. Commenters stated there is no clear way for states to account for renewable generation and the reduction of generation through energy efficiency without disrup ting existing energy contracts, chilling the development of new renewables, and unfairly penaliz ing states and rate payers that have paid for the development of existing renewable resources, an d these problems cannot simply be resolved by the states in the implementation of the Proposed Rule, and are the result of EPA exceeding its authority under the CAA.

Comment 55: Commenters suggested that EPA should establish stri cter standards based on renewable energy and energy efficiency under Buildi ng Blocks 3 and 4.334

Response 55: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of onshore wind and solar cost and performance assumptions.

The following are summaries of the specific comment s under this comment:

Commenters stated that EPA's standards can be tigh tened to achieve significantly more carbon reductions. Commenters said significant additional reductions can be achieved through renewable energy and energy efficiency. Commenters said that demonstrated, updated cost and performance standards show that dramatic reductions can be affordably achieved with the no carbon solutions of building blocks 3 and 4 - renew able energy and energy efficiency. Commenters said EPA's current proposal vastly under estimates those reductions and must be changed to realize these further achievable reducti ons.

3.3.7 Cost effectiveness of RE

This section discusses issues related to cost-effec tiveness of CO 2 emission reduction through Cleaner Generation Sources (Building Block 3). The comments in this section address cost effectiveness of RE and provide additional informat ion both supporting and disagreeing with the EPA's cost models and associated analyses. State-sp ecific issues are addressed, as well as issues related to integration of RE into the electric powe r grid and potential effects of RE-related incentive programs.

Commenters have raised a number of issues related t o this subsection which are organized by topics (comments) below. Responses are provided for these topics.

Comment 1: Commenters provided general information (not neces sarily referring to independent studies) in support of the EPA's analys is and that RE is cost effective.

Response 1: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated the growth in renewable generatio n expected by the Proposed Rule is feasible and cost effective with today's technologi es. Commenters stated the long-term growth in renewable energy deployment has been accompanied by continuous improvements in technology performance and cost. Commenters stated in 2013, th e national average price for wind power purchase agreements (PPAs) hit an all-time low of $ 25/MWh. Commenters stated the system prices for residential and commercial PV, for examp le, declined 6-8 percent per year, on average, from 1998 to 2013. Commenters stated projections by the National Renewable Energy Laboratory (NREL) and Lawrence Berkeley National Laboratory (LBNL) show that this sustained price drop over eight years is expected t o continue, with solar eventually reaching335

widespread grid parity. Commenters also stated rece nt market data indicates that average levelized cost of electricity (LCOE) of renewable g eneration has already become cost competitive with conventional sources, particularly in resource-rich regions. Commenters stated in the latest figures from Navigant Consulting, LCO E for utility-scale photovoltaic (PV) and onshore wind generation were $0.08/kWh and $0.06/kW h, respectively, compared to $0.075/kWh for coal.

Commenters stated Building Block 3 is cost effectiv e. Commenters stated previous renewable energy generation has been cost effectively deploye d. Commenters stated that a NREL and Lawrence Berkeley National Laboratory review of the costs and benefits of increased renewable energy deployment (as anticipated under RPS complia nce) found that the estimated incremental cost from 2010-2012 (the cost above and beyond whatwould have been incurred without an RPS) was on average approximately 1 percent of reta il electricity rates and well below the cost caps that most state legislatures have adopted as p art of their RPS. Commenters stated that in the study's analysis of states with restructured market s, incremental costs ranged from 0.1 percent to 3 percent of retail rates. Commenters stated regula ted states have fared similarly, experiencing incremental costs no higher than 3.5 percent of ave rage retail rates, and in one case, savings of 0.2 percent. Commenters stated this data derives fr om 29 states, most with policies in effect for more than five years.

Commenters stated that additional renewable energy generation is also predicted to be costeffective to develop. Commenters stated NREL found that if utility-scale solar and wind are deployed in prime areas to meet RPS mandates, the r enewables, including transmission costs, could be cost competitive with new NGCC power plant s in 2025. Commenters stated that although NREL's study was limited to the Western El ectricity Coordinating Council, it identified a range of scenarios where renewables would cost th e same or less than NGCC by 2025, and that EIA estimates that even before then, by 2019, the c ost for wind would be less than all forms of coal-fired power. Notably, commenters stated, even large utilities long known for their significant coal plant portfolios, such as Duke Ene rgy, have invested heavily in renewable

energy.

Commenters stated that EPA correctly incorporates r enewable energy and energy efficiency as components of its BSER. Commenters stated the emiss ion reduction strategies from energy efficiency and renewable energy are already being d eployed today in New York to costeffectively secure significant reductions in carbon pollution, beginning to fulfill the goal of this Proposal.

Commenters stated that regardless of the reduction in demand, the most economical generation resource will be dispatched to meet energy demands. Commenters stated that contrary to EPA's assertions in the State Plan Considerations TSD (at25), it is not zero-carbon resources that are the lowest cost resources. Rather, Commenters state d, for most companies (including Basin Electric) coal-based base load facilities are consi stently the least expensive units to operate. Therefore, commenters stated while these programs are best practices for companies in longterm planning and can result in lower emissions of CO2 over time, they are unlikely to lead to EPA's stated goal of reduced generation at coal-bas ed facilities.336

Commenters described the successful development of solar and wind energy in Colorado and focuses on the results of a bidding process as partof the Public Service Company of Colorado renewables acquisition process in a period followin g 2016 and 2018. Commenters stated that the results of the bidding process were "a marketplace test of the cost of renewable energy supervised by a public record at the Public Utiliti es Commission that show new wind and solar come in at lower than system average costs here in Colorado. And we hold for your consideration that if we can do it here, it can be done elsewhere as well."

Commenters stated that numerous studies have shown that this transition needs only the political will to make it happen. Commenters stated that new nuclear reactors cost billions of dollars and take many years to bring online, and renewable ener gy, and especially efficiency are much cheaper and their development is already underway.

Commenters provided examples to illustrate that sol ar and wind energy measures can be implemented at a reasonable cost, and that cost sho uld not be an impediment to including these renewable resources as part of the BSER. Commenters stated the examples included descriptions of First Wind's solar energy projects in Utah and H awaii and the wind energy projects in Hancock County Maine.

Commenters stated that "today, renewable energy is more cost-effective in more regions of the country than ever before, and prices continue to de cline" and provided examples of prices for wind and solar generation and prices in PPAs in var ious states including: Georgia and Texas. Commenters continued by saying that "these examples are consistent with Google's experience in the market. Significant technology development a nd cost reductions for renewable energy resources have persisted over time and are expected to continue apace. To be sure, these renewable energy prices have been supported by fede ral and state policies and tax incentives. However, as for any energy technology, including fo ssil fuel technologies, government support and policies have played a critical role in driving down the unsubsidized cost of the technologies and taking them to greater scale. The Clean Power P lan can help play that role going forward for
renewables."

Commenters stated that "the EPA must not weaken Geo rgia's proposed target because renewables and energy efficiency measures are cost- effective energy solutions for Georgia."

Commenters noted that it is important to adapt to c hanging grid operations "as renewable energy becomes a larger component of the electricity secto r and the generation profile of the electric resources available throughout the day is changing. " "This can be done economically, if supported through appropriate policies, pricing opt ions, and program offerings." " The Western Wind and Solar Integration study found that not onl y is a high renewable energy penetration achievable, but also that any increases in costs or emissions associated with increased cycling of fossil fuel power plants are nominal compared to th e overall cost and emissions savings associated with reduced generation from fossil fuel power plants."

Commenters stated that "renewable energy is neithe r reliable nor dispatchable and is therefore not a perfect substitute for conventional forms of generation, like fossil fueled sources. Moreover, even if one could overcome the reliabilit y and dispatch issues, the costs of producing many types of renewable energy are still not econom ically justified. Basing economic337

development programs on more costly, less reliable energy sources that cannot be dispatched is a
non-starter."

Commenters stated that "wind and solar resources ha ve been deployed by states, utilities, and merchant generators. Commenters stated these techno logies have been growing rapidly and are becoming more cost-effective strategies for CO2 emi ssion reductions than approaches that continue to rely on conventional generation resourc es." Commenters provided statistics to illustrate the point.

Commenters noted that "more than a dozen studies co nducted by independent grid operators, state governments, academic experts, and others hav e found that wind energy benefits consumers by reducing electricity prices, and utilities are t aking note". Commenters stated an example includes the DOE Wind Technologies Market Report 20 12. Commenters stated that this report show how "cost savings with wind power are apparentacross the country. Commenters stated newly released DOE data shows that consumers in the states that use the most wind energy have
fared far better than consumers in states that use less wind energy. Commenters stated supporting arguments are also provided in the American Council on Renewable Energy's report and the Outlook for Renewable Energy in America.

Commenters described how EPA could be more aggressi ve in the targets for RE based on
dramatic since the costs of RE have fallen dramatic ally. Commenters provided examples of this for solar energy.

Commenters highlighted the cost-effectiveness by de scribing the results of a modeling exercise looking at the CPP scenarios for the State of Wisco nsin using the MyPower modeling software and a spreadsheet model. "Both models show that the 30% RPS can reduce Wisconsin's CO2 emissions below EPA's targets, at a lower cost than the fuel switching scenario. These results were shown under conditions where fossil fuel price s rise steadily at 2% annually, and a scenario where natural gas prices reflect historical volatil ity observed from 19998-2013. The 30% RPS produced lower costs than the fuel switching scenar io under each simulation, illustrating the value of renewables as a hedge against price volati lity." "The results of both modeling exercises mirror results of recent analysis performed at the national level by the Union of Concerned Scientists (UCS). The UCS analysis found that EPA's proposed rule significantly underestimates the role of renewables in establishing state-level emissions targets, and fails to reflect the falling
cost of renewables."

Comment 2: Commenters agreed with the general finding that RE is cost effective, and in support cite the results of independent studies.

Response 2: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:338

Commenters stated supporting analyses verify that h igher renewable deployment in the alternative approach is cost-effective and achievab le. Commenters stated independent modeling studies have also determined that the higher nation al penetrations of renewable energy projected in the commenters’ updated Alternative Approach are both technically and economically
achievable. Commenters stated these studies should serve as further confirmation that much higher levels of renewable energy can and should be included in the Best System of Emissions
Reduction. Commenters stated that all three of the supporting analyses referenced rely on NREL's Renewable Energy Deployment System (ReEDS) m odel. Commenters stated that like IPM, ReEDS is a long-term capacity-expansion model for the deployment of electric power generation technologies and transmission infrastruc ture throughout the contiguous United States.
Commenters also stated that ReEDS features the foll owing capabilities to model renewable

energy:

"[ReEDS] addresses a variety of issues related to r enewable energy technologies, including accessibility and cost of transmission, regional qu ality of renewable resources, seasonal and diurnal load and generation profiles, variability a nd uncertainty of wind and solar power, and the influence of variability on the reliability of elec tric power provision. ReEDS addresses these issues through a highly discretized regional struct ure, explicit statistical treatment of the variability in wind and solar output over time, and consideration of ancillary service requirements and costs."

Commenters provided information on recent analyses by the National Renewable Energy Lab (NREL) and U.S. Department of Energy (DOE) demonstr ate the potential for much higher renewables penetration than EPA's proposed targets, even under restrictive sensitivity cases. Commenters provided further detail on the scenarios modeled. Commenters stated the ReEDS modeling suggests that EPA could set significantly higher renewables targets without a significant impact on electricity prices, and depen ding upon the scenario and year, solar and wind generation levels are two to three times highe r in ReEDS than EPA's targets and, in many cases, electricity price projections are lower than EPA's.

Commenters also provided information on a Union of Concerned Scientists (UCS) assessment of the technical and economic feasibility of a propose d "demonstrated growth" approach to targetsetting which results in 995 TWh of renewable energ y. Commenters stated UCS also found that the incremental cost of high levels of RE deploymen t under their proposal was at or below $30/MWh, assuming national trading of RECs. Comment ers also discussed the results of the analysis related to the impact on natural gas and e lectricity prices. Commenters stated that in the UCS analysis, the national average price of natural gas delivered to the electricity sector would be 9% lower than business-as-usual by 2030. Comment ers also stated that at the regional level, consumer electricity prices would range from a 3.7% reduction to a 3.4% increase, while power sector natural gas price reductions would range fro m 8% to 17%.

Commenters also provided information on preliminary results from DOE's Wind Vision report. Commenters stated that the early release of this an alysis shows "that increasing wind power from 4.5% of U.S. electricity use in 2013 to 10% in 2020 , 20 percent in 2030, and 35% in 2050 is technically and economically feasible. Achieving th ese targets would require less than 5% of the country's available wind resource potential and wou ld result in a less than 1% (0.1 cents/kWh) increase in electricity costs by 2030, and a 2% red uction in electricity costs by 2050. In addition,339

the study found that achieving the Wind Vision (com pared to a baseline scenario) would result in cumulative (2013- 2050) savings of:

• $400 billion in avoided global climate change damag es from reducing power plant carbon emissions by 12.3 Gt of CO2-equivalent(a 14% reduction);

• $108 billion in avoided health and economic damages from reducing particulate matter, nitrous oxide, and sulfur dioxide emissions ; and

• $280 billion in lower consumer natural gas bills an d total electric system costs that are 20% less sensitive to natural gas price fl uctuations."

Commenters stated EPA Properly included the additio n of renewable energy in the BSER. Commenters stated electricity generation from renew able resources - such as wind, solar, or geothermal - has been demonstrated to be a cost-eff ective means of displacing emissions from fossil fuel generation. Commenters stated, given th e nature of the electricity grid, the addition of renewable energy will directly result in reduction in other generation. Commenters also stated that there is ample evidence that it is fossil-fuel fired generation that is reduced as additional renewables are brought on-line. For instance, comme nters stated, the New York State Department of Public Service conducted extensive mo deling of the economic and environmental effects of that state's renewable portfolio standar d and concluded that increased renewable energy generation would displace generation from hi gher-emitting sources, primarily natural gas-, coal-, and oil-fired units. Commenters stated renewable energy also meets EPA's cost criteria. Commenters stated recent analysis by Lazard suggests that the costs of carbon abatement from building a new wind or solar project, relative to building a new coal or gas plant, are within EPA's range of $10-$40/tonne and, particularly in areas with strong wind resources, can result in net savings to electricity customers. Commenters al so stated a recent LBNL survey of state renewable generation cost assessments found that mo st states which assessed benefits of RPS policies determined that the policy resulted in netbenefits due to, among other things, pollution reductions, economic development, and natural gas p rice suppression.

Commenters stated that earlier this year a study wa s conducted by PJM, the regional grid operator, on the impacts of integrating up to 30 pe rcent renewable energy by 2026. Commenters stated that the study found that by using 30 percen t solar and wind we would save up to 16 billion dollars per year on electricity production because it would replace the least efficient and most expensive power plants. Commenters stated the study also found that there would be no significant reliability issues from phasing in this level of renewable energy, even with current technology.

Commenters praised the levelized cost of low carbon options analysis performed in Lazard and referred to the results of that analysis, stating t hat "one can go technology-by-technology, regionby-region and even plant-by-plant, which, in theory , is what the EPA will let the state do. Using the mid-points yields exactly the same rank orderin g of the options as standing the ranges sideby-side. The ranges for efficiency, and wind, overl ap as the lowest cost resources. The ranges for gas and Solar PV with the cost trend overlap as the next least costly options. In the context of the nuclear debate, when we look at ranges, nuclear can not compete with efficiency, wind, gas, biomass, solar PV anyplace in the U.S. It is barely competitive with gas with CCS, geothermal,340

microturbines, and solar thermal with storage. Stor age is projected to be the least cost peaking power, just 10 percent more costly than the higher nuclear projections."

Commenters provided examples of various analyses in cluding a 2012 analysis from Citi Research, a Credit Suisse analysis, a Mckinsey stud y, a Sanford Bernstein analysis, to support the argument that on the residential-scale, solar i s already competitive with electricity off the grid. Commenters also stated that utility-scale sol ar will be competitive with gas-fired power in the medium term, and utility-scale wind is already competitive with gas-fired power.

Commenters also stated that "McKinsey reaches the s ame conclusion as Citi and Credit Suisse in projecting cost parity for solar with conventional generation within the next decade, but they go on to argue that this can have a dramatic impact on the marginal demand for conventional resources. Commenters stated the report argued thatthe growth of solar has an "outsize" effect on the demand for base load generation." "By alteri ng the demand side of the equation, solar directly affects the amount of new capital that uti lities can deploy at their predetermined return on equity. In effect, though solar will continue to generate a small share of the overall US energy supply, it could well have an outsize effect on the economics of utilities and therefore on the industry's structure and future." In addition, comm enters pointed out that claims of natural gas price volatility will be discredit since "reducing supply pressures with renewables would dampen any volatility."

Commenters further stated that "the electricity sec tor has moved well beyond the point where environmentalists and renewable advocates argue for the possibility of a transformation. We now have Wall Street analysts and important segments of the utility industry not only observing the ongoing transformation, but also noting the need fo r institutional and infrastructural change to
smooth it. This economic transformation makes it cl ear that base load should not be characterized as a myth; rather it is an antiquated concept that has outlived its economic usefulness and is rapidly becoming obsolete." "The electricity system is well into the transition from a "fuel based" traditional load-following cent ralized electrical grid to an active and smart "renewables-based" electrical distribution system t hat integrates distributed supply with managed
demand."

Commenters provided examples of utilities that have been taking advantage of what they call low and stable long-term pricing available from ren ewable energy generators. Commenters stated those examples include Austin Energy, CPS En ergy in the San Antonio area, the LA Department of Water and Power, and Massachusetts Mu nicipal Wholesale Electric Company.

Commenters cited examples of analyses that demonstr ate that RE energy is already cost effective, including a 2012 analysis by the Michiga n Public Service Commission and a report by
Deutsche Bank.

Comment 3: Commenters stated that they do not think RE is cos t effective and describe the costs and emissions that they say the EPA is not co nsidering.

Response 3: The EPA addresses considerations related to the te chnical feasibility and costeffectiveness of building block 3 generation levels , particularly as it relates to the grid integratio n341

costs of significant RE penetration, in both the pr eamble (section V.E) and GHG Mitigation
Measures TSD. The EPA’s determination of cost-effe ctiveness is the result of EPA analysis.

The following are summaries of the specific public comments under this comment:

Commenters stated that "the EPA misunderstood the L awrence Berkeley National Laboratory Study. A large deployment of RE will cause larger p rice increases than cited in the LBNL Study." "The EPA fails to note these studies covere d what were then the early years of the State programs in which the RPS requirements were fairly modest (in the low single digits). Most State programs do not require significant renewable energy deployment until the post 2020 timeframe. A small percentage requirement of a new generation resource, even if very costly, will not drive very large price increases, as the i ncreased costs are spread over a large amount of electricity load."

Commenters also stated that "the LBNL study does no t demonstrate that RE is a cost effective means to lower CO2 emissions because an analysis us ing energy system models show cost of CO2 Reductions from RE Exceed $50/ton. Further, com menters stated that "in citing Germany as an example of an effective RE program, the EPA p rovides a helpful opportunity to look at the cost effectiveness of RE programs in lowering CO2 e missions, especially in regions with relatively modest technical potential" and provided data from the German experience to show that the German experience demonstrates conclusivel y that RE requirements are among the most costly ways to lower CO2 emissions.

Regarding solar and wind, commenters provided data and described the results of published literature showing "that when the required amount o f back up generating capacity is included in cost calculations, wind and solar remain among the most costly energy resources, even after the inclusion of externalities. In fact, most existing wind and solar energy resources were constructed not because they were the low cost mean s to lower CO2 emissions or to produce energy, but to comply with or take advantage of pol icies created to satisfy other objectives (interest group technology preference, employment, energy security, etc.)." Commenters then concluded that there is enough "analytical evidence demonstrating that electricity generated from wind and solar do not produce cost effective CO2 re ductions and therefore should not be part of
the EPA's BSER determination."

Commenters also provided examples of how, as RE req uirements increase, ratepayer prices will increase noticeably and why current penetration lev els and associated rate increases are meaningless predictors of expected rate increases w ith greater renewable energy penetration
rates."

Commenters stated that "EPA fails to appropriately account for the full costs and rate impacts of its RE proposals." "The costs of increased renewabl e energy go beyond the cost of RE technologies and must include lost revenues incurre d by Louisiana's utilities." Commenters provided estimates for the increased costs.

Commenters described the negative impacts that aggr essive goals on renewable energy penetration can have in electric cooperatives and p rovides the example of Minnkota Power Coop. "In 2007, Minnesota passed what was at the time the most aggressive Renewable Energy Standard (RES) in the country, a mandate requiring a 25 percent renewable energy portfolio by342

2025. As with the conservation mandate, Minnesota p olicy makers believed they were treating utilities fairly by requiring the same renewable en ergy requirement for most of them." "Combined, Minnesota electric cooperatives have los t around $70 million annually in similar MISO transactions, largely because of our steep dai ly demand curves and lack of 24-hour, sevendays-a-week load."

Commenters stated that renewable energy brings a large cost to Georgia communities. "Because solar energy appears to offer the most long-term pr omise in Georgia, it was chosen as the appropriate renewable resource to include in the ev aluation. The added cost to our communities for this Building Block is estimated at $1.7 billio n over the 2020 through 2030 period."

Commenters stated that "requiring their customers t o pay for additional renewables integration at this point will increase rates and not result in a significant reduction in carbon dioxide emissions, particularly since integrating additional intermitt ent generation requires significant investment in carbon-emitting ancillary equipment (e.g., simple c ycle gas plants) for grid frequency and imbalance regulation."

Commenters stated that they do not think that costs factor in impacts in wildlife. Commenters stated "Wind power destroys flying birds, and now t here are articles coming out about the new solar plants catching birds on fire."

Commenters stated that "EPA's proposed rule states that, by deriving its renewable targets from existing state RPS mandates, the result, represents a conservative estimate of cost-effective generation that could actually be developed by stat es." Commenters stated that what is cost effective in one state will not automatically be co st-effective in another.

Comment 4: Commenters argued that RE is not cost effective in Arkansas and provide the reasons why, e.g., limited RE availability.

Response 4: The final building block 3 methodology does not rel y on state-specific deployment estimates, but rather cost-effective RE at an inter connection level. The EPA addresses considerations related to the technical feasibility and availability of regional RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated Arkansas has limited wind potenti al and nearly all of the non-hydroelectric renewable energy that Arkansas consumes originates in nearby states. Therefore, commenters stated, EPA's goal-setting methodology for Building Block 3 would require states like Arkansas to invest in renewable energy resources within the state no matter how inefficient and costly they might be, or to purchase a substantial portion of t he renewable energy in its Building Block 3 target from other states that will already be force d to develop other renewable generation to satisfy their own overly stringent targets. Comment ers stated EPA did not analyze such costs in its Regulatory Impact Analysis. Even then, commente rs stated, given practical constraints on renewable capacity, states such as Arkansas would l ikely be unable to meet EPA's goals even by purchasing renewable energy credits from other stat es.343

Comment 5: Commenters argued that RE is not cost effective in West Virginia and provide the reasons why, e.g. limited RE availability.

Response 5: The final building block 3 methodology does not re ly on RPS requirements or statespecific deployment estimates, but rather cost-effe ctive RE at an interconnection level. The EPA
addresses considerations related to the technical f easibility and availability of regional RE resources in both the preamble (section V.E) and GH G Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters provided a discussion on the costs assoc iated with solar resources in West Virginia. Commenters stated hat as determined in a project co nducted by West Virginia University for the EPA titled "Sustainable Energy Parks on Mine-Scarre d Lands in Appalachia," West Virginia's best potential solar power resources are located in the southern part of the state, where former surface-mined lands exist that have few options for reuse. Commenters stated these lands would be the best potential locations for solar power dev elopment and have been explored for such development. However, commenters stated, the incent ives which states that are heavy utilizers of solar power have in place, e.g. net electricity imp orts and high electricity prices, do not yet exist in West Virginia. Commenters provided the following discussion:

“The report found that the best potential solar res ources in West Virginia are near Welch and have a potential expected output of 4.72 kWh/m2/day . The report also found that financing arrangements were critical to the payback period of a potential solar power project, including the ability to receive tax credits and solar renewable energy credits (SRECs). Without SRECs, the levelized cost of energy produced ranged from 21 to 27 cents/kWh, depending on ownership

structure.

For net electricity importing states such as Califo rnia and New Jersey, solar power often helps to avoid purchasing wholesale electricity at times whe n it is most expensive, such as during peak
load hours in the late summer afternoons. For West Virginia, one of the largest power exporting states, the ability to avoid this type of cost does not exist. Furthermore, peak demand for electricity in West Virginia occurs in the winter, often at times of the day when potential solar power output is zero. As of October 2014, Californi a had about 5,500 MW of utility solar power resources connected to the grid. Total installed solar electric generating capacity in California is closer to 8,000 MW. Any solar power installed in We st Virginia would have to be accomplished without the benefit of avoided peak energy prices w hich has enabled solar power development in California, and without access to what California h as - some of the best solar power resources in
the nation.

In terms of peak capacity needed to serve load, sol ar power is unlikely to be able to contribute at all in West Virginia. While there would be energy s avings associated with solar photovoltaic (PV) investment in West Virginia, the total avoided costs are likely to be much lower than states such as California, Massachusetts and New Jersey wh ere solar capacity is already in place. And while electricity prices are rising in West Virgini a and solar power prices are falling, levelized solar energy costs are not forecast to be competiti ve with current generation before 2030.344

"Solar grid parity" is a term used to illustrate th e continuing decline in the cost of solar power produced electricity in comparison to generally inc reasing retail electricity prices. Solar grid parity at the state level is typically defined as a verage electricity rates minus the levelized cost o f generating solar electricity. Solar grid parity by this definition is expected by some analysts to reach 36 states in 2016, if the 30 percent tax cred it on system costs remains. West Virginia is not one of those states, due to its comparatively low e lectricity rates, despite recent increases.

This definition of parity is incomplete because it compares the retail cost of electricity that
includes the costs of transmission and distribution , costs that can't be avoided when integrating solar energy because the grid must still be maintai ned. States such as Arizona are deciding that distributed, net-metered solar PV owners must pay a fee to support the distribution grid.

The EIA projects that solar PV costs will decline t o 13 cents/kWh in 2019 for systems with a capacity factor of 25 percent. Because solar insola tion in West Virginia is lower, a capacity factor of only 13 to 15 percent is possible, which results in higher costs per kWh.

In West Virginia, the costs of solar power generati on would have to be passed on to ratepayers, many of whom are low-income. Nearly one quarter of West Virginia families have incomes of less than 150 percent of the poverty line ($35,325 for a family of four)35 placing the State eighth in the nation and about five percent above the nati onal average of 19.6 percent. Families in this situation spend a disproportionate nine to ten perc ent of their income on utilities, fuel and public services, whereas the average family pays a little over seven percent of their income on the same goods and services. Rate increases would pose a par ticularly acute problem for low income
households.

Renewable Energy Summary

There are currently no utility-scale solar power in stallations in West Virginia. The state has one announced 35 MW solar power grid project in the per mit stage. Based on the efforts of private developers to build wind, hydro and biomass generat ing capacity over the last decade, it is extremely unlikely that more than 1.8 million MWh o f additional generation can be added to the West Virginia portfolio by 2030. This would leave t he state 8.5 million MWh short of the EPA's goal of 10.3 million MWh of new renewable generatio n, which would only come from solar energy or purchased power. If all the energy were t o come from in-state solar power, at a capacity factor of 15 percent, this equates to abou t 6,450 MW of installed solar PV.

The proposed regulation includes the option to purc hase RE via a power purchase agreement (PPA). If the estimates of feasible RE additions sh own in the following table are accurate, about
8.5 million MWh would need to be obtained either fr om installed solar power or energy purchased from other states via PPAs. At the curren t installed cost for utility solar power of $3 per watt, the investment in 6,450 MW of solar PV wo uld amount to $19 billion. As costs are projected to decline, costs would be somewhat lower when expenditures actually take place. The extension of the production tax credit and investme nt tax credit would also lower costs. It is still likely to be more expensive for West Virginia to de velop in-state solar power resources to meet the goal, so it is assumed that the choice would ha ve to be the purchase out-of-state wind energy.345

Wind PPAs are at all-time lows, especially for proj ects in the interior region. For the years 2011 to 2013, generation-weighted average, levelized win d PPA prices were $53/MWh for contracts in the Great Lakes region and about $58/MWh for the Northeast region. Prices in both regions are higher than the national average and represent the relevant markets that would be available to West Virginia. If the production tax credit were to be removed, these prices would rise.

As shown above, the states of Illinois and Indiana have considerable amounts of untapped wind resources. However, purchasing wind power would res ult in uncertain avoidance of generating costs, because West Virginia is a net generator of electricity. States that are net importers of electricity have much more certain benefits, becaus e they are able to avoid both the fuel (variable costs) and capacity (fixed costs) associated with t he energy purchased.”

Comment 6: Commenters argued that RE is not cost effective in Minnesota and provided the reasons why.

Response 6: The final building block 3 methodology does not re ly on RPS requirements or statespecific deployment estimates, but rather cost-effe ctive RE at an interconnection level. The EPA
addresses considerations related to the technical f easibility and availability of regional RE resources in both the preamble (section V.E) and GH G Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated that "although SMMPA's current ge neration portfolio includes some renewable resources and SMMPA plans to expand its r enewable fleet to meet state standards, those resources are not a perfect substitute for th e baseload generation provided by Sherco. In particular, it costs more to generate electricity f rom renewable plants. Further, the intermittent nature of wind and solar power makes those resource s unreliable sources for baseload generation." "Over the past 5 years MISO has given us capacity credit for 8% to 17% of the name plate rating for our wind generation. Accordin gly, even with an expanded renewable portfolio, to fully meet its members' energy demand s with reliable and affordable energy, SMMPA will need to rely on Sherco's baseload genera tion to hedge against market prices in serving its load, particularly during peak load per iods."

Comment 7: Commenters provided arguments to show that RE is n ot the least cost option.

Response 7: The building block 3 generation levels represent a cost-effective means of replacing affected EGU generation but are nonetheless associa ted with a positive $/ton cost. Incremental RE does not have to represent a cost-saving measure to qualify for inclusion in building block 3.

The following are summaries of the specific public comments under this comment:

Commenters stated that OMU's integrated resource pl an found "OMU's coal fired Elmer Smith Generating Station was the lowest cost source of su pply available to OMU for the next 10 years. Sources evaluated were natural gas combined cycle, natural gas combustion turbine, and346

purchase of OMU's supply requirements from the mark et. In each scenario, the least cost option for OMU's ratepayers was to continue to operate ESG S."

Comment 8: Commenters provided additional information on the costs of RE integration onto the grid.

Response 8: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology. Distributed generatio n technologies are not included as part of building block 3. The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated there are significant additional costs and constraints not factored into the EPA's analysis of Building Block 3. Commenters stat ed the value of the grid has been recognized by numerous stakeholders and EPA pays itno mind in its analysis of what is best in terms of CO2 emissions. Commenters suggested the Ag ency review the following documents:

1. EPRI Cost of Grid Service: Energy and Capacity Cost s (see page 21);

2. EEI, The Value of the Grid;

3. NARUC resolution - encouraging state commissions an d policymakers to continue to engage in collaborative dialogue regarding DG polic ies and regulations;

4. MIT, The Future of the Electric Grid

Commenters stated since DG customers use the grid i n more complex ways than other customers, they are contributing to additional cost s that utilities will incur to transform their distribution systems from the one-way delivery of p ower into a far more complex two-way system. Commenters stated these costs can include i nvestments in new control systems, including IT infrastructure, communications hardwar e and software, and protective equipment. Commenters stated they can also include operating p rocedures and training to ensure the safety of the workforce and the public. Commenters stated EPA should correct its building block 3 estimates to reflect the increased costs of integra tion that come with increased penetration of renewables and increasing heat rates as more margin al generators are forced to follow
intermittent renewables.

Commenters stated the desire "to ensure that EPA ha s fully captured the capital and operating costs of the additional replacement generation and transmission that will be needed to ensure reliability under the Clean Power Plan scenarios." Commenters stated that the primary cost
consideration is “the intermittency of the generation and the financ ial cost of replacement (backup) resources necessary to ensure the reliabil ity of the electric grid. Construction of additional generating capacity to back the intermit tent generation along with the additional transmission and infrastructure significantly incre ases the capital cost of meeting the Clean347

Power Plan rules. In addition, operation of higher- priced resources for reserve adequacy will increase overall system costs.”

Commenters stated that "there is a limit to the amo unt of RE capacity that can exist in any region that is not subject to dispatch (wind and solar) be fore it impacts grid stability. Without the ability to store energy from these intermittent resources, equivalent capacity must exist or be built to supply power when the RE is not available. Independ ently these RE sources are already expensive and when the back-up energy sources, typi cally natural gas combustion turbines, are included in the cost of generation, wind and solar energy become even more expensive. Additionally, wind and solar generators are known t o adversely impact power quality and require compensatory measures to address reactive power." C ommenters questioned if EPA considered these costs in their analysis of Building Block 3 a nd the impact that expanded use of RE might have on grid stability.

Comment 9: Commenters provided what they think is additional information on the costs of RE integration onto the grid.

Response 9: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated a number of technical studies by independent grid operators, utilities, and
national laboratories have demonstrated the feasibi lity of wind penetrations of 40% and higher.
Commenters referenced studies from NREL's Renewable Energy Futures, the Nebraska Power Association, the Minnesota Department of Commerce a nd PJM which studied wind and solar penetration/integration/reliability. Commenters sta ted if EPA does decide to impose such a cap, non-variable renewables, such as biomass and geothe rmal, should not count towards it.

Commenters stated the cost associated with integrat ing variable renewable energy onto the grid is typically lower than or comparable to the cost o f integrating conventional resources. Commenters stated even at 40% wind penetration acro ss SPP, the Nebraska wind integration study found wind's total integration cost to be aro und $2/MWh of wind energy. Commenters stated, for comparison, the cost of accommodating c onventional generator forced outages on a real U.S. power system was calculated to be $2 per MWh of all load served on that power system. Commenters also stated data from the ERCOT grid operator confirm that wind's integration cost is significantly lower than that o f conventional generators' integration cost, on both a per-MWh of generation basis and a total basi s.

Commenters suggested that EPA's assumptions ignore state's economically reasonable resource limitations and the cost effectiveness of each type of renewable source. Commenters also stated that EPA is "not considering all the challenges pos ed by integration of intermittent electricity sources into the grid, for example, permitting, fin ancing, transmission access and technical challenges."348

Commenters stated that "The CPP did not consider th e costs and project delays due to right-ofway obtainment related to expanding renewable energ y transmission project to accommodate the requirements of the rule."

Commenters pointed out that "EPA's assumption that large amounts of renewable power can be developed and brought to market within the proposal 's compliance time lines fails to account for the significant cost and time needed to build the n ecessary transmission."

Commenters stated that "experience in operating pow er systems with wind energy is increasing worldwide, leading to an emerging set of best pract ices." These practices have helped balance concerns regarding the variable nature of wind gene ration." Commenters cited the use of centralized wind energy forecasting systems by ISOs and the refinement of scheduling and commitment processes as examples.

Comment 10: Commenters described regulatory considerations and government incentives
that should be considered in the cost effectiveness analysis.

Response 10 : The cost-effectiveness of building block 3 genera tion levels was analyzed by the EPA without assuming extension of the production ta x credit. Please refer to the IPM documentation for additional information on the reg ulations modeled by the EPA that affect the competitiveness of RE resources.

The following are summaries of the specific public comments under this comment:

Commenters asserted renewables are an important sou rce of electricity; however, systems must be in place to ensure that artificial market mechan isms or regulations are not established that encourage the deployment of assets favoring of a si ngle technology that could aggravate the intention of ensuring a reliability electrical syst em. Commenters also stated there is also a synthetic benefit constructed for Building Block #3 to the extent that investment tax credits
confound the stand-alone cost-effectiveness of thatbuilding block, which falsely enhances its attractiveness under BSER. Commenters questioned wh at is the true cost-effectiveness of Building Block #3.

Commenters said to "support the application of solar and wind in the manner described by the proposed rule. However, this needs to be tempered t o the market forces as Congressional action on ITC and PTC could have significant impact on the se renewables and future build out. EPA has ignored these issues and instead has looked to environmental dispatch rather than market pricing."

Commenters argued that "the EPA should exclude soon to expire federal tax incentive when evaluating the cost of RE". Commenters described th at purchased power agreements (PPA) "are not an appropriate measure of the competitiveness o f different technologies as they do not account for costs hidden or obscured by government subsidies such as Production Tax Credit or Investment Tax Credits. For example, the Production Tax Credit allows developers of wind RE
to offer PPAs at a substantial discount to what the y would otherwise require if they had to pay
for their investment without the tax credits. The E PA would have to make the assumption that349

the Production Tax Credit for wind and the Investme nt Tax Credit for solar RE will continue beyond their current congressionally mandated 2016 expiration dates for their claims of competitiveness to be valid."

Commenters stated that the Proposed Rule relies on compliance with the current renewable energy standard (RES) for MO to assess the probabil ity of achieving the target in both the proposed base case and the proposed alternate case. Although the Proposed Rule relies on the RES, it is not parallel to the state-determined sys tem. "State compliance with the MO RES is subject to a one percent customer rate impact limit ation. The cost of compliance to build new wind or solar farms in MO would quickly exceed the rate cap issued under state directives cost of compliance to build new wind or solar farms in M O would quickly exceed the rate cap issued under state directives and support from the state l egislative process and approved by the people
of MO."

Commenters stated that utilities need to make mone y, "but in order to keep the utilities whole, they have to be incentivized to create programs whe re they make a margin or an extra margin on programs that will integrate high levels of renewab le energy affordably because just a haphazard goal or just only solar net metering is really not going to get us there."

Commenters argued that "subsidies for renewables ha ve a much higher rate of return". "Subsidies play a crucial and unavoidable role in e nergy policy decisions. Renewables are in the early stage of development and receiving subsidies. " "With a much smaller level of subsidy to drive innovation and economies of scale, the renewables have achieved dramatically declining costs in a little over a decade, which is exactly t he economic process that has eluded the nuclear industry for half a century." "The dramatic increas e in innovative activity with relatively low levels of R&D subsidy and much lower cumulative lev els of total subsidies, reflects the
decentralized nature of innovation in the renewable space and leads to the dramatic pay-off in terms of declining price. As we have seen, while wi nd had the earlier success, solar is now catching up."

Commenters stated that "EPA completely fails to ack nowledge the effect of federal subsidy programs on the cost of renewable energy developmen t and the significant uncertainty surrounding the future availability of these subsid ies. For example, the costs cited in the GHG Abatement Measures TSD for wind power purchase agre ements reflect the benefit of the federal Production Tax Credit (PTC) for wind, along with th e additional benefit from modified accelerated cost recovery systems." "This tax credi t was a major driver of growth in wind capacity. The wind PTC expired at the end of 2013, however, and its chances for future renewal are uncertain. Likewise, the costs EPA cites for so lar power purchase agreements reflect the benefit of the federal Investment Tax Credit (ITC). But the solar ITC subsidy is scheduled to be substantially diminished after 2016, substantially increasing the cost of new solar development. Without addressing the future status of these subsi dies and their effect on the cost of future renewable energy development, EPA cannot claim thatits Building Block 3 targets are
achievable."

Commenters stated that policies that encourage deve lopment of RE capacity and discourage premature retirement of nuclear capacity could be u seful elements of CO2 reduction strategies350

and are consistent with current industry behavior. Commenters stated costs of CO2 reductions achievable through these policies have been estimat ed in a range from $10 to $40 per metric ton.

Comment 11: Commenters in this summary discussed consideration s to improve costeffectiveness for small utilities serving low incom e populations.

Response 11: The EPA has phased in the requirements of building block 3 generation levels to provide additional flexibility and time for all aff ected EGUs.

The following are summaries of the specific public comments under this comment:

Commenters said that "Some of Iowa's smaller utilit ies do not have the same options to add renewables as the larger investor-owned utilities d o, because of their smaller size. For example, one Iowa municipal utility has coal generation, no NGCC plants, and some wind generation in Minnesota. The utility has tried to invest in Iowa wind generation without success, because the
scale at which it can invest does not match the siz e of most wind generation projects. These smaller utilities also do not have large customer b ases over which to spread costs as larger utilities. In addition, federal incentives such as production tax credits are not available to municipal utilities, and are thus not available to partially offset the cost of renewable generation for these utilities. Some of Iowa's municipal utili ties and rural electric cooperatives will need more time than the year 2020 to change their genera tion portfolio to include additional lower emitting and carbon-free sources. Granting these ut ilities additional time in which to make the required changes will allow them to spread the asso ciated costs for their customers over a longer period of time and minimize the cost impact on Iowa families and businesses. Too aggressively advancing the rules for these smaller utilities wou ld have a negative impact on family expenses in the impacted communities. When thinking about wh at is a reasonable cost increase to impose on customers, EPA should also consider lower income utility customers."

Comment 12: Commenters described various RE industry specific needs that do not seem to have been fully considered in EPA's cost effectiven ess analysis.

Response 12: The EPA addresses considerations related to the te chnical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated the EPA's determination of state goals for renewable generation does not fully reflect the economic aspects of renewable res ources. Commenters stated resource limitations exist due to permitting, market saturat ion, transmission access, and project financing issues. Commenters stated many prime wind locations have difficulty obtaining the necessary permits and are often objected to at the local leve l. Commenters also stated many high-grade
wind sites are also located in remote areas. Commen ters stated energy generated from these351

locations requires large capital investments to bui ld transmission infrastructure to interconnect to the BPS. Commenters stated location matters, and si tes with high capacity factors are limited.

Commenters stated the expiration of the production tax credits (PTCs) and potential reduction of the investment tax credits (ITCs) for RE resources in the coming years will impact investment
decisions and the economics of new resources. As a result, commenters stated the marginal cost of new RE generation increases, which could impact the long-term development of RE resources. Commenters stated there is also the impl icit need to increase ancillary services as a result of the increased variable resource output. M oreover, commenters stated, there are higher production costs associated with more non-hydro ren ewable generation due to a combination of increased capital costs and low-capacity operating factors. Commenters stated overall, significant cost uncertainties will directly impact the electri c industry's plan to quickly adapt to the CPP requirements.

Commenters provided a list of key considerations th at were not included in EPA's costeffectiveness analysis, citing a NERC report as ref erence, and that include:

• "resource limitations due to permitting, market sat uration, transmission access, and project financing issues. "

• "The expiration of the production tax credits (PTCs ) and potential reduction of the investment tax credits (ITCs) for RE resources in t he coming years will impact
investment decisions and the economics of new resou rces. As a result, the marginal cost of new RE generation increases, which could impact the long-term development of RE resources."

• "The implicit need to increase ancillary services a s a result of the increased variable resource output."

• "Higher production costs associated with more non-h ydro renewable generation due to a combination of increased capital costs and low-capacity operating
factors."

Comment 13: Commenters specifically stated that the EPA needs to change its cost modeling assumptions and data and describe the changes neede d.

Response 13: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of onshore wind and solar cost and performance assumptions.

The following are summaries of the specific public comments under this comment:

Commenters stated building block 3's economic model ing should reflect expected cost reductions from renewable technologies over time. C ommenters stated in addition to technological advances, 'technology learning' throu gh deployment has been shown to consistently drive down cost as the volume of techn ology deployed rises. Commenters stated352

Section 111(d) state compliance plans are likely to encourage additional renewable capacity installation and therefore cost reductions, on top of the cost reductions driven by ongoing renewable energy growth.

Commenters stated the current IPM modeling conducte d by EPA assumes minimal capital cost reductions for wind and solar energy through 2030, with wind costs declining from $2,258/kW in 2016 to $2,250/kW in 2018, $2,220/kW in 2020, $2,12 3/kW in 2025, and $2,039/kW in 2030. In contrast, commenters stated, the Department of Ener gy report found that the current installed cost of wind energy in 2013 was $1,630/kW. Commente rs stated it is deeply concerning that under the current IPM modeling inputs, even though the model assumes continued cost reductions, the wind cost in 2030 is still 15-25% h igher than the wind cost seen today.

Commenters stated in the case of wind energy, EPA s hould rely on the cost reduction projections included in the forthcoming Wind Vision report, whi ch NREL has provided to EPA. In addition to capital costs, commenters stated EPA should also incorporate these documents' projections for reductions in O&M costs, which are listed as 'OpEx' in the Wind Vision document. Commenters
stated the Wind Vision document also contain the ne cessary data for assessing current and future wind performance, i.e., capacity factor. Commenters stated the ReEDS model that was used for the Wind Vision analysis contains a detailed repres entation of hourly renewable plant output in 17 time slices, which can be readily mapped to the hourly wind generation profiles employed in
the IPM. Commenters stated Wind Vision contains det ailed data on expected wind plant capacity factor improvements, broken down by wind resource c lass. Commenters stated these wind resource classes can be readily translated to the r esource classes in the IPM, and used to modify the region and class-specific hourly wind generatio n profiles employed in the IPM.

In addition, commenters stated Wind Vision's extens ive dataset of regional wind supply curve information should be used by EPA to characterize t he economically viable renewable energy resource in each region. Commenters stated EPA shou ld take care not to double count transmission interconnection costs, regional cost m ultipliers, and other factors that are already
included in both the IPM and the Wind Vision cost n umbers.

Commenters also stated the Alternative Renewable En ergy Approach and the NODA Renewable Energy Approach do not include estimates of offshor e wind generation that is likely to be deployed. Commenters stated while offshore wind is relatively new to the United States, it is well established globally with a market that added over 1,700 MW in 2013, bringing total installed capacity to 7,031 MW. Commenters stated i n the U.S., there are 4,900 MW of proposed offshore wind projects in advanced stages of planni ng, with some projects likely to begin
construction in the near future.

Commenters stated EPA must update the cost data it relies on to assess potential growth in renewable energy. Commenters provided the following discussion:

"Renewable energy costs have fallen dramatically an d renewable energy performance has improved in recent years. These changes are well re cognized and consistent with the price declines expected as an industry experiences the ki nd of growth that the renewables industry has seen in the U.S. and abroad. But EPA's analysis fai ls to account for either the cost reductions that have already occurred or the cost reductions that c an reasonably be expected to continue. EPA353

must properly account for these cost reductions and re-analyze the quantity of renewable energy
that is available.

In EPA's analysis of renewable energy (conducted th rough its Integrated Planning Model (IPM) Base Case v5.13,4), EPA adopts load forecasts and n ew technology costs from the Energy Information Administration's (EIA) Annual Energy Ou tlook 2013 (AEO2013). More recent industry data demonstrate that modeling assumptions used for the cost and performance characteristics of new generating technologies are significantly out of date. These cost estimates are especially important because, as discussed belo w, the costs for new generation technologies constrain the amount of renewable energy available to reduce carbon pollution under the Clean
Power Plan.

AEO2013's assumptions are outdated and do not refle ct the dramatic cost declines seen in recent years. In fact, we find that AEO2013's cost assumpt ions for renewables are 46% above current averages for wind and solar technologies. This is n ot surprising, given that the AEO2013 cost assumptions were based on projects completed in 201 2 and reflect pricing contracts that may have been signed several years prior to project com pletion.

Since 2010, the cost of building utility-scale solar projects has declined by about 50 percent from $3400/kW to $1500-1800/kW in 2014. These declines are consistent with NREL's modeled prices using its bottom-up modeling methodology - N REL estimates that the price of solar declined to $1800/kWdc in Q4 2013. The declines are also reflected in average PPAs for utilityscale solar which, in the past year alone, have dro pped from $123/MWh to $86/MWh, with several projects reporting prices (including incent ives) below $70/MWh - competitive with new NGCC plants.

Wind prices have experienced similar declines since 2010. The capital cost of developing onshore wind turbines has also declined, from $2260 /kW to $1750/kW on average. LBNL reports that PPAs for wind projects (including ince ntives) fell, after peaking briefly at $70/MWh in 2009, to a national average of $25/MWh in 2013. Moreover, technology improvements have allowed for taller wind turbines, enhancing perform ance through faster and steadier wind speeds at higher elevation. As a result of these advances, Lawrence Berkeley National Laboratory (LBNL) researchers have indicated that average capa city factor has increased by 10 percent
across all wind classes since 2012. Taller wind tur bines significantly expand the geographic area
suitable for wind turbines.

Lazard estimates that the current range of LCOEs fo r onshore wind, without any subsidies, is between $37/MWh and $81/MWh. In contrast, EIA's out -of-date estimate projects that the LCOE in 2019 will be between $70/MWh and $90/MWh.

There is no basis for EPA to rely on AEO2013's out of date data when it has before it recent government and credible industry analysts' cost dat a, e.g. NREL, LBNL, BNEF and Lazard.
AEO2013's use of installed costs means that the dat a presented will have an 18-month or greater time lag. As LBNL has noted installed cost data "ma y reflect transactions that occurred several or more years prior to project completion" and ther efore are often unable to accurately reflect current prices in such a rapidly changing industry. In this case, the delay causes the analysis to miss key data showing major price declines, and the refore significantly overestimate current354

costs and underestimate recent performance. EPA can also check the monthly FERC-issued grid interconnection report, which shows the utility-sca le projects that have both been approved for interconnection or commissioned as a new generating resource for the regional transmission authorities that lie under FERC jurisdiction.

Importantly, there is no reason to believe that the declines in cost will not continue. DOE/NREL Sunshot Vision study, which constructs a detailed r oadmap for continued cost declines in solar PV technologies, projects that solar system prices can drop 75% between 2010 and 2020. In its 2014 update on Solar PV pricing trends, NREL also p redicted that solar prices are still on track to meet the Sunshot goal of $1/Wdc by 2020 for util ity-scale systems. This would place utilityscale solar projects in direct competition with NGC C plants, without any incentives or carbon policy. Likewise, many industry analysts predict th at wind and solar will become increasingly competitive with new NGCC plants and will make up a major market share of new U.S. demand. As noted, average PPAs for utility-scale solar in t he past year alone have dropped to levels (including incentives) competitive with new NGCC pl ants. Meanwhile, a new Deutsche Bank report predicts that distributed solar power will b e cheaper than average retail electricity prices in 36 states by 2016 (47 states if the 30% ITC is exte nded).

Recent analysis also shows that higher penetrations of renewable energy are feasible. Detailed analyses performed on the PJM grid, the Eastern Int erconnect, and Western Interconnect have all found that renewables can provide up to 10% of gene ration on major ISOs with little to no additional costs, and can provide up to 30% of tota l generation with only minor adjustments to the existing grid and proper system planning. The f indings of these studies demonstrate that it is technically achievable to incorporate higher levels of renewable energy into the existing grid than what has been proposed in EPA's target- settin g.

There is no basis for EPA to rely on outdated cost information in its analysis when it has more recent data available showing that current costs ar e lower. This is particularly true because the
cost differential is dramatic. Based on NRDC's anal ysis of recent data, the costs EPA relied on are 46 percent above current average costs for, res pectively, wind and solar energy. As explained in detail below, the lower costs mean that substant ially more renewable energy can and should be included in the state targets."

Commenters stated that EPA relies on outdated assumptions about the costs of renewable energy and continues by saying that "as UCS notes, the price of wind and solar have dro pped precipitously in recent years, fueling tremendous g rowth in these technologies." Commenters provided specific data illustrating the declining t rend, in particular for the Southeast.
Commenters also stated that "the solar and wind cos t declines projected by UCS and others are the product of rapid technological advances, so it is understandable that the proposal does not adequately capture them", but that EPA should fix t hat in the final rule, in particular for
Alabama.

Commenters cited a report conducted by the Natural Resources Defense Council to say that
"EPA used outdated information to estimate the costand performance of renewable energy. Current estimates show renewable energy is close to half as expensive as suggested by the agency's data. EPA should recalculate its price est imates to help states understand the true costs and benefits of using renewable energy as a complia nce option."355

Commenters encouraged "EPA to reconsider some of it s modeling decisions to more accurately reflect the capacity for renewable energy deploymen t. First, the model used by EPA for Block 3 uses cost data from projects completed in 2012 to e stimate the future cost of renewable energy." "The EPA model should more accurately represent the se price trends by updating the cost and performance assumptions for renewable energy techno logies to more recently forecasted industry data. One way to better account for these market dy namics is to adopt a technical-economic potential analysis of renewable energy capacity in each state, similar to the proposed alternative approach, instead of using regional renewable portf olio standard (RPS) averages."

Commenters stated that "the analysis of which renew able resources are economic should start with current, accurate data on the cost of renewabl e technology deployment. For projecting future economics and performance, we recommend reli ance on what we believe to be credible projections available from the U.S. Department of E nergy and the National Renewable Energy Laboratory."

Additionally, commenters stated to support the foll owing modification, which is outlined in more
detail in the AWEA comments: Periodic review of BSE R to account for new technology developments and cost reductions.

Commenters suggested that "in the final rule, EPA s hould update its cost numbers and strengthen the state targets to reflect the emission reduction s available based on current data on availability and cost." "Analysis by the Natural Resources Defen se Council using the IPM model of a similar but more ambitious set of intensity-based targets i llustrated that we could cut CO2 pollution from power plants by 21 to 31 percent (relative to 2012 levels) by 2020, and 25 to 38 percent by 2025. The reductions are equivalent to 470 to 700 million short tons relative to the Reference case in 2020, and 560 to 860 million short tons in 2025. Th e estimated cost ranges from no increase over the Reference case to about $14.6 billion in 2020, depending on the level of emission reductions and the package of solutions employed. But the bene fits in saved lives, reduced illness, and climate change avoided would be $28 to $63 billion, far exceeding the estimated costs."

Commenters cited the NRDC's December 1 comments urg ing "EPA to make several changes to building block three in order to properly reflect t he amount of renewable energy that can be deployed at reasonable cost. NRDC presented up-to-d ate data that reflect the dramatic cost reductions and performance improvements in renewabl e energy technologies such as solar and wind that have occurred in recent years but are not reflected in EPA's analysis. Current data show that wind and solar costs are each approximate ly 45 percent lower than EPA assumed in its analysis." Commenters urged "EPA to ensure that the rate of renewable energy deployment assumed in EPA's analysis is at least as fast as th e historical rates of deployment."

Commenters said that EPA is not capturing the full potential of RE and that the CPP needs to
reflect the dramatic cost reductions that have occu rred in recent years.

Commenters added that "current data show that wind and solar costs are each approximately 45 percent less costly than EPA assumed in its analysi s."

Commenters also stated that the cost results for BB 3 are similar to those for BB2 and "with even modest corrections, renewables would clearly be les s expensive on average than natural gas."356

Commenters suggested the need to "Improve cost assu mptions for renewable energy in integrated planning model (IPM) frameworks. In the alternative method for determining renewables targets, EPA limited the targets by the economic potential determined by IPM modeling. However, the assumed cost assumptions for renewable technologies are higher than recent real-world experience."

Commenters stated that EPA's "assumptions about the cost and deployment rate of energy efficiency and renewable energy are markedly outdat ed." Commenters cited information from "Reinventing Fire (RMI, 2011) to support the argume nt and further say that "naturally you want your assumptions to be conservative, but we see no sound reason to make them much worse than we now observe in the marketplace let alone those w e can reasonably expect from the solid record and durable prospect of falling costs and ac celerating adoption for both efficiency and
renewables."

Commenters stated that cost declines have made rene wable investment a great deal for utility customers and this is one of the reasons why utilit ies will meet but more likely exceed EPA's growth rate projections. As examples, commenters de scribed what has happened with the Advanced Solar Initiative adopted by Georgia's Powe r Company, Alabama Power agreements to import cost-effective wind generation from the Midw est, along with associated renewable energy credits (RECs), from Oklahoma and Kansas.

Commenters also pointed out that EPA's IPM modeling assumptions are out date. "The solar and wind cost declines projected by market experts are the product of rapid technological advances, so it is understandable that the proposal does not adequately capture them. However, EPA should ensure that the final rule does include updated cos t projections. In addition, EPA should use those updated projections to more accurately quanti fy the amount of renewable energy that can be deployed at reasonable cost in Tennessee" and ot her states.

Commenters stated that "EPA must recalculate the co sts assigned to renewable energy, which
would establish that it overestimated those costs a nd as a result underestimated the amount of renewable energy that can be deployed in the states , which in turn underestimated emission reductions that should be attributed to renewables, let alone state reduction targets." Commenters described the findings of the September Levelized C ost of Energy Analysis - Version 8.0 by Lazard Ltd in support of the statements.

Commenters asserted that "the reformulation of Buil ding Block 3 developed by the Union of Concerned Scientists is superior to either of EPA's approaches". "As far as costs go, UCS conservatively estimates that the demonstrated grow th approach would have only a marginal increase in electricity prices above EPA's proposal ." "Given that consumers will feel little to no noticeable effect in the cost of electricity under the UCS approach, there is every reason to believe that utilities in both regulated and restru ctured states will easily absorb the regulatory costs of this proposal. In regulated states, utilit ies will continue to receive guaranteed returns on prudent capital expenditures, while utilities in market-based systems will pass on minor costs to consumers without significant reductions in demand. Section 111 merely requires that a BSER not impose "exorbitant" costs that would cripple th e regulated industry, and the additive costs of UCS's demonstrated growth approach are far from exo rbitant." "One reason for the modest costs of the demonstrated growth approach is scaling effe cts. That is, the more widespread a particular357

technology or method of generation becomes, the les s costly it is to produce, install, and operate.
This can result from traditional economies of scale , reductions in administrative burdens and other "soft costs" due to increased public support for the technology, and "next-of-a-kind vs. first-of-a-kind"-type benefits."

Commenters further stated that "an additional featu re of renewable energy is that the system integration costs decrease as these resources becom e more dispersed due to system-wide reductions in the variability of generation. While an individual renewable source has variability of generation, a larger pool of such resources dist ributed across a broad geographic area (such as a metropolitan region) have less variability and re quire lower backup or ancillary services costs." Commenters provided data to support this argument. Commenters urged "EPA to adopt the UCS' approach or one similar in order to maximize the ro le that clean energy will play in reducing CO2 emissions from our electricity sector. However, if EPA nevertheless decides to retain the basic approach it laid out in its rule proposal, EP A should make the changes discussed above to comply with the BSER mandate in the Clean Air Act."

Commenters highlighted the following as main consid erations that EPA fails to take into

account:

• EPA overestimates the cost and underestimates the p otential contribution of

efficiency (particularly compared to nuclear power)

.

• EPA falls to analyze how this could affect the cost and quantity of carbon
reduction in the next two decades.

Commenters stated EPA ignores the potential to redu ce carbon emissions by transforming the electricity system from the 20th century approach t hat increases generation to meet load to one that uses information and control technology to int egrate distributed supply with active management of demand.

Commenters stated "We do not mean to suggest that t he transformation of the electricity sector is a simple task. While falling costs and rising renew able load factors are the engines that are driving the change, it requires substantial new phy sical and institutional infrastructure that is centered on system integration and management." "Co st recovery to ensure the deployment of adequate facilities, a problem that plagues electri city markets in general, can be compounded by the expanding role of decentralized resources with low operating costs. Incentives to innovate and compensation for intensive system management is a new challenge."

Commenters also presented data to illustrate how th e expansion of solar capacity will cause the daytime power demand to collapse. Commenters stated that "For companies selling electricity into merchant or competitive markets like Californi a, this is disaster. Demand during what was one of the most profitable times of day disappears. With it, the need for part of the merchant disappears too, for all but the dinner hour. And th at is the issue competitive generators face globally in the 2020-scenario: how to live off dema nd on two hours per day." Therefore, commenters added "the net load to be met by non-sol ar resources declines by about 17%. Assuming that most of that load is fossil fuel, thi s represents a major reduction in CO2 emissions. This is a benefit, not a problem. Howeve r, the challenge resides on meeting the358

demand during the non-daytime hours when there will be a much higher demand peak." Commenters stated that ensuring the reliability of this system is a challenge that requires the transformation of the system to two-way management of supply and demand" and cited the work by "Lovins" and the "Regulatory Analysis Project", which provides a number of measures that can be implemented in a dynamic electricity system that actively manages supply and demand.

Commenters asked "that the EPA consider not just th e fuel costs in terms of CO2 production involved in power generation but also the life cycl e costs" and cites "the intensive amount of processing and manufacturing required to produce so lar cells, actually puts their carbon life cycle cost close to that of a natural gas power plant (12 0 g-CO2 per kWh produced for Natural gas, versus 110 g-CO2/kWh solar)."

Comment 14: Commenters described cost trends in RE without exp licitly suggesting changes to the EPA's analysis.

Response 14: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of onshore wind and solar cost and performance assumptions.

The following are summaries of the specific public comments under this comment:

Commenters presented long term cost trends for nucl ear, wind and solar and use those trend to illustrate that "the economic competitiveness of th ese generation resources reflects technological and economic progress. Over the course of fifty years of commercial nuclear power in the U.S., construction costs have risen substantially a nd persistently and there are no indications that this pattern will change any time soon. The cost of small modular reactors, which have been touted as the next big thing to save nuclear power, are likely to be much higher than the renewables and investment in SMRs has collapsed, wi th both Westinghouse and B&W, the two largest firms pursuing the technology in the U.S., throttling way back on investment. Wind already has much lower overnight costs than nuclear and solar soon will. The projections for the cost of new nuclear reactors have been rising stead ily for over a decade. While other factors affect the cost of power, construction costs are th e key factors that affect the EPA analysis and the key factors in the current debate, particularly for the major, non-fossil fuel generation sources, which are very capital intensive."

Commenters also presented and described trends in o perating costs and merit order dispatch to illustrate that "the trends in operating costs are similar to the trends in construction costs. In contrast to the increasing operating costs of nucle ar reactors, operating costs for wind have been declining. In the mid-1990s nuclear reactors would have been dispatched before wind with a substantial operating cost advantage. Two decades l ater, wind has a substantial advantage, which is likely to grow in the years ahead. Wind operatin g costs have fallen twice as fast as overnight costs. Thus, it is not coal or gas or subsidies tha t is giving aging nuclear reactors heartburn, it is the superior economics of wind and efficiency combi ned with the increasing operating costs of aging nuclear reactors that has made the aging reac tors uneconomic."359

Commenters stated that "Not only are RE resources f ully capable of replacing fossil fuel-fired generation from a technical standpoint, these clean technologies have undergone dramatic price reductions in both the long- and near-terms, and ar e now at or near grid parity with, or are cheaper than, fossil-fired options in many parts of the country. This trend will only increase in the coming years as wind and solar technology becom e increasingly economical in both the U.S
and around the world." Commenters described the work of Lazard as evidence of this argument.

Comment 15: Commenters noted that the cost of implementing ren ewable energy has decreased in recent years and urged the EPA to update its RE cost assumptions, as they are greatly
overestimated.

Response 15: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of onshore wind and solar cost and performance assumptions.

The following are summaries of the specific public comments under this comment:

Commenters noted that for wind, EPA projects capita l costs of $2.26 per watt in 2016 to $2.04 per watt in 2030; however, the U.S. Department of E nergy (DOE) has determined that wind projects installed in 2013 were already much cheape r than these projections, with pricing in the $0.90 to $1.30 per watt range. Commenters also note d that for solar, EPA's IPM modeling assumes solar PV installed costs of $3,098/kW based on the Energy Information Administration's (EIA) Annual Energy Outlook 2013 b ut that more recent information compiled by the Natural Resources Defense Council assessed t he cost of solar PV as being almost half that, $1,770/kW. Commenters stated that updating th ese assumptions would lower the levelized cost of solar energy from $224/MWh to $153/MWh.

Commenters noted that solar has seen significant pr ice declines; solar PV costs fell by about 40 percent from 2008 to 2012, and by another 15 percen t in 2013 while experience in other countries suggests that even greater price reductio ns are likely. Commenters noted that installed prices in the United States remain relatively high compared to other countries, which demonstrates the potential for additional cost decl ines. Commenters noted that solar cost declines are already translating into very low power purchas e agreement ("PPA") prices in the South as utility-scale solar has reached lows of under 5 cen ts per kWh.

Commenters also noted that the national average cos t of wind power has dropped more than 60 percent, making it competitive with new fossil fuel plants in many regions; a trend which is expected to continue. Commenters noted that wind pr icing is at an all-time low and as a result, utilities are increasingly selecting wind as the lo w-cost option. Commenters stated that nine states produced more than 10 percent of their elect ricity output from wind power alone in 2012- in 2007, only one state did (Environmental Defense Fund. A safe and prosperous America: cutting carbon pollution from power plants and depl oying American innovation). Commenters stated that the decline in turbine prices has produ ced a significant reduction in the capital costs of these projects and while EPA projects capital costs of $2.26 per watt in 2016 to $2.04 per watt in 2030, the U.S. Department of Energy (DOE) has deter mined that wind projects installed in 2013360

were already much cheaper than these projections, w ith pricing in the $900 to $1300 per kW

range.

Commenters noted that EPA's cost assumptions for on shore wind generation of $2,258/kW in 2016 to $1,864/kW by 2050 are substantially higher than actually reported wind energy capital costs. Commenters noted that a new LBNL report docu ments recent low wind power prices and overall cost reduction trends for the wind industry and that wind energy prices are declining overall due to lower turbine prices and higher wind turbine performance in terms of capacity factor output. Commenters stated that recent turbin e prices have been in the $900-$1,300/kW range of generation capacity with total installed a verage costs of $1,630/kW in 2013. Commenters noted that average PPA prices reached $2 5/MWh in 2013 and since many of the installed projects last year were able to qualify f or the federal Production Tax Credit (PTC), or a similar incentive, reported PPAs may reflect a redu ction of approximately $15/MWh when taking PTC into consideration. Commenters pointed o ut that average PPA prices themselves fell 64% between 2009 ($70/MWh) and 2013 ($25/MWh). Comm enters also noted that operations and maintenance costs associated with newly constru cted wind farms dropped from $23/MWh (or $55/kW of installed capacity) in the 1990s to a bout $9/MWh (or $23/kW of installed capacity) for projects developed since 2010.

Commenters noted that EPA's IPM used an installed c ost of $3,364 per kW-alternative current (ac) for utility-scale PV starting in 2016, droppin g to $2,859 per kW-ac in 2030 and $2,533 per kW-ac in 2050 and stated that these "forecasted pri ces"--even as far out as 2050--are extremely high and inconsistent with today's prices and trend s. Commenters noted, for example, that utilityscale PV projects installed during the second quart er of 2014 averaged a price of $2,130 per kWac and notably, this price has dropped by 52% since the second quarter of 2011. Commenters said that similar price drops have occurred in the commercial (54%) and residential (42%) sectors. Commenters stated that analysts anticipate the downward cost trend to continue based on further economies of scale and innovation through areas such as better solar performance. Commenters also noted that levelized PPA prices hav e been dropping steadily by about $25/MWh per year since 2007. Commenters conducted s everal analyses to determine solar PV net dependable capacity factors for Southeastern ut ilities and demonstrated that tracking and fixed solar systems have dependable capacity factor s of at least 60% and 50% in the Southeast. Commenters stated that these are significant levels that show that solar is particularly valuable because it can be used to meet generation needs whe n demand is highest.

Comment 16: Commenters describe and suggest changes to the EPA 's IPM modeling assumptions for wind energy.

Response 16: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of onshore wind cost and performance assumptions.

The following are summaries of the specific public comments under this comment:

Commenters stated the wind capital cost assumption for the year 2016 that is used in EPA's IPM run, $2,258/kW in 2011 dollars, is 39% too high rel ative to current installed wind costs,361

documented to be at $1,630/kW for installed wind pr oject costs in 2013 by the Department of Energy and Lawrence Berkeley National Laboratory's dataset. Commenters stated, while wind costs have rapidly declined and continue to decline , with wind purchase prices falling by more than half over the last five years, the DOE/LBNL re port estimates wind projects slated for installation in 2014 are likely to see an average i nstalled cost of $1,750/kW. Commenters stated this is because the 2013 projects were heavily conc entrated in the interior regions of the U.S., which has below average costs for wind plant instal lation relative to other regions. Commenters stated, thus, LBNL concludes that $1,750/kW may be a more representative indication of wind's current installed costs on a national basis. Regard less, Commenters stated, even in this case, the capital cost figure used in EPA's IPM run for 2016 is 29% too high.

Commenters also stated IPM's wind O&M costs are als o significantly too high relative to current
costs. Commenters stated IPM assumes fixed O&M cost s of $38.86/kW/year, while the DOE/LBNL report indicates costs of $28/kW/year in 2 013, as indicated by a Bloomberg analysis of the pricing of 5-year full-service O&M contracts . Commenters stated, before beginning the more difficult task of estimating how renewable ene rgy costs will decline in the future, EPA should ensure that its current year assumptions forrenewable energy costs are brought in line with reality.

Commenters stated the wind cost declines are not re flected in EPA's analysis and proceeds to provide examples with data illustrating the decline and its causes.

Comment 17: Commenters described and suggested changes to the EPA's IPM modeling assumptions for solar energy.

Response 17: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of solar cost and performance assumptions.

The following are summaries of the specific public comments under this comment:

Commenters stated that for solar, new industry data demonstrate that EPA's IPM cost assumptions are significantly out of date and provi des examples to illustrate the point.

Commenters described an alternative way to perform the scenarios modeling that "includes an application of a dollar 30/MWh cost reduction or si milar incentive for zerocarbon technologies and would lead to even higher levels of distributed solar deployment to achieve cost effective emissions reductions." "As distributed PV is a uniq ue, customer sited generation resource, it may be difficult to represent the technology in a whole sale power model such as IPM. Instead, it is more accurate to rely on separate modeling that ful ly accounts for market dynamics at the customer level. For example, NREL has developed the Solar Deployment System model (solarDS), a modeling complement to ReEDS which pro jects distributed PV installations by state based on system prices, retail rates, and consumer economics."

Commenters further stated that "Based on data from the latest U.S. Solar Market Insight Report (Q2 2014), the costs for utility PV are at dollar 1 .81/watt, while the costs for residential and362

commercial PV (which together make up the distribut ed solar market) are at dollar 3.92/watt and dollar 2.39/watt, respectively. This places solar o n track or close to meet the 2030 SunShot goals. Therefore, the Sunshot assumptions can be used as a trendline for 2030 solar costs. "The 62.5 percent Sunshot cost assumptions to use are: dollar 1.50/watt for utility PV as in input directly
into the IPM model dollar 2.25/watt for residential DG PV and dollar 1.88/watt for commercial DG PV for use with the 62.5 percent capacity projec tions as inputs directly for the solarDS model, which is then hardwired into the IPM model."

Comment 18: Commenters stated that the IPM modeling results sh ow that the BB3 targets are too costly.

Response 18: The EPA disagrees with this comment. There is a f undamental difference between compliance modeling and the quantification of a cost-effective amount of building block 3 generation. The amount of incremental RE d eployed by IPM in pursuing a least-cost solution in response to the application of goal rat es has no bearing on the analysis the EPA relies on to establish building block 3 generation levels. The EPA addresses considerations related to the technical feasibility and associated grid integ ration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measu res TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated the four parsed IPM runs that are available demonstrate that the Agency's Building Block 3 targets are far too costly and do not represent realistic estimates of the potential renewable energy generation available to achieve th e Proposed Guidelines. Commenters stated EPA performed IPM modeling runs to assess how state s would comply with the Proposed Guidelines under both state- focused and region-foc used compliance approaches, and thus, the
results of these IPM runs constitute EPA's estimate of representative scenarios in which the power sector is operating in compliance with the Pr oposed Guidelines at the least cost possible, within the constraints EPA imposes on the model.

Commenters stated IPM model runs predict that actua l renewable energy generation growth will meet only a small fraction of EPA's target under th e least-cost approach to compliance with the Proposed Guidelines. Commenters stated IPM predicts that under both the state-focused and region-focused compliance approaches, renewable ene rgy generation will reach only 356,063 GWh by 2029, and will grow at an annual rate of 1.1 percent from 2020 to 2029, far short of EPA's target of 522,723 GWh by 2029. Commenters sta ted this level of generation is only 1.7 percent greater than the renewable energy generatio n that EPA predicts in 2029 under its own Base Case analysis, and is actually 7.6 percent low er than the EIA predicts will occur in 2029 in the absence of any emission guidelines. Commenters stated EPA's own analysis severely undermines the Agency's prediction of the level of increased renewable energy generation that is achievable, and demonstrates that the Agency has fa iled to accurately consider factors such as cost and feasibility. Commenters stated the IPM res ults suggest that rapid growth in renewable energy generation is so costly that states are able to achieve only negligible incremental increases in renewable energy generation above the status quo (at best), and they must instead rely more heavily on other components of EPA's selected BSER in order to comply with the Proposed363

Guidelines. Commenters stated this, in turn, will i ncrease the cost of those other Building Blocks in ways that EPA has failed to analyze in the Propo sed Guidelines.

Commenters stated that "EPA"s own IPM runs demonstr ate that EPA"s Building Block 3 targets are far too costly and do not represent realistic e stimates of the potential renewable energy generation available to achieve the proposed emissi on guidelines.

Commenters further described that that "EPA's IPM m odel predicts that under both the statefocused and region-focused compliance approaches, r enewable energy generation will grow at an annual rate of 1.1 percent from 2020 to 2029. This level of generation is only 1.7 percent greater than the renewable energy generation that EPA predi cts in 2029 under its own Base Case analysis, and is actually 7.6 percent lower than wh at the EIA predicts will occur in 2029 in the absence of any emission guidelines. This analysis s everely undermines EPA's prediction of the level of increased renewable energy generation thatis achievable, and it demonstrates that EPA has failed to accurately consider factors such as c ost and feasibility. The IPM results suggest that rapid growth in renewable energy generation is so c ostly that states are only able to achieve negligible incremental increases in renewable energ y generation above the status quo, and they must instead rely more heavily on other components of EPA's selected BSER in order to comply with the emission guidelines. This, in turn, will i ncrease the cost of those other building blocks in ways that EPA has failed to analyze in its proposal ."

Comment 19: Commenters agreed that solar energy is cost effect ive and provide information in support even if they do not completely agree with t he EPA's assessment.

Response 19: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of solar cost and performance assumptions.

The following are summaries of the specific public comments under this comment:

Commenters stated it does not advocate for the RPS approach, but agree with EPA that solar energy is reasonable cost as part of building block 3 under the RPS approach. Commenters stated that under the RPS approach, the EPA has examined t he cost of implementing renewable measures under an RPS policy. Commenters agreed tha t the cost of deploying renewable energy measures, including solar, through state RPS polici es is reasonable cost. Commenters stated that a May 2014 joint study from LBNL and NREL analyzing the state level cost and benefits estimates from RPS policies found that over the 201 0-2012 period, average estimated incremental RPS compliance costs in the U.S. were e quivalent to 0.9% of retail electricity rates when calculated as a weighted-average (based on rev enues from retail electricity sales in each RPS state) or 1.2% when calculated as a simple aver age. Commenters stated for states with a restructured electricity market, this estimated inc remental RPS compliance cost for retail rates can also be expressed in terms of the cost per unitof renewable energy required, estimated in the range of $2-$48/MWh. Commenters also stated for sta tes with a regulated electricity market, the costs are in the range of minus $4-$44/MWh. Comment ers stated the study also looked at the cost of renewable energy to reduce emissions throug h state RPS policies. Commenters stated the estimates of the benefits ranged from approximately $4-$23/MWh of renewable generation,364

depending on the cost value assumed for CO2, cumula ting to roughly tens to hundreds of millions of dollars on an annual basis depending on the state. Commenters stated the joint study also looks at a number of other benefits, including economic impacts and wholesale market price
reductions.

Commenters stated solar energy measures will contin ue to be reasonable cost because industry costs are expected to decline in the future. Commen ters stated costs across the solar industry are falling rapidly, which will lead to reduced overall costs for implementing solar measures to reduce emissions from affected EGUs. Commenters pro vided additional detailed discussion on the following: installed costs, future installed co sts, balance of system costs, and raw material

costs.

Commenters stated current installed costs for solarshow that solar energy is already a costcompetitive emissions reduction technology and pric es continue to decline rapidly. Commenters
also stated that future costs of solar are forecast ed to decline as well, citing several third-party verified studies. Commenters also stated that CSP, which historically has been limited to larger utility-scale plants and relatively fewer installat ions, has comparatively less price history and can be expected to have a more granular price trajector y. Commenters also stated for PV systems, it is also important to recognize the balance of syste m costs in comparison to the panel costs, citing reports that found that solar financing and other n on-hardware costs now comprise up to 64% of the total price of residential solar energy systems . Commenters stated as total installation costs have declined and continue to decline at a more rap id pace than previously expected, solar is increasingly cost competitive with alternative sour ces of energy and other carbon emission reduction measures. In addition, commenters referen ced a study which also examined the cost and availability of the future supply of sourced ma terials for PV panels which ultimately found no concern over the availability of PV materials ev en in the scenario of planned significant deployment of solar PV globally. Commenters stated these facts illustrate that solar energy measures can be implemented at a reasonable cost, a nd that cost should not be an impediment to solar energy inclusion in the BSER.

Commenters agreed that solar energy measures can be implemented at a reasonable cost and provides data and examples to support this argument . Commenters also stated that "in Colorado, the costs of installed solar energy is coming down even more than national averages" and cites information about the Comanche Solar Project as exa mple. In particular, "the costs for distributed solar systems have come down dramatical ly as well and are below the national average in most of Colorado. These facts prove thatsolar energy measures can be implemented at a reasonable cost, and that cost should not be a n impediment to including solar energy as part
of the BSER."

Commenters stated that "solar energy is already a c ost competitive emissions reduction technology" and present data on average percent dro p in costs nationwide during the periods 2010- 2013, 2010- 2014 and 2006- 2013 to support th eir argument.

Commenters further stated that "with the maturation of the solar industry in Louisiana, we have seen both materials costs, and install costs contin ue to fall. As competition increases in other markets across the country, these factors will cont inue the downward trend in cost nationwide.365

These facts prove that solar energy measures can be implemented at a reasonable cost, and that cost should not be an impediment to including solar energy as part of the BSER."

Commenters further elaborated on what has been rep orted for trends in Maryland and cites "a paper written by professors from Yale University, t he University of Texas - Austin, the University of Wisconsin - Madison, and Lawrence Berkley National Laboratory, which found that residential and small commercial solar PV pric es vary considerably across geographic space, as shown in the differences in the county average p rice per watt." "Within the Northeastern states diagram, Maryland's pricing is quite uniform, and c losely follows national averages. The paper examined a data subset of roughly 100,000 recent re sidential and small commercial installations, and we are confident that their findings are an acc urate representation of the Maryland market."

Commenters argued that "Solar technologies can be d eployed quickly and easily in many locations, making it an extremely flexible energy r esource. It consumes no fuel, thereby shielding customers from the fuel price volatility risks associated with fossil fuel generation."

Further commenters provided citations to documents that describe additional benefits of solar power. For example, commenters stated "solar PV con sumes no water, unlike steam cycle thermal power plants such as fossil and nuclear pla nts, which consume enormous quantities of water. Solar power also provides substantial air an d water quality benefits. Coal plant emissions cause asthma, heart disease, water pollution, and m any other harmful impacts. Solar power also benefits electrical transmission system by providin g generation at or near the point of consumption to lessen the strain on an aging grid a nd reducing the need for expensive new
transmission and distribution infrastructure. Solar can also reduce system energy losses when
installed at or near load centers - losses that can be as high as 20 percent at peak times." "Solar power can also provide significant ratepayer saving s" and "the greater reliance on renewable energy sources like solar would help reduce the eco nomic risks associated with overreliance on natural gas." "Finally, solar power investments cre ate jobs and increased economic investment." In particular, "taking better advantage of the solar resource would create needed jobs in South
Carolina."

Commenters stated that "Arizona is the ideal state for widespread expansion of solar generation. Rapid growth of this technology is pushing down ele ctricity generation costs for renewables and further cost reductions are expected through 2020. "The National Renewable Energy Lab reported that between 2008 and 2013, installed solar photovoltaic (PV) capacity increased over 15 times in the US, and prices for PV modules fell 80%." "This strategy can achieve costeffective compliance, drive job creation and keep A rizonans' hard-earned dollars in the local economy."

Comment 20: Commenters described how solar energy represent a reasonable cost to utility companies.

Response 20 : The resources and data provided in this comment w ere valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of solar cost and performance assumptions.366

The following are summaries of the specific public comments under this comment:

Commenters stated solar energy measures should be i ncluded in the BSER because they are a reasonable cost system to reduce emissions from aff ected EGUs as solar energy measures are
reasonable cost to utilities. Commenters stated uti lities are increasingly procuring solar energy because solar energy technologies, including utilit y PV, distributed PV, and CSP, have become reasonable cost resources when compared to other re sources. Further, commenters stated, the various forms of solar technologies provide signifi cant economic benefits beyond cost, such as price certainty, hedge value, and avoided infrastru cture investment. Commenters stated one of the primary methods of procurement is through a Pow er Purchase Agreement (PPA) with a solar developer. Commenters stated many utilities are now signing PPAs in the $50-$60/MWh range over 20 to 25 years, offering price certainty to bo th utilities and ratepayers without any of the fluctuation in costs that accompanies fossil-fuel p lants, which are subject to variability in fuel costs throughout their operating lives. Commenters stated, in fact, Recurrent Energy, a developer of utility-scale solar PV, recently executed a powe r purchase agreement with Austin Energy in Texas for less than $50/MWh. Commenters stated thes e costs will continue to decline as
economies of scale are achieved.

Commenters also stated solar projects being offered and installed today show that solar is already cost-competitive with new and existing fossil gener ation in certain circumstances. Commenters stated for example, in 2013 Xcel Energy received ap proval from the Colorado Public Service Commission to procure 170 MW of solar strictly on a cost competitiveness basis. In addition, commenters stated, solar recently outbid natural ga s in a competitive evaluation for utility resource planning in Minnesota. Furthermore, commen ters stated, a recent NY Times article notes the following: "According to a study by the i nvestment banking firm Lazard, the cost of utility-scale solar energy is as low as 5.6 cents a kilowatt-hour, and wind is as low as 1.4 cents. In comparison, natural gas comes at 6.1 cents a kil owatt-hour on the low end and coal at 6.6 cents. Without subsidies, the firm's analysis shows , solar costs about 7.2 cents a kilowatt-hour at the low end, with wind at 3.7 cents." Commenters st ated these competitive costs are one of the reasons utilities are looking to include solar syst ems as part of a balanced energy portfolio.

Commenters also stated solar energy offers price ce rtainty to utilities because the fuel is free once the system is constructed. Commenters stated t his allows costs to be transparent and fixed over the length of the contract, which may be anywh ere from 10-30 years. Commenters stated that even when conventional fossil-based generators offer long-term contracts, the actual energy price paid usually varies along with the underlying fluctuating fuel prices. As a result, commenters stated solar is seen as a valuable hedge against volatile fossil fuel prices.

Commenters also stated distributed PV allows utilit ies to avoid significant infrastructure costs. Commenters cited a recent McKinsey analysis which n oted the following avoided costs with the deployment of distributed PV:

"The impact on national energy systems can be signi ficant. A recent report by the California Solar Initiative estimated that 1 to 1.6 GW per yea r of solar power generated by consumers would supply the equivalent capacity of adding a ne w 500kV transmission line, estimated to cost nearly $1.8 billion in capital costs. Distributed g eneration could also provide other benefits, such
as lower line losses due to shorter distances trans mitted, productive use of unutilized real estate367

(rooftops), and environmental benefits. It could be particularly relevant for heavily congested areas where adding new infrastructure is impractica l. Distributed generation can also make the grid more resilient, since it would continue to fun ction when central infrastructure is out of commission. If renewable generation costs continue to fall and energy storage capabilities grow rapidly, we can imagine entire neighborhoods or fac tory complexes being served through distributed solar power. This could make remote hou sing and manufacturing plants more viable by reducing the transmission capacity required from the grid or even eliminating the need to access the grid altogether."

Comment 21: Commenters described how solar energy represent a reasonable cost to
ratepayers.

Response 21 : The resources and data provided in this comment w ere valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated solar energy measures are being a dopted by states and utilities around the country because they are reasonable cost to ratepay ers as well. Commenters stated ratepayers are typically billed for their consumption of electrici ty in kWhs. Commenters stated the charge per kWh may include transmission and distribution servi ces, or they may be billed separately. Commenters also stated utility-scale solar operates much in the same manner as a traditional fossil fuel plant, and the energy is generally sold to utilities at the wholesale price in the same manner as fossil plants. Therefore, commenters stat ed the ratepayer will often see no difference on their electric bill when energy comes from a who lesale solar generator rather than a wholesale fossil fuel generator.

Commenters stated similarly, distributed PV has a n egligible impact on the ratepayer and has been shown to provide a benefit to ratepayers in ma ny circumstances. Commenters stated the benefit to the ratepayer will depend largely on whe ther the system is owned or leased, as well as other factors including where on the grid the syste m is located. Commenters stated if the system is owned or leased by the ratepayer, they will ofte n be able to sell the excess energy they generate back to their utility reducing their overa ll bill. Commenters stated if the system is installed pursuant to a power purchase agreement, t he ratepayer may be able to procure energy at a rate that is lower than the rate provided by the utility through a power purchase agreement. Further, commenters stated, ratepayers may be able to avoid some transmission and distribution service costs that they would be subject to if they were purchasing energy from a central station plant, as the solar system is located on the custom er site.

Commenters stated there are numerous third party ve rified studies that have looked at the costs and benefits of distributed PV to the ratepayer. Co mmenters stated that while some studies show a net benefit and others a net cost to ratepayers, when taken as a whole the studies clearly show that distributed PV is reasonable cost to ratepayer s. Commenters referenced a recent report by the Rocky Mountain Institute which completed a meta -analysis of 16 distributed PV cost-benefit studies, reflecting diverse levels of distributed P V penetration levels and included in their368

comments a chart which shows a summary of the costs and benefits of including distributed PV to the grid.

Comment 22 : Commenters argued that solar energy is not cost e ffective and described the reasons why.

Response 22: The EPA disagrees with this comment. The cost-eff ectiveness of all power sector resources is the result of many factors, including the existing regulatory context. The EPA appropriately considered current law in evaluating building block 3 generation levels.

The following are summaries of the specific public comments under this comment:

Commenters argued that solar energy is not cost eff ective and provides examples of the extent on which "current renewable solar generation is proppe d up with significant federal grants and tax credits", stating that without the current financia l support from federal appropriations, even the renewable generation currently in existence would n ot be "adequately demonstrated". Further, commenters stated that "because of the need for hug e federal appropriations to give this rule support for required renewable energy expansion, th e City strongly suggests that the EPA devotes its attention to working with Congress to p ass this rule in a separate bill, with the necessary funding to support it. As it stands, the creative adaptation of Section 111(d) of the 1970 Clean Air Act still must have Congressional ap proval for the financial support."

Comment 23: Commenters provided information to show that wind energy is cost effective.

Response 23: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

In particular, commenters described a study develop ed by PJM, which concluded that "under its 20 and 30 percent wind energy penetration level sce narios, there would be massive reductions in wholesale prices, as much as 21 billion annually in one scenario. These study results are
consistent with a number of other studies which dem onstrate that the price suppression effects of wind energy, when it competes with other generating resources in the wholesale electricity market, such as the PJM market, basically wind, whe n it competes, is usually one of the lower cost forms of energy at that time, and it will box out other types of energy that are more expensive, thus reducing what we call the clearing price of energy, and lowering the cost, ultimately, to consumers."

Comment 24: Commenters provided considerations for analyzing R E cost-effectiveness in the
RGGI states.369

Response 24:

Comment 25: Commenters provided cost-effectiveness considerati ons specific to the Southeast

states.

Response 25: The EPA does not rely on the data sources listed b elow for the final rule. The
EPA addresses considerations related to the technic al feasibility and associated grid integration costs of significant RE penetration in both the pre amble (section V.E) and GHG Mitigation
Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated EPA has not adequately considered the costs associated with renewable energy development in the Southeast. Commenters sta ted EPA primarily relies on two inadequate cost analyses regarding its renewable en ergy determinations. Commenters stated, first, using EIA-based levelized cost assumptions, the Agency claims the cost to reduce CO2 emissions through renewable energy deployment range s from $10 to $40 per metric ton. Commenters stated EPA, however, did not provide any supporting documentation for this analysis, and it is unclear how the dollar per metr ic ton statistics were calculated, including whether and to what extent EPA considered the regio nal availability, performance, and costs of renewable energy resources and technologies. Regard less, commenters stated, the Agency has ignored integration costs stemming from the large p enetration of intermittent generation resources (i.e., VERs). Commenters stated EPA's sec ond cost analysis relies in part on publicly available reports that detail "modest" rate impacts due to state RPS. Commenters stated these statistics are inapplicable in the Southeast. Comme nters stated through 2012, 85 percent of the nation's renewable electricity, motivated by RPS pr ograms, has been generated by wind. Commenters stated Alabama, Florida, Georgia, and Mi ssissippi do not have adequate wind resources and would need to rely on more expensive solar to meet EPA's renewable energy target. Commenters stated that undeniably, the costimpacts of EPA's Building Block 3 in the Southeast region will be substantially more than th e cost impacts of current state-level RPS. As such, commenters stated EPA has not adequately cons idered the costs associated with renewable energy development.

Commenters stated that using the U.S. Energy Inform ation Agency's most recent installed costs for utility scale photovoltaic (PV) of $3,873 per k W, the installed cost of 4,345 MW of PV is $16.8 billion. Commenters stated that when determin ing the need for new electric generating facilities, Florida law requires the consideration of renewable energy resources; however, under these same statutes, Florida's citizens are protect ed from funding excessive capital projects,
because the FPSC must also consider cost-effectiven ess. Commenters stated that as costeffectiveness is a mandate under State law, they ar e concerned about the reasonableness of the cost of renewable energy technologies used to devel op the Block 3 component of the Final Goal. Commenters stated the cost of achieving the CO2 emi ssions reductions using a proposed 10 percent renewable energy component for calculating the Final Goal does not appear reasonable.370

Comment 26: Commenters provided cost effectiveness considerati ons specific to GA.

Response 26 : The resources and data provided in this comment w ere valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated that "in both its preferred and a lternative approaches, EPA's assumptions regarding the amount of renewable generation that c an be feasibly and at reasonable cost added to Georgia's grid are overly conservative. As UCS n otes in its report, EPA significantly underestimates the potential role of renewable ener gy in setting state targets. Several of the
issues UCS identifies are evident in EPA's treatmen t of Georgia's renewables potential: EPA fails to account for both (1) the continued growth and fa lling costs of renewables projected by market experts and (2) the renewable energy deployment rat es that states are already achieving. SELC agrees with UCS that EPA should revise and update s everal of its underlying assumptions. Doing so will show not only that EPA's current assumption s are reasonable, but that Georgia can in fact reach a much higher renewable energy target almost double the levels assumed by EPA at a
reasonable cost."

Comment 27: Commenters described clean energy financing altern atives, which may have an impact in the cost-effectiveness of RE energy.

Response 27: The EPA addresses considerations related to the te chnical feasibility and costeffectiveness of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters suggested innovative financing alternati ves that the states can consider to spur lowcarbon investment. Specifically, commenters mention ed green banks and financing mechanisms such as credit enhancements, on-bill financing, lon g-term and low-interest-rate loans, loan guarantees, and revolving loan funds. Commenters al so described the examples of Connecticut Clean Energy Finance and Investment Authority and i t Commercial and Industrial Property Assessed Clean Energy program. Commenters stated gr een banks can help states remove barriers to clean energy deployment. Commenters also said th at states struggling to overcome these market barriers should consider clean energy financ ing authorities to drive new in-state
investment.

Commenters stated that to keep the utilities whole, they have to be incentivized to create programs where they make a margin or an extra margi n on programs that will integrate high levels of renewable energy affordably because just a haphazard goal or just only solar net metering is really not going to get us there.371

Comment 28: Commenters called for a more comprehensive analysi s, going beyond cost effectiveness, and described considerations for sta tes to evaluate cost benefit from the proposed
rule.

Response 28: The EPA has phased in the building block 3 generati on levels to provide an appropriate planning horizon for RE investments. C ost-effective RE under building block 3 is not costless RE. The EPA has determined that a $37 /ton cost is reasonable for building block 3.
The EPA addresses considerations related to the tec hnical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated EPA's proposed renewable energy g eneration goals are drastically higher than most states can achieve within EPA's proposed timeline. Commenters stated a balanced assessment of renewable generation, as a supply res ource that is required to determine the lowest cost BSER, requires an examination of all the compo nents that are involved in producing, distributing, and consuming electricity. Commenters stated these components are intertwined and causally linked, and that no one element can be mea ningfully addressed without touching on the
others. Commenters also stated since value-of-servi ce propositions are inherently uncertain, subjective, and speculative, objectively analyzing the various cost and benefit components is all the more difficult. Commenters stated for example, there are numerous ways to think about PV project economics. One common approach is to derive a benefit-cost ratio with the net present value (NPV) of project benefits in the numerator an d the NPV of project costs in the denominator. Commenters stated that using this equa tion, a benefit cost ratio greater than one indicates the project is economically beneficial be cause the ratio can only be greater than one if project benefits exceed the costs. Commenters state d a ratio less than one means that costs exceed benefits and the project is not economically beneficial. Commenters stated EPA has failed to provide a methodology that would give sta tes the flexibility needed to do this in the time frame required.

Commenters stated although the benefit-cost concept ual framework is simple, there is no single, standard modeling approach that would be accepted b y all for this purpose; the results and conclusions can differ depending on how the analysi s is conducted. Commenters stated there are at least three key elements of the modeling that wi ll affect the results: (1) the structure of the benefit-cost equation in terms of the variables inc luded and how the terms are arranged; (2) the values assigned to the variables; and (3) the persp ective from which the analysis is conducted. Commenters stated that the following illustrates so me key costs that are borne by the utility, but often debated during cost-benefit analysis. Comment ers stated EPA should allow these states to consider these as inputs to their cost models.

1. DG does not avoid most utility fixed costs of servi ce. The greatest cost savings from
distributed PV resources are avoided variable fuel costs (provided that distributed PV generation displaces fossil fuel generation and notother renewables) or electricity otherwise purchased in wholesale markets.

2. DG can result in little or no distribution cost sav ings because many DG systems are not designed to improve the safety or reliability of th e grid, and generally do not provide372

backup power in the case of an outage. However, one of the reasons PV is more appealing than other variable resources is the fact that it has a more consistent output with better coincidence to peak load times.

3. Investments in the transmission and distribution sy stem might never be completely avoided, just deferred. To the extent that DG actua lly produces fixed cost savings, measuring the part that the utility may avoid or de fer is challenging.

4. Even when the DG system fails to produce energy, th e utility remains obligated to provide uninterrupted service (generation, transmis sion, and distribution) to the DG
customer."

Commenters stated utilities should have an active r ole in any DG cost-benefit or valuation study as they play an indispensable part in the integrati on and interconnection of PV. Commenters also
stated utilities also have critical information on the cost to serve all customers and on the renewable energy project's contribution toward thatcost. Commenters stated EPA appears to recognize the need for more time to implement its p roposal in its NODA, and that EPA should absolutely add more time for states and any sources subject to regulation to provide recommendations for cost-optimal renewable generati on deployment.

Comment 29: Commenters said in order to fully assess the feasi bility and potential costs of implementing the types of renewable goals envisione d in the proposed rule, more information is needed regarding the final level of renewable energ y to be considered in establishing the state goal; the mechanisms available to resolve interstat e issues regarding the "credit" for renewables procured in one state for the benefit of customers in other states; the mechanisms that will be acceptable to the states and EPA for purposes of de monstrating compliance; and, the location, size, and design of new renewable capacity must be known to adequately evaluate the cost of transmission improvements necessary to support thos e facilities and to assess whether additional generation resources are needed during periods when the renewable resources are not available.

Response 29: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD. Additional guidance o n interstate issues and the crediting of incremental RE is presented in section VIII of the preamble

.

3.3.8 Nuclear energy

This section discusses specifics of the EPA’s propo sed approach to the inclusion of nuclear generation under building block 3 of the CPP. The EPA proposed to include certain aspects of nuclear generation in the computation of the buildi ng block 3 goals. The comments in this373

section address the EPA’s proposed approach to the inclusion of nuclear generation in building
block 3.

Commenters have raised a number of issues related t o this subsection which are organized by topics (comments) below. Responses are provided for these topics.

Comment 1: Several commenters recommended that the EPA treat nuclear power equally with other non-emitting sources, by accounting for 100% of nuclear power generation in the baseline
and in the BSER calculations.

Response 1: EPA acknowledges the comments and has decided to t reat zero-emitting sources consistently in the final rule in the following imp ortant respects. First, while the proposal included all existing RE but only a portion of exis ting nuclear in BSER and as resources eligible for compliance, the final rule excludes all existin g RE and all existing nuclear from BSER and from compliance, which reflects equal treatment of existing non-emitting and nuclear sources. Second, from a compliance perspective, generation f rom any incremental zero-emitting capacity, including nuclear, may be recognized under rate-bas ed compliance, which reflects equal treatment of nuclear with non-emitting sources for compliance purposes. Nuclear and other zeroemitting sources are equally recognized for complia nce notwithstanding that incremental RE is in BSER while incremental nuclear is not (please se e section V.A of the preamble for further discussion of the decision to exclude nuclear power from BSER), because either incremental RE or other qualifying zero-emitting measures (includi ng incremental nuclear) may be used interchangeably for compliance.

In addition, while this rule does not include an ex plicit measurement of nuclear power in the baseline or in BSER, the baseline (and hence the BS ER computation which relies on that baseline) includes an implicit measure of avoided C O 2 emissions that is captured in the effect of existing nuclear generation on baseline fossil-fuel fired generation and emissions. Because that effect is sustained in the quantification of this rule’s performance rates, existing sources will be required to maintain that emission performance whet her or not an existing nuclear unit is retired. Furthermore, in the event that a nuclear unit is re tired, any replacement fossil fuel-fired capacity built must be compliant with applicable new source performance standards for CO 2 . Therefore, EPA believes that the industry, states, and federal energy regulators will be incentivized through this regulatory structure to maintain low- and zero -emitting capacity wherever possible to assist the power sector in meeting these CO2 performance r equirements.

The following are summaries of the specific public comments under this comment:

Commenters stated that the carbon abatement value o f each MWh generated by such sources is generally the same, regardless of whether it is gen erated by nuclear, hydropower, geothermal, solar, wind or other zero-emission sources. Comment ers cited California as an example, and
noted that the EPA would include all of the electri city generated from California's Shiloh Wind Power Plant, which came online in 1989; six percentof the electricity generated from its Diablo Canyon Nuclear Power Plant, which came online in 19 85-1986; and none of the electricity generated from its Stenner Canyon Hydropower Plant, which came online in 1985. Commenters374

also stated this different treatment occurs even th ough all three plants are approximately the same age, and when operating, all three plants prov ide carbon-free generation.

Commenters stated that the EPA's differing treatmen t of existing zero-emission sources is not justified. Commenters stated that all zero-emission s generation (e.g., nuclear, geothermal, wind, solar and hydropower) have climate benefits and the dissimilar treatment of existing zeroemission generation is not warranted.

Commenters continued, "Non-hydro renewable energy, nuclear energy, and hydropower receive vastly different treatment under the proposed rule, which EPA does not explain-let alone justifyeven though the purpose of the proposed rule is 'to address greenhouse gas emissions from existing fossil fuel fired electric generating unit s.' EPA's failure to provide such an explanation violates basic administrative law principles. An ag ency rule is arbitrary and capricious where the agency 'failed to consider an important aspect of t he problem,' or 'offered an explanation for its
decision that runs counter to the evidence before t he agency.' Motor Vehicle Mfrs.' Ass'n v. State Farm Mut. Auto. Ins. Co., 436 U.S. 29, 43 (1983). A court 'may not supply a reasoned basis for the agency's action that the agency itself has not given.' Id. (quoting SEC v. Chenery Corp., 332 U.S. 194, 196 (1947)). Indeed, EPA must 'explain [i ts] decisions with precision,' and the Administrator must 'cogently explain why [she] has exercised [her] discretion in a given manner.' Am. Lung Ass'n v. EPA, 134 F.3d 388, 392 (D.C. Cir. 1998) (second and third alteration in original)."

Commenters stated that existing nuclear power plant s will eventually need to be replaced as they retire, and it is critical to reducing U.S. CO2 emi ssions that they are replaced with equally nonemitting energy technologies, whether they are nucl ear, renewable, hydroelectric, or fossil with CCS. Commenters concluded that the EPA has recogniz ed the importance of maintaining the existing level of renewable zero-emitting generatio n by including 100 percent of existing renewable energy in the 2012 baseline for goal-sett ing, but that only protects about 15 percent of the country's low or zero-carbon generation. Commen ters recommended, to better recognize existing conditions in 2012, as well as the likely future, the EPA should also include 100 percent of existing nuclear in the 2012 baseline.

Commenters stated that the Proposed Rule treats exi sting nuclear capacity different than it does other large, existing sources of zero-CO2 emissions electricity, such as hydropower and renewable energy facilities. Commenters stated thatthe EPA makes assumptions about how much existing nuclear power is at risk due to 'cont inued economic challenges,' yet does not do so for existing hydro and renewable sources that also face economic and non-economic challenges that could reduce capacity through shutdowns or ret irements. Commenters concluded that the Proposed Rule provides no rationale for treating ex isting CO2-emission free resources differently.

Commenters stated, any and all proposed EPA rules s hould support and encourage the continued use of existing nuclear generation. Commenters said support of this zero-emissions resource is essential to maintaining the nation's clean air gen eration portfolio; the policy choices EPA made in this rulemaking may well dictate the fate of man y of the nation's nuclear units and consequently the nation's ability to meet its CO2 r eduction objectives. Commenters said when the operating license of an existing nuclear genera ting unit expires, the state goal for the resident375

nuclear plant should be subsequently adjusted; EPA should also support the NRC's current license renewal process to allow further operating license extension of units with 60-year licenses, to no less than 80 years. Commenters said it is important that zero CO2-emitting resources be treated equally, regardless of age or technology, to provide cost-effective CO2
reduction solutions for consumers.

Commenters advocated that two basic principles gove rn the structure of any carbon reduction program: 1) Avoided emissions have the same complia nce value as emission reductions, and 2) all zero-emission sources (nuclear, renewables, hyd ro, energy efficiency) displace emissions from affected units and should receive appropriate credit. Commenters then stated that aspects of EPA's proposed rule under Section 111(d) fail to me et these fundamental criteria. Commenters stated that renewable energy, nuclear energy and hy dro receive vastly different treatment under the proposed rule, and that nuclear energy does notreceive appropriate credit. Commenters said existing renewables are included in the rate-settin g formula; existing nuclear energy is not (save for six percent of existing nuclear generation cons idered at risk); existing hydro is ignored. Commenters said EPA's proposal does not explain whydifferent generation sources are treated differently under the rule, and does not provide ap propriate credit for existing nuclear power plants.

Commenters stated that existing nuclear should be r emoved from the goal setting calculation because it is a regional resource only affecting atvarying levels 30 out of the 49 states under this proposal. Commenters quoted the EPA's approach for renewables: "'The EPA first quantified the amount of renewable generation in 2012 in each stat e. EPA then summed these amounts for all states in each region to determine a regional start ing level of renewable generation prior to implementation of the best practices scenario. Hydr opower generation is excluded from this existing 2012 generation for purposes of quantifyin g BSER-related RE generation potential because building the methodology from a baseline th at includes large amounts of existing hydropower generation could distort regional target s that are later applied to states lacking that existing hydropower capacity. The exclusion of pre- existing hydropower generation from the baseline of this target setting framework does not prevent states from considering incremental hydropower generation from existing facilities (or later-built facilities) as an option for compliance with state goals." Commenters stated tha t the same argument could be made for treatment of nuclear under Building Block 3; borrow ing from EPA's rationale, existing nuclear generation should be excluded from existing 2012 ge neration for purposes of quantifying BSER because of the regional disparity of the nation's n uclear fleet.

Commenters stated that the proposed rule perpetuate s a policy of supporting renewable generation while largely ignoring the contribution of existing nuclear plants in avoiding carbon emissions. Commenters said for example, in determin ing each state's initial emissions rate and its emissions goals, EPA has proposed to include all me gawatt-hours of electricity presently generated by wind and solar generating facilities; doing so provides states with a strong incentive to preserve all such renewable resources. Commenter s said however, EPA proposes to include only six percent of the generation from a state's e xisting nuclear fleet; that approach leaves a state largely indifferent to the early retirement o f existing nuclear capacity.

Commenters stated that, to the extent that the EPA finalizes a rule that sets rate goals instead of mass goals, the EPA should set initial rates and ca lculate interim and final goals using a system-376

wide rate that accurately reflects a state's entire existing portfolio of generation resources, instea d of ignoring nearly all of the existing nuclear flee t and all hydropower generation. Failing that, Commenters recommended the EPA should revisit the j ustification for considering only six percent of generation from a state's existing nucle ar fleet, as the six-percent approach is also
flawed on its own terms. Commenters noted that the Proposed Rule reasons that, on average nationwide, six percent of the nation's nuclear fac ilities are at risk of premature retirement. Commenters stated that, in reality, the percentage of nuclear capacity at risk of premature retirement varies dramatically from region to regio n; in some areas, such as Illinois, that percentage approaches half of existing nuclear capa city. Commenters recommended that the EPA's final rule should encourage states to take al l necessary steps to protect existing nuclear plants from retiring early, or many states simply w ill not achieve emission reductions, even if those states can demonstrate on-paper compliance wi th EPA's rate goals.

Commenters stated that, in the Proposed Rule, EPA c alculates a state's initial emissions rate and target emissions rates based upon a formula that ac counts for all of the state's existing renewable generation other than hydropower but only six perce nt of its existing nuclear fleet. Commenters also noted that the EPA excludes existing hydropowe r entirely; it is not counted in a state's initial emissions rate or accounted for in its target emiss ions rates, even if the state has significant hydropower resources that may be facing premature r etirement. Commenters stated that the EPA's methodology provides a state with a strong in centive to preserve all of its existing wind, solar, and geothermal generation, because a state's ability to meet its target will be affected by whether all of those renewable megawatts remain ope rational. For instance, closure of any wind power facility will require the state to find an eq uivalent amount of zero-carbon generation just to keep its calculated emissions rate the same. ButCommenters stated that the EPA's goals provide a very weak incentive to preserve the exist ing nuclear fleet; even if all of a state's existing nuclear capacity were to retire, the state would be able to retain the same calculated emissions rate by finding new zero-carbon generatio n totaling just six percent of the retired nuclear generation. Commenters noted that the loss of the remaining 94 percent will be immaterial to the state; the state could still comp ly, even if it replaced the remaining 94 percent with generation from new NGCCs, thereby significant ly increasing its total emissions. Commenters provided the example of a nuclear plant that generates 10 million MWh annually. Commenters stated the Proposed Rule would require a state to replace that nuclear plant with only 0.6 million MWh of wind, and the remaining 9.4 million MWh of lost nuclear capacity could be replaced by new NGCCs, thus massively incr easing carbon emissions, without undermining the state's ability to comply. Commente rs noted that the Proposed Rule's approach is even worse for hydropower: even if a state loses all of its hydropower capacity, there will be no effect on its calculated emissions rate; the sta te can, without consequence, replace retired hydropower with new fossil-fired generation. Commen ters concluded, in short, the EPA creates insufficient incentives for states to prevent the p remature retirement of carbon-free generation (and may drive states to keep 111(b) units out of 1 11(d) calculations).

Commenters stated that there is no reason why only six percent of a state's nuclear capacity should be counted in the state's initial and targetemissions rates, as though the remainder of the state's nuclear capacity does not exist; likewise, there is no reason to omit hydropower. Commenters stated that all of a state's existing nu clear and hydropower capacity is available as
zero-carbon resources and should be counted accordi ngly.377

Commenters also stated that new and existing fossil fuel plants should not get more credit for CO2 reductions than zero-carbon generation. Comment ers stated for example, consider following this treatment to its logical conclusion in a true rate-trading system. Suppose an illustrative state's emissions rate target were 1,2 86 lb/MWh. An NGCC with a CO2 emissions
rate of 900 lb/MWh would be credited with 386 lb/MW h. Nuclear power emits no CO2 per MWh, which should mean it would receive a credit eq ual to the target, or 1,286 lb/MWh. Commenters said however, because only six percent o f nuclear generation counts in the proposed formula, it is credited with only 77 lb/MWh. Nuclear would have to generate five times the
MWh to receive the same CO2 credit as one MWh of na tural gas. Commenters said if the credits have financial value, this creates a subsidy to nat ural gas at the expense of zero-emitting nuclear generation.

Commenters stated whether it is generated by nucle ar sources or other carbon-free sources, the

carbon abatement value of each kilowatt-hour of ele ctricity generated is generally the same. Commenters said, in California, for example, EPA wo uld include all of the electricity generated by California's Shiloh Wind Power Plant, which came online in 1989; six percent of the electricity generated by the Diablo Canyon Nuclear Power Plant, which came online in 1985- 1986; and none of the electricity generated from th e Stenner Canyon hydropower plant, which came online in 1985. Commenters said yet all three plants are approximately the same age and, when operating, all three plants provide carbon-fre e electricity, displacing carbon emissions from affected sources. If anything, commenters remarked, nuclear generation is more important to reducing carbon, not less. Commenters stated that E PA acknowledges as much through the costeffectiveness evaluation in the proposed rule. Comm enters noted, there, EPA notes that the cost of keeping "at risk" nuclear plants operating is ap proximately $12-$17 per metric ton of CO2 avoided (see 79 Fed. Reg. at 34,871), which is more cost-effective than virtually any other carbon abatement strategy. Commenters said, for exa mple, preventing the early retirement of nuclear plants is more cost-effective than: adding renewable capacity ($10-$40 per metric ton of CO2 abated). Id. at 34,858; increasing natural gas combined cycle power plant utilization rates to 70 percent ($30 per metric ton of CO2 abated). Id. at 34,865; implementing demand-side management programs ($16-$24 per metric ton of CO2 abated). Id. at 34,875. Commenters stated that these data demonstrate that ignoring th e vast majority of nuclear generation in the Clean Power Plan is not justified, given the carbon abatement benefit it provides.

Comment 2: Treat nuclear power plants equally with other non-e mitting sources by excluding from them from the goal-setting methodology, but al low states to count new, uprated, and relicensed facilities to count towards compliance.

Response 2: EPA agrees with commenters that the final rule sho uld not include nuclear generation in the goal-setting methodology. The fin al rule allows states to count new and uprated factilities to count towards compliance. Relicensed facilities can only count towards compliance to the extent that there is an uprate in their capa city. Preamble sections V.A, VIII.K and VIII.L provide a discussion of how incremental generation from new and uprated nuclear power is378

addressed in relation to other sources and as appro vable actions to include in state plans, as well
as how the final rule addresses interstate effects. Similar to other qualifying compliance measures, incremental nuclear may be claimed by sou rces in a state other than the state in which the qualifying incremental nuclear is located (subj ect to the conditions explained in section VIII of the preamble).

This final rule does not recognize re-licensing of existing nuclear units as a qualifying emission reduction measure for compliance. The avoided emiss ions impact of such units is already implicitly captured in the 2012 baseline data that represent existing EGU performance before the application of the BSER. As a result, if the EPA w ere to allow compliance credit for generation from these existing nuclear units following a re-li censing procedure, that credit would effectively double-count the emissions impact of that generatio n and thus improperly relieve existing EGUs of the intended emission reduction requirement inco rporated in BSER.

The following are summaries of the specific public comments under this comment:

Commenters stated that the EPA should treat under-c onstruction, relicensed, and uprated nuclear
facilities the same as it treats RE facilities: it should exclude these facilities from the state goal

setting methodology, but allow states that build ne w facilities or uprate or relicense existing facilities to count the generation from those facil ities toward compliance. Commenters stated that just as the EPA has excluded states' full RPS commi tments (as well as states' under-construction RE capacity) from state goals, so too the EPA shoul d exclude under-construction nuclear energy from state goals; and just as the EPA has ignored a t risk hydro and RE in setting state goals, so
too should the EPA exclude consideration of at risk nuclear generation in calculating state goals.

Commenters stated that the EPA's proposed treatmentof under-construction nuclear generation is arbitrarily more punitive than the EPA's treatme nt of other zero-carbon generation. Commenters first stated that, although the EPA's pr oposed goal-setting methodology assumes that every state that has committed to constructing new nuclear capacity will do so, the agency is not assuming that states that have committed to amb itious RE policies (e.g., through a state RPS) will construct the amount of RE capacity that is ca lled for by their own RPS policies. Commenters noted that California's RPS requires the state to meet 33% of its retail load from renewable energy by 2020; Colorado and Minnesota's goals are 30% by 2020; yet the EPA's goal-setting methodology only expects California an d Colorado to meet 21% of their in-state generation from renewable resources by 2030, while Minnesota must only reach 15%. Commenters further stated that this inconsistency i s especially puzzling given RE commitments are enforceable through RPS regulatory programs, wh ile commitments to build new nuclear generation are not mandated through any state regul atory requirement. Commenters concluded
that the EPA has no choice but to correct its BSER methodology by excluding underconstruction nuclear capacity from its calculation of state goals, just as it excludes underconstruction RE capacity from that calculation. Com menters also concluded that the EPA must allow states to count 100% of the MWh generated fro m under-construction nuclear facilities toward state goals, as the agency has already propo sed to do for other under-construction zerocarbon generation (such as wind and solar facilitie s).

Commenters stated that nuclear is a proven technolo gy for power generation, but nowhere has it been demonstrated that developing nuclear is a meth od for reducing unrelated fossil fuel EGU379

including where nuclear power plants and affected f ossil fuel-fired EUGs are owned and operated by separated entities. Commenters said EPA notes in the proposed guidelines, Section 402(i) of the Energy Policy Act of 2005 (EPAct05) s tates: "No technology, or level of emission reduction, solely by reason of the use of the techn ology, or the achievement of the emission reduction, by 1 or more facilities receiving assist ance under this Act, shall be considered to be - (1) adequately demonstrated for purposes of section 111 of the Clean Air Act..." 42 U.S.C. Section 15962(i). Commenters said that Congress cra fted limitation broadly with respect to "facilities receiving assistance under this Act [i. e., the EPAct]." Commenters said that tax credits and loan guarantees were provided for nuclear react ors under the EPAct.

Commenters stated that since nuclear energy is the largest source of carbon-free electricity in America, by a substantial margin, it is clear that any program to reduce carbon emissions must preserve existing nuclear generating capacity, prov ide an incentive for new nuclear plant construction and certainly must not create a disinc entive for new nuclear generating capacity. Commenters said, absent this, any program to reduce carbon emissions is simply not credible. Commenters said EPA is to be commended for having r ecognized the value of nuclear energy in its proposed rule. Commenters said that the key que stions are whether the approach proposed by EPA is equitable and, based upon the rulemaking rec ord, internally consistent, workable and likely to achieve the intended effect. Commenters a sserted, unfortunately, by all four criteria, EPA's 111(d) proposal is deficient. Commenters remarked that two basic principles must govern the structure of any such program: Avoided emission s have the same compliance value as emission reductions, as discussed above, and All ze ro-emission sources (nuclear, renewables, hydropower, energy efficiency) displace emissions f rom affected units and should receive appropriate credit. Commenters stated that aspects of EPA's proposed rule under Section 111(d) clearly do not meet these fundamental criteria. Com menters said renewable energy, nuclear energy and hydro receive vastly different treatmentunder the proposed rule, but nuclear energy does not receive appropriate credit. Commenters sai d existing renewables are included in the rate-setting formula; existing nuclear energy is no t (save for six percent of existing nuclear generation considered at risk); existing hydro is i gnored. Commenters stated that EPA's proposal does not explain why different generation sources are treated differently under the rule. Commenters noted that EPA is required to explain it s rationale for this treatment of nuclear energy. (15 See, e.g., Oklahoma Dep't of Envtl. Qua lity v. EPA, 740 F.3d 185, 192 (D.C. Cir. 2014) ("EPA has a preexisting duty to examine key a ssumptions as part of its affirmative burden of promulgating and explaining a non-arbitrary, non -capricious rule and therefore must justify that assumption." (internal quotation marks and ell ipses omitted)); Horsehead Resource Dev. Co. v. Browner, 16 F.3d 1246, 1269 (EPA may not rely on "speculation" in setting rules, as "speculation is an inadequate replacement for the a gency's duty to undertake an examination of the relevant data and reasoned analysis").) Comment ers stated that EPA's failure to provide such an explanation raises problems with respect to basi c principles of administrative law. Commenters said an agency rule is arbitrary and cap ricious where the agency "failed to consider an important aspect of the problem," or "offered an explanation for its decision that runs counter to the evidence before the agency." Motor Vehicle M frs.' Ass'n v. State Farm Mut. Auto. Ins. Co., 436 U.S. 29, 43 (1983). Commenters said a cour t "may not supply a reasoned basis for the agency's action that the agency itself has not give n." Id. (quoting SEC v. Chenery Corp., 332 U.S. 194, 196 (1947)). Commenters concluded, statin g that EPA must "explain [its] decisions with precision," and the Administrator must "cogent ly explain why [she] has exercised [her] discretion in a given manner." Am. Lung Ass'n v. EP A 134 F.3d 388, 392 (D.C. Cir. 1998)380

(second and third alteration in original).Commenter s stated that the EPA's proposal for reliance on renewables and energy efficiency functionally op erates as a de facto national renewable and energy efficiency portfolio standard, albeit with a small carve-out for "at-risk" nuclear generation capacity, and that the EPA should not discriminate along low-carbon generation sources in its proposed rule. Commenters stated that, alternativel y, the EPA should provide a carve-out for nuclear generation of 20 percent in Building Block #3.

Commenters stated that the EPA's approach of attemp ting to forecast capacity increases separately for low-emission sources such as renewab le, energy efficiently, at-risk nuclear and new nuclear should be discarded in favor of adoptin g an aggregated total of low-carbon generation, regardless of source. Commenters said t his bank of low-carbon emission capacity could then be allocated on a state-by-state basis a s clean energy goals that the individual states can determine how best to achieve the needed capaci ty.

Commenters stated that it appears the EPA arbitrari ly chose to use 6 percent when in reality over half of the U.S. nuclear operating fleet could be f orced to retire over the next several decades, if the proper and appropriate incentives are not provi ded for. Commenters stated that, in contrast, the EPA has included 100 percent of the existing re newable generation capacity in this building block. Commenters recommended that nuclear energy g eneration should be treated equivalently.

Commenters stated that existing wind and solar EGUs are provided a full 100% credit in the BSER baseline calculation under the proposed regula tion, and BSER baseline determination
formula should be amended to include 100% of each s tate's nuclear generation.

Commenters stated that, since the goal of the propo sed rule is to reduce carbon emissions, carbon-free nuclear generation that comes online af ter the 2012 baseline of this rule should be treated the same as other new carbon-free generatio n sources.

Commenters noted that existing wind and solar EGUs retired before 2030 would require a "megawatt-for-megawatt" replacement with another no n-emitting technology. Commenters stated that nuclear power should be treated the sam e, by amending the BSER baseline rate determination formula to include 100 percent of eac h state's nuclear generation.

Commenters stated that states only get credit for p reserving 6 percent of its existing nuclear fleet against future emissions reduction targets, while t he EPA allows 100 percent of a state's existing renewable fleet to count towards future goals. Comm enters stated that all emissions-free power should be treated equally under the rule and this arbitrary cap should be removed.

Commenters stated that the rule doesn't give even o r balanced credit for existing clean sources, because nuclear power is not given the same weight, in terms of carbon credit, that renewables are. Commenters stated that nuclear generation shou ld not be replaced by sources like wind and solar for the sake of "progress," when the result a ctually will be destabilization of the grid, and a likely increase in GHG emissions since renewable so urces will in all likelihood be backed by natural gas combined-cycle plants.

Commenters stated that the EPA should explicitly su pport a policy whereby all carbon-free electric generating capacity is treated equally.381

Commenters stated that the EPA has promoted the Pro posal on the basis that it would help cut carbon emissions from the power sector by 30% from 2005 levels, however, none of the five under construction nuclear units were operating or under active construction in 2005. Commenters also stated that the EPA imposing a benc hmark for these nuclear units that it does not apply to other actions EPA has designated as BS ER. Commenters stated that individual energy efficiency projects and programs already pla nned are not identified by the EPA or captured in the rate-setting calculation; neither are any renewable energy projects, even though there are specific renewable energy projects that a re "under construction." Commenters stated that available data suggest there are over 12,000 M W of wind capacity currently under construction in the U.S. and over 2,820 MW of solar energy projects, and that the EPA has not explained why it chose such starkly different - and completely arbitrary - approaches for under construction solar/wind as compared to under construction nuclear.

Commenters stated that there are two important inco nsistencies between how renewables and nuclear are treated. First, Commenters stated that the EPA's proposal assumes that nuclear generation must only count towards compliance for t he state in which the resources is located, whereas the proposal suggests that renewable genera tion may count toward compliance in the state responsible for the development of the resour ce, instead of the state in which the resource is located. Commenters stated that in the preamble to its proposal, EPA notes that "a state could
take into account all of the CO2 emission reduction s from renewable energy measures implemented by the state, whether they occur in the state or in other states," but that the EPA's proposal contains no indication that increased nucl ear generation in one state could count as credit in another's compliance demonstration. Comme nters also asked additional guidance regarding how renewable energy generated in one sta te could be credited to another state without "double counting," which the commenters agreed woul d be a difficult and important concern. Commenters stated that the second inconsistency is that the EPA's proposal would allow credit for increased generation from existing renewable re sources, but the commenters states that the EPA's proposal indicates that increases in generati on from existing nuclear units will not count towards compliance. Commenters requested that the E PA should either ensure all zero-emitting generation is credited to the state in which the re source is located, or allow credit for all zeroemitting generation to cross state lines, regardles s of whether it is renewable or nuclear.

Commenters stated that the rule as written reduces the importance of nuclear energy in meeting emissions goals, and if nuclear were accounted for as wind and solar are, emissions standards would be much more stringent and states would be mo re incentivized to build and maintain low carbon sources of power. Commenters also stated tha t, if nuclear were accounted for as wind and solar are, states which closed nuclear facilities w ould have to replace that zero carbon power, watt per watt, which would be incredibly difficult to do with renewables alone. Commenters
concluded that this is in stark contrast to wind an d solar, in which 100% of existing wind and solar is credited in target setting.

Commenters recommended that nuclear plants should b e treated equally with other non-emitting sources, by amending the BSER baseline rate formula to include 100 percent of each state's existing nuclear generation. Commenters also recomm ended that the EPA should "acknowledge and reward states with new nuclear plants under con struction" by removing new nuclear plants
under construction from the BSER formula and allow states to count the avoided emissions toward their compliance plans once they are operati onal.382

Commenters believed the proposed rule contains two major flaws that, unless corrected, would
render the rule at best ineffective and at worst co unterproductive to the goal of reducing power plant carbon emissions. Commenters provided two rec ommendations that, if adopted, would rectify some of the rule's shortcomings and provide an important incentive for preservation of the existing fleet and the deployment of new nuclear ge nerating capacity.

1. Treat existing nuclear plants equally with other no n-emitting energy sources

Under the proposed rule, the EPA seeks to set state -specific carbon emission standards using a Best System of Emission Reduction (BSER) calculatio n. The BSER formula provides all states with nuclear energy facilities credit equal to 5.8% of their 2012 capacity toward achieving their carbon reduction goal. This percentage was derived from an Energy Information Administration (EIA) estimate that six plants, comprising 5.8% of the U.S. generation capacity, are "at-risk" of closure before 2030. Unfortunately, the at-risk pla nts identified by the EIA are unique cases local
to a few states. Other DOE scenarios envision retir ement rates of as high as 33% by 2030. In order to understand the insufficiency of the propos ed credit for at-risk nuclear, consider the following scenario: One of the six "at-risk" plants closes in a particular state. Ten percent of the resulting loss in output is replaced by wind and so lar generation; the remaining 90% is replaced by natural gas plants. Under the proposed rule, the state could claim a "reduction" in carbon emissions, even though its actual output of CO2 wou ld increase substantially. Indeed, members of the University of Tennessee ANS Student Section analyzed a hypothetical scenario (submitted to this docket under separate cover) in which all U .S. nuclear plants were closed and replaced with combined cycle natural gas generation. They fo und that at least 15 states could claim a
fictitious "reduction" in carbon emissions under th e BSER formula. In contrast, existing wind and solar EGUs are provided a full 100% credit in t he BSER baseline calculation under the proposed regulation. As such, any retirement of the se units before 2030 would require a "megawatt-for-megawatt" replacement with another no n-emitting technology. Clearly, the 5.8% at-risk nuclear credit, while perhaps well-intentio ned, would defeat the underlying purpose of the proposed regulation, promote greater use of fossil fuels, and encourage the premature shutdown
of the current US nuclear fleet. ANS recommendation : amend the BSER baseline rate determination formula to include 100 percent of eac h state's existing nuclear generation.

2. Acknowledge and reward states with new nuclear plan ts under construction

Currently, there are five new nuclear plants under construction in the U.S., Watts Bar 2 in Tennessee, Vogtle 3-4 in Georgia, and Summer 2-3 in South Carolina. The states in question have each made a deliberate policy decision to supp ort the construction of new nuclear generating capacity in order to meet its expected e lectricity demand and reduce its carbon emission in expectation of future binding federal r egulations. Under the proposed rule, the EPA includes the carbon reduction benefits of these pro jects in its BSER determination as though they were in an operational status today. This is in stark contrast to its treatment of non-emitting EGUs currently under construction using other advan ced technologies such as carbon capture and storage (CCS), which are not included in the ba seline determination and can be applied in full to the host state's compliance plan. Whether i ntended or not, the EPA's treatment of under construction nuclear plants is punitive in nature, penalizing those "early adopter" states that have assumed significant financial risks in order to mak e substantial reductions in carbon emissions through the use of nuclear energy technology. As su ch, we strongly encourage the EPA to move383

under construction nuclear plants out of the BSER b aseline and instead allow the affected states to count the emission reductions as part of their c ompliance strategies.

Commenters stated that the EPA's approach does not treat nuclear energy "on par with other zero-emission options such as wind and solar." Comm enters then suggested several alternatives that "...might better recognize the low carbon bene fits of nuclear energy."

Commenters stated as proposed, despite attempts by EPA to recognize and reward existing atrisk nuclear units, the way existing nuclear plants are treated under the rule creates risks of shut downs and large increases in emissions. Commenters said the approach does not treat nuclear energy (both existing and new) on par with other ze ro-emission generation options such as wind
and solar.

Commenters stated currently EPA allows 5.8 percent of at-risk nuclear plants to count towards compliance; (This contrasts with EPA's proposal to recognize 100 percent of existing non-hydro renewable energy.) however, because the 5.8 percentis applied on an equal basis to all nuclear generation, it does not offer sufficient incentive to the specific units in competitive power markets that are most at-risk (and provides a subsi dy to those not at risk). Commenters added the proposal assumes that existing nuclear generation w ill continue to operate past the 2030 compliance year; this may not be the case, as units start hitting the 60-year threshold in 2029, after which relicensing will be needed. Commenters said to the extent that nuclear plants are not relicensed (and many smaller units may not be due t o economic reasons), this would have a significant impact on emissions and compliance afte r 2030. Commenters said a concern was raised about not rewarding under-construction nucle ar plants for early action; instead, states are essentially penalized if the plants don't operate a t 90 percent capacity. (In contrast, all new wind and solar generation under development would be all owed to earn credits towards compliance starting in 2020.) Commenters said several alternat ives were suggested that might better recognize the low carbon benefits of nuclear energy :

• Leave existing nuclear energy out of rate-setting, but count losses. This way, the state goal is not lowered as a result of nuclear en ergy, but retirements would increase the actual lbs/MWh emission rate (by reduc ing generation or increasing emissions), making the state goal harder to meet an d creating a strong incentive
for states to incent at-risk nuclear.

• Include 100 percent of existing nuclear energy in t he rate setting formula (the same as how non-hydro renewable energy is treated) and count existing nuclear energy towards compliance. This approach would driv e down state intensity goals and creates a powerful incentive to keep operating the existing nuclear power plants. (This is because reductions in nuclear plan t operation could create a substantial compliance gap for the host states and affected units in those states.)

• Remove existing nuclear from rate setting and compl iance, but count new nuclear, including up-rates, new plants and relicensing. Thi s would have the effect of encouraging existing plants to remain on-line and ( eventually) extend operations through relicensing. To the extent that states rely on nuclear energy, this approach would also lead to higher (less stringent) state em ission rate goals.384 • Allow existing nuclear energy to count in the rate setting formula and for credit to the extent that it operates above the national flee t-wide average capacity factor of about 80 percent. This would encourage full utiliza tion of existing nuclear energy capacity and appears more objective than determinin g which plants are most atrisk. However, this approach would advantage nuclear plants that are least at-risk.
This could be a solution for under constructionnucl ear plants.

• If existing nuclear energy is included in the state goal, allow the state to adjust its goal in the event that the NRC rejects renewal and/ or if a company decides not to
renew its nuclear license or otherwise retires earl y. This would reduce the risk to states of non-compliance due to non-renewal, but itwould not incent relicensing. It may be desirable to protect states against nucle ar retirements for safety reasons but not for retirements for purely economic reasons . Making use of this option
would allow an increase in emissions."

Commenters stated it is very important to Nuclear t o be included with Clean Energy.

Commenters provided comments and changes:

1. Treat existing plants equally by including 100% of their current output in the baseline
CO2 calculation.

2. Allow states with new plants under construction to count their clean energy generation toward their EPA emissions target.

Commenters stated that the EPA has proposed that st ates can use renewable energy generated from outside their boundaries in their compliance d emonstrations under a rate-based program, and advocated the same treatment for nuclear genera tion. Commenters stated the EPA should recognize that generation from new nuclear power pl ants will cross state boundaries and should allow the importing state to factor the generation into its compliance demonstration. Commenters said the EPA is not proposing to allow equal treatm ent for nuclear generation, but it must.

Commenters stated Duke Energy operates in and serve s customers in, among other states, North Carolina and South Carolina; Duke Energy has applie d for a combined operating license for the Lee Nuclear Station, which if built, will be locate d in South Carolina. Commenters said the fact that it would be built in South Carolina, however, does not mean that it will exclusively serve their South Carolina customers; the electricity tha t would be produced from the Lee Nuclear
Station would serve customers in both states. Comm enters said the North Carolina customers would pay the largest share of the cost of the faci lity; and while the generation that comes to
North Carolina from the Lee Nuclear Station would h elp lower the CO2 emissions of the North Carolina operations, under the Proposed Guidelines, North Carolina would be prohibited from considering any of the generation from the Lee Nucl ear Station in its compliance determination unless North Carolina and South Carolina develop a joint plan. Commenters said this does not
make sense and believes that the EPA should allow a state such as North Carolina that is importing electricity from a new nuclear unit in an other state to be able to factor that generation into its compliance demonstration, as long as it is not being double counted by the state hosting385

the nuclear facility. Commenters said this would si mply treat generation from new nuclear units the same way the EPA is proposing to treat generati on from renewable resources.

Commenters stated that the EPA allows all MWhs gene rated by renewables such as solar and wind to be included in compliance plans, regardless of the potential for retirement. Commenters said this favors wind and solar over nuclear, witho ut any discernible justification or legal
authorization.

Commenters stated EPA has also chosen to treat vari ous zero emission generation resources differently; EPA has included the "At Risk" designa tion for a portion of existing nuclear capacity, but allows all MWhs generated by renewabl es such as solar and wind to be included in the compliance plans, regardless of the potential f or retirement. Commenters said the EPA favors wind and solar over nuclear, without any discernibl e justification or legal authorization; as a practical matter, nuclear generation is base load a nd doesn't have the intermittency challenges of solar and wind and thus does not require back-up ge neration, which is fossil and carbon emitting. Commenters said nuclear should have been given pref erence over renewables, and should not have been penalized by the EPA; to do so is arbitrary and capricious and outside of the authority granted to the EPA under the Clean Air Act.

Commenters stated if the CPP's goal is to regulate carbon emissions, then generation types must be valued based on emissions with no one type of ge neration being favored over another; therefore, clean nuclear generation must be credite d the same as renewable clean energy sources
at 100%.

Commenters were concerned the CPP does not encourag e the use of nuclear power; specifically, the BSER provides a 5.8% credit to a generator's 20 12 nuclear capacity in states with nuclear generating facilities. Commenters recommended clean nuclear generation is credited the same as renewable clean energy sources at 100%.

Commenters continued in addition to the environment al impacts of nuclear power facilities shutting down, jobs will be lost and local economie s will be hurt. Commenters said roughly 550 employees work at a nuclear facility performing rou tine maintenance and operations; approximately 3,500 construction workers are employ ed when a new facility is built.

Commenters recommended nuclear energy be a part of the solution and considered on an equal playing field with other non-emitting energy techno logies such as solar and wind; generation types must be valued on emissions without favoring one over another.

Commenters stated states also should be able to inc lude in their compliance plans, and thus receive emissions credit for, all output of new nuc lear capacity (including uprates of existing plants and existing license extensions) that begins operating after the issuance date of the EPA's Proposed Rule. Commenters said the Proposed Rule al lows this with new renewable generation, and this principle should be extended to include ot her forms of zero carbon generation, such as
nuclear.

Commenters suggested that the EPA would consider al lowing states to include power uprates and additional new reactors in their plans, credite d at 100% of the additional capacity relative to386

the baseline year, even though power uprates and ad ditional new reactors are not included in the goal.

Commenters - stated that, for many years in advance of this proposed rule, electric providers in South Carolina took major steps to decrease their c arbon emissions, and that electric providers and their customers have already invested billions of dollars in order to be leaders in the clean energy movement by building two new nuclear generat ing facilities.

Commenters suggested that the proposed rule uses se veral arbitrary distinctions and baselines when seeking to capture under construction nuclear in the state goals. Commenters said that the proposed rule makes an arbitrary distinction betwee n (a) states where nuclear units are currently under construction and (b) states where no such uni ts are under construction. Commenters said that there is no sound, objective, and lawful basis to impose vastly different state goals on this
distinction. Commenters said that in a recent artic le for the Brookings Institute explains that "EPA's approach of including under-construction nuc lear capacity in setting state goals would draw an arbitrary distinction between states that h ave already invested in new reactors and states considering but not yet building new reactors" Comm enters said that GEPD has commented to
EPA: "We see no reason that under-construction nucl ear should be treated any differently than yet-to-be planned nuclear.".

Commenters suggested that, EPA's apparent distincti on between under construction nuclear and yet-to-be-planned nuclear is similarly flawed. Comm enters said that EPA seems to imply that, because it has in other rulemakings distinguished b etween affected sources that have "commenced construction" as of the date of a propos ed rule and those that have not commenced construction, EPA can, for purposes of determining BSER, distinguish between under construction nuclear units and those that are not y et planned. Commenters said that neither new
nor under construction nuclear units are "affected sources" under section 111. Commenters said that there is no precedent or legal rationale for E PA's proposed approach.

Commenters suggested that the Proposed Rule makes a n arbitrary distinction between (a) existing nuclear capacity and (b) under constructio n nuclear capacity. Commenters said that for existing nuclear capacity EPA reflects 6% of the to tal existing generation in the rate-setting
calculation. Commenters said that for under constru ction nuclear capacity, EPA reflects 100% of the anticipated generation from the new units. Comm enters said that, if these units were operational before the Proposed Rule, EPA would acc ount for just 6% of their generation in the rate-setting calculation, but because these project s remain under construction, EPA has proposed to reflect 100% of their generation in the calculat ion.

Commenters suggested that the Proposed Rule arbitrarily ignores its own use of 2005 as a
relevant benchmark. Commenters said that the Admini stration has repeatedly stated that a primary environmental objective is to reduce GHG em issions in the United States "in the range of 17 percent below 2005 levels" by 2020.56 Comment ers said that EPA has also promoted the Proposed Rule on the basis that it would "help cut carbon emissions from the power sector by 30 percent from 2005 levels." Commenters said that EPA now proposes to treat these five nuclear units, which were not operating or under active con struction as of 2005, in a manner that essentially eliminates any positive credit their ho st states would receive as a result of these zero-387

emission power plants. Commenters said that this ca lls into question EPA's approach to under
construction nuclear units.

Commenters suggested that EPA's treatment of under construction nuclear facilities is arbitrarily different from its treatment of renewable energy. C ommenters gave an example that EPA does not include specific renewable energy projects thatare "under construction" in the state goals calculation, even though renewable energy projects are also identifiable. Commenters said that available data suggest there are over 12,000 MW of wind capacity and over 2,820 MW of solar energy projects currently under construction in the United States. Commenters said that EPA has not explained why emission reductions from under co nstruction nuclear facilities are included in state goals, but emission reductions from other zer o-carbon facilities are ignored.

Commenters stated that EPA arbitrarily distinguish es between existing and new zero-emitting resources in the proposal. Commenters said the exis ting zero-carbon sources are discounted, while not-yet-constructed sources are allowed to be counted towards compliance with state goals. Commenters said this incorrect interpretatio n of Section 111, which requires standards of performance to be based on technology that has been adequately demonstrated for sources in the listed source category. Commenters said if this app roach were applied to a traditional pollution control device, sources that had already installed scrubbers prior to the proposal would not be able to rely on emission reductions resulting from operation of the scrubbers, simply because they were built before the proposal, incentivizing them to dismantle their existing scrubbers and build new ones after the proposal date. Commenters said EPA's approach creates absurd incentives and ignores the significant costs that h ave already been incurred by sources that support zero-carbon generation.

Commenters stated the costs, non-air impacts and l ong-term planning considerations render nuclear energy unsuitable for designation as BSER.

Commenters stated EPA's approach to utilizing sour ces that do not emit carbon in the goal setting calculation and the role that these same so urces can take in a state's compliance plan is inconsistent and arbitrary. Commenters said these i nconsistencies mostly show up in how zero emissions sources can be included in a state's comp liance plan. Commenters said new and incremental sources of zero emitting generation can be used in a state's compliance plan, but EPA limits the role of generation from existing zer o emissions sources, including: nuclear - states can only use 5.8 percent of existing nuclear , hydropower - states cannot use generation from any existing hydropower resource, including ge neration imported from other countries, and biomass - states can use generation from new and ex isting biomass-based units, but this generation may not be deemed to be zero-emissions.

Commenters stated in response to the Notice of Data Availability (NODA) where the EPA requested comment on alternative approaches that ac count for the displacement of fossil fuel generation by Blocks 3 and 4 resources 12, the comm enters stated that the EPA's proposed approaches differ from one another in determining w hich fossil fuel sources are displaced, and thereby the amounts to which emissions in the numer ator of the formula would be reduced: 1)388

New low-/zero-carbon resources displace existing fo ssil fuel generation proportionally, 2) New low-/zero-carbon resources displace existing fossil fuel generation in order of emissions intensity, and 3) New low-/zero-carbon resources di splace a mix of existing and new fossil fuel generation. Commenters said any of these proposals would address a significant bias in the draft rule, which would both establish unrealistically la x emissions rate goals and incentivize preferences for relying on natural gas generation o ver non-fossil fuel resources in states' implementation plans. Commenters said the result of including low-/zero-carbon resources as the EPA did in the draft rule, is that states could ach ieve compliance without actually reducing emissions substantially. Commenters said for instan ce, if the state's total electricity consumption were to grow substantially over the next fifteen ye ars, but the state satisfied enough of that demand with block 3 and 4 resources, it would effec tively "dilute" its existing level of actual carbon emissions in a greater quantity of electrici ty produced. Commenters said for example, Southern Company seems prepared to encourage Georgi a along such a path, stating it intends to propose a yet another pair of new reactors, linking the proposal to implementation of the EPA rule. Commenters said while the deployment of so mu ch low-/zero-carbon resources to achieve such an outcome would signal a significant change i n the trajectory of state energy policies, it would not advance the ultimate objective of reducin g the amount of CO2 added to the atmosphere by existing generation sources.

Commenters stated Building Block 3 must be adjuste d to remove existing nuclear generation from the state goal-setting calculation. Commenters said existing nuclear generation should be treated like new nuclear generation, with all exist ing nuclear generation available for inclusion in state compliance plans. Commenters said this approa ch would provide incentive to maintain existing nuclear generation and would be consistentwith the regulatory objective of reduced carbon emissions associated with electricity genera tion.

Commenters stated that several factors limit states ' ability to govern the operation of these facilities - particularly under the auspices of the Clean Air Act. Commenters said, first, as zeroemissions resources, these plants are not directly regulated under the Act. Commenters believed the EPA has no authority to compel these resources to operate, and further, particularly in states with deregulated electricity markets, states are al so restricted from providing out-of-market incentives to these resources by FERC rules. Commen ters continued, stating that as it pertains to nuclear assets, licensing and supervision of these plants is the sole jurisdiction of the federal Nuclear Regulatory Commission (NRC), and states who have sought decision-making authority with respect to nuclear plants within their borders have found themselves with few options to either incentivize the continued operation of, or a dvocate for the closure of, these units.

Commenters stated that including under-construction new nuclear and at-risk existing nuclear in goal-setting is not authorized under Section 111(d)

.

Commenters stated that EPA's approach unfairly and severely penalizes States that are leading in the expansion of nuclear energy in America, and it is inconsistent with U.S. energy policy and the President's own statements in support of expand ing nuclear energy. Commenters added that389

EPA's approach in Building Block 3 exceeds EPA's au thority under Section 111(d) of the Clean Air Act because nuclear units are not part of the r egulated source category.

Comment 3: Several commenters recommended that the five nucl ear plants currently under construction (Watts Bar 2 in Tennessee, Vogtle 3-4 in Georgia, and Summer 2-3 in South Carolina) should be removed from the BSER baseline formula, and that states should be allowed to count the avoided emissions toward their complia nce plans once the plants are operational.

Response 3 : EPA acknowledges the comments and has determined that the BSER for the final rule will not include the provisions we had propose d for under-construction units in the setting of state goals, and will allow incremental generation from new nuclear units to be applied towards compliance. Please see section V.A of the preambl e for further discussion of the treatment of new nuclear plants, and section VIII.K and VIII.L o f the preamble for further discussion of provisions in state plans of allowable actions thatresult in an adjusted CO2 emission rate of an affected EGU, the accounting approach for increment al generation, and how states can address interstate effects in their plans. We appreciate co mmenters’ concern regarding crediting issues. We believe that changes made in the final rule reso lve these issues.

The following are summaries of the specific public comments under this comment:

Commenters recommended that the EPA should remove n uclear generating capacity under construction from the rate-setting formula, and all ow states to include "new" nuclear generating capacity, when it is operating, in their compliance calculations, thereby providing an incentive to expand carbon-free nuclear generating capacity. Com menters further recommended that "new" nuclear capacity should include:

1. New nuclear power plants (those currently under con struction or others that might be built between now and 2030 and beyond);

2. Power uprates at existing nuclear plants (which inc rease the plant's capacity) initiated at the beginning of the 2012 baseline year or thereaft er;

3. Nuclear plants relicensed to operate beyond 60 year s (second license renewal), and any nuclear plants that had not received license extens ions to operate beyond their original 40-year license term as of the beginning of the 201 2 baseline year.

Commenters stated that Georgia made the choice to i nvest significant state resources in nuclear power (1) in reliance on state policies in favor of nuclear power as a clean, carbon-free source of energy, and (2) in expectation of future federal re gulations on carbon emissions. Commenters stated that the EPA's proposed treatment of under-c onstruction nuclear places a disproportionate burden on Georgia, as well as South Carolina and Te nnessee, for taking early action.

Commenters stated that three states, Georgia, South Carolina and Tennessee - are adversely impacted by EPA's inclusion of this under-construct ion nuclear generation in building block 3; specifically, Georgia has an additional 17,345 GWh added into its building block 3 target, while390

South Carolina has 17,345 GWh added to its target, and Tennessee has 8,846 GWh added to its target. Commenters stated that the utilities constructing these five nuclear facilities likely intend to operate these units, but various issues beyond t heir control could affect licensing, start-up, and operations. Commenters stated that the inclusion of under-construction nuclear generation has such a large impact on a state goal that any shortf all in operations would be very difficult, if not impossible to overcome; for example, including Geor gia's new nuclear generation in building block 3 lowers the state's 2030 final goal under Op tion 1 by 138 lbs/MWh, from 972 lbs/MWh to 834 lbs/MWh. Consequently, Commenters recommended t hat the EPA should not include underconstruction nuclear generation in its goal setting methodology for building block 3.

Commenters stated that there is no logical basis to include output from nuclear plants under construction plants in the rate-setting formula. Co mmenters cited two reasons. First, these plants are not complete and not operating: Their generatin g experience and their capacity to avoid emissions have yet to be established. Second, addin g potential output from these plants to the denominator in the rate-setting formula reduces the state's intensity target significantly, thereby penalizing states that have supported new nuclear p lant construction. Commenters stated that South Carolina's state target is 22 percent more st ringent than it otherwise would be because of EPA's treatment of Summer 2 and 3, and Georgia's an d Tennessee's targets are 14 percent more stringent on this basis. Commenters stated that thi s is a substantial and unjustified penalty levied on just three states for no legitimate purpose rela ted to the permissible goals of the Clean Air
Act.

Commenters continued that, although the states woul d be able to receive credit for these new nuclear plants, by counting the output from them in their compliance calculations, that credit is effectively nullified by including that output in t he rate-setting formula. Commenters did not believe output from the nuclear units under constru ction should be part of the rate-setting
calculation.

Commenters opposed any efforts to, in the EPA's wor ds, "include in the state goals an estimated amount of additional nuclear capacity whose constru ction is sufficiently likely to merit evaluation for potential inclusion in the goal-sett ing computation.' Commenters stated that there is only one justifiable approach to new nuclear gen erating capacity that might be 'under construction' either currently or at some time in t he future: Remove it entirely from the targetsetting calculation but credit the output to compli ance.

Commenters noted that the EPA has solicited comment s on "whether it is appropriate to reflect completion of these [under-construction nuclear uni ts] in the state goals and on alternative ways of considering these units when setting state goals ." Commenters strongly opposed incorporating nuclear units under construction in t he section 111(d) target-setting calculation, and stated that the EPA's approach: (1) unfairly an d severely penalizes states that are leading the expansion of nuclear energy in America; (2) is inco nsistent with U.S. energy policy and the President's own statements in support of expanding nuclear energy and treatment of other underconstruction BSER resources; and (3) exceeds EPA's authority under section 111(d) of the Clean
Air Act.

Commenters stated that the five nuclear units under construction are projected to supply over 5,600 MW of new, baseload, zero-emission electric g eneration, and represent a combined391

investment of over $28 billion, approximately 11,50 0 total construction jobs and 2,500 permanent jobs, and that the five nuclear reactors will constitute the single largest new carbonfree source of generation in the United States. Com menters further stated that just one of these new reactors will produce approximately as much car bon-free electricity as all of America's solar electric generating capacity. However, Commenters n oted that in the proposed rule, the EPA decided to treat these units as part of BSER becaus e, in the EPA's view, there is no 'incremental
cost' associated with CO2 emission reductions from completion of these multi-billion dollar nuclear units. Commenters stated that the EPA provi ded no legal or technical analysis in the proposed rule to support this conclusion.

Commenters stated that without expressing an opinio n on the legal merits of EPA's proposed rule as a whole, Commenters agreed with EPA's determinat ion that 'under construction' nuclear units should be "part of the inventory that the state can count towards compliance with its state goal." However Commenters stated they believe it is comple tely unreasonable and unlawful for the EPA to penalize states where nuclear units are unde r construction by imposing, at the front-end of the process, a substantially more stringent CO2 emission target in these states, as the EPA has proposed. Commenters noted that, by taking into acc ount nuclear units under construction in this manner, EPA has set CO2 emission targets for Georgi a, South Carolina and Tennessee that are approximately 14-22 percent more stringent than the se targets would otherwise be if EPA did not include these units in the target-setting calculati on. Commenters concluded that this is a substantial and unjustified penalty levied on just three states for no legitimate or lawful purpose.

Commenters also stated that they had performed a cl ose review of the EPA's calculations and supporting documents that showed how the EPA's appr oach seriously penalizes these states, and provided the following details:

• If Vogtle 3-4 were not factored into EPA's target-s etting calculation, Georgia's 2030 goal would be in the range of 970 lbs/MWh, which would b e significantly less burdensome than EPA's current proposal of 834 lbs/MWh. As it s tands in the proposed rule, Georgia's target is 14 percent more stringent than it would b e if EPA did not include these units in
the calculation.

• Similarly, if Summer 2-3 were not factored into EPA 's target-setting calculation, South Carolina's 2030 goal would be in the range of 990 l bs/MWh, which would be less burdensome than EPA's current proposal of 772 lbs/M Wh. That is 22 percent more stringent than South Carolina's target would otherw ise be.

• Tennessee is similarly harmed by EPA's approach. If Watts Bar 2 was not factored into EPA's target-setting calculation, Tennessee's 2030 goal would be in the range of 1,352 lbs/MWh, which would be less burdensome than EPA's current proposal of 1,163 lbs/MWh. This is 14 percent more stringent than Ten nessee's target would otherwise be.

Commenters stated that, because each unit at Watts Bar 2, Vogtle 3-4, and Summer 2-3 will, when operational, be capable of producing over 8,00 0,000 MWh per year, inclusion of these units in the EPA's target-setting formula results i n a tremendous change in the targets for these states. Commenters placed these figures in context:392

• For Tennessee, the amount of MWh generation from Wa tts Bar 2 far exceeds the total historic generation from all of Tennessee's existin g natural gas combined-cycle units (NGCC), which EPA has identified as approximately 6 ,548,000 MWh. The generation from this single new unit at Watts Bar 2 is roughly on par with the total amount of redispatched NGCC generation that EPA has identifie d for Tennessee (9,846,000 MWh), and it far exceeds even the aggressive renewable en ergy (RE) generation levels that EPA has assigned Tennessee for 2030 (4,305,000 MWh).

• For Georgia, the amount of MWh generation from Vogt le 3-4 approaches one-half of the total historic generation from all of Georgia's exi sting NGCC units, which the EPA has identified as approximately 37,591,000 MWh. The gen eration from these two new units at Vogtle is also about one-third of the total amou nt of redispatched NGCC generation that the EPA has identified for Georgia (51,372,000 MWh), and it far exceeds the RE generation levels that the EPA has assigned Georgia for 2029 (12,230,000 MWh).

• For South Carolina, the amount of MWh generation fr om Summer 2-3 is over 150 percent more than the total historic generation fro m all of South Carolina's existing NGCC units, which the EPA has identified as approxi mately 11,209,000 MWh. The generation from these two new units at Summer is al so roughly equal to the total amount of redispatched NGCC generation that EPA has identi fied for South Carolina (17,457,000 MWh), and it is roughly double the RE generation le vels that EPA has assigned South Carolina for 2029 (9,675,000 MWh).

Commenters stated that, as a result, including over 8 million MWh generated at Watts Bar 2 and over 16 million MWh generated each at Vogtle 3-4 an d Summer 2-3 in the denominator of the EPA's target-setting calculation has a dramatic imp act on the final emission target for each of these states. Commenters stated that it appears tha t no other single assumption in the EPA's target-setting calculation has such a sizeable impa ct on state targets as the EPA's treatment of
these nuclear units that are under construction. Co mmenters stated that this presents a large future compliance risk to these states' affected un its and a challenge to meet future electricity demand cost-effectively. Commenters also stated tha t this also presents a challenge for the region given that these units are all located in three con tiguous states in the Southeast.

Commenters concluded that, as part of an EPA propos al aimed at reducing GHG emissions from the power sector, each of these states, and effecti vely the region, would be seriously penalized for taking proactive steps to expand the use of the nation's most significant source of zeroemission electricity. Commenters stated that this p enalty is particularly perverse in light of the EPA's recognition 'that the planning for those unit s likely included consideration of the possibility of future regulation of CO2 emissions f rom EGUs.' Commenters asserted that, because these units will produce millions of MWh of clean generation, a larger input based on individual units in the EPA's equation than any oth er single factor, the impact on these states is disproportionate and simply unfair. Commenters expr essed concern that the EPA proposal may discourage other states from taking proactive steps to expand nuclear power.

Commenters stated that the EPA's approach to the fi ve nuclear units under construction is inconsistent with national energy policy. Commenter s stated, "Promoting the next generation of commercial nuclear reactors is a key element of our nation's energy policy. EPA's approach to393

nuclear units under construction is directly contra ry to that policy. In both the Energy Policy Act of 2005 (EPAct) and the Energy Independence and Sec urity Act of 2007 (EISA), the last major pieces of energy policy legislation to be enacted i nto law, Congress sought to promote the expansion of nuclear energy through, among other th ings, investments in modern nuclear
reactors and reforms to streamline the nuclear lice nsing process for new nuclear units."

Commenters quoted President Obama as stating that t o "meet our growing energy needs and prevent the worst consequences of climate change, w e need to increase our supply of nuclear power," and that we should be "building a new gener ation of safe, clean nuclear power plants in this country." Commenters also noted that when the President unveiled his Climate Action Plan, he stated: "[T]hanks to the ingenuity of our busine sses, we're starting to produce much more of our own energy. We're building the first nuclear po wer plants in more than three decades, in Georgia and South Carolina."

Commenters then stated that there is a significant disconnect between these expressions of national energy policy and EPA's proposed rule, whi ch Commenters said would penalize those states that are expanding their nuclear energy infr astructure. Commenters stated that the EPA should not penalize states at the front end of the process by imposing a more stringent standard
relative to other states.

Commenters stated that the EPA's assumption of a 20 20 start date for the nuclear units under construction was inconsistent with the EPA's genera l approach to setting the state-specific emission rate. Commenters stated that, for all othe r actions and measures, the EPA used 2012 as the base year. Commenters concluded that, "If the state goals are based on historic 2012 data, it is arbitrary to use projected 2020 data for the nuc lear portion of the goals for Georgia, South
Carolina and Tennessee."

Commenters then stated that Vogtle units 3 and 4 wi ll displace up to 2,250 MW of net electrical output from fossil fuel generation (either existing or future growth). Commenters also noted that
Tennessee and South Carolina also have new nuclear generating capacity under construction. Commenters concluded, "EPA's proposed treatment of under-construction nuclear places a disproportionate burden on Georgia for moving forward with two of the first nuclear plants constructed in three decades by 1) including under- construction nuclear in Georgia's state goal, and by 2) requiring renewable energy and energy eff iciency targets for Georgia equivalent to those in states that are not investing in nuclear g enerating capacity."

Commenters referred to the EPA's statement regardin g renewable energy requirements and nuclear power on page 34858 of the Proposal, which said in part: "More than half the states already have established some form of state-level r enewable energy requirements, with targets calling on average for almost 20 percent of 2020 ge neration to be supplied from renewable sources. The EPA is unaware of analogous state poli cies to support development of new nuclear units ..." Commenters provided excerpts from Georgi a's State Energy Strategy that explicitly list advanced nuclear reactors as an energy need for the state, including that the Georgia House and the Georgia Senate passed single-chamber resolution s in the 2006 legislative session supporting the development of new nuclear capacity (HR 1365 an d SR 865), and that in 2009, the Georgia Public Service Commission approved the construction of two new nuclear generation units at Plant Vogtle in Waynesboro, Georgia. Commenters sta ted that the estimated cost of Vogtle units394

3 and 4 is $14 billion, and the project would not b e moving forward without state policies that support the development of new nuclear units. Comme nters also stated that the significant likelihood of future greenhouse gas regulations was also considered in the Georgia utilities' decision to add nuclear generation.

Commenters stated that Georgia made the choice to i nvest significant state resources in nuclear power (1) in reliance on state policies in favor of nuclear power as a clean, carbon-free source of energy, and (2) in expectation of future federal re gulations of carbon emissions. Commenters then stated that the EPA's proposed treatment of un der-construction nuclear places a disproportionate burden on Georgia, as well as Sout h Carolina and Tennessee, for taking early
action.

Commenters quoted from page 34870 of the proposal, "...The EPA believes that since the decisions to construct these units [Watts Bar 2 in Tennessee, Vogtle 3-4 in Georgia, and Summer 2-3 in South Carolina] were made prior to this prop osal, it is reasonable to view the incremental
cost associated with the CO2 emission reductions av ailable from completion of these units as zero for purposes of setting states' CO2 reduction goals (although the EPA acknowledges that the planning for those units likely included considerat ion of the possibility of future regulation of CO2 emissions from EGUs)." Commenters strongly disa greed with EPA's assertion that the capital costs and incremental costs associated with CO2 emission reductions as a result of Vogtle units 3 and 4 are zero, and noted that Georgia Powe r's ratepayers began paying for this investment in nuclear energy in 2011 with an increa se in their base bill to pay for the financing of this project. Commenters stated that Georgia Pow er's Nuclear Construction Cost Recovery Schedule (NCCR) recovers the cost of financing asso ciated with the construction of Vogtle units 3 and 4, and the NCCR rider is currently 9.3141%. C ommenters stated that, once these plants are operational, the rate impact is projected to be 6-8 % of the base bill, and that the other utilities investing in Plant Vogtle are similarly passing on these costs to their ratepayers. Commenters
then stated that these actual costs undermine the E PA's basic reason for including underconstruction nuclear in the baseline calculations, because these new units are not an inexpensive opportunity to reduce carbon emissions from existin g fossil fuel units but are in fact quite costly. Commenters stated, by including under-construction nuclear in Georgia's goal, but treating the significant investment in under-construction nuclear as "sunk costs," the EPA's proposal forces Georgia to expend funds in addition to the billions invested in under-construction nuclear to meet the proposed goal. Commenters concluded that, for t his reason alone, under-construction nuclear
should not be included in the calculation of the st ate goal.

Commenters stated that the proposed rule's treatmen t of under-construction nuclear eliminates state flexibility in achieving the goal and is not compatible with the other building blocks.
Commenters noted that current estimated commercial operation dates for Vogtle units 3 and 4 are the fourth quarters of 2017 and 2018, respectiv ely, and stated that additional construction delays and cost overruns are possible. Commenters s tated that while it is certainly likely that Vogtle units 3 and 4 will ultimately start-up and g enerate power at or near their rated capacity, the units would not be operational for several more years even in a best-case scenario. Commenters also stated that the Vogtle units repres ent advanced nuclear technology, which creates a certain degree of uncertainty regarding t he time to ramp up to expected performance as well as on-going reliable operation. Commenters con cluded that reflecting the completion of Vogtle units 3 and 4 in a proposed state goal is si mply not appropriate.395

Commenters stated that the way nuclear generation u ltimately impacts the goal and achievement of the goal is fundamentally different than the oth er building blocks. Commenters stated that, if any of the renewable energy, energy efficiency, or heat rate improvements efforts fall short, it is possible to compensate by overachieving in one of t he other areas. In contrast, commenters stated that the under-construction nuclear generati on has such a significant impact on the goal that any shortfall in ultimate performance would be virtually impossible to overcome. Commenters stated that the way under-construction n uclear is treated in the proposed rule essentially eliminates any "headroom" Georgia has i n meeting either the interim or the 2030 goals.

Commenters included a chart breaking down Georgia's 2030 goal computation (as proposed by EPA) percentage rate change from each of EPA's buil ding blocks.

Commenters stated that the building blocks for heatrate improvement, natural gas dispatch, renewable energy and energy efficiency were all der ived from practices or policies already in place in other sectors or states. Commenters then s tated that under-construction nuclear only exists in three states, so there is no benchmark to reference or use as a basis for how to treat
under-construction nuclear. Commenters also noted t hat other building blocks are expressed as a percentage along a continuum (e.g. 9.8 % of sales f rom energy efficiency), whereas nuclear plants are not designed to be ramped up and down; n uclear capacity is either there and fully utilized or not there at all (i.e. not built or shu t down due to planned maintenance outages or other unplanned outages). Commenters noted that sho rtfall in generation during periods of outages could severely impact Georgia's ability to meet the emissions goal. Therefore, the
commenters stated that under-construction nuclear i s a unique entity within the building blocks and fundamentally different than the other componen ts used to calculate the goal. Commenters recommended that it does not logically fit into the methodology for calculating state goals and
should be deleted from this calculation.

Commenters stated in 40 CFR 60.5820, EPA proposes a definition for affected entity as ' ... Affected Entity shall mean any of the following: An affected EGU, or another entity with obligations under this subpart for the purpose of m eeting the emissions performance goal requirements in these emission guidelines ... ' Com menters said assuming but not conceding that
this definition is consistent with the Clean Air Ac t and the regulations promulgated pursuant thereto, EPA should allow states to include under-c onstruction nuclear and new nuclear, along with solar, wind and other zero-carbon or low-carbo n generation, in the definition of affected entity for the purposes of demonstrating compliance in a state plan.

Commenters stated that Georgia has an ambitious red uction goal even without underconstruction nuclear complications. Commenters stat ed even with removal of the underconstruction nuclear from Georgia's goal computatio n, the state will be making significantly
more reduction in carbon emissions than the six sta tes without under-construction nuclear
investment.

Commenters stated that including under-construction nuclear units in the BSER determination places a disproportionate burden on the citizens of Georgia. Commenters also stated that the regulation as proposed could disproportionately rai se Georgia's electricity costs versus neighboring states, could hurt Georgia's competitiv e position for future economic development.396

Commenters stated that four states are already exce eding their renewable energy goals, and EPA has chosen not to adjust their goals. The comment c ontrasted this to the three states (Georgia, South Carolina and Tennessee) moving forward with u nder-construction nuclear; their renewable energy goals were adjusted. Commenters also stated, regarding the state of Georgia, that forcing additional renewable energy generation into the sta te, in addition to the under construction nuclear with this proposed regulation, will likely result in stranded assets of coal units with significant remaining useful lives. Commenters note d that coal units has invested in air pollution controls to comply with Georgia's Multipollutant Ru le (SSS), MATs, and CAIR/CSAPR, and that the accompanying reductions in SO2, NOx, and m ercury have resulted in significant improvements in air quality for ozone, PM2.5, and r egional haze. Commenters stated that the
utilities have also invested in heat rate efficienc y projects at the remaining coal units to make them as efficient as possible for their remaining u seful life. Commenters stated that if the utilities have to retire more of these coal units early to ac hieve carbon emission goals, electrical rates will be adversely impacted as the capital cost recovery for these pollution control projects is incorporated into the rate structure in Georgia.

Commenters stated that removing under-construction nuclear from EPA's BSER determination is
consistent with the EPA's exclusion of Partial Carb on Capture in BSER. Commenters recommended that the proposed 111(d) rule should be revised to exclude the CO2 emissions
reduction associated with the five under-constructi on nuclear units from the state goals for Georgia, South Carolina, and Tennessee as it has ex cluded under-construction coal-fired CCS units in setting the state goals for Mississippi, T exas, and California.

Commenters continued that thirty-one (31%) percent of the 2012 - 2030 emissions rate reduction in Georgia's goal is associated with implementation of BSER Building Block 3a, underconstruction nuclear; achievement of Georgia's emis sions goal therefore requires completion of construction, startup, and successful operation of Vogtle Units 3 and 4 at their forecast generation rates.

Commenters concluded that the inclusion of under-co nstruction nuclear in the State of Georgia's emissions performance goal eliminates flexibility i n achieving the goal by means of other BSER building blocks. Commenters recommended that the EP A should remove under-construction nuclear generation from the computation of BSER and state emissions goals, and that the EPA
should retain under-construction nuclear in the def inition of affected entity for the purposes of demonstrating compliance in a state plan.

Commenters 23715 stated that the utilities construc ting the five nuclear facilities surely intend to operate these units, but various issues beyond thei r control could affect licensing, start-up and operations. Commenters stated that the inclusion of under-construction nuclear generation has such a large impact on a state goal that any shortf all in operations would be very difficult, if not impossible, to overcome. Commenters recommended tha t, consequently, the EPA should not include them in its goal setting methodology for Bu ilding Block 3.

Commenters stated the EPA's methodology penalizes G eorgia, South Carolina, and Tennessee for investing heavily in new zero-carbon generating capacity, and that under-construction nuclear
should not be included in the calculation of the st ate goal. Commenters stated that including Georgia's new nuclear generation in Building Block 3 lowers the state's 2030 Final Goal under397

Option 1 by 138 lbs/MWh, from 972 lbs/MWh to 834 lb s/MWh, with similar effects for South
Carolina and Tennessee.

Commenters stated that there is a lack of precision with regard to the 2012 nuclear fleet capacity within some states. Specifically Commenters stated that, of the 30 states EPA lists in Table 4.10
- Nuclear At-Risk Generation in its GHG Abatement M easures TSD - the 2012 nuclear fleet capacity reported in 16 states differed from the su mmer net capacities reported in EIA's 2012 Form-860. Commenters noted that San Onofre (CA), Cr ystal River 3 (FL), and Kewaunee (WI) have already been retired, and Oyster Creek (NJ) is scheduled to be retired in 2019.

Commenters 22786 stated that the proposed rule's tr eatment of under-construction nuclear energy is arbitrarily different from its treatment of other sources of emission-free generation. Commenters stated in addition to being internally i nconsistent in terms of its treatment of other forms of nuclear energy, EPA's proposal to include generation from under-construction reactors in calculating state goals is also inconsistent wit h the Proposed Rule's approach to other sources of emission-free electricity in several way; these inconsistencies further emphasize the arbitrariness of EPA's approach to under-constructi on nuclear reactors.

Commenters stated that the first inconsistency rela tes to the EPA's unequal assumptions about the achievability of state commitments to emission- free electricity. Commenters noted stated that although the Proposed Rule effectively assumes thatevery state and utility that has committed to constructing one of the five under-construction nuc lear facilities will do so, the proposal does not apply this assumption to state and utility commitme nts to building additional renewable energy
facilities.

Commenters continued that in many ways, states' com mitments to building additional RE - particularly those that are codified in renewable p ortfolio standards (RPS) or binding targets for particular utilities- are more certain to lead to t he required level of deployment than are states' and utilities' commitments to completing the construction of the five under-construction nuclear facilities. Commenters stated that although Georgia has supported the construction of Plant Vogtle's under-construction reactors through state incentives and other measures, none of these measures comes close to imposing a binding legal re quirement to complete construction of any of these facilities on a particular schedule, or, i ndeed, at all. Commenters contrasted this to most RPS programs, which Commenters stated impose bindin g schedules for implementing RE deployment that are typically enforceable through t he possibility of injunctions, penalties, or
other sanctions. Commenters noted that these state programs are specifically designed to ensure that electric utilities develop a specific amount o f new RE capacity in order to meet the RPS
mandate.

Commenters stated that, in spite of their binding n ature, the EPA has not calculated state goals based on the assumption that the RPS or utility-spe cific RE targets that states have established will be achieved. Commenters stated for example, un like the three states where new nuclear facilities are currently under construction, the em ission goals for California, Colorado, and Minnesota -three states with aggressive RPS standar ds- are not based on the full level of RE to
which these states have committed:398

• Although California's RPS requires the state to mee t 33% of its load from RE by 2020, while Colorado's RPS imposes a 30% requirement, EPA 's goal-setting methodology only expects California and Colorado to obtain 21% of ea ch state's in-state generation from renewable resources by 2030.

• Similarly, although Minnesota's RPS program require s its utilities to obtain 30% of their retail sales from RE by 2020, EPA's goal-setting ap proach only assumes that Minnesota will reach 15% RE deployment by 2030- a proportion of sales that is even lower than the
state's actual level for 2012.

Commenters stated that the EPA has not explained wh y it assumes that states whose utilities have committed to building under-construction nucle ar capacity will construct and operate that capacity at 100% of the expected level, but does no t assume that states that have adopted binding RPS programs will construct and operate 100% of the ir RE commitments. Commenters stated that this inconsistency is especially puzzling in l ight of the fact that many RE commitments are legally enforceable obligations, whereas commitment s to build new nuclear generation are neither required nor enforceable through any state or federal regulatory requirement.

Commenters stated that the Proposed Rule's approach to under-construction nuclear reactors is
also inconsistent with its treatment of other under -construction emission-free sources of electricity. Commenters stated that although the EP A has identified and included all five of the nuclear reactors that are currently under construct ion in state goals, the EPA has ignored the thousands of MW of renewable generation that are cu rrently under construction throughout the country. Commenters stated that the EPA has also no t included generation from the over 500 MW of new hydroelectric capacity that was under con struction in 2013 and 2014. Further still, Commenters noted that the EPA's state goal calculat ion omits projected emission reductions from large carbon-capture and sequestration (CCS) g enerating facilities such as Mississippi Power's Kemper facility, which is now under constru ction and slated to come on-line in 2016.

Commenters stated that, even more inexplicably, the EPA does not even incorporate 100% of the generation from RE facilities that are already onli ne and operating into some states' goals. Commenters stated that the EPA's projected RE perfo rmance levels for Iowa, Maine, Minnesota,
and South Dakota are lower than the levels that the se states actually obtained from RE in 201; the EPA's proposed approach does not take into to a ccount the full amount of either underconstruction or actually-operating RE generation wh en calculating these states' goals. Commenters concluded that the EPA's proposal would arbitrarily penalize states that have chosen to reduce emissions by building one form of emission-free energy (nuclear energy) while adopting a less stringent approach to states and ut ilities that are moving forward with (or have already built) other sources of emission-free energ y such as RE, hydroelectricity, or CCS.

Commenters stated that the proposed rule's assumpti ons in quantifying the emission reductions
and costs associated with under-construction nuclear generation are arbitrary and capricious. Commenters stated that, in addition to being arbitr arily different from the treatment of other nuclear and emission-free sources of energy, the EP A's approach to quantifying the level of emission reductions that may be achievable from dep loying under-construction nuclear facilities is based on several erroneous assumptions. Commente rs stated that the incorrect assumptions include the following:399

• the five under-construction facilities will be comp leted and operational by 2020;

• these facilities will operate at an average 90% cap acity factor throughout their lives; and

• the costs of reducing emissions by completing const ruction of these facilities is effectively zero.

Commenters concluded that each of these erroneous a ssumptions further weighs in favor of excluding nuclear generation from the goal computat ion methodology.

Commenters stated that the EPA's assumption that ea ch of the under-construction reactors will be operating by 2020 is unreasonable and contradict ed by the projects' own construction history.

Commenters stated that nuclear power is far and awa y the most complex, technical, and highly regulated generation source on the planet, and ever y step in the construction, installation, and operation of a nuclear reactor is overseen by regul ators and inspectors at the NRC. Commenters stated that the technical and regulatory complexity involved in constructing a new nuclear reactor and the significant regulatory hurdles invo lved in adjusting design or fabrication assumptions can lead to long delays and unexpected increases in costs. Commenters also noted that unforeseen events such as Three-Mile Island, C hernobyl, and the more recent tsunamiinduced meltdown at the Fukushima Daiichi reactor i n Japan, could trigger new safety regulations, regulatory reviews, and major design c hanges that could significantly delay completion of under-construction reactors. Commente rs concluded that, although utilities in Georgia and elsewhere may now be committed to build ing the five reactors identified in the Proposed Rule, it is possible that changes in NRC r egulations, the cost of reactor components, or the availability of financing could result in major delays and possibly even the abandonment of one or more of these projects.

Commenters stated that the Tennessee Valley Authori ty's (TVA) Watts Bar Unit 2 -which is one
of the five "under-construction" facilities the Pro posed Rule assumes will be completed by 2020- is perhaps the best example of the uncertainty inhe rent in predicting when new nuclear facilities will be operational. Commenters observed that the N RC issued the TVA a construction permit for Watts Bar Unit 2 more than 40 years ago, in 197 3. Commenters noted that TVA began construction on Unit 2 shortly thereafter, but had only completed approximately 80% of construction by 1985, when construction was halted, only to be resumed in 2007. Commenters stated that Watts Bar Unit 2 is an important and hi ghly relevant cautionary tale: although the reactor was expected to enter commercial operation within three years of receiving its license, it was mothballed a decade later, then construction wa s restarted more than 20 years later.
Commenters stated that Watts Bar Unit 2 is still un der construction today, more than four decades after it began construction.

Commenters stated that, although Watts Bar Unit 2's lengthy construction schedule may not be typical of every nuclear reactor, the fact remains that large nuclear projects such as Plant Vogtle Units 3 and 4 face numerous risks, long constructio n timelines, and a greater potential for multiyear delays and potential risks of abandonment than almost any other type of energy project. Commenters further noted that both the Vogtle proje ct in Georgia and the V.C. Summer project in South Carolina have already experienced lengthy construction delays. Commenters concluded400

that the EPA's assumption that these units will com plete construction according to schedule is highly suspect, and is not supported by the actual construction history of these and other nuclear

reactors.

Commenters stated that even if the under-constructi on reactors in Georgia and elsewhere are able to complete construction by 2020 -as the EPA's Prop osed Rule assumes- there are a number of reasons why these units may not operate at a 90% capacity factor throughout their lifetimes. Commenters stated that new facilities typically req uire lengthy testing and fine-tuning periods before they are able to run at their designed capac ity factor. Commenters concluded that the new Vogtle units may well operate at low capacity facto rs during the first few years they come online, which could create a significant compliance d eficit for Georgia that would have to be made up by higher-than-90% capacity factors in the futur e, or by the addition of other emission-free energy or EE.

Commenters also stated that, despite the fact that the national average capacity factor for nuclear reactors has been approximately 90% for the last se veral years, there is no guarantee that the five individual facilities will operate at that level fo r their entire lives. Commenters noted that occasional outages for refueling, turbine replaceme nt, or safety issues are all but inevitable. Commenters stated that a typical reactor must refue l at least once every 18 months- an event that requires a shutdown lasting six weeks or more, and unexpected shutdowns for maintenance or safety issues, meanwhile, can last six months or mo re. Commenters stated that the Nuclear Energy Institute, which compiles reports of outages for the nation's existing nuclear fleet indicates that, between 2000 and 2014, indicated re actors experienced at least six planned outages lasting more than 100 days. Commenters also noted that the average duration of all planned outages during the same period was almost t hree months. Commenters stated that, according to the Energy Information Administration (EIA), the average lifetime capacity factor of the U.S. nuclear fleet is only 80.3% -ten percen t lower than EPA's proposed capacity factor assumption for nuclear generation. Finally, the com menters noted that in the last three years, the lowest quartile of U.S. nuclear facilities operated at an average capacity factor of only 70.8%.

Commenters also noted that Southern California Edis on's San Onofre Nuclear Generating Station (SONGS) Units 2 and 3 (2,150 MW total) near San Die go, California, have both been offline since January 2012 as a precaution after a steam ge nerator tube leak led to the discovery of excessive wear in the plant's new steam generators. Commenters noted that the problems ultimately proved to be so significant that both un its were prematurely retired from service. Commenters further referred to extended outages at the Fort Calhoun reactor, Crystal River Unit 3, and other reactors. Commenters stated that, in l ight of these statistics, it would be arbitrary and
unreasonable for EPA to assume that each of the und er-construction reactors will run at an average capacity of 90% for their entire lives, or even for the entire span of a single compliance period.

Commenters stated that the EPA's assumptions about the cost of completing the five underconstruction reactors are incorrect. Commenters con tinued that the Proposed Rule asserts that completing construction of the five under-construct ion reactors would be associated with zero
'incremental' cost because 'the decisions to constr uct these units were made prior to this proposal.' Commenters stated that this simplistic c onclusion overlooks numerous incremental costs that are associated with constructing and ope rating these units. Commenters stated that401

completion of the two Vogtle units is expected to c ost approximately $14 billion, and that these construction costs are being paid for through a 9.3 141% "Nuclear Construction Cost Recovery Schedule" rider on Georgia Power's customers' elect ric bills and similar rate increases for the other utilities involved in the development of the new Vogtle units. Commenters also stated that once construction is complete, the operation of the se units is expected to add 6-8% to ratepayers' bills for many years into the future. Further, Comm enters noted that other construction delays may occur, and that according to press reports, eac h day that construction is delayed at Vogtle could add $2 million to the costs of this complex p roject.

Commenters stated that the construction costs are i ncremental to the Proposed Rule because they would not necessarily continue to be incurred in th e absence of the Proposed Rule. Commenters stated that in the Proposed Rule, EPA recognizes th at "a host of factors -increasing fixed operation and maintenance costs, relatively low who lesale electricity prices, and additional capital investment associated with ensuring plant s ecurity and emergency preparedness- have
altered the outlook for the U.S. nuclear fleet in r ecent years." Commenters noted that the importance of these factors varies dramatically fro m reactor to reactor, but the same cost pressures that apply to some existing facilities ap ply to these under-construction nuclear facilities. Commenters stated that, without the Pro posed Rule, stakeholders in these projects would have the option of delaying or modifying the projects if costs reach unacceptable levels - just as TVA decided to do in 1985 with Watts Bar Un it 2.

Commenters concluded that the inclusion of under-co nstruction generation in state goals is not cost-less; rather, the additional policy constraintcreated by the Proposed Rule will cause the developers and operators of these units to incur ad ditional costs above those that they would have incurred in the absence of the Proposed Rule. Commenters stated that the EPA should reflect these real, incremental costs in its evalua tion of this aspect of BSER, and the agency's failure to do so violates the requirements of EPA's own regulations as well as the plain language
of section 111.

Commenters stated that the proposed rule's approach to under-construction nuclear facilities is arbitrarily inconsistent with its approach to other sources of nuclear energy. Commenters also stated that, in addition to being illegal and unpre cedented in EPA's over 40-year history of implementing section 111, the Proposed Rule's appro ach to under-construction nuclear facilities is arbitrarily inconsistent with the proposal's tre atment of existing and planned nuclear reactors, as well as nuclear uprates. Commenters stated that, under the Proposed Rule, all future nuclear
facilities other than the five deemed under-constru ction -including the 12 new nuclear reactors that are currently under Nuclear Regulatory Commiss ion (NRC) review -would be completely excluded from the state goal calculation, even thou gh most of these facilities are currently projected to come on line during the Proposed Rule' s interim compliance period. Commenters concluded that the EPA has not explained why it has chosen to include nearly all of the expected generation from the five reactors that began construction before the Proposed Rule, while completely excluding the projected generation from the 12 facilities whose applications are currently under review, and which could also begin generating electricity during the first compliance period.

Commenters stated that increased generation from up rates at existing nuclear facilities -including uprates that were planned, approved, or under const ruction before the issuance of the Proposed402

Rule- also would not be included in the goal calcul ation. Commenters stated that a review of the NRC's licensing database reveals that the NRC appro ved 16 separate uprate projects between May 2012 and August 2014. Of these, eight were "ext ended" uprates, meaning that substantial construction and equipment upgrades would be involv ed. Commenters noted that, like the five "under-construction" reactors identified by EPA, ea ch of these uprates either came online or will complete construction after the proposed 2012 basel ine year (meaning that generation from these uprates represents additional generation above the baseline). Commenters stated that some of these uprates were likely still under construction or about to commence construction when EPA issued the Proposed Rule. Commenters stated that th e expected MWh from these underconstruction nuclear uprates -some of which will ad d substantial capacity to existing facilitiesalso were not included in state goals, despite EPA' s proposal that the MWh from these uprates would be eligible for use as a compliance option. C ommenters concluded that the EPA's proposal that all of the expected generation from the under- construction nuclear reactors would be included in state goals, while generation from plan ned reactors and under-construction nuclear uprates would be entirely excluded, defies explanat ion, and is clearly both arbitrary and capricious.

Commenters also stated that, in contrast to its tre atment of all other sources of nuclear energy, the Proposed Rule would include 5.8% of a state's e xisting nuclear capacity in the state goal
calculation. Commenters stated that inclusion of th is existing nuclear generation is both illegal and unreasonable, and is also arbitrarily differentfrom EPA's approach to under-construction
facilities. Commenters noted that the EPA states th at the five under-construction reactors have "long been known to grid operators for planning purposes." Similarly, Commenters stated that
the EPA asserts that inclusion of these facilities as elements of BSER is effectively cost-less, which means, effectively, that the EPA considers th ese under-construction facilities to be functionally equivalent to existing facilities (inc remental costs for which would also be zero). Commenters concluded that logically, the agency sh ould apply the same assumptions to the five under-construction facilities that it applies to ot her already-built facilities. Commenters stated that assuming, for the sake of argument, that the E PA's stated rationale for including a share of existing nuclear generation in state goals (i.e., t hat this percentage of the nation's nuclear generation is "at risk" of retirement is reasonable , the logical extension of this argument would require inclusion of only 5.8% of the expected gene ration from under-construction facilities as well. Commenters stated that presumably, if a gener ic 5.8% of the nation's nuclear capacity will be at risk of retirement during the Proposed Rule's compliance periods, the market forces that the EPA asserts may lead to retirement would also affec t the under-construction facilities that the EPA assumes will be operational during the same per iod. Commenters concluded that for reasons the EPA has not (and likely cannot) explain , the EPA has opted to include all of the expected generation from the five under-constructio n facilities while including only 5.8% of existing reactors' generation.

Commenters recommended that, rather than treating u nder-construction nuclear facilities as if they are already built -an approach that ignores th e very real risk that one or more of these facilities will not be built or will cost significa ntly more than is projected- the Proposed Rule
should treat these un-built facilities as new facil ities, applying the same approach the proposal uses for under-construction nuclear uprates and new nuclear facilities that are currently in the planning and permitting stage. In other words, the commenters recommended that the EPA should calculate state goals without including a pr ojection of future generation from under-403

construction reactors, while allowing generation fr om these emission-free sources to be used for compliance if and when they are actually built. Com menters stated that any other treatment would be arbitrary and capricious.

Commenters recommended that output from under-const ruction nuclear units should not be used to calculate state emissions rate goals. Commenters stated that the EPA's decision to include these units in setting the state-specific goal rate s unreasonably increases the stringency of the goals for the states and electric utilities that ha ve made substantial investments in new zeroemitting generation resources.

Commenters recommended that units that are not comp lete and not operating should not be considered when setting state emission rate goals. Commenters noted that the proposed guidelines state that "Building Block 3 is based on shifting generation from affected fossil units to new renewable energy generating capacity, which is added over time, and new or preserved nuclear capacity, all of which is expected to be in place by 2020." Commenters stated that development of a new nuclear plant is a long and co mplicated process that takes a minimum of nine years to complete, even if everything goes acc ording to schedule, but new units are often subject to construction and permitting delays.

Commenters further stated that assuming a 2020 star t date for these units is inconsistent with EPA's general approach to setting the state-specifi c emission rate goals for the states. Commenters noted that, for all other actions and me asures, the EPA used 2012 as the base year.
Commenters noted that the EPA "chose the historic d ata approach as it represented the most recent year for which complete data were available at the time of the analysis." Commenters stated that if the state goals are based on histori c 2012 data, it is arbitrary to use projected 2020 data for the nuclear portion of the goals for Georg ia, South Carolina and Tennessee.

Commenters stated the EPA should remove nuclear gen erating capacity under construction from the rate-setting formula, and allow states to inclu de 100 percent of "new" nuclear generating capacity, when it is operating, in their compliance calculations, thereby providing an incentive to expand carbon-free nuclear generating capacity.

Commenters stated that the EPA repeatedly recites t hat the proposed rule with its four Building Blocks provides states flexibility to tailor their responses to the rule to their own specific energy profiles, needs, and policies, but this is largely a fiction. Based on the commenter's understanding of the understanding of the states in which it has generation resources, the amount of emission reductions supposedly achievable in eac h state from each block provides little leeway to adjust the actions the EPA used to create the blocks or to rely on measures that differ
from those in the blocks. Commenters stated that a good example of false flexibility is the proposed treatment of nuclear units under construct ion. Commenters stated than an important clean energy activity in which it is engaged is the addition of 1150 MWs of zero-emitting baseload nuclear capacity at Watts Bar Nuclear Plan t (WBN2), which will be on-line in late 2015. Commenters noted that, rather than structurin g Block 3 to allow Tennessee and TVA to use this clean energy for compliance flexibility, t he EPA embeds energy from WBN2 in the Block 3 denominator making Tennessee's emission gui deline much more stringent and hamstringing whatever flexibility Tennessee may oth erwise have.404

Commenters stated that they and their customers hav e invested over $4 billion and continue to invest in Watts Bar Nuclear Unit 2, which accounts for nearly one-third of Tennessee's emission rate reduction required by 2030. Commenters stated that they and other owners of nuclear under construction are leading the expansion of new nucle ar energy in the 21st century, but are being penalized by EPA and given a lower emission guideli ne compared to other states.

Commenters stated that, in the proposed rule, the E PA solicited comments on 'whether it is appropriate to reflect [the five nuclear units unde r construction] in the state goals and on alternative ways of considering these units when se tting state goals.' Commenters strongly opposed incorporating nuclear units under construct ion in the section 111(d) calculation of state goals. Commenters stated that the EPA's proposal (1 ) unfairly and severely penalizes states that are in the vanguard of the effort to expand generat ion of nuclear energy in the United States; and (2) is inconsistent with the U.S. energy policy and the commenter's Integrated Resources Plan. Commenters recommended that the output from these u nits under construction should count toward compliance in the same manner as any other n ew nuclear capacity whether achieved through additional nuclear plant construction or po wer up-rates. Commenters also recommended that plants that extend their licenses should recei ve credit in compliance calculations.

Commenters stated that no other single assumption i n EPA's rate-setting calculation has such a sizable impact on the state emission goals as EPA's treatment of nuclear units under construction. Commenters stated that this creates a huge complian ce risk for Tennessee, Georgia, and South Carolina and will discourage other states from join ing with these states in multi-state plans; should a nuclear unit not start up and perform as p lanned, the compliance risk for all states in a multi-state agreement would greatly increase.

Commenters stated that, contrary expressions of nat ional energy policy by the President and Secretary of Energy, EPA's treatment of nuclear uni ts under construction would penalize the very states that have been proactive in developing and investing in nuclear power. Commenters recommended that, rather than penalize these states , EPA should recognize their contributions by allowing the states the benefit of using the genera tion from these units to meet the state CO2 emission reduction targets. Commenters stated that, paradoxically, EPA's approach would extend this benefit to states that propose development of nuclear power in future, but not to states that have been in the vanguard of promoting the national policy of developing nuclear power to provide carbon-free electricity.

Commenters stated that the EPA's approach to nuclear units under construction does not constitute BSER and violates CAA section 111(d). Co mmenters first disagreed with the EPA's
assertion that under construction nuclear units con stitute the "application of the best system of
emission reduction." Commenters stated that the EPA has never before based emission guidelines on application of beyond-the-unit techno logies, or asserted that reduced utilization at a regulated source qualifies as a legitimate "syste m of emission reduction." Second, Commenters asserted the EPA failed to properly "take into acco unt the cost" when it proposed to treat nuclear
under construction as BSER. Commenters stated that assuming "zero" cost for under construction "controls" is unprecedented in the sec tion 111(d) context, and by ignoring the total value of the commenter's investment merely because Commenters acted early in advancing the first new nuclear power plants in nearly 30 years, the EPA's determination is fundamentally
flawed. Commenters stated that the EPA has never ma ndated such a large capital investment as405

BSER for affected units. Third, the commenters stat ed that section 111 requires the degree of emission limitation to be 'achievable,' and the EPA 's approach to under construction nuclear units eliminates any meaningful margin for compliance purposes, substantially hindering the opportunity for these states to achieve compliance. Commenters stated that the EPA's claim that the rule provides 'flexibility' is incorrect; in re ality, Georgia, South Carolina, and Tennessee will face substantial Clean Air Act compliance risk, wit h no real flexibility, as a result of their more stringent state goals. Fourth, the commenters state d that the proposal violates section 111(d) by defining BSER differently for each state. Commenter s stated that EPA has effectively proposed BSER differently for Georgia, South Carolina, and T ennessee as compared to the other states, and EPA has determined that completion of 'under co nstruction' nuclear units constitutes BSER for these few states where those projects happen to be under construction. Commenters stated that EPA lacks the authority to establish BSER on a state-by-state basis in the manner EPA has done with under construction nuclear. Fifth, the co mmenters stated that while nuclear power has been demonstrated to be a proven source of safe, af fordable, reliable, and clean energy, the EPA has provided no support in the record for its concl usion that these under construction nuclear units are already 'adequately demonstrated' as thatstatutory term is intended in the special context of section 111(d).

Commenters stated that the EPA's treatment of nucle ar units under construction is different from its treatment of other zero-carbon generation sourc es. Commenters stated that the EPA's calculation for setting state emission goals does n ot account for solar or wind projects that are also currently under construction despite the fact that solar, wind and nuclear are all grouped in Building Block 3. In the same vein, Commenters stat ed that EPA's standard-setting does not incorporate the avoided generation from individual energy efficiency projects or energy efficiency programs that are already planned. Comme nters stated that the EPA provides no explanation in the rulemaking record for this disparate treatment, nor does the EPA explain why it is treating nuclear under construction different ly from hydropower. Commenters noted that the EPA excludes all hydropower generation from the rat e-setting formula, while recognizing that states can consider "incremental hydropower generat ion from existing facilities (or later built facilities) as an option for compliance with state goals." Commenters recommended, similar to its treatment of hydropower capacity, the EPA shoul d exclude generation from nuclear units under construction from the rate-setting calculatio n, but allow such generation to be used for compliance purposes.

Commenters recommended that the EPA should provide an off-ramp in the event a nuclear unit retires or is offline for an extended period. Comme nters recommended that, should EPA choose
to include nuclear units under construction in the goal setting calculation, States should be allowed to retain the right to adjust reduction goa ls in the event of the unexpected retirement or a lengthy outage for one of these units. Commenters s tated that otherwise, compliance for these states would be impossible due to the large amount of zero-emitting generation that would be
lost.

Commenters stated that preserving 'at-risk' nuclearand under-construction nuclear and increasing renewables cannot be considered a part o f BSER for existing power plants, because favoring a certain type(s) of generation is not an emission control. Commenters stated that the EPA incorrectly assumes some portion of all existin g nuclear units is at risk of retirement and unfairly penalizes three states, including Georgia, where utilities have taken steps to build new406

nuclear generation in preparation for a carbon-cons trained future. Commenters stated that the
EPA's inclusion of under construction nuclear in it s state goal calculations results in much more stringent targets for these states.

Commenters stated that the proposed rule evaluates the cost and impact of Vogtle Units 3 and 4 as having no additional cost to Georgia's ratepayer s. Commenters stated that the EPA fails to understand that construction is on-going, continuat ion of the project is evaluated semi-annually, and ratepayers have been paying for this resource s ince 2011. Commenters stated that this evaluation, as with the original certification, inc orporates carbon price scenarios and recognizes the new units as being carbon-free. Commenters stat ed the EPA incorrectly assumes the Georgia
PSC did not consider the cost of carbon when certif ying the new nuclear units as a carbon-free resource. However, the commenters stated that from the initial financial analysis for the Plant Vogtle project, cost scenarios include the possibil ity of a price for carbon at multiple levels. Commenters recommended that the potential to save r atepayers from the costs of CO2 emissions increases the value of Vogtle Units 3 and 4.26 Geor gia's investment in carbon-free energy should be given full credit toward compliance with the pro posed rules.

Commenters stated that, because the Agency has fail ed sufficiently to account for the costs associated with constructing, operating, and mainta ining nuclear units, the EPA has failed to follow its statutory mandate under 111(d) to take i nto consideration costs in setting BSER.

Commenters stated as part of Building Block 3, EPA also assumes that the five nuclear units under construction in Georgia, South Carolina, and Tennessee will come online as scheduled and immediately and continuously operate at a 90 percen t capacity factor. Commenters said in Georgia, EPA focuses on the construction of Units 3 and 4 at Plant Vogtle; incorporation of Plant Vogtle Units 3 and 4 into Georgia's goals mak es them significantly more stringent, taking the final goal from 970 lb/MWh to 834 lb/MWh, an ad ditional 14 percent reduction.
Commenters said EPA's reliance on under constructio n nuclear contravenes the statutorily mandated factors under 111(d), fails to account foroperating characteristics of nuclear units, and is inconsistent with Congress' intent as evidenced in the Energy Policy Act of 2005.

Commenterss stated that in the proposal, EPA treats Plant Vogtle Units 3 and 4 as part of BSER because, in EPA's view, there is no "incremental co st" associated with CO2 emission reductions from completion of these multi-billion dollar nucle ar units. Commenters stated that the EPA must take into account costs when setting BSER unde r Section 111. Commenters concluded that
the EPA's failure to consider the costs to construc t Plant Vogtle Units 3 and 4 in its
determination as to whether these and other under c onstruction nuclear units are BSER for fossil
fuel-fired EGUs is a clear error.

Commenters stated that neither EPA's proposal nor t he multitude of TSDs include any legal or technical analysis, beyond mere assertions, that su pports or justifies EPA's decision to ignore the
costs that have been incurred to construct these nu clear units and instead focus solely on "incremental costs," which EPA deems to be zero. Co mmenters stated that the EPA has not explained how it defines "incremental cost" in this context or how incremental costs would be calculated and provides no precedent for this appro ach. Commenters stated that the Regulatory Impact Analysis ('RIA') makes a passing reference t o EPA's treatment of under construction nuclear units. Additionally, Commenters noted that GHG Abatement Measures TSD contains a407

lone paragraph that recites EPA's assertion about t he 'incremental cost' of completing these projects, but does not otherwise explain the legal or technical basis for that assertion. Furthermore, the commenters stated that the EPA's l egal memorandum accompanying the proposed rule merely asserts that these five units have "long been known to grid operators for planning purposes," but the legal memo does not oth erwise explain or justify EPA's approach. Commenters observed that the EPA itself acknowledge s that 'nuclear generating capacity is relatively expensive to build compared to other typ es of generating capacity.' Commenters
concluded that when OMB raised concerns about EPA's treatment of under construction nuclear units, EPA did not explain its rationale, choosing instead to simply tell OMB that "EPA is taking
comment on whether we should include the new on the way nuclear in the state targets as BSER
. . . ."

Commenters stated EPA has completely ignored the si gnificant capital investment necessary to support under construction nuclear; as further supp ort for its treatment of under construction nuclear, EPA suggests that because these units were not constructed to comply with future carbon regulation, the costs should not be included in this analysis. Commenters said specifically, EPA says that it is 'unaware of analo gous state policies to support development of new nuclear units . . . .' Commenters said EPA, how ever, completely ignores laws and policies in Georgia that, consistent with the national goals an d priorities described above, have sought to support the development of new nuclear units in par t because of the likelihood of future carbon regulation. Commenters said as explained in comment s submitted to EPA by the GEPD, the State of Georgia has a State Energy Strategy, first developed in 2006, that specifically supports
'advanced nuclear reactors.' Commenters said in add ition, in 2009, Georgia enacted the 'Georgia Nuclear Energy Financing Act' to facilitate advance d cost recovery associated with new nuclear power projects; these policies confirm that Georgia planned ahead to ensure a diverse energy mix for its customers in anticipation of CO2 regulation . GEPD put it best:

• Georgia made the choice to invest significant state resources in nuclear power (1) in reliance on state policies in favor of nuclear p ower as a clean, carbon-free source of energy, and (2) in expectation of future federal regulations of carbon
emissions.

• As a result, there is no basis for EPA's conclusion that these units would have been built anyway absent carbon regulation. As such , EPA's approach to under construction nuclear units has not been adequately justified and lacks support in
the record. EPA should remove under construction nu clear from Georgia's state goals.

Commenters stated the EPAct05 and the Energy Indepe ndence and Security Act of 2007 ('EISA') sought to expand the commercial utilization of nucl ear energy in the United States, while also reducing CO2 emissions and ensuring affordable, rel iable, and clean domestic energy for
Americans. Commenters stated that the EPA should al ign the mechanics of its regulations with our nation's energy and environmental policies by r emoving under construction nuclear from Georgia, Tennessee, and South Carolina's state goal s and then allowing future generation from those units to be available for compliance.

Commenters recommended that the EPA should adopt fi nal GHG guidelines that:408

• Will encourage States to preserve, life-extend, and expand existing nuclear generation;

• [Allows States to] include in compliance plans and thus receive emissions credit related to all output of new nuclear capacity (including up rates of existing plants) that begins operating after the issuance date of the proposed r ule.

Commenters stated the proposed treatment of under-c onstruction nuclear power generation is arbitrary and capricious; unlike other generation s ources in Building Block 3, the proposal treats even under-construction nuclear generation as exist ing generation for the purpose of goal ratesetting. Commenters said the result of this treatme nt is to effectively penalize those electric
utilities that have invested in under-construction nuclear units (and their consumers), who will incur very significant costs to bring online this C O2-free generation but will get no credit for that generation as a compliance option. Commenters said other under-construction zero-emission generation sources in Building Block 3 are not trea ted in this manner; these other generation sources are excluded from the goal rate-setting; th us, they receive credit for zero-emission generation when they come online and ultimately con tribute power to the grid. Commenters said this discriminatory treatment of under-construction nuclear, when there is no identifiable difference between it and Building Block 3 renewabl es, is irrational; as a consequence, EPA's proposed Building Block 3 is arbitrary and capricio us. EPA can remedy this by treating underconstruction nuclear units like it treats all other s: as irrelevant for goal rate-setting, but availab le for goal compliance once constructed."

Commenters stated that including under-construction plants in the rate-setting algorithm drives Georgia's 2030 intensity target for existing source s down to 834 lbs./ MWH, and South
Carolina's to 772 lbs./ MWH. Commenters stated thatthis is well below the 1,100-lb/ MWH
New Source Performance Standard established in EPA' s 111(b) rulemaking governing new fossil-fired power plants. Commenters concluded tha t it is irrational and arbitrary to have an emission rate standard for existing power plants th at is below the emission rate specified for new power plants. Commenters recommended that the five reactors under construction - Vogtle 3 and 4, Summer 2 and 3, and Watts Bar 2 - should be excl uded from the rate-setting formula. Commenters further recommended that their outputs s hould count toward compliance, as should any other new nuclear capacity once it is online. C ommenters also recommended that plants that extend their licenses beyond 40 years or beyond 60 years should continue to receive credit in compliance calculations.

Commenters stated that the output from under-construction nuclear units should not be used to calculate state emissions rate goals. Inclusion of nuclear units under construction in the rate setting penalizes states that support new nuclear p lant construction. Commenters also stated that the EPA proposes to include the "projected amounts of generation available by completing all nuclear units currently under construction..." (Wat ts Bar 2 in Tennessee, Vogtle 3-4 in Georgia, Summer 2-3 in South Carolina) by 2020 in the rate s etting for three states, even though those units are still under construction and not yet oper ating. Commenters stated that the EPA has chosen an arbitrary projected start date of 2020, a nd an unrealistic capacity factor of 90 percent. Commenters stated that by taking this approach, the Agency has created unreasonable compliance risks, and significantly increased the s tringency of the emission rate goals for Georgia, South Carolina and Tennessee by creating " phantom" zero-emissions generation used to determine the state goals. Commenters continued tha t, as EPA itself notes, "reflecting409

completion of these units in the goals has a signif icant impact on the calculated goals for the
states in which these units are located. If one or more of the units were not completed as projected, that could have a significant impact on the state's ability to meet the goal." As a result, Commenters stated that the EPA's approach penalizes states that are building new nuclear capacity, and potentially consigns three states to a deficit in zero-emissions generation needed to demonstrate compliance before the interim complianc e period even begins.

Commenters stated that, as EPA notes, including the se under construction units in the rate setting for Georgia, South Carolina and Tennessee could hav e a significant impact on the ability of those states to meet their goals, since they would have t o replace any lost zero-emissions MWh with other zero-emissions MWh (by increasing reductions from both BSER and approvable nonBSER measures). Given the magnitude of the generati on expected from these units, the commenters stated that it will be impossible to mak e up deficits in zero-emissions MWh with other BSER or non-BSER reductions. Therefore, Comme nters stated that the output from underconstruction nuclear units should not be used to ca lculate a state's emission rate goal.

Commenters recommended that the EPA should revise i ts assumptions regarding the incremental
cost of the under construction units. Commenters st ated that the EPA includes the five units under construction as part of BSER because it conte nds that there is no "incremental cost" associated with CO2 emission reductions from comple tion of these multibillion dollar nuclear
units based on the belief that "since the decisions to construct these units were made prior to this proposal, it is reasonable to view the incremental cost associated with the CO2 emissions reductions available from completion of these units as zero for purposes of setting states' CO2 reduction goals." Commenters stated that, in realit y, approximately $10 billion remains to be spent on these five reactors; therefore, the EPA's assertion that there is "no incremental cost" associated with completing these plants is incorrec t. Commenters stated that these are real costs that are being incurred, and the EPA needs to revi se this assumption regarding the incremental
cost of the under construction units.

Commenters stated while under construction units sh ould not be used in the rate-setting process,
states should be able to include these units in the ir compliance plans once they are operational, as they would be the functional equivalent of any othe r new nuclear capacity achieved (e.g., new plants or power uprates). Commenters said these uni ts should be classified as new nuclear units, the generation from which could be used by a state to help meet its goal; allowing these and other as yet unplanned units to be utilized for com pliance will not only aid states in meeting their goals, but also serve as an incentive for states to build new nuclear units.

Commenters stated EPA's treatment of Georgia's 'und er construction' nuclear, Plant Vogtle Units 3&4, is inequitable and misguided and would almost certainly result in higher electricity rates for
their members. Commenters also stated under-constru ction nuclear generation should not be included in calculating state goals.

Commenters stated with regard to Vogtle Units 3&4, Georgia ratepayers who are paving the way in reducing carbon emissions should be allowed to t ake full credit for zero-emitting carbon emissions from nuclear generation in complying with any state or utility-specific performance standards promulgated pursuant to this rule.410

Commenters stated in calculating the state goals, E PA also included generation from new nuclear units that were under construction in 2012; as with the under construction NGCC units identified above, the decision to include under construction n uclear units in setting state goals unreasonably increases the stringency of the reduction targets f or states that have made substantial investments in non-emitting nuclear generation. Commenters said the states within which these units are being constructed (Georgia, South Carolina and Tenn essee) will need all of the generation from
these new units in order to meet the calculated emi ssion rate targets. Commenters said if these units are not available for any reason in the futur e, these states would face significant compliance challenges. Commenters requested EPA remove under c onstruction nuclear units from the calculation of the state goals.

Commenters stated that the EPA should not include u nder-construction nuclear units in the state goal computations.

Commenters stated the EPA has proposed that the pro jected generation provided by five nuclear units currently under construction be factored into the state goals for the respective states where
the under construction units are located. Commenter s said the EPA is making this proposal
because of its belief "that since the decisions to construct these units were made prior to this proposal, it is reasonable to view the incremental cost associated with the CO2 emission reductions available from completion of these units as zero for purposes of setting states' CO2 reduction goals." Commenters opposed the EPA's prop osal to incorporate the projected generation from under construction nuclear units in state goal computations; in addition to exceeding the EPA's authority under section 111(d) of the CAA to include under construction
nuclear in its BSER determination for fossil fuel-f ired EGUs, the only thing the proposal achieves is to make the goals for South Carolina, G eorgia, and Tennessee significantly more stringent. Commenters said penalizing these states for supporting the continued development and deployment of nuclear power, the single largest CO2 reduction option available within the power sector, in a rule intended to reduce CO2 emissions within the power sector, is misguided from a policy perspective. Commenters said including gene ration from the under construction nuclear units in the state goal computations also introduce s a significant risk of noncompliance if the units are either not completed, or are completed bu t do not perform as the 90 percent capacity
factor the EPA has assumed. Commenters said if the EPA proceeds with finalizing its Proposed Guidelines, it should do so without including in th e goal computations for South Carolina, Georgia, and Tennessee any contribution from the un der construction nuclear
units. Commenters said the EPA should also make itclear that if the units are completed, their output should be available to the states for compli ance.

Commenters stated under-construction nuclear should not be included in the calculation of state goals; EPA's inclusion of Vogtle 3 and 4 in setting Georgia's performance standard is inequitable and misguided. Commenters said rather than rewardin g states and utilities that are the early movers in permitting and constructing this importa nt type of non-emitting generation, EPA's
inclusion of under-construction nuclear in calcula ting state goals serves instead as a penalty. Commenters said specifically, the electricity consu mers of Georgia should not be penalized for stepping up and spending over $14 billion on Vogtle 3 and 4, which will provide the state with 2,200 megawatts of power, with zero CO2 emissions. Commenters said it is blatantly unfair and sends precisely the wrong message to the business c ommunity.411

Commenters stated EPA has offered no alternatives t o this expensive climate change agenda action; it would require Georgia utilities to cut e missions by an additional 44 percent by 2030 at existing plants, and it expects this to be done by converting to alternative sources of energy and by energy conservation and efficiency. Commenters s aid the EPA won't credit Georgia's utilities for their work done in embracing carbon-free energy by building the first nuclear unit since
Three Mile Island.

Commenters stated in Georgia, the two new state-of- the-art reactors will produce approximately 2,200 megawatts of reliable emissions-free electric ity around the clock, EPA's approach to new nuclear units like these in Georgia is unacceptable . Commenters said if EPA's objective is to reduce CO2 emissions, then EPA should not penalize the citizens of Georgia for investing billions in more nuclear power by not giving us ful l credit for this carbon-free energy source.

Commenters stated initially, Georgia Power and othe rs committed to be the first in the nation to construct new nuclear in almost 30 years. Commente rs said while other utilities will benefit from the path paved by Vogtle's units 3 and 4, GA t ook this step with hopes of enhancing fuel diversity and addressing future CO2 requirements.

Commenters said yet, rather than reward the expansi on of zero-carbon generation, EPA guidelines penalize Georgia for its early action; b ecause of Vogtle's units 3 and 4, EPA requires more aggressive reductions from Georgia than any ot her similarly situated state.

Commenters said in fact, EPA admits that it ignores the investment they are making in Vogtle 3 and 4, yet it relies on the CO2 reduction in settin g Georgia's limits. Commenters said as a result, EPA's proposal forces Georgians to take on a signif icant additional cost of further reduced CO2.

Commenters stated EPA has proposed building blocks to help states achieve lower emissions; however, many of these assumptions for these buildi ng blocks are not a good fit for South
Carolina. Commenters said the most critical in ter ms of cost is the way the proposal treats new nuclear already under construction.

Commenters said the new nuclear project with South Carolina Electric and Gas will cost about $10 billion, and South Carolina electric consumers are already paying into the project. Commenters said by considering these under-construc tion units as if they are already built, and in doing so setting the goal more restrictively, EP A is punishing South Carolina for being proactive in its CO2 reductions and investing early in this project. Commenters said EPA should not count under-construction nuclear as a part of t he state target, but should allow it to be used for compliance with the revised target. Commenters said this approach would give South Carolina full credit for its efforts, and the custo mers would not bear the burden of paying for
additional reductions.

Commenters stated two specific concerns: first, und er construction, nuclear should not be included in the calculation of state goals. Commen ters said EPA's inclusion of Vogtle 3 and 4, in setting Georgia's performance standard, is unfair a nd misguided; rather than rewarding states and utilities, like Georgia, that are the early movers in permitting and construction for this important type of zero-carbon emission generation, EPA's incl usion of under-construction nuclear in calculating state goals serves, instead, as a penal ty. Commenters said Georgia utilities and the412

consumers should not be penalized for stepping up a nd spending over $14 billion on Vogtle 3 and 4, which will provide the state 2,200 megawatts of power with zero CO2 emissions; this is blatantly unfair.

Commenters stated the current proposal does not all ow us to consider the new V.C. Summer nuclear units coming online in 2018 and 2019 as par t of the efforts to reduce the carbon emissions, and that plan is being built by South Ca rolina Electric and Gas -- SCANA is the parent company -- and by Santee Cooper, who is the power supplier.

Commenters stated the early action to build the V.C . Summer nuclear plants, and actually displace or eliminate some of the capacity with the nuclear stations, is not being included in these numbers at all, and it places a big burden on South Carolina, as far as money and reaching the target reductions is concerned.

Commenters stated another factor in the unfairness of Georgia is how the rule ignores the efforts in building two new emission-free nuclear plants.

Commenters stated Plant Vogtle is undergoing the co nstruction of two new nuclear reactors, units 3 and 4. Commenters said Georgia rate-payers, including manufacturers, have been paying the financing costs already for this construction, which is due now to come online in 2017 and 2018; and they will be responsible for the substant ial end-service cost once those units become operational.

Commenters said Vogtle 3 and 4 is a major investmen t in Georgia's future; and it will contribute to lower CO2 emissions; however, the rule penalizes Georgia for that decision by using the fact that Vogtle 3 and 4 will lower CO2 emissions to jus tify a higher emissions reduction target. Commenters said this essentially gives Georgia no c redit for the construction of Vogtle 3 and 4
when it comes to CO2 emissions.

Commenters also supported the preservation and upgr ade of the existing nuclear fleet; this could offer significant zero carbon power if the investme nts can be justified. Commenters said EPA notes the potential of new nuclear but also notes t he impact of schedule on state plans. Commenters noted that SCANA and Southern Company ha ve announced multi-year delays since the draft rule was published which will clearly cha nge the South Carolina and Georgia proposal by EPA and further shows the risks inherent in such planning.

Commenters stated also in Building Block 3 (Using a n Expanded Amount of Less CarbonIntensive Generating Capacity) the EPA has proposed that Nuclear Under Construction is assumed to be already built and operating and is in cluded in the state goals. Commenters said
there are five nuclear units under construction in the country; two of these units (V.C. Summer 2 and 3) are located in South Carolina and are 40 per cent owned by Santee Cooper, the primary power supplier. Commenters said the proposed rule g ives absolutely no credit for Santee Cooper's investment in the two 1100 MW Westinghouse nuclear units, with a combined expected price tag of over $10 Billion; instead of being credited for being at the vanguard of clean emissions investment, the State of South Caro lina receives a penalty. Commenters said this single provision of the EPA rules results in South Carolina's target CO2 level decreasing from 990 lbs/MWh to 772 lbs/MWh, and will cost an estima ted $8.7 Billion to the membership.413

Commenters said this cost is in addition to the bil lions of dollars which the membership will pay for the new non-emitting nuclear units. Commenters said they are paying twice for the same
carbon reduction. Commenters said the EPA made the decision to include these units within the
BSER based on its unsubstantiated and undocumented conclusion that there is "no incremental
cost" associated with CO2 emissions reductions avai lable from the completion of units under
construction. Commenters said the conclusion seems to rest solely upon the observation that the "decisions to construct these units were made prior to this proposal." Commenters said the true "incremental cost" to the customers paying for thes e Nuclear Under Construction investments is
the additional cost of carbon reduction over and ab ove the costs that will be incurred due to those
commitments.

Commenters stated as a practical matter for those s tates which have nuclear under construction, the EPA assumption that the plants will be complete d places an additional burden on those states over and above the huge price tag that must be paid for paying twice for carbon reduction.
Commenters said the new nuclear units at V.C. Summe r when fully operational will produce approximately 16 million MWh of power annually; thi s amount is more than all of the proposed redispatched NGCC in 2029 and far greater than the amount of renewable generation that the EPA has targeted for South Carolina in 2029 (9,675, 000 MWh). Commenters said this is a massive amount of clean, carbon free capacity and e nergy which the state is assumed to have available; any inability to build the units or keep them on line represents a huge, and almost insurmountable, regulatory compliance risk to their members.

Commenters stated EPA's treatment of Nuclear Under Construction as completed is especially arbitrary when the treatment of other non-hydro ren ewables is examined; all non-hydro renewable MWhs generated during the plan period are allowed as compliance resources, regardless of in-service dates. Commenters said the EPA offers no explanation for the disparate treatment of non-carbon emitting resources. Comment ers asserted the failure to treat Nuclear Under Construction in a similar manner to non-hydro renewables is arbitrary and capricious and is beyond statutory authorization, and strongly enc ourages the EPA to alter its proposed rule to
allow credit for Nuclear Under Construction.

Commenters stated EPA's treatment of Nuclear Under Construction is also arbitrarily inconsistent with U.S. energy policy. Commenters sa id expansion of nuclear energy was part of both of the last two major pieces of energy legisla tion (the Energy Policy Act of 2005 (EPAct) and the Energy Independence and Security Act of 200 7 (EISA)). Commenters said President Obama has repeatedly and very publicly expressed hi s support for new nuclear energy. Commenters said despite this clear expression by bo th Congress and the President, the proposed rule punishes South Carolina for its actual expansi on of nuclear capacity.

Commenters stated the proposed rule includes the ou tput from yet-to-be-completed nuclear units in the calculation of the state goal for "existing units, even though the units will not produce any power until years after the final rule is released. Commenters said this treatment of nuclearunder-construction is particularly troublesome beca use of the extreme lead-time needed to permit and construct these units; if the process of buildi ng these units had begun after the release of the proposed rule (when they would be treated totally d ifferently), the very earliest to expect to receive power from those plants would be around 202 5 ... 5 years after the beginning of the intermediate goal required by the proposed rule. Co mmenters said this inconsistent treatment has414

disproportionately increased the amount of CO2 emis sion reductions that South Carolina must
achieve.

Commenters stated in contrast, states that have uti lities which have begun but not finished wind and solar projects are rewarded by EPA because thos e sources and the future carbon emissions reductions they are expected to achieve are not "as sumed" and therefore can be used to effectively meet a state's goal. Commenters said if investment in nuclear is not afforded the same net benefit as all other zero emitting generation t owards meeting the State goal, then utilities in
South Carolina will be forced to build additional a lternative carbon-free generation to offset carbon emissions from fossil fuel generation and co nsumers will be forced to pay twice for carbon reductions just because they invested early in one carbon-free technology instead of
another.

Commenters stated that the EPA Should Not Include U nder Construction Nuclear Units in State Goal Computations.

Commenters continued the EPA has proposed that the projected generation provided by five nuclear units currently under construction be facto red into the state goals for the respective states
where the under construction units are located. Com menters said the EPA is making this proposal because of its belief "that since the deci sions to construct these units were made prior to this proposal, it is reasonable to view the increme ntal cost associated with the CO2 emission reductions available from completion of these units as zero for purposes of setting states' CO2 reduction goals." Commenters opposed the EPA's prop osal to incorporate the projected generation from under construction nuclear units in state goal computations. Commenters said in addition to exceeding the EPA's authority under sec tion 111(d) of the CAA to include under
construction nuclear in its BSER determination for fossil fuel-fired EGUs, the only thing the proposal achieves is to make the goals for South Carolina, Georgia, and Tennessee significantly more stringent. Commenters said penalizing these st ates for supporting the continued development and deployment of nuclear power, the si ngle largest CO2 reduction option available within the power sector, in a rule intended to redu ce CO2 emissions within the power sector, is misguided from a policy perspective. Commenters sa id including generation from the under construction nuclear units in the state goal comput ations also introduces a significant risk of noncompliance if the units are either not completed , or are completed but do not perform as the 90 percent capacity factor the EPA has assumed. Co mmenters said if the EPA proceeds with finalizing its Proposed Guidelines, it should do so without including in the goal computations for South Carolina, Georgia, and Tennessee any contribu tion from the under construction nuclear
units. Commenters said the EPA should also make itclear that if the units are completed, their output should be available to the states for compli ance.

Commenters stated nuclear generation is undervalued in the marketplace; states need to join Georgia and South Carolina and recognize the import ance of the nuclear fleet and adopt policies that will allow us to develop reactors like we're d oing. Commenters said unfortunately, the rule doesn't go far enough; in fact, the new rule, most likely, will make us even more dependent on natural gas.

Commenters stated a simple calculation illustrated recently by FERC Commissioner Norris demonstrates that the country's gas fired fleet alr eady emits more CO2 than our 2050 national415

target. Commenters said it seems paramount that any rule must substantially incent new and existing nuclear power far more than this rule does . Commenters said the rule's evaluation of the cost and impact of new requirements assume that Pla nt Vogtle's Units 3 and 4 add zero dollars to Georgia's CO2 reduction efforts. Commenters said th is rule assumes that the Georgia PSC and Vogtle owners did not consider the cost of carbon a t all when they certified Plant Vogtle as a carbon free emitting resource; nothing could be fur ther from the truth.

Commenters stated in fact, their ongoing monitoring of this plant continues to consider the cost of carbon every 6 months, but you can bet the cost is not zero dollars, as this rule assumes.

Commenters stated the Southeast is uniquely impacte d by building block 3 in the treatment of nuclear units under construction. Commenters said g eneration fleets across the Southeast have been transitioning to supply electricity with lowercarbon emissions. Commenters said for TVA, this has meant relying more on renewable energy res ources, natural gas-fired generation, and, importantly, nuclear energy.

Commenters said TVA is completing construction of a second unit at its Watts Bar Nuclear Plant in Tennessee; billions of dollars have been investe d in this carbon-free resource and when Watts Bar unit 2 comes online in late 2015, it will be th e first new nuclear unit in the twenty-first century and provide nearly 10,000 gigawatt hours of emission-free generation per year.

Commenters said Watts Bar 2 is an integral componen t of TVA's goal to achieve a more balanced, cleaner portfolio of energy resources.

Commenters expected this investment to give TVA a g ood start toward complying with the carbon emission regulations. Commenters said under EPA's rule, as proposed, that does not happen; rather, TVA and the utilities with nuclear units under construction are handicapped because the generation for these units is used to s et more stringent limits on the affected fossil fleets in our states. Commenters said rather than g aining compliance margin under the proposed rule, Tennessee, TVA, and Tennessee's compliance ri sks are increased; that's not right, and that's poor environmental policy.

Commenters stated EPA asserts that there's flexibil ities for states to use some, none, or all of the building blocks in crafting the state plans; but in states where nuclear is under construction, they have no valid options to assuage the impact of this block due to its size. Commenters said any single source making this much contribution to a st ate's reduction provides a compliance risk to the region. Commenters said the proposed rule effec tively punishes this early action in investments by ratepayers by creating a big complia nce risk.

Commenters stated utilities should not be penalized for investment already made in zero carbon emissions sources, such as nuclear. Commenters said PowerSouth has committed to participating in the expansion of the Southern Nuclear Vogtle Nuc lear Plant near Augusta, Georgia through a Purchase Power Agreement with Municipal Electric Au thority of Georgia and PowerSouth will receive approximately 125 MW of energy from the uni ts for 20 years. Commenters said the CPP
includes under construction nuclear units when calc ulating state's goals; rather than penalizing these voluntary investments in nuclear generation, EPA should reward these efforts and treat
under construction nuclear like future nuclear unit s.416

Commenters stated the draft rule cancels out the be nefits of nuclear development. Commenters said the draft rule penalizes for advancements and ignores the significant investment by making Georgia's goal more stringent than otherwise compar able states to account for operation of these new units. Commenters said penalizing states for be ing proactive sends the wrong message to future commissions. Commenters said instead, Georgi a should be credited for its foresight by treating Vogtle Units 3 and 4 the same as other fut ure nuclear units that are not yet under construction- available for compliance with, but no t incorporated into, the state goal.

Commenters stated EPA's approach to 'under-constru ction' nuclear generation is flawed and
should be revised.

Commenters said EPA has proposed to include the exp ected zero-carbon generation from five new nuclear reactors in the state goals for Georgia , South Carolina, and Tennessee. Commenters
said EPA assumes that each of these reactors will b e built before 2020, and will operate at an average 90 percent capacity factor during both the interim and final compliance periods; this approach is problematic for several reasons.

Commenters said first, the sheer size of these unit s means that their contribution to the emission targets of their host states is extremely significa nt; the inclusion of the full expected megawatthours (MWh) of generation from these facilities in state goals thus creates a large compliance
risk for these states. Commenters said construction delays, temporary shutdowns, unexpected maintenance outages-all of which are typical for nu clear reactors-could mean that generation from these units could fall short of EPA's assumpti ons by many millions of MWh during some compliance periods (particularly the short three-ye ar compliance period EPA proposes for final state targets).

Commenters added due to the complexity of the techn ology and the potentially significant consequences of making an error, operators of nucle ar reactors typically require months or years to bring a new facility fully online; therefore, itis far from certain that these facilities, if buil t, will operate at an average capacity factor of 90 pe rcent during the interim compliance period. Commenters said although EPA is correct that the in dustry-wide average capacity factor across the entire nation was approximately 90 percent in 2 013, this snapshot hides significant differences in average capacity factors among react ors and over an individual reactor's lifetime. Commenters said for example, the average capacity f actor of existing nuclear reactors over the last 30 years in the United States is only 78 perce nt; similarly, one quarter of U.S. nuclear facilities operated at an average capacity factor o f only 70.8 percent over the last three years.

Commenters said because of the large size of the fi ve under-construction reactors, overly ambitious or mistaken assumptions about their futur e capacity factors could substantially and unreasonably increase the stringency of state goals . Commenters said EPA should reduce the assumed capacity factor for under-construction faci lities to account for the distinct possibility that they will operate at capacity factors of 70 pe rcent or lower during some compliance periods. Commenters said in addition, EPA should allow state s with under-construction nuclear facilities to recalculate their targets after promulgation of the final rule if these large projects are significantly delayed or shut down due to unforesee n circumstances that are beyond the state's control. Commenters said such a "safety valve" woul d ensure that these states' proactive efforts417

to construct zero-carbon generators do not unintent ionally become significant liabilities as a result of the Proposed Rule.

Commenters said finally, regardless of what approac h EPA takes, it should recalibrate the interim targets for states hosting under-constructi on nuclear facilities to account for the possibility that these units may not be operating a t full capacity in the early years of the interim compliance period. Commenters said by gradually pha sing in expected generation from these units (as it proposes to do for RE and EE), EPA can help mitigate the risk that these massive clean energy projects will be delayed or unable to reach full capacity by the start of the first compliance period."

Commenters disagreed with EPA's proposal to include under-construction nuclear units in the calculation of a state's goal. Commenters said EPA states that "since the decisions to construct these units were made prior to this proposal, it is reasonable to view the incremental cost
associated with the CO2 emissions reductions available from completion of these units as zero for the purposes of setting states' CO2 reduction g oals." Commenters said while the decisions to initiate construction of these units did precede th e Proposed Rule, the units are not anywhere near completion and their ultimate commercial opera tion dates are unknown. Commenters said furthermore, federal actions to limit the emissions of CO2 from the power sector were already
under consideration when the decisions to initiate construction were made. Commenters said the owners and their regulators undertook the additiona l costs of nuclear generation in large part to be better positioned to comply with those anticipat ed federal actions; customers of the owners of
the five under-construction nuclear units are alrea dy paying, and will be paying for the life of the units, for the CO2 reductions due to their operatio n.

Commenters said the inclusion of the under-construc tion nuclear units in the emission rate goal
calculation for the affected states results in subs tantially more stringent goals; Georgia's target is 14% more stringent, South Carolina's is 22% more st ringent, and Tennessee's is 14% more stringent than would otherwise be the case, absent their under-construction nuclear units. Commenters said furthermore, it is certain that at least some of the new nuclear units that EPA proposes to include in state CO2 goal computations will face additional hurdles during operation that will reduce their ability to generate MWh on t he schedule and at the level that EPA assumes in setting state targets; for example, new faciliti es typically require lengthy testing and finetuning periods before they are able to run at their designed capacity factor. Commenters said in addition, individual facilities may not operate at the 90% capacity factor EPA uses in the calculation during extended periods because of the need to refuel or due to other planned and unplanned outages. Commenters said a typical reacto r must refuel at least every 18 months: a shutdown usually lasting six weeks or more. Comment ers said shutdowns for maintenance, uprates, or safety issues can last much longer: on the order of six months or more. Commenters said as construction continues, the risk remains th at additional challenges in fabrication, assembly, delivery, and installation of structural modules, delays in the receipt of the remaining permits necessary for the operation of these units, or other issues could arise and might further impact project schedules and costs. Commenters said finally, events occurring far from the under-construction units that affect nuclear genera tion (e.g., the tsunami-induced meltdown at the Fukushima Daiichi reactor in Japan) could lead to mandatory design changes, additional regulations, and shutdowns that could significantly impact the timing and quantity of electricity produced by the under-construction nuclear units.418

Commenters said EPA's proposal to include generatio n from under-construction nuclear units in the calculation of state goals is also unfair and a rbitrary because it is markedly different from EPA's treatment of renewable energy, even though bo th generation technologies' ability to reduce emissions from the power sector is the same.

Commenters said while EPA's proposed calculations f or building block 3 assume that every state that has committed to constructing new nuclear capa city will do so, EPA does not similarly
assume that states with commitments to ambitious re newable energy policies (e.g., through a state Renewable Portfolio Standard (RPS)) will foll ow through with their own RPS policies. Commenters said unlike Georgia, South Carolina, and Tennessee (the states with underconstruction nuclear units), EPA's building block 3 goals for states with RPSs are not based on the level of renewable energy to which these states have committed (in their own RPS schedules); for example, Minnesota's goal is 30% by 2020, yet EPA's goal-setting methodology requires Minnesota to only reach 15% of its in-stat e generation from renewable resources by
2030.

Commenters said EPA has not explained why it has ar bitrarily increased the stringency of the emission goals for states with under-construction n uclear units by assuming they will fully complete the construction and have the units at ful l operation by 2020, while not also building into state goals states' commitments to build signi ficant amounts of new renewable energy. Commenters said this inconsistency is further under scored by the fact that renewable energy commitments are enforceable through regulations ass ociated with the RPS, while the
commitments to build new nuclear is not mandated th rough any state regulatory requirement.

Commenters believed all under-construction, non-CO2 -emitting generation sources be excluded from a state's goal calculation in building block 3 , while their output should be allowed to receive credit in compliance calculations, again in accordance with NARUC's resolution on this topic.

Commenters quoted the EPA: "We request comment on w hether it is appropriate to reflect completion of the five identified nuclear EGUs curr ently under construction in the state goals and on alternative ways of considering these units when setting state goals."

Commenters responded:

• No, this is not appropriate.

• If EPA considers development of nuclear energy partof a BSER, you should simply calculate an expected growth rate in nuclear generation between now and
2030.

• That growth rate would likely be quite small, but i t would be a much more fair method than a plant-by-plant approach.

• EPA should note that there are many ways to increas e nuclear generation beyond construction of new plants. Many projects to increa se the generation of existing plants ("uprates") have been pursued over the last 4 decades, and these uprates419 have resulted in increased nuclear generation equiv alent to many new plants. Increases in capacity factor since 1980 have also c aused increased yearly nuclear generation equivalent to many new plants.

• The current approach, identifying particular plants , perpetuates the incorrect sentiment that the costs of nuclear power are uniqu ely high and problematic.

• The current approach also unfairly modifies the Sta te Goals of 3 particular states."

Commenters quoted the EPA: "We invite comment on al l aspects of the approach discussed for treatment of nuclear generation. In addition, we sp ecifically request comment on whether we should include in the state goals an estimated amou nt of additional nuclear capacity whose construction is sufficiently likely to merit evalua tion for potential inclusion in the goal-setting computation.

Commenters responded that:

• No, this is not appropriate.

• Judgments of the likelihood of construction of part icular plants cannot be fairly quantified.

• This approach, involving the identification and ass essment of particular construction projects, would again represent the us e of an unfair plant-by-plant approach that is not consistent with other building blocks of the BSER.

• This approach would again result in unfair modifica tions to the State Goals of particular states. This approach would be even more unfair than the approach reflecting completion of the five nuclear EGUs abov e, since it would be inherently speculative.

• The intent of this approach could be satisfied by c alculating an expected growth rate in nuclear generation between now and 2030, as suggested above.

Commenters stated three states have new nuclear pla nts under construction; these plants will not begin operation until after EPA is scheduled to iss ue the final rule; however, EPA has prematurely included this carbon-free generation in establishing these state goals. Commenters
said EPA's treatment of these new nuclear units has lowered the emission rate goals for each of these states, ignoring the practical difficulties a ssociated with such projects; also, developing a new nuclear power plant could take about 15 years f rom inception to operation; hence, the 2030 deadline for compliance with the CO2 goal will not likely incentivize any additional nuclear
units.

Commenters provided the following recommendations:

a. New nuclear generation should be excluded from buil ding block 3 when determining state emission rate goals and instead should only b e considered as an eligible action for compliance purposes.420

b. New nuclear generation should remain an eligible ac tion.

c. Given the long lead time for development and construction of a nuclear generation unit, EPA should consider new nuclear generation as an el igible action if construction has commenced prior to the end of the compliance period . If a nuclear unit or uprate is under construction prior to 2030, the predicted CO 2 reduction or MWh benefits should be credited in 2030, as a way to further promote new n uclear generation.

Commenters stated in addition to the expanded use o f renewables, EPA recognizes that increasing the amount of nuclear capacity that is a vailable to operate is a technically viable approach to reducing CO2 emissions from affected fo ssil fuel-fitted units; thus, new nuclear and nuclear up rates performed in the future will be cr editable towards compliance. Commenters supported this approach to addressing new nuclear a nd nuclear unit up rates; however, EPA is proposing to include new nuclear generation under c onstruction (assuming a 90% capacity factor) in the denominator of a state goal, includi ng Watts Bar in TN, Vogtle in GA, and Summer in SC. Commenters agreed with stakeholders who beli eve that owners of first-mover new nuclear units currently under construction should not be ef fectively penalized by having the projected generation from these units included in the determi nation of the state emission goals.

Commenters cited the following from the preamble to the proposed rule:

"One way to increase the amount of available nuclea r capacity is to build new nuclear EGUs. However, in addition to having low va riable operating costs, nuclear generating capacity is also relatively expe nsive to build compared to other types of generating capacity, and little new nuclear capacity has been constructed in the U.S. in recent years."

Commenters stated however, the EPA does not appear to have performed a meaningful analysis of the costs of new nuclear; instead, the Agency ac cepted the premise that new nuclear is too expensive to be competitive and focused on the five new reactors already in construction, but
nevertheless determined the incremental cost of the ir inclusion in the rule to be zero because the states/utilities involved have already decided to b uild them, regardless of the rule. Commenters
said the draft rule includes those five reactors in the calculation of the goals for the affected states (Georgia, South Carolina, and Tennessee).

Commenters said the EPA used the same methodology w ith NGCC units currently in construction, but its application to nuclear warran ts a more substantive economic analysis because of its much greater costs; the Agency impli citly understood this, based on its assessment that the low levels of capacity additions are due t o the excessive cost of new reactors. Commenters said what is more, although the EPA did not conduct the requisite economic analysis to reach a properly informed conclusion as to the appropriateness of its approach, it does recognize that uncertainties remain regarding the u ltimate completion of the reactors:

"[W]e are proposing that the emission reductions ac hievable at affected sources based on the generation provided at the identified nuclear units currently under construction should be factored into the state goals for the respective st ates where these new units are located. However, the EPA also realizes that reflecting completion of these units in the goals has a significant421

impact on the calculated goals for the states in wh ich these units are located. If one or more of the units were not completed as projected, that cou ld have a significant impact on the state's ability to meet the goal."

Commenters said without having calculated the incre mental cost of bringing the reactors online, and by assuming it to be zero, the EPA lacks a cred ible rationale for this aspect of the rule; the significance of this defect is considerable. Commen ters said the draft rule would incentivize the states to ensure these reactors are completed by re quiring them to achieve the same emissions rate reductions, regardless of the projects' total costs nor those of the alternatives; the states would be under pressure to count the cost of includ ing the reactors in their 111(d) compliance plans as $0. Commenters said if the costs of altern ative to nuclear were greater than $0, they would appear to be less cost-effective compliance o ptions even if, in reality, they were less expensive than completing the reactors.

Commenters said furthermore, because construction o n most of the reactors is still at less than 50% complete, it would be possible to avoid a signi ficant amount of the total cost should the
states or utilities decide to cancel them. Commente rs said it is essential that the EPA calculate the cost of completing the reactors so the states m ay accurately compare it to other available alternatives; such an analysis would be complicated due to its dependency on a number of variables, from the timing of the decision, the sta ge of completion of the reactor at that time, the escalation of costs that might influence such a dec ision, the "exit costs" of canceling contracts with vendors and contractors, stranded costs, etc. Commenters said EPA's failure to recognize the need for such rigor makes it appear that the de cision to incorporate the five new reactors into Building Block 3 was arbitrary and capricious, and conclusion-driven rather than a sound policy
decision.

Commenters said based on the history of cancelled n uclear reactor projects, it is quite possible
that one or more of the five reactors in constructi on could be cancelled; of fifty-one reactors that were cancelled after commencing construction, nine were at an advanced stage of completion (50% or greater), including four which were more th an 80% complete and one which was completed but never began commercial power operatio ns. Commenters said utilities had spent a total of over $25 billion on the projects, amountin g to an inflation-adjusted (2014) $58 billion.

Commenters said the owners of both the Vogtle and S ummer projects have announced construction delays and cost overruns, and analysts predict that more can be expected; while the utilities and regulators have exhibited willingness to continue with the projects, it is quite possible they will reevaluate the projects before t he reactors begin commercial operation, even if they have reached an advance stage of completion. C ommenters said the Tennessee Valley Authority (TVA) all but cancelled the Watts Bar Uni t 2 project, suspending construction for nearly 20 years after having reached an advanced st age of construction (~80%); in addition, TVA must still receive an operating license from the Nu clear Regulatory Commission, since the reactor is being licensed under the regulations tha t were in place when TVA commenced the project in 1973. Commenters said the exceptional le vel of uncertainty that plagues nuclear reactor construction warrants a thorough evaluation of these projects.

Commenters stated based on their exceptional cost a nd the possibility that they may never be completed, the EPA should remove reactors in construction from the BSER; doing so would422

result in higher goals for the three affected state s (and therefore lower levels of emissions reductions), but the EPA has no rational basis for its decision to include them in the BSER. Commenters said however, using more realistic estim ates of renewable energy and efficiency additions, as recommended by IEER, would establish goals for these three states that are more economically and technically sound, and which would be comparable to or superior to those in
the draft rule.

Commenters stated five nuclear EGUs at three plants are currently under construction. U.S.; EPA
believes that since the decisions to construct thes e units were made prior to this proposal, it is
reasonable to view the incremental cost associated with the CO2 emission reductions available from completion of these units as zero for purposes of setting states' CO2 reduction goals (although they acknowledges that nuclear is very ex pensive and the planning for those units likely included consideration of the possibility of future regulation of CO2 emissions from EGUs). Commenters said because U.S. EPA considers c ompletion of these units at zero cost, they have determined addition of these units into t he state goals can be done at a very reasonable cost; obviously a new nuclear plant would be quite expensive and it surely benefits U.S. EPA in the cost analysis of this rule to consider these un its at zero cost. Commenters believed, at a minimum, U.S. EPA should consider the real costs of these units because absent this rule, these units would not be required to be preserved and ope rate at U.S. EPA specified levels indefinitely.

Commenters stated U.S. EPA also realizes that refle cting completion of these units in the goals has a significant impact on the calculated goals fo r the affected states and if one or more of the units were not completed as projected, the affected state could struggle to meet the goal. Commenters said therefore, U.S. EPA is requesting c omment on whether it is appropriate to reflect completion of these units in the state goal s. Commenters asserted this is another example as to why there MUST be flexibility to adjust goals in the future when there are legitimate circumstances that warrant an adjustment.

Commenters stated under construction nuclear capaci ty should be treated like "new" units for all purposes under the final rule. Commenters said the proposed rule includes under construction units in the state goal-setting calculation. Commen ters stated it is inappropriate to include nuclear generation in determining a state's carbon emission target level; rather than count under construction units in the state goal-setting calcul ation, EPA should permit states to use the entirety of the generation from such units in state compliance plans.

Commenters stated EPA's approach to setting state g oals is arbitrary and capricious; EPA should adjust South Carolina's goal to reward rather than punish the state for making significant investments in zero-carbon generation.

Block Three: EPA's Assumptions About Nuclear Genera tion Unfairly Penalize South Carolina for Taking the Lead on New Zero-Carbon Gen eration.

Commenters stated EPA's inclusion of under-construc tion and "at risk" nuclear generation in calculating state emission goals is both arbitrary and unnecessary for achieving EPA's desired
reduction in EGU emissions. Commenters said it is a lso opposed by the National Association of Regulatory Utility Commissioners (NARUC), which pas sed a resolution urging EPA not to base state goals on emission reductions from "at risk" o r under-construction nuclear generation.423

Commenters agreed with NARUC that EPA should not ca lculate state goals based on assumed
emission reductions from "underconstruction" and "a t risk" nuclear generation. Commenters said as with other forms of zero-carbon compliance optio ns, new under-construction nuclear generation, as well as uprated and relicensed nucle ar generation should, however, be an eligible compliance pathway for state plans.

Commenters stated EPA's proposal to include expecte d generation from "under-construction" nuclear facilities in calculating state goals has g enerated tremendous concerns among customers. Commenters said as of November 25, 2014, Santee Coo per has received for submission into the record over 36,000 comments from individual custome rs opposing EPA's proposed treatment of under-construction nuclear and urging EPA to provid e South Carolina full credit for building new clean nuclear power. Commenters said this high (24%) response rate is just one measure of the importance that customers place on this issue. Commenters added numerous local governments have passed resolutions expressing conc ern about the inconsistent treatment of
under-construction nuclear.

Commenters stated EPA's approach to setting state g oals is arbitrary and capricious; EPA should adjust South Carolina's goal to reward rather than punish the state for making significant investments in zero-carbon generation; EPA's assump tions about nuclear generation unfairly penalize South Carolina for taking the lead on new zero-carbon generation.

Commenters continued stating Santee Cooper, along w ith eight other utilities in three states, submitted joint comments regarding EPA's treatment of under-construction nuclear generation. Commenters said these comments provide information about the five units under construction in South Carolina, Georgia and Tennessee, discuss EPA' s proposed methodology for incorporating electric generation from these units in the rate-se tting calculation and how that approach severely penalizes South Carolina, Georgia and Tennessee, sh ow how EPA's approach is inconsistent with key aspects of our nation's energy and environ mental policies, and explain why EPA's approach is unsupported in the record, arbitrary, a nd unauthorized by section 111(d). Commenters said the joint comments request that EPA remove the under-construction nuclear units from the rate-setting calculation, and allow South Carolina, Georgia and Tennessee to receive compliance credit for emissions reductions enabled by these units when they become operational.

Commenters stated EPA's approach to setting state g oals is arbitrary and capricious; EPA should adjust South Carolina's goal to reward rather than punish the state for making significant investments in zero-carbon generation. Commenters s aid EPA's assumptions about nuclear generation unfairly penalize South Carolina for tak ing the lead on new zero-carbon generation; inclusion of 'under-construction' nuclear generatio n in states' emission goals is arbitrary and

unnecessary.

Commenters stated the current proposal is both arbi trary and unnecessary; it is arbitrary because EPA is effectively penalizing states and utilities that have made substantial investments in nuclear power-which is one form of zero-carbon elec tricity-while rewarding states that have invested in other forms of zero-carbon electricity (such as renewable energy). Commenters said it is unnecessary because states and utilities will already have strong incentives under the Proposed Rule to complete under-construction nuclear facilities and preserve existing nuclear424

capacity. Commenters said in South Carolina's case, EPA's inclusion of under-construction nuclear energy is responsible for a third of the st ate's ambitious emission reduction goal.

Commenters stated Santee Cooper's decision to inves t in zero-carbon nuclear generation rather than traditional, fossil-fueled forms of power was motivated in large part by the recognition of the need to reduce the greenhouse gas intensity of Santee Cooper's generation fleet in light of expectations that EPA or Congress would soon impose limits on the amount of greenhouse gases that could be emitted by the power sector. Commente rs said for example, Santee Cooper's resource planning decisions have for years been bas ed on assessments that a federal carbon tax or similar policy could be implemented as early as 2010. Commenters said in addition, Santee Cooper's Board of Directors adopted a policy of 40% of electricity to be sourced from nongreenhouse gas emitting generation in 2007. Comment ers said although Santee Cooper also invests in other forms of low-carbon energy and ene rgy efficiency, the decision was made to invest in nuclear energy because this investment me ets customers' needs for reliable, affordable energy while significantly reducing the generating fleet's GHG emissions.

Commenters stated EPA's proposal to include expecte d generation from these under-construction nuclear reactors is arbitrary and unfair for severa l reasons. Commenters said first, EPA arbitrarily assumes that the cost of CO2 reductions from these units is zero and that they will run at a 90% average capacity factor during each compli ance period; second, EPA's treatment of
states' commitments to and investments in nuclear e nergy is arbitrarily different from (and more punitive than) its treatment of states' commitments and investments in renewable energy (RE).

Commenters stated EPA's approach to setting state g oals is arbitrary and capricious; EPA should adjust South Carolina's goal to reward rather than punish the state for making significant investments in zero-carbon generation. Commenters s aid EPA's assumptions about nuclear generation unfairly penalize South Carolina for tak ing the lead on new zero-carbon generation. Commenters said EPA incorrectly assumes that under- construction nuclear facilities will be constructed on time, provide CO2 reductions at zero cost, and that they will operate at a minimum 90% capacity factor.

Commenters continued EPA's unsupported assumption t hat each of the under-construction nuclear facilities identified in the Proposed Rule will be constructed on time and as projected is clearly arbitrary and based on faulty assumptions. Commenters said construction of a new nuclear reactor is perhaps the most complex and hig hly regulated industrial activity any utility
can undertake in the United States. Commenters said most of the essential components of each new reactor must be specially manufactured by preci sion manufacturers who must meet the highest standards of quality and accuracy. Commente rs said each step in construction and operation is overseen by regulators at the Nuclear Regulatory Commission (NRC), and any changes to design or fabrication that may become ne cessary must also be submitted to and approved by the NRC; consequently, the complexity o f building a nuclear reactor and the significant regulatory hurdles involved in adjustin g design or fabrication assumptions can lead to significant delays and unexpected costs. Commenters said although Santee Cooper and its partners strive to construct and operate their nucl ear assets on budget and on time, such complex projects inevitably encounter unexpected setbacks a nd potential cost overruns that are outside of Santee Cooper's control; for example, the schedule for the two Summer units has been extended425

by approximately 27 months due to problems with fab rication and supply of high-tech equipment
for the facilities.

Commenters stated other reactors have experienced e ven more significant delays: the Tennessee Valley Authority's Watts Bar Unit 2-which EPA has d esignated as one of the five 'underconstruction' facilities the agency assumes will be completed by 2020-has been under construction since the 1970s, and was nearly 80% co mplete when construction was halted indefinitely in 1985, only to be resumed more than twenty years later in 2007. Commenters said although Watts Bar Unit 2's lengthy construction sc hedule may not be typical of every nuclear reactor, the fact remains that large nuclear projec ts-including those identified by EPA in the Proposed Rule-face numerous risks, long timelines, and significant potential for multi-year delays.

Commenters stated in addition, unforeseen events, s uch as the tsunami-induced meltdown at the Fukushima Daiichi reactor in Japan, could lead to a dditional shutdowns or unanticipated regulatory and design changes that could significan tly extend the schedule and reduce the amount of nuclear energy that South Carolina will b e able to produce from its under-construction nuclear facilities. Commenters said thus, although Santee Cooper and others may now be committed to building the five reactors identified in the Proposed Rule, it is possible that changes in the cost of components, in the availability of f inancing, or in state or NRC regulations could result in one or more of these projects never being completed.

Commenters stated furthermore, even assuming that t hey are ultimately built, it is reasonably
certain that at least some of the new nuclear facil ities that EPA has proposed to include in state CO2 goal computations will face additional hurdles during operation that will reduce their ability
to contribute to emission reductions on the schedul e and at the level that EPA assumes in setting state targets. Commenters said for example, new fac ilities typically require lengthy testing and fine-tuning periods before they are able to run at their designed capacity factor. In addition, individual facilities may not operate at the nation al average during extended periods because of the need to refuel or due to both planned and unfor eseen outages; for example, a typical reactor must refuel at least every 18 months-an event that requires a shutdown lasting six weeks or more. Commenters said according to the Nuclear Energy Ins titute, between 2000 and 2014, there were at least six planned outages of nuclear facilities that lasted longer than 100 days, while the average duration of planned reactor outages during this period was almost three months. Commenters said unexpected shutdowns for maintenanc e or safety issues can last much longeron the order of six months or more.

Commenters stated consequently, EPA's proposal to i nclude generation equal to a 90% capacity
factor for under-construction nuclear units in stat es' goal computations is speculative, arbitrary, and capricious; it is also contradicted by actual d ata from the industry. Commenters said although the Energy Information Administration's (E IA) reported average capacity factor for the nuclear fleet as a whole during 2013 was in the ran ge of 90%, the average lifetime capacity factor of the nuclear plants that are currently ope rating is only 80.3%. Commenters said furthermore, the 2013 fleet average capacity factor figure provided by EIA includes 21 plants with capacity factors above 100% due to the techniq ue EIA used to calculate the average; the inclusion of these outliers clearly skews EIA's res ults upward. Commenters added, over the past three years, fully one quarter of U.S. nuclear faci lities operated at an average capacity factor of426

just 70.8%. Commenters said consequently, it would be arbitrary and unreasonable for EPA to
assume that each of the under-construction reactors will run at an average capacity of 90%- particularly over the shorter, three-year window th at EPA proposes for the "final" compliance period.

Commenters stated EPA itself has acknowledged that including under-construction nuclear units in a state's target puts the state on a tight-rope for compliance with its target; nuclear capacity is added in much larger increments than other zero-emi tting resources and therefore each unit has a substantial impact on the calculation of a state's target. Commenters said a single underconstruction nuclear unit operating significantly b elow a 90% capacity factor could make it impossible for a state to meet its emission rate target."

Commenters stated EPA's Proposed Rule substantially understates the significant investments that Santee Cooper has made in low-carbon generatio n; in particular, EPA's assertion that the 'incremental' cost of building these reactors is ze ro180 is erroneous for several reasons. Commenters said first, EPA fails to recognize the f act that Santee Cooper's decision to invest in nuclear power rather than other available technolog ies was driven in no small measure by the fact that nuclear power provides significant baselo ad generation without the CO2 emissions that come with traditional baseload technologies such as coal and natural gas; in fact, constructing and operating the Summer units instead of equivalen t amounts of natural gas generation could result in an incremental cost of $54/metric ton of CO2 avoided-well above EPA's estimates for the other building blocks.

Commenters stated current estimates are that comple ting construction of the Summer units will cost $10 billion; in addition, it is possible that that complications during construction could increase these costs beyond current projections or require renegotiation of commercial contracts. Commenters said without the Proposed Rule, stakehol ders in these projects would have the option of delaying, modifying, or abandoning the pr ojects if costs reach unacceptable levels; however, the inclusion of expected generation from under-construction reactors in state goals could force these stakeholders to continue expendin g their resources even if delays or cost
overruns would otherwise make construction of the u nits uneconomical. Commenters said therefore, if the Proposed Rule is finalized as is, it could be directly responsible for many of the costs that will be incurred in completing these uni ts; EPA should at the very least reflect these real, incremental costs in its evaluation of this a spect of BSER.

Commenters stated moreover, preliminary modeling fo r South Carolina, using a 2% growth scenario, indicates that EPA's proposal to include under-construction nuclear facilities in the calculation of South Carolina's goals could result in approximately an $8.7 billion increase in South Carolina's expected compliance cost, compared to the cost of compliance if EPA were to exclude under-construction nuclear from the goal. C ommenters said complying with the rule as proposed could cost South Carolina approximately $1 7.5 billion-a figure that is almost double the cost of compliance without under-construction n uclear. Commenters said the impacts of
these additional costs on South Carolina consumers will be significant; even assuming modest (1%) load growth, the model estimates that inclusio n of under-construction nuclear in the
baseline could raise costs for residential customer s by $99 per customer per year. Commenters
said costs for commercial and industrial customers could be even higher: the average commercial customer in South Carolina could face a $461 increa se in its annual electricity bill as a result of427

including under-construction nuclear in the goal, w hile the average industrial customer could face an incremental increase of $47,815 per year as a result of EPA's approach to underconstruction nuclear.

Commenters stated EPA's assumption that states can obtain CO2 emission reductions from the
five under-construction reactors identified in the rule at no cost is unreasonable and contrary to
the factual record. Commenters said EPA's failure t o consider the cost of this supposed "system of emission reduction" despite the agency's statuto ry and regulatory obligation to consider costs is yet another reason why inclusion of under-construction nuclear generation in state goal-setting exceeds EPA's authority.

Commenters stated for all of these reasons, it woul d be arbitrary, capricious, speculative, and unreasonable to include generation from unbuilt, un der-construction nuclear facilities in states' emission goal calculation-particularly given EPA's assumption that these units will be in operation by 2020 and that they will operate at a 9 0% capacity factor in each of the compliance periods.

Commenters stated EPA's treatment of under-construc tion nuclear generation is also arbitrarily
different from its treatment of other sources of nu clear energy.

Commenters continued under EPA's proposal, 5.8% of a state's existing nuclear capacity would be included in the state goal calculation. Commente rs said uprates at existing facilities-even those that were planned, approved or under construc tion before issuance of the Proposed Rulewould not be included in the goal calculation at al l, although the MWh from these uprates would be eligible for use as a compliance option. Comment ers said new nuclear generation (i.e., generation that had not commenced construction as o f June 18, 2014) is not included in the state goal calculation either, but can be used for compli ance.

Commenters stated it is unreasonable and arbitrary to treat emission reductions from the five "under-construction" nuclear facilities differently from these other sources of nuclear energy; according to the NRC, sixteen separate uprate proje cts have been approved between May 2012 and August 2014. Commenters said of these, eight we re designated as "extended" uprates, which signifies that substantial construction and equipme nt upgrades would be involved. Commenters
said like the "under-construction" reactors identif ied by EPA, none of these uprates was fully operational during EPA's proposed 2012 baseline yea r, and some are likely still under construction; yet unlike for under-construction nuc lear, the expected MWh from these underconstruction uprates-some of which will add substan tial capacity to existing facilities-was not
included in states' baselines.

Commenters stated furthermore, the NRC is currently reviewing applications to construct twelve new nuclear reactors-most of which are currently pr ojected to come on line during the Proposed Rule's interim compliance period. Commenters said g eneration and potential emission reductions
from these units also was not included in states' b aselines, despite the fact that a number of these projects are in advanced stages and could begin con struction in the next few years.

Commenters stated neither the under-construction nu clear reactors identified in the Proposed Rule nor the under construction uprates and propose d new nuclear reactors was generating power428

during EPA's chosen baseline year, yet each of thes e sources of nuclear generation categories have, in EPA's words "long been known to grid opera tors for planning purposes." Commenters said consequently, EPA should not treat the five de signated under-construction reactors differently from these other planned sources of zer o-carbon electricity. Commenters said as it has done for nuclear uprates and proposed new nuclear f acilities, EPA should exclude any projection of future capacity from the five under-construction reactors from BSER and from the state goal computation; furthermore, if these five "under-cons truction" units are ultimately constructed, they should be treated just like any other new, nuc lear resource for purposes of compliance. Commenters said that is, generation from these faci lities should count toward compliance in the same way that generation from new uprates or reacto rs would be counted; to do otherwise would be both arbitrary and capricious.

Commenters stated the inclusion of under-constructi on at at-risk nuclear generation in state goals is not necessary to encourage states to complete co nstruction or preserve at-risk reactors.

Commenters stated because EPA's emission goals will increase the cost of fossil-fueled electricity relative to zero-carbon electricity, So uth Carolina and other states will have strong incentives to complete construction of the five und er-construction nuclear units identified in the Proposed Rule and to build more if the costs are ju stified; thus, states and utilities will already have a strong incentive to complete construction of the five under-construction nuclear reactors. Commenters said moreover, excluding the five under construction units from state goals would have a negligible impact on the Proposed Rule's con tribution to emission reductions. Commenters said these units account for only 1.4% o f the total 2030 generation that is accounted for in the Proposed Rule; were EPA to treat the fiv e under-construction reactors as new units (excluding them from the goal calculation, but allo wing states to count MWh produced by these units toward compliance if they are built), the nat ional emission rate target would be only 1.2% higher in 2030 than under the rule as proposed.

Commenters stated the inclusion of at risk nuclear generation in states' emission goals is also unnecessary to encourage states to preserve their e xisting capacity; as with under-construction nuclear, the imposition of CO2 emission limits on t he power sector will naturally incentivize
states and affected entities to favor lower-carbon power sources, including existing nuclear facilities. Commenters added, states that fail to p reserve their nuclear capacity will be incentivized to replace that lost capacity with oth er low-carbon generation or energy efficiency because replacement of lost zero-carbon generation with fossil-fueled generation would make it
more difficult for the state to meet its emission t arget.

Commenters stated moreover, if EPA persists in incl uding either under construction or at risk nuclear generation in states' goals, it is possible that states and ratepayers would effectively pay
twice for the loss of one of these nuclear faciliti es. Commenters said this is because the state would be unable to count the expected MWh from the under construction or at risk nuclear facility toward compliance, and would also be requi red to replace the lost nuclear generation with fossil generation or costlier low-carbon alter natives.

Commenters stated a major, proactive step taken by South Carolina has been the investment in new zero carbon emitting nuclear power; significantincentives for nuclear power were included in the Energy Policy Act of 2005. Commenters said t ogether with volatile fossil fuel prices and429

the possibility of greenhouse gas regulation, these federal incentives helped drive a renewed interest in nuclear energy, as was the case in Sout h Carolina. Commenters said South Carolina Electric and Gas Company (SCE&G) and Santee Cooper signed a contract to build two new
nuclear units at the V.C. Summer Nuclear Station on May 23, 2008. Commenters said in testimony provided before the South Carolina Public Service Commission (PSC) on March 2009, SCE&G's President stated that adding these two unit s might allow his company to reduce its reliance on an aging fleet of coal-fired plants; in cluded in the testimony were statements suggesting these new units could not only allow for the retirement of some of the less efficient plants but also insulate customers from future CO2 regulation and other environmental compliance costs associated with fossil fuels.

Commenters stated the EPA's Clean Power Plan propos al invited comment on whether new nuclear capacity should be reflected in setting the state goals; the EPA further noted that reflecting the completion of the new under construc tion units would have a significant impact on the calculated goals for the three states in which these units were located: Tennessee, Georgia
and South Carolina. Commenters said the EPA states in the preamble, "The EPA believes that
since the decisions to construct these units were m ade prior to this proposal, it is reasonable to
view the incremental cost associated with the CO2 e mission reductions available from completion of these units as zero." Commenters said it is important for the EPA to understand that, to date, less than one half of the costs of t he new nuclear units in South Carolina has been incurred, so a significant cost remains to support the completion of these units; further, only the financing costs are currently being paid and the pr incipal will be paid off over the estimated 60 year lifetime of the new nuclear units. Commenters said there is clearly an incremental cost for
these new units that will be added to customer bill s to pay for the zero carbon emitting units once they come online.

Commenters stated the EPA's proposal specifically a dds the under construction nuclear generation into the denominator of the goal equatio n which has the effect of increasing the stringency of the emission rate goals for states wi th under construction nuclear units; although
states can use the under construction nuclear units in their compliance demonstration, inclusion of it in setting the state goal removes appropriate credit, or in reality, becomes a wash. Commenters said in addition, these states with unde r construction nuclear units continue to have an equivalent amount of renewable energy and energy efficiency capacity included in their goal calculation; as a result of this, and as the EPA co rrectly noted in the proposal, the goals for Tennessee, Georgia and South Carolina are significa ntly more stringent. Commenters recommended a more appropriate application of under construction nuclear generation in the final rule that will treat this generation in a man ner consistent with other states planned or under construction renewable fuel generation; specificall y, the EPA does not add existing or underconstruction renewable energy into a state's final goal calculation and allows it to fully count towards compliance.

Commenters stated if the EPA revises its approach f or under-construction nuclear generation in the final rule as requested above, it is important for the EPA to recognize that South Carolina
will still have to find additional CO2 emission red uctions to achieve its revised goal. Commenters said additionally, South Carolina's revi sed goal would be 991 lbs CO2/MWh which would bring South Carolina's goal closer to the pro posed emission rate required for new sources430

under Section 111(b); this would be more consistentwith previous application of Section 111 which allowed less stringent standards for existing sources.

Commenters stated the President's remarks announcin g the Climate Action Plan identified the importance of nuclear power in securing the country 's energy future; recognition was given to Georgia and South Carolina for leading the way in a renaissance of nuclear power. Commenters
said the Climate Action Plan also identified the co mmitment to develop safe and secure use of nuclear power, including the management of nuclear wastes that are a byproduct of nuclear energy. Commenters said it is critical that these w aste issues be adequately addressed including consideration of impacts to environmental justice c ommunities. Commenters said as noted in a September 9, 2014 letter, to President Obama from 1 5 State Governors, including Governor Haley, support for both current, under-construction and future planned nuclear plants must have a viable, long-term solution for nuclear waste disp osal; otherwise, this zero carbon emitting
resource cannot be considered a viable tool for red ucing GHGs.

Commenters stated, "The EPA has appropriately recog nized that available nuclear units will be dispatched before fossil fueled generation. This is due to their low variable operating costs. In South Carolina, the two UCN units represent 2200 MW of zero carbon electric generation that will displace or eliminate the need to construct a similar amount of electrical output from fossil fuel generation. Because the capacity factor of nuc lear is among the highest of all sources of generation, this new capacity will have the effect of offsetting a significant amount of base load generation that would otherwise be provided by foss il fuels."

Commenters stated the EPA's treatment of UCN genera tion in the proposed rule is a disincentive for the development of additional new nuclear gener ating capacity; in addition, it is inconsistent with the Administration's recognition of nuclear ge neration as a source of carbon free electric generation and the President's recognition of the l eadership that South Carolina and Georgia have
taken. Commenters said if the EPA's final rule does not provide meaningful credit for the actions taken by South Carolina and Georgia to develop addi tional nuclear generating capacity for the purpose of reducing GHG emissions, it potentially p uts in jeopardy the future of all additional
new nuclear units. Commenters said there are curren tly 23 new nuclear units that are under review by the US Nuclear Regulatory Commission thatcould add more than 23,000 MW of carbon free generation.

Commenters stated another major disincentive for th e growth of nuclear energy applies to both existing and UCN energy; the EPA must consider in i ts Environmental Justice analysis the appropriate disposal of nuclear waste and potential impacts on communities. Commenters suggested that the EPA work with the Nuclear Regula tory Commission to seek a congressional solution to resolve the nuclear waste disposal issu es confronting the country. Commenters said as noted in a September 9, 2014 letter to President Ob ama from 15 State Governors, including Governor Haley, support for both current, under-con struction and future planned nuclear plants must have a viable, long-term solution for nuclear waste disposal; otherwise, this zero carbon emitting resource cannot be considered a serious to ol in EPA's national toolbox for reducing
GHGs.

Commenters stated the bulk of their concern with th e proposed Clean Power Plan for existing
units is the treatment of new nuclear units which a re currently under construction; as currently431

proposed, the Clean Power Plan treats these units a s though they are already generating electricity during the 2012 baseline year even thou gh they are only halfway complete and won't start generating electricity until the 2018-2020 ti meframe. Commenters said this has the net effect of creating a more stringent goal for South Carolina that gives no compliance credit for the benefit these units will have on reducing the State 's carbon intensity. Commenters said what's more, the proposed state goal creates an unmanageab le situation should the startup of the new units be delayed or their subsequent maintenance re quire extended outages in the ensuing years.

Commenters agreed with the ideology behind the clea n air proposal and understand the importance of decreasing CO2 emissions, but the way the rule is currently written requires that South Carolinians be responsible for a disproportio nate share of the efforts to reduce carbon emissions nationwide. Commenters said the proposed state goal calls for a 51% reduction in carbon intensity or stated differently, a drop of 8 15 pounds of CO2 per megawatt hour; this is the largest reduction in the nation because of the disp arate treatment of new nuclear and the resultant effect on the state goal.

Commenters stated statistically, South Carolina has already reduced CO2 emissions 31% from 2005 to 2012; now the proposed state goal is demand ing another 51%. Commenters said in order to achieve that, customers will have to pay signifi cantly more beyond the forecasted rate
increases that will finance the two new nuclear uni ts. Commenters asserted that the 31% reduction that South Carolina has already achieved demonstrates support of the President's goal of reducing CO2 emissions and are willing to do mor e. Commenters said the requirement for
South Carolina to contribute an additional 51% redu ction is unduly burdensome, inconsistent with other states' goals and can only be detrimenta l to the well-being of South Carolinians; it is also a disincentive to states that have been proact ively going about reducing their carbon
emissions.

Commenters stated the Clean Power Plan for Existing Units is massive and it is complex; in order to correct the situation, the two new nuclear units should be removed from the calculation of the state goal but be given full credit towards compliance once they are operational. Commenters said with this change alone, the state g oal for South Carolina still requires a 38% reduction in addition to the 31% already achieved s ince 2005; clearly, this is well beyond the 30% national goal.

Commenters anticipated the likelihood of new CO2 re gulations when choosing between new base load generation options in 2008 and presented testimony on the benefits of building new nuclear generation before the South Carolina Public Service Commission:

May 2008. " ... With the new nuclear load online, w e would be able to reduce the amount of time we would be having to run our older coal-fired unit s, which would also reduce the emissions from those units by about 21 percent and take us ba ck to around 1996 or 1997 levels of emissions, which we think is an important opportuni ty for us to have as we look at carbon legislation that may come in the future - giving us flexibility to respond to potential future environmental restrictions of requirements."432

Commenters stated full credit for all new non-carbo n emitting generation including new nuclear is extremely important as they fully implement the carbon reduction strategy that was explained in their April 1, 2013 letter.

Commenters stated as a result, in 2018 when both ne w nuclear units are expected to be commercially available, all six of the older coal-f ired units would be fully retired, the percentage of non-emitting electricity produced by SCE&G would be approximately 60 percent, and their carbon emissions should be below their previous 199 5 carbon emissions. Commenters said therefore, full implementation of the plan in 2018 would not only be a significant achievement for SCE&G and customers but it also would support t he current administration's objective of promoting energy growth and addressing climate chan ge.

Commenters recommended that the EPA remove under-co nstruction nuclear generation from the calculation of a state's emissions rate goal but pr ovide emissions credit of all nuclear capacity that becomes operational after the issuance of the Proposed Rule.

Commenters stated the EPA's methodology set forth i n the Proposed Rule requires South
Carolina to reduce its emission rate from the EPA's 2012 estimated rate of 1,587 pounds ("lbs") of carbon dioxide ("CO2") per megawatt-hour ("MWh") ("lbs CO2/MWh") to an interim goal of 840 lbs CO2/MWh and then to a final goal of 772 lbs CO2/MWh by 2030. Commenters said this methodology equates to a 51% reduction, which is th e third largest percentage reduction from 2012 among all states; yet, the methodology embedde d in the Proposed Rule fails to credit South
Carolina for the under-construction zero-carbon emi tting nuclear generation being made in this

state.

Commenters stated South Carolina is one of only thr ee states where new nuclear power is presently being constructed; two new nuclear energy generating units totaling approximately 2,200 megawatts ("MW") are under construction in th is state, and South Carolina power producers and their consumers are investing billion s of dollars in these carbon-free electric generating units. Commenters said the Units are amo ng the first new nuclear generating units to be built in the United States in more than thirty y ears. Commenters said construction is moving forward, but the Units are not complete and certain ly are not yet operational. Commenters said current information projects substantial completion of the first unit in late 2018 or the first half o f 2019 followed by the projected substantial completi on of the second unit approximately twelve
months after the first unit.

Commenters stated the EPA invited comment on whethe r under-construction nuclear capacity should be reflected in the state goals. Commenters said the EPA noted that reflecting the completion of the new nuclear units under construct ion in the goals has a significant impact on the calculated goals for the states in which these units are located. Commenters said clearly, this is true for South Carolina; including approximately 2,200 MW of generation from underconstruction nuclear units as though operational re sults in a much lower mandatory goal for
South Carolina. Commenters said the two Units will not begin operation until long after the EPA is scheduled to issue its Final Rule, yet including this carbon-free generation in Building Block 3 lowers South Carolina's goal to 772 lbs CO2/MWh.433

Commenters stated the PSC approved the application to build the Units after a full evidentiary hearing that included a review of the costs of alte rnatives such as natural gas combined cycle units and new coal-fired units with the potential f or GHG regulations affecting their economic viability. Commenters said in part, the PSC was per suaded that nuclear generation, from an environmental standpoint, was the best alternative for meeting the energy needs of the regulated utility and its customers with the least impacts on the environment when comparing air and particulate emissions with coal or natural gas gene ration. Commenters said while the PSC's
decision to authorize the construction of the Units was made prior to the June 18, 2014, release date of the Proposed Rule, it is not reasonable to view the incremental cost associated with the CO2 emission reductions available from completion o f the Units as zero cost.

Commenters stated in a state of almost four million citizens with a per capita income 15% below the national average, South Carolinians are and wil l pay heavily for the Units, and construction has already experienced delays. Commenters said the investment of $10 to $11 billion in the Units is significant; South Carolina should not be penalized for being pro-active in choosing a form of base load generation that is non-carbon emi tting. Commenters said in approving the Units, the PSC found that "[n]uclear generation als o insulates customers from future CO2 and other environmental compliance costs associated wit h fossil-fuels, which are likely to be significant." Commenters said upon the Units being completed and beginning operations, South Carolina should receive credit for the new generati on as an eligible action toward meeting the mandatory goal.

Commenters stated even though the Units are present ly being constructed and several years away from completion, the Proposed Rule treats the Units as if they were already built and operating in
2012. Commenters said South Carolina is allowed no credit for these substantial investments and this state's pursuit of clean carbon-free energy; r ather than recognizing South Carolina's commitment to cleaner electric generation, the trea tment under the Proposed Rule effectively penalizes South Carolina for its self-imposed clean energy initiatives and discourages future commitments. Commenters said the disparity of the P roposed Rule's treatment of the underconstruction nuclear units is readily apparent when compared to treatment provided underconstruction solar or under-construction wind proje cts. Commenters said under-construction solar or wind projects are not included in determin ing the state's emission goal, yet underconstruction nuclear projects are included in the s tate's goal. Commenters said the Proposed Rule should treat these carbon-free under-construction g eneration sources similarly. Commenters said as it currently stands, the Proposed Rule treats ze ro-emitting under-construction nuclear generation resources differently than other under-c onstruction zero emitting generating resources thereby favoring one form of non-CO2 generation ove r another. Commenters said such disparate treatment is discriminatory, is arbitrary and capri cious, and should be changed in the Final Rule.

Commenters stated the current treatment of under-co nstruction nuclear places undue risk on
South Carolina and the two other states with curren t new nuclear construction; if the Units are not completed but abandoned, South Carolina ratepay ers face the costs of achieving a lower, more stringent compliance goal in addition to the a ctual costs of abandonment.

Commenters requested that the EPA reconsider its po sition on the inclusion of underconstruction nuclear generation and exclude such fu ture generation from Building Block 3 when determining state emission rate goals. Commenters s aid under-construction nuclear generation434

should not adversely affect a state's emission rate goal but rather should be fully credited as an eligible action toward meeting the state's goal onc e the new nuclear generation becomes operational.

Commenters stated the CPP recognizes nuclear genera tion as a method for reducing greenhouse gas emissions, characterizing it as carbon-free gen eration with high construction costs and relatively low variable operating cost. Commenters said thus, EPA reasons that states can reduce their greenhouse gas emissions by increasing nuclear generation to displace fossil fuel-fired generation.

Commenters stated a brief summary of how EPA treats nuclear is below; commenters notes that its treatment differs in some respects from that of other resources, both traditional fossil-fuel sources and from renewable generation. Commenters s aid as a general matter, the commenters asserted that such disparate treatment is allowable , and even may be compelled by the material differences in the nature of the resources; for ins tance, unlike nuclear, under-construction fossilfuel fired sources fall under 111(d) in their own r ight, since they directly contribute to GHG emissions, and can follow load.

Commenters stated even between zero-emitting resour ces like nuclear and renewables, differing
treatment can be traced to inherent differences tha t bear consideration under a scheme like the CPP with its system-wide approach; for instance, nu clear units differ from renewables due to the tremendous scale on which nuclear resources are dep loyed, their massive up-front costs (often in the billions of dollars), federal permitting oversi ght, and their extensive lead times (usually taking years, or even decades, to complete). Commen ters said assessing RE's potentia1 to reduce CO2 emissions in a given state depends much more on that state's particular technologic, geologic, geographic, and economic condition than i t depends on the resource's construction status. Commenters said in contrast, the degree to which a state can fairly be expected to utilize nuclear generation to reduce its emissions depends far more on a project's construction status.
Commenters said the Clean Air Act itself envisions taking into account factors other than strictly CO2 impacts when establishing BSER. Commenters said for nuclear, these factors would include
environmental and human health risks associated wit h potential accidents and radioactive waste
storage.

New Generation

Commenters stated as EPA correctly notes, while nuc lear generation has GHG-reduction benefits, building new nuclear generation costs farmore than other types of generation both in
terms of dollars and time. Commenters said EPA ther efore concludes that requiring states to construct new nuclear generating units would not co nstitute BSER; however, EPA does propose to give existing nuclear and nuclear projects alrea dy under construction a role in setting BSER.

Existing Generation

Commenters stated for existing nuclear generation, EPA finds that states could reasonably and cost-effectively take steps to prevent cuts in thei r existing nuclear fleets; such steps would contribute to the CPP's goals because lost nuclear generation requires replacement generation from some source, likely a fossil-fired plant. Comm enters said as EPA notes, between 2012 and435

June 2014, utilities either closed or announced clo sure plans for six nuclear EGUs at five plants across the country. Commenters said EPA notes that the EIA forecasts an additional 5.6 GW of capacity cuts in the U.S. nuclear fleet; that forec ast is used as a proxy to determine that six percent of the U.S. nuclear fleet is at risk of ret irement due to (1) increased fixed operation and maintenance costs, (2) relatively low wholesale ele ctricity prices, and (3) additional capital investment associated with ensuring plant security and emergency preparedness.

Commenters stated EPA posits that, under a CPP-comp liance approach, utilities and states can prevent that six percent loss without incurring unr easonable costs, and that preserving the six percent "at risk" nuclear generation could avoid 20 0 to 300 million metric tons of CO2 emissions over a ten-year phase in period, at a cost of $12 t o $17 per metric ton. Commenters said EPA accordingly concludes that each state could take st eps to "retain" the existing "at risk" nuclear generation and incorporates this retention into its BSER target-setting calculus; notably, this six percent retention calculus reduces a state's targetemissions rate even if a particular state has no existing nuclear generation at risk.

Commenters stated on the whole, while factoring "atrisk" nuclear generation into a state's target serves to reduce that state's target, most states n eed not take any actual steps (or expend any additional dollars) to incorporate this "at risk" g eneration when calculating their emissions rates in a proposed compliance plan; essentially, the "atrisk" nuclear provision becomes a "one in, one out" book exercise with no real-world burdens place d on the states.

Under-Construction Generation

Commenters stated while EPA concludes that the CPP should not include entirely new nuclear construction as BSER, EPA does note that three stat es (South Carolina, Georgia, and Tennessee) currently have nuclear projects under construction; while docket proceedings continue, the proposed projects in both South Carolina and Georgi a have received their Certificates of Public Convenience and Necessity. Commenters said the new unit in Tennessee is nearly complete; as a result, EPA concludes that those states could expec t these new under-construction nuclear units to reduce GHG emissions at no additional compliance cost. Commenters said in other words, these units' multi-billion dollar price tag would b e ignored when considering relative CPP compliance costs, on the theory that the states wer e going to build the units regardless of whether the CPP goes into effect.

Commenters stated adding these under-construction u nits' generation into the target-setting formula substantially changes the result; for examp le, the CPP currently sets South Carolina's target emissions rate at 772 lbs/MWh, down from a s tarting point of 1,791 lbs/MWh.
Commenters said if EPA did not include under-construction nuclear generation in South Carolina's target but left all other Building Block s the same, the CPP would set South Carolina's target at 990 lbs/MWh. Commenters said the Clean Po wer Plan currently sets Georgia's target emissions rate at 834 lbs/MWh, down from a starting point of 1,598 lbs/MWh. If EPA did not include under-construction nuclear generation in Ge orgia's target but left all other Building Blocks the same, the Clean Power Plan would set Geo rgia's target at 972 lbs/MWh. Commenters said the CPP currently sets Tennessee's target emis sions rate at 1,163 lbs/MWh, down from a starting point of 2,015 lbs/MWh. If EPA did not inc lude under-construction nuclear generation in436

Tennessee's target but left all other Building Bloc ks the same, the CPP would set Tennessee's target at 1,352 lbs/MWh.

Commenters stated as with "at risk" nuclear, EPA's proposal factors the under-construction generation into the denominator when setting South Carolina, Georgia, and Tennessee's target emissions rate. Commenters said the CPP then propos es to allow those states to count 100 percent of the generation from these units when cal culating the state emissions rates in a compliance plan; again, on paper, under constructio n nuclear amounts to little more than a "one in, one out" book exercise since that generation re duces the states' emissions rates in target setting but then also reduces the rate in calculati ng a compliance plan.

Alternatives to the CPP's Treatment of Under-Construction Nuclear- Possible Alternative
Treatments If EPA Determines That Under-Constructio n Nuclear is BSER

Commenters stated EPA's proposed target-setting cal culus assumes South Carolina will complete Summer Units 2 and 3, while the CPP further assumes that South Carolina can, and will, include the same amount of megawatt hours of generation fro m these units in demonstrating compliance with the proposed 772 lbs/MWh target. Commenters sa id it is possible, however, that cost overruns and delays could so adversely impact the e conomics that South Carolina would prefer to abandon the project. Commenters said if South Carolina abandoned the project, the proposed target would require the state to make up the addit ional rate reduction in some other fashion, a challenging proposition given the size of the two u nits. Commenters said the proposed nuclear units will each generate 1,117 megawatts of electri city, which will in tum amount to an estimated 17.4 million megawatt hours per year. Commenters sa id if South Carolina cannot complete an entire nuclear unit, it cannot produce any electric ity from that unit.

Commenters stated EPA's proposed target-setting cal culus assumes Georgia will complete Vogtle Units 3 and 4, while further assuming that G eorgia can, and will, include the same amount of megawatt hours of generation from these u nits in demonstrating compliance with the proposed 834 lbs/MWh target; it is possible, howeve r, that cost overruns and delays could so adversely impact the economics that Georgia would p refer to abandon the project. Commenters said if Georgia abandoned the project, the proposed target would require the state to make up the additional rate reduction in some other fashion, a challenging proposition given the size of the two units. Commenters said the proposed nuclear uni ts will generate 2,200 megawatts of electricity, which will in turn amount to an estima ted 17.4 million megawatt hours per year; if Georgia cannot complete these units, it cannot prod uce any electricity from them.

Commenters stated EPA's proposed target-setting cal culus assumes Tennessee will complete Watts Bar Unit 2, while the CPP further assumes tha t Tennessee can, and will, include the same amount of megawatt hours of generation from these u nits in demonstrating compliance with the proposed 1,163 lbs/MWh target; conceivably, that co st overruns and delays could so adversely impact the economics that TVA would decide to aband on or further prolong completion of the unit. Commenters said if Tennessee abandoned the pr oject, the proposed target would require the state to make up the additional rate reduction in s ome other fashion, a challenging proposition given that the unit would supply approximately 1,10 0 MW of capacity. Commenters said if Tennessee cannot complete the entire nuclear unit, it cannot produce any electricity from that
unit.437

Commenters stated unlike other zero-emitting resour ces, like renewable energy and energy efficiency, which are typically deployed in much sm aller portions, where the utility can simply build fewer installations, new nuclear is a bulky, "all or nothing" resource. Commenters said if the state abandons the project, it will enjoy none of those zero-carbon megawatt hours; in essence, EPA's approach presents a considerable det errent to states not completing these units and effectively encourages their completion by assu ming they provide compliance "for free" compared to other compliance measures.

Commenters stated no new nuclear units have come on line in the United States in nearly twenty years, largely due to cost overruns, controversy, a nd delays; these issues continue to threaten the current under-construction nuclear projects, and, t o varying extents, a certain possibility exists that South Carolina, Georgia, or Tennessee may stil l cancel its project. Commenters said such a decision would drastically change that state's expe cted energy mix and its ability to meet EPA's target emissions rate; as such, they ask EPA to clarify whether and how it could revise a state's target to reflect that new reality, should it occur . Commenters additionally requests EPA to consider whether, due to the fact that new nuclear units are massive, incredibly expensive, "all or nothing" undertakings with significant and continue d risks, EPA could make the state target effectively contingent on the state maintaining its current course of action of allowing completion of the units despite the delays and esca lating costs. Commenters said in South Carolina's case, that would mean that if the state abandons VC Summer Units 2 and 3, the emissions target would revert to 990 lbs/MWh instea d of 772 lbs/MWh. Commenters said in Georgia's case, that would mean that if the state a bandons Vogtle Units 3 and 4, the emissions target would revert to 972 lbs/MWh instead of 834 l bs/MWh. Commenters said in Tennessee's case, that would mean that if the state abandons Wa tts Bar Unit 2, the emissions target would revert to 1,352 lbs/MWh instead of 1,163 lbs/MWh.

Commenters stated additionally, if EPA continues to treat under-construction nuclear generation as part of BSER, it might adjust the way it does so . Commenters asked EPA to consider whether
to treat the resource like under-construction natur al gas, focusing on the extent to which the under-construction nuclear units will displace exis ting fossil-fuel fired sources. Commenters said for under-construction natural gas, EPA assumes tha t those units will operate at 55 percent capacity factor under a "business as usual" approac h to meet demand growth. Commenters said EPA then assumes that utility operators could actua lly increase dispatch of those new natural gas units from 55 percent capacity factor to 70 percent capacity factor by applying Block 2. Commenters said according to EPA, then, states coul d use the increased 15 percent capacity factor to displace existing fossil-fueled generatio n. Commenters said this assumption lowers the state's emissions rate target; constructing the new natural gas units and operating them above 55% capacity factor would be a means of compliance.

Commenters stated EPA should consider whether it co uld make a similar calculation for underconstruction nuclear units. However, the commenters do not believe that the exact approach EPA took for under-construction natural gas applies to under-construction nuclear. Commenters said both types of generation likely will meet some dema nd growth and offset some portion of existing fossil-fueled generation; but the CPP appr opriately views under-construction nuclear differently than it views under-construction natura l gas because operators can scale natural gas dispatch depending upon load, whereas nuclear opera tors lack that flexibility. Commenters said therefore, while EPA would review data from South C arolina, Georgia, and Tennessee to438

estimate what percentage of the under-construction nuclear generation could reasonably be said to be available to displace existing fossil-fuel ge neration and what percentage to meet demand growth, it would have to find a different, reasonab le basis for the displacement-to-demandgrowth ratio.

Commenters stated in this process, when calculating those states' emissions targets, EPA would factor in that percentage of under-construction nuc lear expected to actually displace existing fossil-fueled generation; total generation in megaw att hours would remain constant, but the replacement of fossil-fueled generation with zero-c arbon generation would reduce the total pounds of CO2 emitted; in other words, assuming the same amount of energy is produced, more of it would come from zero-carbon sources, such tha t the state's total target emissions rate would go down. Commenters said this process would lower t he state's target emissions rate by the
amount that EPA estimated under-construction nuclear would actually displace existing fossil.
Commenters said EPA would then allow states that co mplete their under-construction nuclear units to add the same amount of that nuclear genera tion to the denominator when demonstrating compliance; that is, since EPA will use that displa cement estimate in setting the target, those states could use the same displacement percentage w hen demonstrating compliance.

Possible Alternative Treatment If EPA Determines Un der-Construction Nuclear Is Not BSER

Commenters stated some parties in South Carolina, G eorgia, and Tennessee have objected to EPA's inclusion of under-construction nuclear gener ation in setting their target emissions levels, but seek to count 100 percent of their under-constr uction nuclear generation in demonstrating compliance. Commenters said EPA should understand t hat this approach could provide excessive credit for under-construction nuclear projects beyo nd their ability to displace existing fossil generation.

Commenters stated calculating a CO2 emissions rate (lbs/MWh) requires estimating both the total pounds of CO2 emitted and the total megawatt hours of generation; although presented as a rate of CO2 emissions, EPA's proposal includes gene ration from certain sources that have no CO2 emissions. Commenters said as a result, the CPP 's "target" CO2 emissions rates are not just the in-state average of CO2-emitting sources; the t argets are actually the average of CO2- emitting sources and a select few zero-carbon sourc es that qualify as BSER. Commenters said mathematically, anything that increases the total g eneration (i.e., the denominator) lowers the emissions rate; this is especially true when zero-c arbon generation is added to the denominator, because such an addition adds no new pounds of CO2 to the numerator. Commenters said how EPA, or a state, includes zero-carbon emitting sour ces radically changes the calculated result.

Commenters stated including 100 percent of under-co nstruction nuclear generation in compliance denominators would give the appearance o f dramatically lower emissions rates, even if the under-construction nuclear does not displace or reduce actual CO2 emissions from existing fossil-fueled units. Commenters said one possible s olution to this dilemma is to recognize that
under-construction nuclear units will reduce a stat e's emissions rate to the extent the under construction nuclear units actually displace existi ng fossil sources, as discussed above. Commenters said under this approach, EPA would remo ve under-construction nuclear generation from the target setting and also prohibit states fr om factoring that generation into their compliance formulas. Commenters said if and when th ose units come online, and to the extent439

they actually displace existing fossil units, those states' actual CO2 emissions rates will reflect that displacement because their total fossil-fueled generation in MWh will decrease (by way of reduced or shut down fossil-fired plants), which wi ll in tum lower the total pounds of CO2 emitted.; thus, EPA need not factor in the under-co nstruction nuclear units' megawatt hours of generation in either the target-setting or the comp liance phases because the CPP already allows
credit for under-construction nuclear to the extentthat it has a real-world impact on the state's
emission rate.

Under-Construction Nuclear

Commenters stated EPA's proposed treatment of under -construction nuclear in Georgia and two other states has been a source of controversy. Comm enters said in comments to EPA dated September 16, 2014, the Georgia EPD urged EPA to re move under-construction nuclear generation from the state emission goals but to all ow it to be used for compliance. Commenters said currently, the anticipated generation from the two units under construction at Plant Vogtle accounts for 30 percent of Georgia's target reducti on; removing those units from the targetsetting would substantially relax Georgia's carbon reduction requirements. Commenters said at the same time, allowing the nuclear generation to b e used for compliance (i.e., added to the denominator of EPA's rate-setting equation, as EPD recommends) would mean that Georgia could achieve much of its target without lowering a ctual carbon problematic and offer the following comments to guide EPA's resolution of thi s issue.

Commenters stated that generation from nuclear faci lities under construction in Georgia in 2012 is expected to be 17.4 million MWh; new nuclear cap acity would decrease Georgia's emission rate by an increment of 225 lbs per MWh.

Commenters stated that nuclear power plants under c onstruction might not be completed, and requested that the EPA provide clarification on how states with nuclear plants under construction would adjust their goals if that happened. Commente rs provided alternatives to treatment of Watts Barr unit 2 if it is considered as BSER, and gave alternatives for treatment of underconstruction reactors if they are not considered as BSER.

Commenters stated that it is inappropriate to refle ct completion of under-construction nuclear energy facilities as if they were currently operati onal. Commenters also stated EPA fails to treat nuclear consistently with RE technologies in the sa me building block- although under construction nuclear units were included in the goa ls of three states, under construction RE projects were not included within state goals as th e 2012 starting point from which states are required to grow RE technology.

Commenters provided the following resolutions regar ding the Clean Power Plan:

Resolution Concerning U.S. EPA's Proposed Greenhous e Gas Emission Guidelines for Existing Fossil-Fueled Power Plants

Commenters stated another component of the proposed regulations that has serious implications for the Southern region is the EPA's treatment of u nder-construction nuclear energy facilities. Commenters said in calculating state benchmarks, th e EPA credited under-construction nuclear energy facilities as if they were currently operati onal; this disproportionally affects states in the440

southern region, as the only nuclear energy facilit ies currently being constructed are in the states of Georgia, South Carolina, and Tennessee. Commente rs said it is inappropriate to reflect the completion of these units in state goals, as the un its are not currently completed; as a result, the
affected states will have to make more drastic emis sions reductions in order to meet the proposed goals

Resolution Questioning Nuclear-Specific Provisions of U.S. EPA's Proposed 111(d) Carbon
Rule

Commenters stated whereas there is broad consensus throughout industry, academia, the United States government, and international organizations that zero-carbon nuclear energy is a necessary component of any meaningful strategy to reduce carb on in the electric generation sector, and nuclear energy presently generates nearly two-third s of all carbon-free electricity in the U.S.; and

Commenters stated whereas, the existing 44 reactor nuclear fleet throughout the Southern States Energy Board region, and five new reactors now unde r construction to come on-line in Tennessee, Georgia, and South Carolina by 2019, are key assets in the South's ongoing comprehensive, multi technology carbon reduction st rategy; and commenters stated whereas, the U.S. Environmental Protection Agency (U.S. EPA) has recognized that maintaining the existing
nuclear fleet is a cost-effective carbon abatement strategy, but the agency's proposed carbon rule considers only six percent of the carbon-free elect ricity produced by a state's existing nuclear power plants and would not count the output of nucl ear reactors now under construction in the U.S., all of which are being built in the South; an d

Commenters stated whereas, EPA's proposal counts al l renewable electricity production regardless of when it was placed into service, but ignores 94 percent of existing nuclear plant electricity production and all hydroelectric plant production.

Commenters called on U.S. EPA to treat all sources of non-carbon generation equally and recognize that nuclear energy is critical to any na tional carbon reduction strategy so that states have sufficient incentive to preserve existing nucl ear capacity and build new reactors.

Commenters stated EPA's methodology lumps together low- and zero-emitting generation as a strategy to reduce carbon emissions at affected EGU s, but then applies the individual technologies within the block (nuclear and RE) arbi trarily and inconsistently as compared to one
another. Commenters said the inclusion of under con struction nuclear units for only three states produces inequitable results between states and acr oss regions of the country. Commenters said the proposed guideline's distinction between states with nuclear and those without nuclear is arbitrary and punishes three states in the Southeas t for forward-thinking investments in largescale, zero-emitting technology. Commenters said st ates that chose to invest heavily in RE generation do not have the additional requirement t o invest in and build a new nuclear unit, but the three states that chose to invest heavily in bu ilding new nuclear must not only complete those units with the guaranteed delivery of power at a hi gh rate on a date certain, but also invest in and grow RE energy. Commenters said further EPA fails t o treat nuclear consistently with RE technologies in the same building block- although u nder construction nuclear units were included in the goals of three states, under construction RE projects were not included within state goals as the 2012 starting point from which states are re quired to grow RE technology. Commenters441

said EPA's treatment of under construction nuclear in this building block is both arbitrary and capricious.

Commenters stated, regarding the under-construction nuclear unit in Tennessee, the significant amount of emission reduction represented by this on e yet-to-be completed nuclear unit is an immoveable, inflexible mandatory requirement that T ennessee cannot replicate or meet through another other technology or strategy; therefore, th e treatment of under-construction nuclear generation within this block essentially eliminates all flexibility for Tennessee in designing a state plan to meet its goal. Commenters said techno logy or strategy options within other building blocks in EPA's proposed BSER will not be able to c ompensate for reductions required by the nuclear portion of this building block in the circu mstance that this unit is unable to perform as EPA is proposing.

Commenters stated EPA includes nuclear generating c apacity in this building block under the assumption that it can replace generation at fossil fuel-fired EGUs, thereby reducing CO2
emissions. Commenters said EPA concludes that incre asing nuclear capacity above the amount of nuclear capacity that 'would otherwise be available to operate' is a technically viable approach, citing low variable operating costs of nuclear and its priority in resource dispatching order before fossil fuel-fired EGUs. Commenters said EPA propose s two strategies for increasing the amount of nuclear capacity available to displace fossil fu el-fired EGUs: (1) building new nuclear facilities and (2) preserving nuclear at existing n uclear facilities that might otherwise be retired. Commenters said EPA and these comments generally re fer to the first as 'under-construction'
nuclear and the second as 'at risk' nuclear.

Commenters stated the nuclear portion of building b lock 3, as encompassed within proposed BSER and applied to Tennessee, places a disproporti onate burden on Tennessee and represents significant compliance risk for the state. Commente rs said EPA's proposed approach forces the state to create a state plan requiring the finished construction and operation of a new nuclear unit that must come online and deliver power at a time c ertain and at a high utilization rate. Commenters said the significant amount of emission reduction represented by this one yet-to-be completed nuclear unit is an immoveable, inflexible mandatory requirement that Tennessee cannot replicate or meet through another other tech nology or strategy; therefore, the treatment of under-construction nuclear generation within this b lock essentially eliminates all flexibility for Tennessee in designing a state plan to meet its goa l. Commenters said technology or strategy options within other building blocks in EPA's propo sed BSER will not be able to compensate for reductions required by the nuclear portion of this building block in the circumstance that this unit is unable to perform as EPA is proposing; this is p articularly true given the fact that Tennessee's existing nuclear units are and will continue to ope rate, but they are unlikely to displace generation from affected units as EPA assumes they will. Commenters said EPA has suggested that states have the flexibility to use options out side the proposed BSER for compliance, but has
indicated that states can and will be able to meet their mandatory goals utilizing the technologies and strategies within the proposed BSER; for Tennes see, this assurance may very well not be

true.

Commenters stated, with regard to the under-constru ction unit at Watts Bar, the EPA multiplied a 90 percent capacity factor with the MW capacity a nd operating hours assumed and then applied the resulting MWh figure into the denominator of th e state goal calculation. Commenters said442

importantly for this massive amount of emission red uction, it appears EPA assumes the level of generation, and the associated emissions reductions , for Watts Bar 2 will come online in 2020
and remain constant thereafter. Commenters said the value of emissions reductions from Watts
Bar 2 dwarfs the reductions EPA assumes from 'at-ri sk' nuclear, representing 36 percent of Tennessee's total target reduction rate. Commenters said EPA's inclusion of the underconstruction nuclear units in the proposed BSER is arbitrary and capricious; these units are not complete and have not received all necessary approv als to operate and deliver power.

Commenters stated TVA owns and operates two nuclear facilities in the state, Sequoyah and Watts Bar; the three units at those facilities prod uce a significant amount of zero-carbon electricity in the state and have a combined 3400 M W summer net dependable capacity. Commenters said in addition to its existing Tenness ee nuclear fleet, TVA is in the process of constructing an additional unit at Watts Bar; compl etion of that unit is planned for December
2015.

Commenters stated in the proposed guidelines, EPA r ecognizes that new nuclear generating capacity is expensive to build as compared to other types of generation and that "little new nuclear capacity has been constructed in the U.S. i n recent years." Commenters said regardless, EPA indicates that five nuclear EGUs at three plant s are currently under construction. Commenters said according to EPA, because the decis ions to construct these plants were made prior to the proposed guidelines, the incremental c ost associated with the CO2 emissions reductions available from their completion is zero and the reductions achievable from affected
EGUs based on these units are factored into the sta te goals for Tennessee, Georgia and South
Carolina. Commenters said EPA admits "that reflecti ng the completion of these units in the goal has a significant impact on the calculated goals fo r the states in which these units are located; if one or more of these units were not completed as pr ojected, that could have a significant impact on the state's ability to meet the goal." Commenter s said despite this admission, EPA proposes to include TVA's under-construction nuclear unit, Watt s Bar 2, in Tennessee's goal.

Commenters stated EPA determined the total under co nstruction nuclear capacity at Watts Bar 2 and then incorporated it, along with the 'at-risk' capacity, state goal as zero-emitting generation. Commenters said with regard to the under-constructi on unit at Watts Bar, EPA did this by multiplying a 90 percent capacity factor with the M W capacity and operating hours assumed and then applied the resulting MWh figure into the deno minator of the state goal calculation.
Commenters said EPA did not consider nuclear as a ' dispatchable' resource as it did with NGCC capacity. Commenters said importantly for this mass ive amount of emission reduction, it appears EPA assumes the level of generation, and the associ ated emissions reductions, for Watts Bar 2
will come online in 2020 and remain constant therea fter. Commenters said the value of
emissions reductions from Watts Bar 2 dwarfs the re ductions EPA assumes from 'at-risk' nuclear, representing 36 percent of Tennessee's total targetreduction rate.

Commenters stated EPA's inclusion of the under-cons truction nuclear units in the proposed BSER is arbitrary and capricious. These units are n ot complete and have not received all necessary approvals to operate and deliver power; t hese units are not NGCC units in any way, shape or form and they should not be treated as suc h. Commenters said first, they are not affected units under Section 111 of the CAA; second , the amount of investment, time, and owner/operator sophistication required to finance, construct, complete, receive approval and443

operate a nuclear unit is vastly different than an NGCC unit. Commenters said utilities investing in new nuclear units are unlikely to be spending large amounts to grow Regeneration resources or perhaps even energy efficiency; yet, the states that these units are within are now held to growing these other low-carbon emitting resources b ased on quantified amounts derived from what EPA determined to be the best performing state s; however, states without under construction nuclear units are not required to inve st in this zero-emitting technology, even if those states may have applications before the Nucle ar Regulatory Commission or other planning efforts already underway. Commenters dstated they d o not include this information to suggest that EPA require every state in the U.S. to invest in new nuclear units, but this information was included to point out that EPA's choice to apply th e under-construction nuclear unit in setting goals for Tennessee, Georgia and South Carolina is arbitrary and cannot stand.

Commenters stated that EPA's inclusion of the under -construction nuclear units in the proposed BSER is inconsistent when compared to how EPA deals with RE generation in the same building block. Commenters said EPA's proposed BSER included under-construction nuclear units in three state goals, but it does not include under-co nstruction renewable projects in 2012, 2013 or 2014 for any state. Commenters recommended that EPA remove under construction nuclear from the proposed BSER and allow for the three states itimpacts to use some or all of the value of this zero-emitting generation for compliance.

Commenters continued EPA's starting point for apply ing the quantified amount of RE generation growth included within the proposed BSER to states for computation of their goals is the current level of performance (i.e., the 2012 net renewable generation amount). Commenters said EPA
utilizes EIA state level data for 2012 that is deri ved from EIA Form 923; the commenters reviewed EIA form 923 data used by EPA in setting t he baseline renewable generation for states and it appears that RE energy projects that were un der construction in 2012 and completed thereafter are not reported on the EIA form; theref ore, not included within the 2012 current level of performance. Commenters said for example, one pr oject that does not appear to be included is the First Solar Imperial Solar Energy Center South in Imperial County, A. Commenters said EIA monthly generation data indicate that this solar ph otovoltaic project with a capacity of 130 MW has been producing since November 2013. Commenters said according to the project's website the project supplies San Diego Gas & Electric began construction in 2012 and was completed in 2013 . Commenters said additional projects that wer e under construction in 2012 include the Arlington Valley Solar Project II in Arlington, AZ (125 MW solar photovoltaic capacity.
Commenters said website document indicate that it w as in the middle of construction in 2012, finishing up in March 2013, as well as the Centinel a Solar Energy project (also in Imperial County, CA) with a capacity of 170 MW. Commenters said this project began development in 2012. Commenters said according to EIA, it began pr oducing in July 2013.

Commenters concluded therefore, RE projects that we re under construction during the 2012- 2014 time frame that will deliver significant amoun ts of low-carbon electricity over the compliance period will be used as compliance margin for their home states. Commenters said Tennessee, Georgia and South Carolina, on the other hand, have little to no compliance margin given the massive value associated with the under c onstruction nuclear units included within their state goals. Commenters said EPA's arbitrary and inconsistent inclusion and application of technologies within building block 3 creates an ove rly burdensome result for three states and significantly increases the likelihood that these s tates will not be able to comply with their state444

goals. Commenters recommended that "EPA remove unde r construction nuclear from the proposed BSER and allow for the three states it imp acts to use some or all of the value of this zero-emitting generation for compliance."

Commenters stated that the EPA should give states c redit for the emissions avoided by utilizing nuclear power plants, by excluding plants under con struction from goal-setting, but counting their generation capacity towards compliance.

Commenters stated it is important that the contribu tion of new nuclear plants, those being deployed now as well as those under development in the next decade, be recognized for their positive impact on reducing greenhouse gas emission s. Commenters said in the EPA proposed rule, nuclear plants under construction in Georgia, South Carolina, and Tennessee are treated as though they are already operating at 90 percent cap acity factor. Commenters said when calculating the intensity target, those states are effectively penalized for supporting this new nuclear plant construction; EPA needs to work close ly with the nuclear industry through the Nuclear Energy Institute (NEI) to modify the rule t o assure proper credit is achieved for these zero-emissions future electricity producing nuclear plants. Commenters said new nuclear production must be strongly encouraged and fairly r ewarded. Commenters said as recommended by NEI, this added nuclear generating capacity shou ld be excluded from goal-setting in the EPA rule, but counted toward compliance.

Commenters stated with regard to new nuclear capaci ty under construction, but not yet in operation, the EPA should not unfairly penalize Ten nessee, Georgia and South Carolina by artificially lowering and making more severe their respective emission rate reduction targets.

Commenters stated that the inclusion of new nuclear generation capacity prior to its operation in just three states is arbitrary and represents a de facto penalty imposed on these states by lowering the emission reduction targets for those states.

Commenters stated that the EP treatment of Georgia' s "under construction" nuclear, Vogtle units 3&4, is inequitable and misguided.

Commenters stated that final rule should provide So uth Carolina and Georgia the full benefit for proactive decisions to reduce GHG emissions, by rem oving under-construction nuclear (UCN) generation from the goal calculation and allowing t he carbon free generation of the UCN to be used in state compliance calculations.

Commenters stated that the EPA's treatment of UCN i s a disincentive for the development of additional nuclear capacity, and is inconsistent wi th the Administration's recognition of nuclear generation as a source of carbon free electric gene ration and the President's recognition of the leadership that South Carolina and Georgia have tak en. Commenters also stated that, if the EPA's final rule does not properly credit additional nucl ear capacity, it puts in jeopardy the future of the 23 new nuclear units that are under review by the U S Nuclear Regulatory Commission that could add more than 23,000 MW of carbon free generation.445

Commenters stated that the two UCN units in South C arolina represent 2200 MW of zero carbon electric generation that will displace or eliminate the need to construct a similar amount of electrical output from fossil fuel generation.

Commenters stated that the EPA should, at a minimum , remove under construction nuclear units from the rate-setting calculation, and Georgia, Sou th Carolina, and Tennessee (and any other state where new nuclear units are built) should be able to receive compliance credit for all the megawatt-hours (MWh) produced by these units when t hey become operational.

Commenters stated that Georgia is being penalized b y the plan for its significant early actions.

Commenters stated that nuclear plants under constru ction must be removed from the BSER and
states must be allowed to count on avoided emission s toward their compliance plans once the nuclear plants are in operation.

Commenters recommended that the EPA allow under-con struction nuclear in South Carolina to be used for compliance with a revised target to be calculated by the State of South Carolina.
Commenters recommended that the EPA remove nuclear generation not yet on-line from the state goal formula. Commenters stated that the inco rporates the generation capacity from TVA's Watts Bar 2 Nuclear Plant, which is under construct ion and slated for operations in December 2015, into the denominator for Tennessee's state go als. Commenters stated that this is arbitrary and capricious; there is no other similar action in the proposed rule for other sources of power generation currently under development.

Commenters stated that the Clean Power Plan should recognize the amount of time and money necessary to develop and construct a new nuclear un it. Commenters further stated that, in essence, Georgia, South Carolina, and Tennessee wou ld have been better off delaying construction until the target emission rates were s et. Commenters did not purport to have a solution to this problem, but encouraged the EPA to explore options to adjust the Proposal to encourage new generation without effectively penali zing states that have taken early action.

Commenters stated that the EPA's treatment of Nucle ar Under Construction as completed is especially arbitrary when the treatment of other no n-hydro renewables is examined. Commenters stated that all non-hydro renewable MWhs generated during the plan period are allowed as compliance resources, regardless of in-service date s, and that the EPA offers no explanation for the disparate treatment of non-carbon emitting reso urces.

Commenters stated that states that have utilities w hich have begun but not finished wind and solar projects are rewarded by the EPA because thos e sources and the future carbon emissions reductions they are expected to achieve are not "as sumed" and therefore can be used to effectively meet a state's goal. Commenters stated that if investment in nuclear is not afforded the same benefit as other zero-emitting generation towards meeting the State goal, then utilities and customers in states with nuclear plants under c onstruction will be forced to pay twice for carbon reductions because they invested early in on e carbon-free technology instead of another.

Commenters stated that, under the proposed rule, th e EPA includes the carbon reduction benefits
of the five nuclear units under construction in its BSER determination as though they were in an operational status today. Commenters stated that th is is in stark contrast to treatment of non-446

emitting EGUs currently under construction using ot her advanced technologies such as carbon capture and storage (CCS), which are not included i n the baseline determination and can be applied in full to the host state's compliance plan

.
Commenters noted that the EPA requested comment on whether or not it is appropriate to reflect completion of [currently under construction nuclear units] in the state goals. Commenters stated that is not appropriate, and that any state should be allowed to elect to count new nuclear (including under construction units that come on-li ne) towards compliance in its state plan, and that the EPA should state affirmatively that such e lections are approvable.

Commenters recommended that nuclear generation unde r construction in South Carolina should count toward the State's compliance with EPA's Clea n Power Plan.

Commenters stated that, although the EPA treats "nu clear under construction" as already built and operating, substantial further spending is requ ired, so the Proposal punishes consumers in South Carolina by approximately $8.7 billion.

Commenters stated that, if treatment of nuclear und er construction remains unchanged from the EPA proposal, South Carolina will be forced to comp ensate by building natural gas power plants, which will require new interstate natural gas infra structure.

Commenters stated that the EPA's inclusion of nucle ar generation being constructed in Georgia (Plant Vogtle 3 & 4) in setting Georgia's performan ce standard is inequitable and misguided, and penalizes electric consumers of Georgia for spendin g over fourteen billion dollars to provide the state with 2,200 megawatts of power with zero CO2 e missions.

Commenters urged the EPA to allow under-constructio n nuclear to be used for compliance with a revised emission target.

Commenters stated that the EPA's assumption that th e costs of the reactors under construction are "sunk costs" is factually wrong, since none of the reactors is complete and large expenditures
remain to be incurred. Commenters also stated that it is not at all clear the reactors will be completed, and cited delays in the construction of the Watts Bar 2 reactor, which was started in 1973, with a projected start date of 1978. Commente rs further stated that the EPA itself recognizes that under-construction nuclear reactors may not be completed.

Commenters stated that the EPA's approach to "under -construction" nuclear generation is flawed
and should be revised. Commenters stated that the i nclusion of the full expected megawatt-hours (MWh) of generation from these facilities in state goals creates a large compliance risk for these
states. Commenters also recommended that the EPA re duce the assumed capacity factor for
under-construction facilities to account for the di stinct possibility that they will operate at capacity factors of 70 percent or lower during some compliance periods. In addition,
Commenters stated that the EPA should allow states with under-construction nuclear facilities to recalculate their targets after promulgation of the final rule if these large projects are significantly delayed or shut down due to unforesee n circumstances that are beyond the state's control. Commenters concluded that, regardless of w hat approach EPA takes, it should recalibrate the interim targets for states hosting under-construction nuclear facilities to account447

for the possibility that these units may not be ope rating at full capacity in the early years of the interim compliance period.

Commenters stated that the power capacity under con struction nuclear units should be available to states for calculation toward compliance with it s carbon emissions goal (under Block 3) rather than arbitrarily categorized as existing capacity f or purposes of goal calculation. Commenters stated that any nuclear unit whose construction or uprating will start prior to the 2030 compliance deadline should be allow to apply that z ero-emissions energy toward Block 3 goals.

Commenters stated that, if the EPA finalizes the Pr oposal "as-is," without necessary revision, its action would be arbitrary and capricious rulemaking , in derogation of Federal law. Commenters stated that the Proposal unfairly (and inexplicably ) penalizes the three states that have proactively acted - at great expense - to reduce fu ture CO2 emissions by undertaking to construct and operate the first new nuclear generation in thi rty years.

Commenters stated that it is not appropriate to ref lect completion of the five identified nuclear EGUs currently under construction in the state goal s, and that the current approach unfairly modifies the State Goals of three particular states . Commenters also stated that the EPA should note that there are many ways there are many ways t o increase nuclear generation beyond construction of new plants, such as "uprates" and i ncreases in capacity factor.

Commenters stated that the rule should be altered t o give plants under construction credit for
carbon offset in the books of the states in which t hey're being built.

Commenters stated that, even without including unde r construction nuclear, Georgia's goal is still more stringent - which means that more invest ment will be required - than all of the other southeastern states that have not recently acted to add new nuclear capacity. Commenters stated this means that the EPA is requiring renewable ener gy and energy efficiency targets for Georgia equivalent to those for states that did not invest in new nuclear capacity. Commenters stated that
the EPA's inclusion of under construction nuclear runs in state goals is directly contrary to the Obama Administration's policy on the importance of nuclear energy in addressing climate change. Commenters concluded by stating that under construction nuclear generation should not be included in calculating state goals, and that St ates, their citizens and their utilities should be allowed to take full credit for non-emitting nuclea r generation in complying with any state or utility-specific performance standards promulgated pursuant to this rule.

Commenters stated that the future base load operati ons of "under construction nuclear units" are inappropriately included in the calculation of stat e goals. Commenters also stated that the EPA's Proposed Rule would preclude using this Vogtle Proj ect generation resource to help show compliance in Alabama, where most of the commenter' s generation fleet is located, just because the Vogtle project happens to be located in Georgia . Commenters continued that the EPA's conjecture that States may somehow work out regiona l plans to solve these issues is speculative at best, and that the unjustifiable, unfair, and un tenable approach utilized by the EPA in the Proposed Rule underscores how trying to contort exi sting authorities under the CAA to further global climate goals is indefensible and should be abandoned. Commenters concluded that if, however, the EPA continues with implementation of t hese provisions, these issues must be448

resolved such that utilities with interests in gene ration in multiple states are afforded compliance advantages commensurate with their investment.

Commenters stated that nuclear generation currently under construction should not be included in calculating South Carolina's goal and should be allowed to contribute towards a South Carolina's compliance with its assigned goal. Comme nters stated that the EPA's CPP proposal treats nuclear generation under construction differ ently from other zero-emitting carbon resources included in Building Block 3, because the se other generation sources units are excluded for the goal rate-setting and thus receive credit for carbon-free generation when they contribute power to the grid. Commenters stated tha t the state goal the EPA has assigned to South Carolina is 28 percent more stringent than itshould be because of the EPA's treatment of V.C. Summer Units 2 and 3, and, at 772lbs CO2/MWh, this goal is well below the 1,100 lbs
CO2/MWh New Source Performance Standard established in the EPA's 111(b) rulemaking governing new fossil-fired power plants. Commenters stated that it is irrational and arbitrary to have an emission rate standard for existing power p lants that is below the emission rate specified for new power plants.

Commenters opposed the inclusion of nuclear units u nder construction in the calculation of state goals. Commenters stated that by including the outp ut of nuclear units that are assumed to be completed at some date in the future in the calcula tion of a State(s) existing carbon/MWh rate (the output of the units under construction is imbe dded in the denominator of the fraction), the EPA has artificially changed the rate and made comp liance with the goal exponentially more
difficult. Commenters also noted that this has been done despite these units having never produced any electricity, or even having received a n operating license to begin production. Commenters stated that no other energy source that does not currently exist is included in the Proposed Rule's calculation of the emission rate.

Commenters stated that the EPA's proposal as publis hed punishes the ratepayers who through long-term power contracts have been, and are, payin g for the investment in Watts Bar Nuclear Unit 2 in their rates, and will continue to do so. Commenters stated that such environmental rules result in unfairness and are bad public policy.

Commenters stated that the EPA includes plants unde r construction in their respective states baseline calculation, the requiring them to take ad ditional measures to comply with the regulation beyond these carbon free investments tha t they are already made, and that the rule must count new nuclear construction projects toward s the EPA emissions target. Commenters
also stated that studies have shown that investment s outside of nuclear do not significantly
contribute to carbon decline since most wind and so lar plants must be co-located with natural gas plants due to intermittency.

Commenters stated that by accounting for under cons truction and at risk nuclear in the state's emission rate equation, the EPA is essentially puni shing states that have already made an effort to reduce CO2 emissions by holding those states acc ountable by basing their CO2 emission rate goals on the future operation of these nuclear gene ration facilities. Regarding nuclear power and the CPP, commenters stated that EPA should not coun t electricity production from nuclear reactors under construction because nearly one-half of all proposed nuclear reactors in the US have never started operation. Commenters cited seve ral examples of nuclear reactors that were449

under construction or where construction was planne d but were cancelled. Commenters stated that with the significant hurdles to building new n uclear reactors, the EPA should not allow reactor projects under construction to be credited for CO2 reductions until a project is completed and operational. Commenters stated that the histori c and recent challenges of bringing a nuclear reactor online, from concept to creating energy, is reason enough as to why this technology
should not be included as a BSER.

Commenters stated that the EPA's approach contraven es important national energy and environmental policy objectives as well as state po licies. Commenters cited the Energy Policy Act of 2005 and the Energy Independence and Securit y Act of 2007 as providing substantial support to expand the commercial utilization of nuc lear energy in the United States and improving the nuclear regulatory process. Commenter s also cited multiple state legislative actions in Georgia, South Carolina, and Tennessee t hat supported nuclear power, including the "Georgia Nuclear Financing Act," and South Carolina energy policy with specific support for nuclear power. Commenters stated that in the NPRM, the EPA is imposing a penalty on these states, which is unfair and directly contradicts th e nation's established energy and environmental policies.

Commenters stated that at Plant Vogtle, located near Augusta, Georgia, Units 3 and 4 are currently under construction; commercial operation is slated in 2017 for Unit 3 and in 2018 for
Unit 4. Commenters noted that the units will be sta te-of-the-art Westinghouse AP1000 reactors, each producing approximately 1,117 MW, at a project ed capital investment of $14 billion, creating some 5,000 on-site construction jobs and 8 00 new permanent jobs.

Commenters stated that the owners of Vogtle 3-4 are GPC, the Corporation, MEAG and Dalton Utilities; SoNOPCo, a subsidiary of the Southern Co mpany, is the licensee and operator of the Plant. Commenters remarked that early planning work began in 2005 and on March 28, 2008, SoNOPCo filed an application with the Nuclear Regul atory Commission ("NRC") for licenses
for the two units. Commenters stated that the NRC i ssued the necessary licenses for Vogtle Units 3 & 4 on February 9, 2012, and in March 2013, the i nitial pouring of concrete for the reactor buildings began; construction has continued from th at point forward.

Commenters stated that more specifically, in the Pr oposal, EPA determines that as part of BSER, building block 3 includes the projected amounts of generation available by completing all nuclear units currently under construction. Comment ers stated that EPA proposes to include "under construction" nuclear generation in the deno minator of its formula for calculating state CO2 emission rate goals:

CO2 rate28 = [(Coal gen. (coal ER)) + (OG gen. (OG ER)) + (NGCC gen. (NGCC ER)) + ("Other" emissions)] [Coal gen. + OG gen. + NGCC gen. + "Other" gen. + N uclear gen. + RE gen. + EE gen.]

Commenters contended that the Proposal violates the CAA and betrays national energy and environmental objectives and EPA's own policy goals , and if EPA finalizes the Proposal "as-is," without necessary revision, its action would be arb itrary and capricious rulemaking, in derogation of Federal law. Commenters remarked thatit unfairly (and inexplicably) penalizes the450

three states that have proactively acted - at greatexpense - to reduce future CO2 emissions by undertaking to construct and operate the first new nuclear generation in thirty years.

Commenters stated that the UCS supports the EPA's i nclusion of new nuclear reactors that are under construction in setting state emission reduct ion targets and for compliance. Commenters recognized the potential for nuclear to reduce carb on emissions from existing fossil fuel power plants, and supports the EPA's proposal to include new nuclear reactors that are currently under construction in setting state emission reduction ta rgets and for compliance. Commenters stated that this approach is consistent with the EPA's tre atment of new natural gas combined cycle plants and UCS' recommendation for new renewables t hat are under construction; however, while these technologies are currently cost-effecti ve to deploy on a larger scale for the purposes of the BSER, new nuclear plants are not. Commenters stated agreement with the EPA's approach for not including any additional new nuclear reacto rs beyond the ones that are under construction for setting state targets because of their current high costs and long lead times; however, states would have the flexibility to include additional nu clear plants for compliance under the proposed rule. Commenters also suggested that the incrementa l generation from uprates, at existing plants that meet important safety standards, such as those described above, should be eligible for compliance.

Commenters stated that for many years in advance of this proposed rule, electric providers in South Carolina took major steps to decrease their c arbon emissions, noting that electric providers and their customers have already invested billions of dollars building two new nuclear generating facilities, and a significant share of the cost of these units are to be borne by our electric cooperatives through their wholesale agreements wit h Santee Cooper. Commenters continued, stating since the goal of the proposed rule is to r educe carbon emissions, carbon-free nuclear generation that comes online after the 2012 baselin e of this rule should be treated the same as other new carbon-free generating sources; however, this proposed rule does not give South Carolina credit for making early investments in cle an nuclear energy. Commenters believed that by including the output from yet-to-be-completed nu clear units in the calculation of the state goal for "existing units", EPA has effectively handicapp ed their State and disproportionately
increased the amount of CO2 emission reductions tha t South Carolina must achieve. In contrast, commenters remarked, states that have utilities whi ch invested in wind and solar are rewarded by
EPA because those sources and the future carbon emi ssions reductions they are expected to beget
cannot be not "assumed" and therefore can be used t o more effectively meet a state's goal.
Commenters believed that if this investment in futu re carbon-free electric generation is not
afforded the same net benefit as all other zero-emi tting generation towards meeting the State goal, then utilities in South Carolina will be forc ed to build additional alternative carbon-free generation to offset carbon emissions from fossil f uel generation.

Commenters stated including under-construction "at -risk" existing nuclear in goal-setting is outside section 111(d) authority.

Commenters stated EPA's attempt to justify its app roach by creating a distinction between under-construction nuclear and yet-to-be-planned nu clear is similarly flawed. Commenters said EPA implies that because it historically has distin guished between affected sources that are under construction at the time of proposal and thos e that are not, that the Agency similarly can distinguish between under-construction nuclear unit s and those that are not yet planned as part of451

its BSER determination; however, neither new nor un der-construction nuclear units, nor existing nuclear units, are affected sources under Section 1 11. Commenters said there is no precedent or rationale for EPA's proposed approach, and it is in stead simply based on EPA's policy goal to decrease the utilization of existing fossil generat ing units.

Commenters stated EPA must select reasonable benchm arks when setting standards under the Clean Air Act. Commenters stated, in this context, EPA has proposed to calculate emission targets for Georgia, South Carolina and Tennessee t hat reflect nuclear projects in those states that are not anticipated to be complete until the 2015-2 020 timeframe. Commenters believed this approach: (a) is inconsistent with the Administrati on's own benchmarks for cutting CO2 emissions; (b) arbitrarily relies on a concept of " under construction" that does not appropriately fit this regulatory context; (c) is inconsistent wi th other relevant legal standards for when nuclear units should be considered "under construction," an d (d) is inconsistent with benchmarks EPA has selected for other "BSER" identified in the pro posed rule. Commenters remarked that the Administration has repeatedly stated that a primary environmental objective is to reduce GHG emissions in the United States "in the range of 17 percent below 2005 levels" by 2020. (47 The President's Climate Action Plan, at p. 4 (June 2013 ), available at http://www.whitehouse.gov/sites/default/files/image /president27sclimateactionplan.pdf (emphasis added).) Commenters said EPA has also rep eatedly promoted the proposed rule on the basis that it would "help cut carbon emissions from the power sector by 30 percent from 2005 levels." (48 EPA Fact Sheet: Clean Power Plan, avai lable at http://www2.epa.gov/carbonpollution-standards/clean-power-plan-proposed-rule (emphasis added). With respect to EPA's overall estimate of 30% reduction by 2030, it appears that EPA has turned the Section 111(d) process on its head by, first, determining on its o wn the level of emission reductions EPA would prefer to achieve on a nationwide basis and, then, fashioning a program that fits that objective. This is contrary to the clear statutory directive i n Section 111(d).) Commenters said such a statement is even in the preamble to the proposed r ule itself. (49 79 Fed. Reg. at 34,832 ("Nationwide, by 2030, this rule would achieve CO2 emission reductions from the power sector of approximately 30 percent from CO2 emission level s in 2005.").) Commenters noted, inconsistent with these statements, EPA now proposes to treat these five nuclear units, which were not operating, or even under constructio n, as of 2005, and were not operational at the time of this proposal, in a manner that essentially eliminates any positive credit their respective
states should receive as a result of these zero-emi ssion power plants. Commenters stated that Watts Bar 2, Vogtle 3-4, and Summer 2-3 were not "u nder construction" in 2005 or operational at the time of the proposal and, consistent with lo ngstanding Administration positions on emissions reductions, efforts to complete these zer o-emissions units - whether after 2005, after 2012, or after the proposed or final rule - should result in a positive result for these states, not a negative impact.

Commenters questioned EPA's decision to base this a nalysis on whether a particular nuclear unit was "under construction" at the time of the proposa l. Commenters stated that EPA provided no justification or explanation as to why it chose to employ the term "under construction" as opposed to "operational." Commenters said EPA simpl y stated, without supporting legal or technical analysis explaining why such a framework is relevant, that the "decisions to construct these units were made prior to this proposal." Comm enters believed this framework, which452

defines BSER based on whether these units were "und er construction" at the time of the proposal, is arbitrary and unreasonable. Commenters said these are complex and expensive projects subject to a host of regulatory requiremen ts and procedures. Commenters asserted that EPA is not qualified to make assumptions or asserti ons, for purposes of a BSER analysis, about the construction or completion of these nuclear pro jects. Commenters said, indeed, even if asked, the Nuclear Regulatory Commission could not present ly assert that these units "will be" operational at a certain date. Commenters stated th ey anticipate completion and operation of these units in the timeframes identified by the own ers/operators, but it is not within EPA's authority to establish regulatory standards on thatbasis. Commenters remarked that under relevant definitions of "under construction," Vogtl e 3-4 and Summer 2-3 were not under construction in 2012, let alone 2005. Commenters sa id, for example, in order to qualify for the production tax credit for advanced nuclear energy, the Internal Revenue Service (IRS) has stated that "construction begins when a person who has app lied for or been granted a combined license for an advanced nuclear facility initiates the pour ing of safety-related concrete for the reactor building." (50 Internal Revenue Bulletin No. 2006-1 8 (May 1, 2006), available at http://www.irs.gov/irb/2006-18_IRB/ar07.html.) Comm enters stated, similarly, the Department of Energy has, in the context of standby support pr ograms for advanced nuclear power plants, stated: "Commencement of construction means the poi nt in time when a sponsor initiates the pouring of safety-related concrete for the reactor building." (51 71 Fed. Reg. 46306, 46326 (Aug. 11, 2006) (emphasis added).) Commenters noted, as t he Congressional Research Service has recently recognized: "Pouring of the first 'safety related' concrete, which marks the start of reactor construction, was completed on March 11, 20 13, for V.C. Summer Unit 2 and three days later for Vogtle Unit 3." (52 Congressional Researc h Service, Nuclear Energy Policy, at p. 3 (Sept. 2013).) Commenters said, in other words, fro m a legal perspective, construction had not begun for these units until 2013, well after the 20 05 or 2012 baselines and benchmarks applied by EPA. Commenters asserted that it is, therefore, neither appropriate nor reasonable for EPA, when setting emissions targets, to consider these u nits as "under construction." Commenters closed, stating as part of its selection of BSER fo r purposes of this rule, EPA is imposing a
benchmark for these nuclear units that it does not apply to other BSER (with the possible exception of NGCC plants, which also have similar c oncerns with EPA's approach to "under construction" units), and EPA does not specifically identify "energy efficiency" projects/programs that are in the process of being developed and deployed, nor does EPA identify specific renewable energy projects that ar e "under construction."

Commenters stated that as part of Building Block 3, EPA accounts for zero-emission nuclear energy by assuming that no existing "at risk" nucle ar capacity will be retired and that all new nuclear energy units under construction will be bui lt. Commenters added specifically, with respect to existing nuclear facilities, EPA assumed that six percent of current nuclear capacity is at risk of retirement and applies a uniform credit of six percent of each State's current nuclear capacity to electricity generation when computing e ach State's emission reduction target. Commenters believed this approach to avoided retire ments is arbitrary and capricious because it does not account for key differences between States and between individual facilities. Commenters explained first, that EPA's approach ass umes that all existing nuclear facilities can continue to operate in perpetuity and fails to incl ude any safety valve to account for facilities that
reach the end of their licensed lives and notes tha t nuclear facilities must be permitted by the Nuclear Regulatory Commission (NRC), and a signific ant portion of the existing nuclear fleet has already obtained 20-year extensions that are se t to expire before, or shortly after, the final453

2030 compliance deadline. Commenters added that 36, 000 MW of nuclear generating capacity will reach the end of the 20-year extension period between 2029 and 2035. (79 NEI, Subsequent License Renewal: Creating the Foundation for Nuclear Plant Operation Beyond 60 years (Feb. 2013), http://www.nei.org/CorporateSite/media/filefolder/NEI-White-Paper-SubsequentLicense-Renewal.pdf.ext=.pdf) Commenters remarked t hat EPA does not to consider the possibility that for economic, reliability, or othe r operational reasons, the facility owners or the NRC determines that the facility has reached the en d of its useful life and on that basis declines to seek or grant another extension and that such a decision would be beyond the authority of EPA or the States to control, and EPA must consider whether changes to its emission reduction targets would be required under such circumstances. Further, commenters remarked that EPA does not account for the potential that other, unfo reseen events could require a facility to retire, citing the example, in 2013 the Crystal River 3 fac ility was retired as a result of unrepairable cracks in the containment building's outer concrete wall. (80 Press Release, Duke Energy, Crystal River Nuclear Plant to be retired; company evaluating sites for potential new gas-fueled generation (Feb. 5, 2013), available at http://www.dukeenergy.com/news/releases/2013020501. asp) Commenters added that likewise, the San Onofre Nuclear Generating Station retired t wo units as a result of leaks in steam generators. (81 Press Release, Southern California Edison, Southern California Edison
Announces Plans to Retire San Onofre Nuclear Genera ting Station (June 7, 2013), available at http://www.songscommunity.com/news2013/news060713.a sp) Commenters concluded that if
EPA is to include avoided nuclear retirement in its BSER analysis, it must account for the possibility that similar equipment failures may occ ur in the future, and, moreover, EPA does not address what would happen if retirements in a State exceed six percent of the State's nuclear capacity. Commenters’ second point supporting his p osition is that EPA's proposed 90% capacity factor for nuclear facilities, while perhaps reason able for the entire U.S. nuclear fleet, is unrealistic on a smaller, State-level scale. Commen ters explained that while nuclear facilities can provide reliable baseload energy, both planned and unplanned outages do occur and maintenance, repair, and upgrades can take a signif icant amount of time to complete, and as a result, a single long-term outage could threaten a State's ability to achieve 90% capacity in a given compliance year. Further, commenters added, E PA's uniform application of a six percent "at risk" capacity factor to all States across the board ignores the binary nature of plant retirements, and while a uniform figure may be just ifiable at a national level, many States have a
small number of nuclear facilities and the retireme nt of even one unit would exceed six percent of the State's existing nuclear capacity. Commenter s cited the example that Michigan has four operating nuclear power reactors, the smallest of w hich represents 20% of the State's nuclear generating capacity. Commenters said, under the cir cumstances, an "at risk" capacity factor of less than 20% would be arbitrary and capricious bec ause it assumes that only part of a facility is at risk of retirement, and thus, at a minimum, EPA must conduct a State-by-State analysis and adjust the "at risk" capacity in the event that the State's smallest nuclear energy unit represents more than six percent of the State's total nuclear capacity. Commenters’ third point supporting their position is that by applying a uniform six pe rcent "at risk" factor to all States, EPA implicitly assumes that all nuclear facilities are equally at risk of retirement. Commenters believed this assumption is unreasonable and cites factors such as facility age, permitting cycle, and location in a competitive market or vertically integrated State can all play a role in determining the likelihood of a specific plant's re tirement. Commenters stated that given the relatively small universe of existing nuclear energ y facilities and the significant impact of this454

rulemaking, it is arbitrary and capricious for EPA to rely on aggregate national data to set Statespecific emission reduction targets, and at a minim um, EPA must apply a more granular methodology that evaluates each State independentlyto determine the amount of existing nuclear capacity that is truly at risk of retirement and th en set State specific "at risk" capacity factors. Commenters’ fourth point supporting their position is that even apart from EPA's six percent "at risk" factor, EPA independently assumes that, for purposes of determining a State's emission reduction target, that all under construct ion nuclear plants will be completed. 79 Fed. Reg. at 34,870. (82 EPA is also effectively assumin g that the NRC will license these plants. The NRC has refused to issue an operating license in th e past, which led to the project beingabandoned. http://www.nrc.gov/reading-rm/doccollections/nuregs/brochures/br0468/br0468.pdf.) Co mmenters noted that given the cancellations, delays, and budget overruns experien ced by numerous nuclear plants, this assumption is unwarranted. (83 http://www.timesfree press.com/news/2012/jun/04/delays-mirenuclear-plant-construction/; see also http://en.wikipedia.org/wiki/List_of_canceled_nucle ar_plants_in_the_United_States (these projects have all "announced delays and budget overruns")), and adds that as EPA concedes, if a project is abandoned, that would have a "significan t impact on the state's ability to meet" the emission reduction target mandated for it by EPA. 7 9 Fed. Reg. at 34,870. Commenters stated that by making this assumption, EPA is arbitrarily penalizing "first-mover" States. (84 notably, in EPA v. EME Homer City Generation, L.P., the EPA took the position that its construction of the Clean Air Act should be given deference, inter alia, because it accounted for the extent to which States had previously invested in emission re ductions. See Br. of Resp. EPA, at 49 (S. Ct. Nos. 12-1182, 12-1183)) Commenters remarked that a State that constructs a nuclear power plant the day after the proposed rule is finalized would be able to use that increased generating capacity to meet its emission reduction target. But commenters said Georgia, South Carolina, and Tennessee get no such benefit even though they soug ht to construct nuclear facilities before EPA published the proposed rule to curb carbon emission s. Commenters concluded that, to the contrary, EPA has set emission reduction targets th at will be required in addition to the reductions that would be achieved if the plants und er construction were finished and became operational.

Commenters stated that, in summary, by treating nuc lear units under construction as constituting BSER for purposes of Section 111(d), EPA's proposed rule severely penalizes the states of Georgia, South Carolina and Tennessee even though t hese states are leading the expansion of nuclear power - the nation's most significant sourc e of zero-emission electric generation. Commenters said this is unjustified and counter-pro ductive to the agency's objective of reducing CO2 emissions, and EPA's approach clearly violates section 111(d). Moreover, commenters asserted that EPA has failed to provide a sound leg al and technical basis for its decision to treat these states in this manner. On these grounds, comm enters would also strongly oppose any efforts to, in EPA's words, "include in the state g oals an estimated amount of additional nuclear capacity whose construction is sufficiently likely to merit evaluation for potential inclusion in the goal-setting computation." (61 79 Fed. Reg. at 34,8 71) Commenters believed the states where
these nuclear units are under construction should b e able to use the generation from these units, when operational, for purposes of demonstrating com pliance with applicable goals. In other words, commenters stated that any state should be a llowed to elect to count new nuclear (including under-construction units and units that may be in a company's long-term resource plan455

but not yet under construction) towards compliance in its state plan when those units come online, and EPA should state affirmatively that such elections are approvable.

Commenters stated that N. Georgia EPD and EPA do no t have the authority to require construction or operation of new nuclear generating units. Commenters explained that the Vogtle 3 and 4 nuclear generating units are not affected s ources under the Clean Air Act, or Section 111 in particular, and as a result, neither EPD nor EPA has the authority to require the construction or operation of these units or to enforce the decision to build Vogtle Units 3 and 4 (made by the coowners of the units, with oversight/approval by the Georgia Public Service Commission in the case of Georgia Power, and by Boards of Directors a nd/or municipal government authorities in the case of co-operative and public power/municipal co-owners, and the Nuclear Regulatory Commission). Commenters explained that the state of Georgia cannot reasonably meet the stringent goal that EPA has proposed without the co nstruction and operation of these units and the EPD and EPA's lack of authority is highlighted by EPA's assumption that Vogtle Units 3 and 4 will operate at a 90% capacity factor once on-lin e (which EPA then incorporates into its calculation of Georgia's state goal). Commenters ar gued that while Vogtle Units 3 and 4 are being built to operate at greater than 90% capacityfactors, EPA has not accounted for planned maintenance outages that must occur, and for unplan ned outages that may occur, that affect the units' ability to operate at these capacity factors at times. Yet, commenters remarked, neither EPD nor EPA has any authority to regulate the opera tion of these units by assuming or requiring that these units can always operate at such high capacity factors. Commenters believed this flawed assumption places Georgia at significant ris k regarding the ability to comply with the goal during periods that even one of these units is offline, especially given EPA's proposal to require short-term compliance with interim period c heck-ins every two rolling calendar years and a three-calendar-year rolling average for final com pliance.

Commenters stated that in the NPRM, EPA decided to treat Vogtle 3-4, Summer 2-3, and Watts Bar 2 as part of BSER because, in EPA's view, there is no "incremental cost" associated with CO2 emission reductions from completion of these mu lti-billion dollar nuclear units. [79 FR 34,870] Commenters stated they searched the NPRM an d related documents in the record and found no legal or technical analysis, beyond assert ions, that supports or justifies EPA's approach in this instance. Commenters added, (verbatim) EPA has not explained how it defines
"incremental cost" in this context or how increment al costs would be calculated. [45 EPA's failure to explain its interpretation of "increment al cost" in this context and to explain how those costs are calculated contrasts with other examples of where EPA uses a similar analysis. See, e.g., 40 C.F.R. pt. 51, app. Y (explaining how to " calculate incremental costs" as part of EPA's Guidelines for BART Determinations Under the Region al Haze Rule).] Commenters said the Regulatory Impact Analysis (RIA) makes just a passi ng reference to EPA's treatment of under construction nuclear units. [46 RIA, at 3-10] Comme nters noted that the Greenhouse Gas Abatement Measures Technical Support Document (GGAM TSD) contains a lone paragraph that
recites EPA's assertion about the "incremental cost " of completing these projects, but does not otherwise explain the legal or technical basis for that assertion. [47 GGAMTSD, at 4-33] Furthermore, commenters noted that EPA's legal memo randum accompanying the NPRM merely asserts that these five units have "long been known to grid operators for planning purposes," [48 EPA Legal Memorandum for Proposed Carbon Pollution Emission Guidelines for Existing Electric Utility Generating Units, 69, available at http://www2.epa.gov/sites/production/files/2014-06/ documents/20140602-456

legalmemorandum.pdf] but the legal memo does not ot herwise explain or justify EPA's approach. Commenters said nor has EPA explained its determination that, for purposes of the Section 111(d) analysis, these units are adequately demonstrated. [49 In addition, EPA has not evaluated whether section 402(i) of the EPAct of 20 05 would dictate that Vogtle 3-4 and Summer 2-3, which have received, or will receive, a ssistance provided through the EPAct of 2005, should be treated as "adequately demonstrated " for these purposes.] Commenters stated, when OMB raised concerns about EPA's treatm ent of under construction nuclear units, EPA did not explain its rationale, choosing instead to simply tell OMB that "EPA is taking
comment on whether we should include the new on the way nuclear in the state targets as BSER." [50 See OMB Interagency Review Comments, sup ra note 26 at 9 (showing EPA's response to OMB comments).] As such, commenters bel ieved EPA's approach to under construction nuclear units has not been adequately justified and lacks support in the record.

Commenters stated that the degree of emission limit ation that EPA requires under Section 111(d) must be "achievable." Commenters noted, however, EP A's approach eliminates any meaningful margin for compliance purposes, substantially hinde ring the opportunity for these states to achieve compliance with EPA's standards. As a resul t, commenters believed the standard proposed for these states is, within the meaning of 111(d), unachievable. Commenters stated, although EPA references "flexibility" over 100 time s in the proposed rule, in reality Georgia, South Carolina and Tennessee will likely face a sub stantial Clean Air Act compliance risk, with no real flexibility, as a result of the substantial ly more stringent emission reduction requirements in the proposal. Commenters stated that there simpl y is no flexibility for achieving compliance with targets that are between 14-22 percent more st ringent than they otherwise would be. Commenters stated, by incorporating such a sizeable and significant factor as the construction of nuclear units projects that are still ongoing, req uire substantial additional expenditures, and remain subject to additional regulatory actions - E PA has essentially created for these states a compliance target that is likely unachievable. Comm enters noted that this concern was emphasized by the Office of Management and Budget ( OMB) during the Interagency Review Process when OMB provided EPA with comments on this aspect of the proposal, stating: "EPA is proposing that the emission reductions achievabl e at fossil fuel-fired sources due to the generation that would be provided by these nuclear units under construction be factored into the state emission performance goal through Building Bl ock 3, effectively making them more stringent. Commenters said the inclusion of the fiv e new nuclear units that EPA has identified account for an inordinate amount of the goals that EPA is proposing for those states." (57 57 Summary of Interagency Working Comments on Draft La nguage under EO12866: Interagency Review, at p. 9 of 28 (attachment to e-mail dated M ay 15, 2014, from Robert Wayland, Leader, EPA Energy Strategies Group, to Cortney Higgins, Po licy Analyst, OMB/OIRA) (available in EPA's docket for this rulemaking) (hereinafter, "OM B Interagency Review Comments"). ) Commenters said, moreover, OMB stated that the "inc lusion of all generation from these units in the state goal is problematic as any prolonged outa ge would almost guarantee that any state relying on carbon-free nuclear generation to meet i ts annual carbon goal would fail to meet that goal." (58 58 Id. at 9.) Commenters believed OMB's concerns support the view that EPA's proposal for "under construction" nuclear generatio n imposes unachievable standards on the
affected states.457

Comment 4 : Commenters expressed concerns regarding the propo sed 90 percent capacity factor and why this is not realistic in goal setting.

Response 4: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include the provisions we had propose d for under-construction units in the setting of state goals, and will allow incremental generation from new nuclear units to be applied towards compliance. Please see section V.A of the preambl e for further discussion of the treatment of new nuclear plants, and section VIII.K of the pream ble for further discussion of provisions in state plans of allowable actions that result in an adjusted CO2 emission rate of an affected EGU.

The following are summaries of the specific public comments under this comment:

Commenters stated that EPA also factored in the exp ected generation from the under construction nuclear units at an assumed 90 percentcapacity factor in developing the interim and final state goals for these three states; however, it is not realistic to assume that these units will operate at such a high capacity factor from the dat e of first commercial operation. Commenters said although a capacity factor of 90 percent is a realistic long-term equilibrium value, these under construction units can be expected to experie nce a 'shake down' period once they commence operation when capacity factors could be s ignificantly lower. Commenters said moreover, as of late October, 2014, on average the total U.S. nuclear plant capacity factor was slightly less that 85 percent.

Commenters stated for purposes of each state's goal computation, generation from 'at risk' nuclear capacity is based on an estimated 90 percen t annual average capacity factor; EPA uses 90 percent because it indicates this utilization ra te is consistent with long-term average annual
utilization rates observed across the national nucl ear fleet. Commenters said EPA, however, does not provide a reference to justify the assumed util ization rate; furthermore, a long-term average is not consistent with EPA's guidelines that requir e a process for reporting on plan implementation, progress toward achieving goals, an d implementation of corrective measures no less than every two calendar years during the inter im compliance period and a three year average during the final compliance period. Commenters said in fact, the U.S. nuclear fleet recently operated below EPA's assumed 90 percent utilization rate. Commenters said in 2011 and 2012, the U.S. nuclear fleet operated at an 88.9 percent and 86.4 percent capacity factor respectively. Commenters said additionally, individual states may be considerably different than EPA's assumed utilization rate; for example, Florida's mo st recent three-year capacity factor for nuclear generation was 76.6 percent, and Mississippi's mostrecent three-year capacity factor was 83.5 percent. Commenters said as a result, EPA's across- the-board assumption that each state's nuclear capacity has and will continue to operate a t 90 percent capacity factor is not supported.

Commenters stated EPA's unjustified assumption thatPlant Vogtle Units 3 and 4 will be online and operating at 90 percent capacity factor by 2020 , and each year thereafter, creates a substantial risk that both routine and unexpected o utages at these units will require Georgia to obtain additional, expensive emission reductions el sewhere. Commenters said shutdowns for refueling, maintenance, and safety issues could lea d these units to operate at capacity factors below 90 percent for sustained periods. Commenters said likewise, it is possible that these new units will not operate at their full capacity durin g the first months or years of operation as plant operators test and fine-tune the new units. Comment ers said EPA's 90 percent capacity factor458

assumption, which is based on historical national a verage capacity factors for existing nuclear, is even more inappropriate for the nuclear units under construction because these units are first of their kind, new technology, which creates additiona l uncertainty regarding the time to ramp up to expected performance as well as on-going operations

.

Commenters stated neither GEPD nor EPA has the auth ority to force the operation of Plant Vogtle Units 3 and 4; as a result, if the capacity factors for these units fall below 90 percent, Georgia will be required by EPA's Section 111(d) pr ogram to make up for the potentially significant shortfall with more expensive renewable generation or energy efficiency, leading to large financial penalties for Georgia's early inves tments in zero-carbon nuclear power. Commenters said as OMB explained to EPA during the Interagency Review process, the "inclusion of all generation from these units in th e state goal is problematic as any prolonged outage would almost guarantee that any state relyin g on carbon-free nuclear generation to meet its annual carbon goal would fail to meet that goal ." Commenters said Congressional Research Service ("CRS") explained: "[i]f these anticipated units do not complete construction and enter service, these states would likely have more diffic ulty achieving their emission rate goals."
Commenters said the GEPD was more direct in its com ments, explaining that "underconstruction nuclear generation has such a signific ant impact on the goal that any shortfall in ultimate performance would be virtually impossible to overcome." Commenters said as a result,
EPA should remove under construction nuclear from i ts goal calculation for Georgia, and instead should treat Plant Vogtle Units 3 and 4 like any ot her future nuclear generation, not incorporated into the state goal, but available for compliance.

Commenters quoted NEI and EEI's evaluation of the t rue average lifetime capacity factor for the U.S. nuclear fleet, which determined that the avera ge lifetime capacity factor of the 100 nuclear plants currently in operation is 81.6% (through 201 3). Commenters suggested that, even to the extent that the final rule does not fully account f or all nuclear generation in state compliance plans, any generation from existing nuclear EGUs in excess of the average lifetime 81.6% capacity factor should be authorized for inclusion by states in their compliance demonstrations. Commenters also suggested that the final rule shoul d allow nuclear generation above the 81.6% lifetime capacity factor between the years 2012 and 2020 to be "banked" and applied toward post-2020 compliance.

Commenters stated that there are several deficienci es, inconsistencies and errors in EPA's methodology to include the 6% at-risk nuclear capac ity and 90% capacity factor of dispatch in the goal calculation. Commenters also pointed out s everal differences between the stated nuclear capacities for Ohio in the GHG Abatement Measures T SD with EIA reports. Commenters mentioned that EPA states in that document that 2,1 50 MW of nuclear capacity were operational in Ohio in 2012, however the 2012 EIA-860 report fo r the same year lists 2,236.8 MW of nameplate nuclear capacity. Commenters stated that the 2012 EIA-860 report gives a summer capacity of 2,134 MW.

Commenters stated that the EPA's unjustified assump tion that each of the five nuclear units under construction will be online and operating at 90% capacity factor by 2020 and each year
thereafter creates a substantial risk that both rou tine and unexpected outages at these facilities will require host states to obtain additional, expe nsive emission reductions elsewhere.
Commenters further stated that shutdowns for refuel ing, maintenance, and safety issues could459

lead these units to operate at capacity factors bel ow 90% for sustained periods, and that it is possible that these new units will not operate at t heir full capacity during the first months or years of operation as plant operators test and fine -tune these new power plants. Commenters quoted Office of Management and Budget (OMB) during interagency review comments: "inclusion of all generation from these units in th e state goal is problematic as any prolonged outage would almost guarantee that any state relyin g on carbon-free nuclear generation to meet its annual carbon goal would fail to meet that goal ." Commenters concluded that unlike Georgia, South Carolina, and Tennessee, states that did not invest in large, zero-carbon projects do not face such severe compliance risks under EPA's propo sal, and that this disparity is manifestly
unfair to the states that chose to invest in zero e mission generation.

Commenters stated that, in the Proposal, the EPA se eks to impose operational requirements on nuclear units, such as Vogtle 3 and 4. Commenters s tated that there is a fundamental problem with this portion of the Proposal - the Vogtle 3 an d 4 nuclear generating units (in fact, all U.S. nuclear generating units) are not affected sources under the CAA, including - in particular - section 111, the governing provisions for this rule . Commenters stated that therefore the EPA (and, either through Federal approval of its State programs or state authorizing legislation, the Georgia Environmental Protection Division ("EPD")) does not have the authority to require the construction or operation of Vogtle units 3 and 4 o r to even enforce the decision to build them. Commenters continued that this lack of authority is highlighted by the Proposal's assumption that Vogtle Units 3 and 4 will always operate at a 90% c apacity factor once on-line (a requirement then incorporated into the calculation of Georgia's state goals). Commenters stated that the 90% capacity factor assumption is without foundation, a nd that, according to the International Atomic Energy Agency, the average lifetime capacity factor of the 100 nuclear plants through 2013 is 80.3%, while the average nuclear plant capacity fac tor in 2012 was 86%. Commenters stated that, during the initial phase of nuclear operation s, capacity factors could be significantly lower than 90 percent, and that the EPA should lower its capacity factor assumption to a level consistent with what units have historically been a ble to maintain.

Comment 5: EPA's assumption of 5.8 percent "at risk" in the st andard-setting calculation does not accurately represent nuclear units that are "atrisk" of premature retirements.

Response 5: EPA acknowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for e xisting nuclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude existing nuclear power from BSER, and section VIII. K of the preamble for further discussion of provisions in state plans of allowable actions thatresult in an adjusted CO2 emission rate of an

affected EGU.

The following are summaries of the specific public comments under this comment:

Several commenters stated that the EPA's assumption that 5.8% of the nuclear power in each of the 30 states with nuclear power was "at risk" was flawed.460

Commenters stated that there is no logical or factu al basis to assume that six percent of the nuclear generation in every state with nuclear gene ration is "at risk." Commenters stated that, although there are nuclear plants at risk, they are generally located in states with competitive markets, not evenly distributed among all states wi th nuclear capacity. Therefore, commenters stated that the EPA's approach is thus arbitrary an d indefensible analytically. Commenters noted that in some states (depending on the make-up of th e state's generation portfolio), the six percent 'at risk' factor may have perverse and unintended c onsequences, i.e., a state could lose its nuclear generation, replace only six percent of it with oth er zero-carbon resources, still meet the intensity target, but total carbon emissions would increase. Commenters concluded that, as a result, the six percent nuclear factor does not achieve the intende d result: It provides no incentive for states to preserve nuclear capacity at risk.

Commenters stated that the EPA's treatment of exist ing nuclear energy in the proposed rule is fundamentally flawed due to the 'at risk' framework applied only to nuclear generation.
Commenters stated that the EPA underestimates the n uclear generation at risk of premature retirement in some states, and overstates the nucle ar capacity at risk in others. Commenters stated that public data shows that the "at risk" pl ants are not evenly distributed among all states with nuclear capacity, and that much more than six percent of nuclear capacity is at risk in competitive markets. Commenters noted that Illinois , for example, Exelon Corp. has indicated publicly that five of its 11 nuclear reactors are a t risk of premature shutdown, and that the 11 nuclear reactors in Illinois produce approximately 48 percent of the state's electricity.

Commenters concluded that in some states (depending on the make-up of the state's generation portfolio), the six percent "at risk" factor may ha ve perverse and unintended consequences, i.e., a state could lose its nuclear generation, replace on ly six percent of it with other zero-carbon sources, still meet the intensity target, but total carbon emissions would increase. Commenters stated that such an outcome does not support the go al of the regulation, reducing the effects of carbon emissions on global climate. Commenters conc luded that the six percent nuclear factor does not achieve the intended result, and EPA's dec ision to ignore 94 percent of nuclear generation is not justified: It provides no incenti ve for states to preserve nuclear capacity at risk.

Commenters also stated that if states are to achiev e meaningful emission reductions, carbon-free generation (including existing nuclear generation) must remain in operation or be replaced by carbon-free generation. Commenters noted that if a state has a single 1,000-megawatt nuclear plant that shuts down prematurely, six percent of t hat capacity would be only 60 megawatts, and a state could replace that easily with, for example , a new wind farm. Commenters recommended
that a state should not be indifferent to the loss of the remaining 940 megawatts of nuclear capacity, which would almost certainly be replaced by new gas-fired combined cycle units that
would increase the state's total carbon emissions. Commenters stated that, given the purposes of this rule, it would be arbitrary and capricious for EPA not to consider the possibility of this outcome, yet the proposed rule allows a state to be indifferent to the loss of 94 percent of its nuclear generating capacity, because it charges the state with the loss of only six percent of prematurely retired nuclear capacity.

Commenters also stated that retiring only six perce nt of a state's nuclear capacity is implausible, if not impossible. Commenters noted that the owner of a nuclear plant cannot retire six percent of the facility; the only choice is to retire it compl etely or keep it operating. Commenters further461

noted that number of states have only one nuclear f acility, which means that any retirement will necessarily be a retirement of 100 percent of the s tate's nuclear generating capacity. Commenters also noted that even in states with multiple nuclea r units, virtually any single nuclear unit will generate more than six percent of in-state nuclear generation. Commenters concluded that, if any nuclear facility is prematurely retired, it is near ly certain to represent more than six percent of a state's nuclear capacity. But Commenters stated tha t six percent is the most that is relevant under the proposed rule.

Commenters stated the EPA's rule could, paradoxical ly, increase the financial pressure on existing nuclear plants, because the rule expresses its targets in terms of a state-by-state emission
rate rather than actual emissions. Commenters state d that by measuring only the rate, not the total emissions, states could be encouraged to (1) ignore zero-emission resources like nuclear energy, and (2) focus instead on complying with the emission rate by artificially increasing the marginal cost of higher-emitting generators (like c oal-fired plants) while reducing the marginal cost of lower-emitting generators (like gas-fired c ombined cycle plants). Commenters provided the example that at a state might adopt an emission s credit regime that taxes higher-emitting fossil fuel plants and subsidizes lower-emitting fo ssil fuel plants. Commenters stated that, under such a program, a gas-fired combined cycle plant wo uld be able to sell electricity for less than its true marginal cost, thereby lowering the market pri ce of electricity for all generators, further undercutting the economic viability of existing nuc lear plants.

Commenters also stated that there are practical rea sons not to use a snapshot-in-time figure of nuclear capacity at risk as the basis for a rule th at will govern for decades. Commenters observed that market conditions are dynamic, and a plant tha t is not at risk today may be at risk tomorrow,
and vice versa.

Commenters stated that the 5.8 percent figure was c omputed based upon an AEO 2014 projection, without evaluating specific nuclear cap acity in each state. Commenters stated that this approach does not in any way reflect the actual sta te of existing nuclear capacity in any state, resulting in additional generation being included i n the goal setting equation for some states, if
not all. Commenters recommended that factors such a s license renewal and expiration dates, expected capital improvements, profitability and ot her factors should be considered and an appropriate unit/state specific risk factor be appl ied.

Commenters recommended that, consistent with EPA's desire for flexibility in development of State Plans, states should be able to justify and u tilize in their State Plans more state-specific determinations of "at risk" nuclear generation with in their state rather than being restricted to the numerical methodology set forth in the Proposed Rul e. Commenters stated that RTOs with capacity markets have tools available to assist sta tes in ranking the competitiveness of individual units under an "at risk" showing. Commenters stated that while confidentiality provisions would limit the specifics of this information being sprea d on the public record, states and RTOs could develop state and regional formulae that would bett er allow for the identification of at risk nuclear plants in a given footprint with the EPA me thodology than available solely as a default.

Commenters stated that the 6% credit for 'at-risk' nuclear is insufficient incentive to keep these units in operation, and does not reflect conditions in Georgia, and recommended that EPA should not include the at-risk nuclear in the goal computa tion. Commenters further stated that nuclear462

power plants/units are either fully operational or fully shutdown and their continued operation have been solely based on their ability to be re-li censed by the Nuclear Regulatory Commission (NRC).

Commenters asserted that states with existing nucle ar capacity are penalized in the calculation of emission rate goals. Commenters stated that under t he EPA's approach, states with nuclear power are left with a more stringent emission rate goal r elative to states that do not employ nuclear power because of EPA's inclusion of the 6% "at risk " generation factor in the calculation of state goals. Commenters recommended that this factor be d ropped in the determination of states' CO2 compliance goals.

Commenters stated that the method EPA has employed to include nuclear capacity in its development of state goals penalizes those states i n which there is both existing capacity and capacity under construction. Commenters stated thatthis penalty is in the form of additional nuclear generation being added into the denominator of the goal computation formula under Building Block 3, decreasing the overall calculated target rate (CO2 lbs/MWh) used to determine the state emission goals. Commenters asserted that a state without existing nuclear capacity will benefit from EPA's Building Block 3 relative to oth er states, in that its denominator will not include nuclear generation, resulting in a higher s tate goal. The commenters concluded that states that have nuclear generating units with zero CO2 em issions or that are currently developing nuclear units are effectively penalized and lose an y flexibility as to whether to complete or operate those units.

Commenters also stated the EPA's assumption that 5. 8 percent of each state's 2012 nuclear capacity is "at risk" does not in any way reflect t he actual state of existing nuclear capacity in any state, resulting in excessive generation being included in the goal setting equation for some states, if not all. Commenters recommended that if the EPA decides to include 'at-risk' nuclear generation in state goals (even though doing so inappropriately penalizes states with existing nuclear capacity), the EPA should evaluate factors such as license renewal and expiration dates, expected capital improvements, profitability, and o ther factors in order to determine an accurate state-specific assessment of at-risk capacity. Comm enters concluded that the EPA's proposed approach to existing nuclear generation, which it t hinks is an incentive to keep 'at-risk' nuclear capacity on-line, is merely a penalty.

Commenters stated that nuclear energy and hydroelec tric generation represent about 85 percent of current low- or zero-emitting resources, and all of the megawatts produced by nuclear and hydroelectric generation are zero-emitting. Comment ers further stated that, of the existing zeroemitting capacity (including nuclear, hydroelectric , solar, wind, and geothermal), 81.3 percent can be replaced (under the current formulation) wit h generation that emits at a rate equal to the state's goal rate, which will lead to CO2 emissions increases representing a huge step backwards from the starting CO2 emissions rate of zero for th ese technologies, and resulting from this rule.

Commenters concluded that while EPA's rates are rea sonable in that they reflect an easily achievable target in this regard, they do not go far enough, and in fact may create incentives to increase CO2 emissions. To fix this problem, the co mmenters recommended that if the EPA is going to continue to rely on building block 3 as an y part of the basis for its targets, the Agency463

will need to adjust the nuclear portion of its buil ding block 3 assumptions to more accurately reflect current and expected future conditions in t he industry.

Commenters stated that analysis by Justin Knowles a nd Remy Devoe , reveals that the current formulation of the building block 3 portion of the BSER target setting exercise actually rewards 15 states with lower apparent (calculated) target e missions rates if they shut down their nuclear power generation and replace it with natural gas ge neration, than the rates they would have if
more realistic nuclear scenarios were used in the t arget setting exercise.

Commenters presented the example of Illinois, where the current target CO2 emission rate calculated by the EPA, based on including 5.8 perce nt of nuclear power in the baseline, is 1,271
lbs/MWh. Commenters stated that if Illinois were to take its nuclear capacity offline and replace it with natural gas generation, its resulting emiss ions rate as calculated by the EPA would be 1,130 lbs/MWh, despite the fact that the state's ab solute CO2 emissions would have risen by 48.4 percent (considered on a mass basis, they would go from 163.7 million tons CO2 per year to 242.9 million tons CO2 per year). Commenters conclu ded that Illinois can drastically increase its actual emissions, and yet still meet or exceed its EPA state target emission rate.

Commenters asserted that a similar situation exists for 14 additional states, as illustrated by the Knowles and Devoe analysis. Commenters stated that in all states with nuclear generation, the importance of nuclear generation in maintaining and lowering CO2 emissions is undervalued by
the current baseline calculation. Commenters stated that the existing methodology leaves absolute emission reductions highly vulnerable to t he loss of nuclear power generation by omitting its contribution in the goal-setting step. Therefore, commenters recommended that the EPA include 100 percent of existing nuclear generat ion in the building block 3 BSER baseline
emission rate calculation -- and in the other eleme nts of the target setting methodology -- removing the incentive to retire existing nuclear g eneration and replace it with higher emitting generating resources.

Commenters recommended that the EPA eliminate the a t-risk nuclear provision from the goalsetting calculation. Commenters stated that the pro posed rule's "at-risk" nuclear provision results in more stringent goals for states with existing nu clear capacity than for states with no nuclear generation, and that states in which nuclear plants increased their output prior to 2012 are penalized rather than rewarded for this investment.

Commenters stated the EPA should instead provide an incentive for nuclear units to continue to operate and increase their capacity factor and outp ut, if possible. Commenters stated that the atrisk nuclear provision in the goal does not incenti vize nuclear plants to maintain operations; once constructed, nuclear plants are relatively cheap to operate. Commenters recommended excluding existing nuclear from the goal-setting calculation, but allowing states with existing nuclear to take credit for a portion of their nuclear generati on for compliance purposes would, in order to provide this incentive. Commenters stated that othe rwise, states are penalized for having nuclear that shuts down, when oftentimes there may be littl e states can do to keep nuclear generation operating. Commenters noted that states have little to no input on the decisions of nuclear plant operators to continue operations or shut down, and no input on the dispatch of nuclear units.464

Commenters also recommended that the EPA should rec ognize the early action that utilities have taken to increase nuclear plant output, such as the 2011 extended power uprate of 160 MW at the Point Beach Nuclear Plant. Commenters stated that, rather than getting any credit for this additional, zero-CO2 generation, the additional 160 MW only serves to increase the stringency of Wisconsin's goal by increasing the at-risk nucle ar factor in the goal-setting calculation. Commenters recommended that, if the EPA retains the inclusion of at-risk nuclear capacity in setting state goals, at least the capacity from rec ent (post-2005) uprates should be excluded from determining the amount of at-risk nuclear generatio n.

Commenters concluded that if the EPA does retain a provision in the goal-setting calculation to account for at-risk nuclear capacity, the EPA shoul d distinguish units that are truly at-risk and recalculate the percentage of "at-risk nuclear" use d in setting state goals. Commenters suggested that a non-regulated merchant plant could be consid ered at-risk, whereas a utility-owned plant in a rate-regulated state or a plant with a long-term power purchase agreement, such as Point Beach, would not be "at-risk."

Commenters stated the EPA's approach to account for nuclear capacity at risk of retirement is arbitrary and flawed. Commenters said the EPA ident ifies Texas as having 290 MW of nuclear capacity at risk of retirement; however, the smalle st nuclear power plant unit in Texas is approximately 1200 MW. Commenters said the EPA shou ld have considered the actual sizes of the nuclear units in the states before arbitrarily applying the 5.8% to the states' nuclear power plant fleets. In reviewing the National Electric E nergy Data System (NEEDS) data on nuclear units, the commenters have not found a single state with a nuclear unit small enough to correspond to the capacity which the EPA says is atrisk of retirement for that state. Commenters said the EPA's arbitrary application of the 5.8% wi thout consideration of other factors has resulted in a nonsensical adjustment to the state g oal. Commenters said the EPA's adjustment has an adverse consequence for states that actually hav e nuclear units at risk of retirement because EPA's approach assumes that only 5.8% of their flee t is at risk when in reality a higher percentage may actually be at risk of retirement.

Commenters stated in addition to violating the plai n language of section 111, EPA's proposal to incorporate approximately 5.8% of each state's supp osedly "at-risk" nuclear capacity in calculating state goals is also arbitrary and capri cious for the following reasons. Commenters said first, the study on which EPA relies does not project that 5.8% of Georgia's units are at risk of retirement; indeed, the assumption that Georgia may retire some of its existing nuclear capacity is unreasonable in light of the fact that the State's utilities are investing billions of
dollars to build additional nuclear capacity in the State; moreover, the costs of both new and existing nuclear generation are already included in their utilities' rate base. Commenters said consequently, temporary electricity market fluctuat ions -such as those that generators in competitive wholesale markets may experience- will not put Georgia's existing units at risk of retirement. Commenters said finally, none of Georgi a's four existing reactors will be required to seek a license extension until at least 2034; there fore, there is no reason to believe that any of
these units are at risk of retirement in the near f uture. Commenters said EPA should not arbitrarily apply an assumption that was developed on a national scale for nuclear facilities in different market situations to Georgia's four exist ing reactors -all of which are expected to continue providing power for the foreseeable future

.465

Commenters stated furthermore, the Proposed Rule's treatment of existing nuclear capacity is also arbitrarily inconsistent with the proposal's t reatment of other large, existing sources of emission-free electricity, such as hydroelectric da ms or RE facilities. Commenters said EPA asserts that the inclusion of 5.8% of existing nucl ear capacity in calculating states' emission goals is reasonable because the EIA projects that this pe rcentage of existing nuclear capacity will retire due to "continued economic challenges; however, bot h hydroelectric facilities and RE facilities also face market and non-market challenges that cou ld lead to reduced capacity or shutdown in future years. Commenters said for example, a number of hydroelectric dams have been removed due to safety, economic, or environmental concerns, and others are at risk of removal or derating due to Endangered Species Act and other conc erns.

Commenters stated renewable energy facilities in Ca lifornia and other markets could also face economic challenges as the supply of non-dispatchab le RE exceeds demand for lengthy periods or as their generation technology degrades over tim e. Commenters said the typical operating life of a solar facility is 30 years, whereas a typical wind facility is 20 years; therefore, existing RE
facilities that were installed before 2010 are like ly to begin retiring in large numbers during the proposed interim and final compliance periods; on t he other hand, nuclear facilities typically hold operating licenses that last 40 years, with th e opportunity to apply for an additional 20-year license extension (as Georgia's Hatch Units 1 and 2 have done). Commenters said consequently, it is at least as likely that existing RE and hydro electric resources will shut down or retire during the Proposed Rule's compliance period as it is thatnuclear facilities will do so. Commenters said despite this reality, EPA has not proposed to penal ize states that retire existing hydroelectric or RE capacity by incorporating an assumption about "a t-risk" hydroelectric or RE generation into state goals; EPA's decision to include only some "a t-risk" emission free resources in state goals while excluding others is arbitrary and capricious.

Commenters stated another flaw in EPA's proposal to penalize Georgia if utilities in the State fail to preserve their existing nuclear reactors is thatGeorgia has limited control over whether nuclear capacity in the State is preserved or retir ed. Commenters said the fact that all plants in the State are licensed until at least 2034, combine d with the fact that nuclear generation costs are included in Georgia's customers' rate base, signifi cantly reduces the likelihood that these power plants will need to retire, negative long-term regi onal or national trends that are beyond Georgia's control could still require their utiliti es to shut down or reduce operation at one or more of their existing reactors. Commenters said fu rthermore, changes to federal regulations, such as those that followed the Fukushima disaster, could also impose additional requirements on existing reactors that would lead to early retireme nt; therefore, although it is highly unlikely and arbitrary for EPA to consider Georgia's four existi ng reactors at risk of retirement, the fact remains that Georgia cannot itself guarantee that t hese units will continue to generate electricity in the future. Commenters said consequently, it wou ld be arbitrary and capricious to consider the preservation of existing nuclear capacity to be an "adequately demonstrated" system of emission reduction for Georgia's power plants, because the S tate and its utilities have little control over whether these facilities will continue to operate i n the future if economic or regulatory changes make continued operation impossible or uneconomic.

Commenters stated in the 2012 baseline year propose d by the EPA, approximately 30 percent of generation produced in the RGGI region was derived from nuclear resources; in fact, even as466

demand in the RGGI region decreased over time, nucl ear generation increased its percentage share of the total in-region generation by 3 percen t between 2005 and 2012.

Commenters stated the overall experience of the RGG I states demonstrates that a mass-based approach to emission reductions can incentivize eco nomic and otherwise viable nuclear resources to remain on-line by increasing the compe titiveness of legacy nuclear resources with fossil fuel-fired EGUs (which should increasingly r eflect a carbon price in their offerings). Commenters said however, experience in the RGGI reg ion suggests that financial and other
issues need to be taken into consideration when eva luating or forecasting the contribution of nuclear resources, particularly in light of the tra nsformation of the natural gas market in recent years. Commenters said in the rate-based goal-setti ng methodology at issue here, the EPA proposal attempts to incentivize states to retain e xisting nuclear generation through the inclusion of an at-risk assumption in the goal computation me thodology.

Commenters stated while additional incentives may b e necessary - especially at the federal level, the EPA should remove the at-risk assumption from t he goal computation methodology since its design neglects to account for the full range of po ssible circumstances in which a nuclear resource may be pressed into retirement. Commenters said if the EPA opts to retain its proposed approach, then the EPA should consider outlining an off-ramp by which the nuclear generation component would be removed from a state's goal comp utation upon expiration of an existing license or following an accident that translates in to cost-prohibitive repairs.

Commenters continued EPA calculates the generation (in MWh) of electricity from 'at risk' nuclear plants and then adds this generation to the denominator of the goal, resulting in a more stringent 2030 emission rate for states with nuclea r capacity. Commenters said EPA explains that the proposed rule counts only six percent of existi ng nuclear facilities because (according to EPA) six percent of nuclear capacity nationwide is "at risk" for premature retirement.

Commenters stated however, if states are to achieve meaningful emission reductions, it is important that all existing nuclear generation (as well as all existing zero-emission sources) remain in operation-yet the proposed treatment of " at risk" nuclear generation inadequately promotes this goal. Commenters said for instance, i f a state has a single 1000 MW nuclear plant that is retired, six percent of that capacity will be only 60 MW-capacity that a state could easily replace with, e.g., a new wind farm. Commenters sai d a state should not be indifferent to the loss of the remaining 940 MW of nuclear capacity-supply that will almost certainly be replaced in large part by new NGCCs that will increase the stat e's total carbon footprint. Commenters said yet such indifference is precisely what the propose d rule fosters by charging the state with the loss of only six percent of prematurely retired nuc lear capacity and providing no incentive to keep the remaining nuclear capacity in operation.

Commenters stated moreover, the proposed rule's rat ionale for counting only six percent of nuclear generation-namely, that only six percent of nuclear capacity is "at risk"-is too broadly applied. Commenters said first, the reality is that"at risk" nuclear facilities are concentrated in a small number of states with competitive markets, ge nerally located in three regions of the country: the Northeast, the Midwest and the Great L akes. Commenters said in those areas, the
fraction of the merchant nuclear fleet that is at r isk of early retirement is much greater than six percent. Commenters said in other regions, where nu clear plants are owned by regulated utilities,467

the fraction of the at-risk fleet is much less than six percent and, in many of those states, effectively zero. Commenters said second, if any nu clear facility is prematurely retired, it is nearly certain to represent more than six percent o f a state's nuclear capacity-indeed, likely far more. Commenters said for example, a number of stat es have only one nuclear facility-which means that any retirement will necessarily be a ret irement of 100 percent of the state's nuclear fleet; yet six percent is the most that is relevantunder the proposed guidelines. Commenters said EPA's decision to count the six percent of nuclear generation "at risk" when setting state-specific goal rates unreasonably increases the stringency of state goals where nuclear already exists while not providing an adequate incentive to maintain the economic viability of any "at risk" nuclear plants.

Commenters stated finally, there are practical reas ons not to use a snapshot-in-time figure of nuclear capacity at risk as the basis for a rule th at will govern for decades; market conditions are dynamic, and a plant that is not at risk today may be at risk tomorrow.

Commenters stated if EPA is going to continue with its proposed interpretation of BSER, the Agency should remove the six percent "at risk" nucl ear capacity from the goal calculation. Commenters said a number of alternative approaches to the treatment of existing nuclear generation will be offered by stakeholders in indiv idual comments. Commenters said one approach that EPA should consider, however, is for a state to demonstrate in its plan reasonable assurance that it will preserve its existing carbon -free generating capacity, particularly nuclear generating capacity. Commenters said for operating nuclear generating units in regulated states, such assurance already exists because integrated ut ilities have a reasonable opportunity to recover costs, plus a reasonable return. Commenters said in competitive states with nuclear generating units potentially at risk, this could in volve a commitment to policy changes through legislation or regulation, or other market-based me chanisms, or a combination that would create incentives for continued operation of these zero-em itting generators.

Commenters recommended in the event of premature ec onomic shutdown of a nuclear unit (most likely to occur in a competitive market if the unitis not recovering its costs), the lost nuclear
kilowatt-hours should be subtracted from the denomi nator of the state's compliance calculation. Commenters said this would provide states an unequi vocal signal that existing nuclear generating capacity has irreplaceable carbon abatement value a nd must be preserved. Commenters said this compliance penalty would not apply in any situation or in any state where a nuclear unit shuts down for reasons beyond a state's control. Commente rs said this compliance penalty would only be applied for the period between premature shutdow n and the end of the unit's remaining useful
life.

Commenters stated relying on a national projection from the EIA, the Agency has estimated that six percent of the nation's nuclear capacity is at risk of premature retirement; however, public data shows that a much larger percentage of the mer chant nuclear generating capacity in competitive markets is at risk, and that the "at ri sk" plants are not evenly distributed among all of the states. Commenters said in some states, such as Illinois, significantly more than six percent of the merchant nuclear capacity is at risk. Commenter s said there, for example, Exelon Corp. has indicated publicly that five of its 11 nuclear reac tors in the state are at risk of premature
shutdown. Commenters said the eleven nuclear reacto rs in Illinois produce approximately 48 percent of the state's electricity.468

Commenters stated EPA's inclusion of 'at risk' nucl ear capacity is arbitrary and serves only to penalize states with existing nuclear capacity. Com menters said the Agency has made no attempt to evaluate whether any nuclear capacity is actuall y at risk of retirement in any state, instead extrapolating from generalized estimates of nationw ide nuclear retirements. Commenters said the
result is that EPA overestimates the amount of nucl ear capacity that is at risk (if any) in most, if not all, states. Commenters said even if some nucle ar capacity is at risk in a state (whether at the level EPA estimates or at some lower level), includ ing this capacity in a state's goal does nothing to incentivize its preservation because states have no control over the primary factor threatening
nuclear EGUs: federal license renewal. Commenters s aid thus, because states have little ability to promote nuclear capacity and can only be harmed by including under construction and 'at risk' capacity in the goals, EPA's approach is simply a p enalty and not an incentive. Commenters said to the extent preserving and increasing nuclear cap acity needs to be incentivized, that needs to be done by the relevant federal agency (the Nuclear Re gulatory Commission) to the extent Congress has given that agency that authority. It cannot be done, however, by EPA through the CAA.

Commenters recommended that existing nuclear should be removed from the state goal setting calculation because it does not represent the nucle ar units "at-risk, and that the inclusion of existing nuclear in the proposed rule only increase s the compliance risk for those states that have existing nuclear capacity. Commenters stated that " the true 'at-risk' units are plants that are not economically viable in capacity markets due to low natural gas prices and units that are not planning to seek re-licensure through the Nuclear R egulatory Commission.

Commenters stated in 2012 nuclear-powered generatio n comprised 48 percent of generation in Illinois, 47 percent in Connecticut, 36 percent in Maryland, and 30 percent in New York.
Commenters noted that if some amount of at-risk nuc lear generation is discontinued, as projected by the U.S. Energy Information Administration, then emissions or emission rates would be likely to increase unless the lost generation capacity was replaced entirely with non-emitting resources or avoided through demand-side energy efficiency.

Commenters stated EPA's assumption that 5.8% of eac h state's nuclear fleet is "at risk" for retirement is flawed. Commenters said for Texas, EP A assumed that 290 MW of nuclear capacity is "at risk" for retirement even though th is does not equate to a full nuclear unit.
Commenters said EPA should have considered the actu al size of nuclear units that were actually at risk for retirement rather than applying an arbi trary percentage to all states. Commenters said EPA does not specify any type of monitoring or veri fication for at risk nuclear generation; nor is it clear how or whether actual net nuclear generati on would be taken into account for complying with Rule 111(d). Commenters said while this assump tion does not appear to have a meaningful impact on Texas's emissions rate, it further illust rates the arbitrary and unreasonable manner that EPA has used in promulgating Rule 111(d).

Commenters stated in 2007, the Commission approved the construction of two new advanced nuclear generating units at the Vogtle site which w ill produce approximately 2,200 MW of carbon-free base-load power. Commenters said the ru le treats these new units, which are projected to be in service in 2017 and 2018, for Un its 3 & 4, respectively, as existing resources. Commenters said as such, the rule appears to be pun itive to Georgia and its citizens.
Commenters said if these exact same nuclear units w ere announced today, the full value of production would be available for environmental com pliance; penalizing states for being469

proactive sends the wrong signal to those responsib le for making planning decisions to meet energy needs.

Commenters stated by reducing nuclear production to only 5.8% of current units and removing units currently under construction from the goal ca lculation, the proposal sends a negative signal to utilities to invest in nuclear generation. Comme nters said the reduced figure is based on specific "at risk" units in other states which have no bearing on the longevity of the current nuclear units in Georgia. Commenters said the Techn ical Support Document for Greenhouse Gas Abatement Measures show that 237 MW of nuclear capa city is at risk implying that a portion of a unit (or multiple) would shut down. Commenters sa id these units will either be in full operation or retired, there is no option for partial electric ity production. Commenters said applying risks and the subsequent emissions reductions to units th at are clearly not at risk of retirement is illogical and should be changed in the final rule. Commenters said the EPA should tailor the rule to each specific unit individually and not rely on blanket assumptions in the rulemaking process.

Commenters questioned the methodology used by the E PA in calculating the contribution of nuclear plants to the state goal in Building Block 3. Commenters said EPA determined that 5.8 percent of the existing nuclear fleet is at-risk, a nd in calculating the state goal assumed that the existing nuclear generation in each state would be reduced by that amount. Commenters said that at-risk generation was used in the calculation of t he goal, but is then awarded to the state without conditions in calculating compliance with the goal. Commenters said at-risk nuclear plants are in danger of a total shut-down, not a curtailment in t heir generation; therefore, existing nuclear plants should not contribute to the state goal calc ulation, and only existing nuclear plants that are truly at-risk should be counted for compliance purp oses, provided the approach is lawful under Section 111 (d) of the CAA. Commenters said in Penn sylvania, the nuclear portion of Building Block 3 accounts for 7.8 percent of the state goal.

Commenters stated EPA's assumption that six percentof existing nuclear capacity in the Southeast is 'at-risk' of retirement is improperly based on national data and averages. Commenters continued EPA has determined that preser ving the operation of at-risk nuclear capacity would likely help achieve CO2 reductions f rom affected EGUs at a reasonable cost. Commenters said EPA then concludes that approximate ly six percent of existing nuclear capacity
across the nation is 'at risk' of closure due to cu rrent market conditions. Commenters said in discussing the preservation of the existing nuclearfleet, EPA notes several factors that have led
to the retirement of six nuclear EGUs since 2012: i ncreasing fixed operation and maintenance costs, relatively low wholesale electricity prices, and additional capital investment associated with ensuring plant security and emergency prepared ness. Commenters said other factors include increased costs due to an inefficient regulatory pr ocess and defects in merchant market policies that do not value fully the various attributes of b ase load nuclear plants. Commenters said EPA relies on the EIA's Annual Energy Outlook 2014 to p roject that 5.7 GW of nuclear capacity is likely to retire. Commenters said EPA views this 5. 7 GW, which comprises approximately six percent of existing U.S. nuclear capacity, as a rea sonable proxy for the amount of nuclear capacity at risk of retirement. Commenters said EPA then factored in the zero emissions generation from operating these at-risk units at a 90 percent capacity factor in developing the interim and final state goals for all states that h ave existing nuclear capacity.470

Commenters stated EPA factors in the continued oper ation of six percent of nuclear generation into the goal for every state that has existing nuc lear capacity, regardless of whether the Agency believes a specific unit in a state is an early clo sure risk; for example, EPA's BSER determination concludes that approximately six perc ent of the nuclear capacity in Alabama, Florida, Georgia, and Mississippi will retire by 20 19 absent EPA's rulemaking. Commenters said all of the nuclear capacity in Alabama, Florida, Ge orgia, and Mississippi is licensed to operate beyond 2019; in fact, only one license is currently scheduled to expire prior to 2030, and that unit already is in the relicensing process.

Commenters stated as a result, even based on EPA's flawed methodology, there is no basis to lower the state goals for Alabama, Florida, Georgia , or Mississippi to account for nuclear units that may be at risk of retirement; these units will continue to operate through 2030 regardless of this rulemaking.

Commenters stated further, to arrive at its conclus ion that 5.7 GW of nuclear capacity is at risk of retiring, EPA references EIA's "most recent Annu al Energy Outlook" and an April 2014 EIAauthored article, which states:

"[t]he AEO2014 Reference case assumes an additional 6 GW of generic nuclear retirements from 2012 to 2019, beyond the six reactor retirements al ready announced (a total that includes the Oyster Creek plant), as higher-cost units face cont inued economic challenges."

Commenters stated the results from EIA's AEO2014 Re ference case provided online, however, only show 4.8 GW of nuclear retirement by 2020. Com menters said at the very least, EPA must explain this discrepancy or use the 4.8 GW capacityrather than 5.7 GW.

Commenters stated penalties associated with existin g nuclear power should be eliminated, as they are contrary to the goals of the proposed plan . Commenters said the application of 5.8 percent at-risk nuclear plants to every state with nuclear energy is not appropriately considering the actual nuclear power availability in the states with those plants. Commenters said such a generalization is not appropriate or accurate, sinc e the risk of closure is almost certainly quite high for a minority of plants and quite low for man y others. Commenters said states are in the best position to evaluate the real risk of closure of any particular plant.

Commenters stated Michigan currently has four opera ting nuclear reactors at three plants; three nuclear reactors (D.C. Cook 1 and 2, and Palisades) were recently relicensed by the Nuclear Regulatory Commission (NRC) to operate another 20 y ears, and one (Fermi II) is currently under review by the NRC for relicensing. Commenters said as such, while Michigan qualifies to claim the 5.8 percent 'at risk' provision under Building Block 3, it is unclear as to whether the USEPA's proposal provides any incentive worth claiming for the carbon reductions attained through the use of nuclear generation, even though nuclear gene ration does not emit any of the pollutant actually being regulated, while natural gas generat ion does.

Commenters stated they generally understand the app roach proposed by the USEPA to keep existing nuclear assets that are at risk of prematu re shut-downs to continue operating; however fail to see how this treatment protects the ability of those existing nuclear assets to continue producing base-load, zero-carbon energy. Commenters recommended USEPA to consider471

adopting another methodology as a means to incentiv ize continued operation of existing nuclear assets. Commenters stated possible methodologies in clude:

1)Consider all or a substantial percentage of gener ation from existing nuclear units and assume a more reasonable capacity factor reflecting forced/u nforced outages in setting the standard; this would create a tangible incentive for states with n uclear to use for compliance purposes.

2)Remove nuclear generation from the existing rate- setting formula, but allow states to reflect any retired nuclear units by removing lost generati on from prematurely closed nuclear units from the denominator of the compliance rate formula.

Commenters stated they recommend the USEPA conside r a 'safety valve' approach in the state compliance plan to address compliance risks in cert ain situations such as:

1. Retirement of a nuclear unit prior to its licensed life.

2. Equipment failure or catastrophic event that render s the unit uneconomic to repair or replace.

3. Nuclear uprating projects and relicensing should be able to be credited towards compliance as well; the additional generation would be added into the denominator of the goals.

Commenters recommended that the 5.8 percent nuclear generation component should be removed from states' interim and final goals. Comme nters said the current methodology of adding 5.8 percent of the state's 2012 nuclear capa city (operating at a 90 percent CF) into the rate-based goal denominator has the effect of needl essly lowering a state's final and interim goals. Commenters said the fact that most states wi th nuclear generation would receive this MWh 'credit' with virtually no change to the state' s electric industry does not justify the inclusion of this element to the BSER; it does not reflect th e full extent of a state's nuclear generation.

Commenters stated 'Forced and unforced' outages wer e experienced at all four of the nuclear plants in Michigan during 2011, 2012, and 2013. Com menters said nuclear units require periodic planned outages (unforced) for refueling the reacto rs, as well as performing routine maintenance while the units are down for refueling. Commenters said beyond these planned outages, the nuclear units in Michigan also had 'unplanned' or f orced outages due, in part, to equipment failure, water leaks, and safety-related issues, wh ich resulted in the units being down for
considerable amounts of time. Commenters said as nu clear units typically operate 24 hours a day, seven days a week, 365 days per year due to th eir inherent design and operation, having units down for more than the unforced outages requi red utilities to obtain replacement energy
from the MISO market to meet their customer demand during this period. Commenters said this replacement energy was comprised of a mix of genera tion fuel types, most of which was coal and gas; hence, the emission profile for 2012 refle cts a variance from what the emission profile would have been had the nuclear units been operatio nal under their typical CFs.

Commenters stated the CF of Michigan's nuclear flee t in 2012 was 80.6 percent, which is less than the 90 percent CF assumed in the proposed rule . Commenters said outages in April and December at Fermi II were largely responsible for l owering this fleet wide CF. Commenters said472

plant outages may be unavoidable and the USEPA's pr oposed treatment of nuclear generation gives little accommodation to this operational real ity. Commenters said the current methodology assuming a 90 percent CF creates a larger carbon re duction obligation than if the USEPA had used 2012 nuclear generation (in MWh and also multi plied by 5.8 percent). Commenters said a three-year average (2011 to 2013) of the fleet wide CF would yield 86.4 percent, still less than the 90 percent CF assumed in the USEPA's calculatio n.

Commenters stated it is important to note, however, that due to increased natural gas generation and renewables across the United States, as well as RTO market structure issues, nuclear generation is facing economic pressures to compete on a more level playing field and remain viable into the future as part of the base-load ene rgy mix. Commenters said indeed, this issue bears individual attention by federal regulators (F ederal Energy Regulatory Commission [FERC] and NRC) beyond the application of an 'at-risk ince ntive' within the confines of USEPA Section 111(d) compliance.

Commenters stated Michigan should achieve, or come close to achieving the emission reductions set forth in Building Blocks 3 and 4 if it can also achieve reductions in CO2 emissions equivalent to those in Building Blocks 1 and 2.

Commenters stated Michigan should be able to count the proposed 5.8 percent 'incentive' for atrisk nuclear; however, commenters believe that nucl ear generation should be eliminated from calculation of the rate-based goals. Commenters rec ommended that USEPA consider adopting another methodology as a means to incentivize conti nued operation of existing nuclear assets; possible methodologies include but are not limited to:

• Consider all or a substantial percentage of generat ion from existing nuclear units and assume a more reasonable capacity factor reflec ting forced/unforced outages in setting the standard; this would create a tangib le incentive for states with nuclear to use for compliance purposes.

• Remove nuclear generation from the existing rate se tting formula, but allow states to reflect any retired nuclear units by removing lost generation from prematurely closed nuclear units from the denominator of the complianc e rate formula.

Commenters stated with reliability being the watchw ord in this entire rulemaking, it is essential
that we facilitate those alternatives that we can t ruly count on for replacing any and all fossil burning plants that are retired. Commenters said re newable sources - with all of the benefits and significant potential they offer for the long-term future - will still have relatively limited capacit y in the big picture over the next several decades. C ommenters stated it takes an enormous amount of energy to meet our nation's power generation nee ds; if we are going to retire a large number of fossil plants, the replacement plan must be properl y crafted to allow nuclear power to play a significantly larger role.

Commenters specifically recommended that the EPA, e nsure greater reliance on nuclear energy in the plan by fully crediting existing nuclear pow er plant capacity and promoting additional means to assist states in expanding nuclear generat ion capacity.473

Commenters stated in the Proposed Rule, the nuclear generation component is based on a percentage of existing nuclear capacity (6%), which EPA considers at risk of premature
shutdown. Commenters said EPA based this on the Ene rgy Information Administration's 2014 Annual Energy Outlook study that concluded about 6% of all U.S. nuclear units would be retired
for various reasons in the near term. Commenters sa id EPA assumes 6% of a State's 2012 nuclear capacity runs at a 90% capacity factor and then add s those megawatt-hours when calculating a State's intensity target. Commenters said states ar e then allowed to take credit for up to 6% of the generation from these units in their compliance cal culations, which, in EPA's view, provides States an incentive to avoid premature nuclear shut downs; however, 6% is not an incentive if it merely holds a utility or State whole - that is, if 6% of "at risk" nuclear generation is used in calculating a State's goal, a 6% credit for complia nce simply makes the economics of running the
"at risk" units neutral at best. Commenters said th is is not really much of an incentive to a utility, if any, to keep an "at risk" unit running. Commente rs said if EPA wishes to provide a true incentive, it should take the 6% out of a State's g oal calculation, but allow States to take compliance credit for up to 6% of the generation fr om 'at risk" facilities."

Commenters concluded if EPA insists on keeping the 6% in the goal calculation, the Agency should allow a higher percentage of existing nuclear generation to be counted in meeting individual state goals - for example, 20% instead o f 6%. Commenters said while these existing nuclear units do not emit any CO2, they do represen t significant initial investments by their owners. Commenters said these units also require hi gh levels of capital expenditures to maintain operations and to comply with ever-evolving safety requirements. Commenters said increasing the percentage of nuclear generation counted toward s the state goal to 20% would create meaningful incentives to keep operating these units as they approach the end of their lives and to build new CO2-free nuclear units; however, increasi ng the nuclear contribution toward meeting state goals to 20% should not result in any increas e in setting individual state goals.

Commenters stated that the EPA explains that the go als in the Proposed Rule account for only six percent of existing nuclear generation because (according to EPA) six percent of nuclear capacity nationwide is "at risk" for premature reti rement. Commenters stated that justification cannot support the decision to effectively discount nuclear generation by 94 percent.
Commenters stated that if states are to achieve mea ningful emission reductions, it is important that all existing nuclear generation remain in oper ation - yet the proposed treatment of nuclear generation inadequately promotes this goal.

Commenters stated the Proposed Rule's rationale for counting only six percent of nuclear generation - namely, that only six percent of nucle ar capacity is "at risk" - is neither logical nor defensible on its own terms. Commenters said first, whatever amount of capacity is "at risk" nationwide, the reality is that "at risk" nuclear f acilities are concentrated in a small number of states; specifically, at-risk nuclear plants are co ncentrated in states with competitive markets, generally located in the Midwest and Great Lakes re gions. Commenters said in those areas, the fraction of the fleet that is at risk of early reti rement is much greater than six percent. Commenters said in other regions, where nuclear pla nts are owned by regulated utilities, a smaller fraction, and possibly none, of the fleet i s at risk.

Commenters stated second, even within the regions w here at-risk nuclear plants are concentrated, conditions vary significantly from state to state o r even within the state. Commenters said474

Illinois, for example, generates more nuclear energ y than any other state - 47 percent of the state's electricity generation is provided by nucle ar facilities; however, many nuclear plants in Illinois are facing significant economic pressure, not only because shale gas has driven down the prices of both natural gas and electricity, but als o because wholesale electricity prices are suppressed by an increasing amount of subsidized wi nd generation in transmission-constrained areas. Commenters said these economic pressures are particularly severe for nuclear plants located on the western side of Illinois, where wind power imports have overloaded the local transmission system and significantly depressed pow er prices. Commenters said prices in the northwest corner of the state are now 25 to 30 perc ent less than at the Northern Illinois hub; as a result of these dynamics, some of Exelon's plants i n Illinois are losing money, as discussed above. Commenters said if a path to financial susta inability cannot be found, these units may be shut down to avoid long-term losses; for example, i n the last capacity auction held by PJM, price signals pointed toward the premature retirement of the Byron and Quad Cities stations in Illinois.
Commenters said these units were unable to sell the ir capacity in the auction, as market prices were lower than these plants required to remain fin ancially viable; likewise, market revenues have been too low to sustain the Clinton station, w hich is located in the MISO region. Commenters said each of these stations produces far more than six percent of Illinois's nuclear generation, and collectively, they generate a combi ned output of 43,300 GWh each year, which is approximately 45 percent of Illinois's nuclear g eneration and 21 percent of the state's total electricity generation. Commenters said these numbe rs demonstrate that EPA's use of a nationwide average fails to account for the many fa cilities that, in reality, are at imminent risk of shutting down.

Commenters stated third, a scenario in which only s ix percent of a state's nuclear generation is retired is implausible, if not impossible. Commente rs said the owner of a nuclear unit cannot retire only six percent of the unit, thus, its only choices are to retire the unit completely or keep the unit operating. Commenters added that a number of states, meanwhile, have only one nuclear unit - which means that any retirement will necessarily be a retirement of 100 percent of the state's nuclear fleet; and even in states that cont ain multiple nuclear units, virtually any single nuclear unit will generate more than six percent of nuclear generation. Commenters said the Ginna unit in New York is instructive; it is a smal l unit - only 583 MW - but still amounts to 11 percent of New York's nuclear generation; thus, if any nuclear unit is prematurely retired, it is nearly certain to represent more than six percent o f a state's nuclear capacity - indeed, likely far more; yet that six percent is the most for which th e Proposed Rule's goals account.

Commenters stated fourth, it is illogical to use a snapshot-in-time figure of nuclear capacity at risk as the basis for a rule that will govern the p ower sector for decades. Commenters said market conditions are dynamic: just six years ago, before cheap natural gas and subsidized renewables began to drive nuclear wholesale prices down, nucle ar plants did not face the economic challenges that they face today; thus, a plant thatis not at risk today may be at risk tomorrow. Commenters said indeed, by potentially spurring fur ther subsidization of renewable and natural gas generation, the Clean Power Plan itself may wel l increase the economic vulnerability of nuclear plants. Commenters said EPA's own analysis demonstrates that the proposed guidelines have the potential, paradoxically, to increase the financial pressure on existing nuclear plants; this will occur if states in competitive markets ch oose to comply with EPA's emissions rate target by subsidizing natural gas or renewable generation in a manner that allows such generation to sell electricity for less than its true marginal co st, which would have the effect of artificially475

lowering the market price of electricity for all ge nerators and further undercutting the economic viability of existing nuclear plants.

Commenters stated finally, even if 94 percent of nu clear capacity truly is safe from early retirement, and will remain so throughout the fores eeable future, that still is not a reason to give states credit for only six percent. Commenters said even if nuclear capacity were not at risk, counting it in a state's initial and target emissio ns rate or in a state's compliance calculation coul d do no harm: although the state would be responsible for preserving the nuclear capacity, it would by definition be preserved without further action f rom the state. Commenters said treating nuclear generation as safe when it is actually vuln erable, on the other hand, would insufficiently incentivize a state to preserve it - and, as descri bed above, could result in the premature retirement of a critical carbon-free resource, resu lting in the expansion of a state's carbon footprint.

Commenters stated that no nuclear generation in Ark ansas was known to be "at risk," and that the 5.8% assessment regarding "at risk" nuclear tha t the proposed Rule assumes for each state should be removed from the Arkansas state goal comp utation.

Commenters stated they know of no nuclear generatio n in Arkansas that is considered or has been identified as 'at risk,' as all nuclear genera tion is currently operational and does not appear threatened; therefore, the 5.8% assessment regardin g 'at risk' nuclear that the proposed Rule
assumes for each state should be removed from the A rkansas state goal computation. Commenters said this incorrect assumption only serv es to artificially lower Arkansas' target emission rate, which compounds the effort and money Arkansas will have to expend to achieve its already disproportionate 44% emissions reductio n. Commenters said setting aside the question of whether a premise that 'at risk' nuclear generation could be used to reduce emissions from a fossil unit has any legal basis, 'at risk' n uclear should only be a factor for states that whos e nuclear capacity is truly 'at risk.' Arkansas is no t one of those states.

Commenters stated contrary to the proposed Rule's a ssumption, the nuclear units in Arkansas are currently not 'at risk' of shutting down; this inac curate assumption artificially lowers Arkansas's target emission rate.

Commenters stated that the factor six percent of st ates' nuclear generation into states' emission rate goals penalizes states and companies that inve sted in nuclear generation, because existing plants will eventually retire and must be replaced by emission-generating plants. Commenters
recommended that the EPA should allow states to rev iew and amend their emission rate goals based on circumstances arising after finalization o f the rule, such as when a nuclear license is not
renewed.

Commenters stated that the EPA's assumption of 5.8 percent "at risk" in the standard-setting calculation does not accurately represent nuclear u nits that are "at risk" of premature retirements due to market conditions, because some states are m ore impacted than others.

Commenters recommended that any megawatt hours from an individual nuclear unit that exceeds the national average capacity factor or that partic ular unit's lifetime capacity average should be available annually for compliance.476

Commenters stated that keeping the 5.8 percent nucl ear generation in the standard-setting
formula could have unintended effects on emissions if a nuclear unit shuts down for an extended period. Commenters stated given the various roles o f nuclear generation in each state, including which plants are 'at-risk', EPA should provide stat es several options to consider when including nuclear generation in its goal setting formula; for example:

• EPA could remove existing nuclear from the rate-set ting formula, but require states to reflect any lost nuclear when calculating compliance (e.g., by subtracting the lost output from any prematurely closed existin g nuclear units from the denominator of the compliance rate formula); in thi s context, premature retirements would include those that occur before t he end of the current licensing period, with an exception for catastrophic malfunct ions where repair costs exceed
the emissions benefits.

• States with existing nuclear generation could be au thorized to determine how much should be included in goals (including determi ning their own levels of "at risk" in-state nuclear generation), recalculate the goals, and then allow this existing zero-emissions generation to be used for c ompliance."

Commenters continued if nuclear generation is inclu ded in a state's goal, Commenters recommends that EPA allow states to incorporate 'sa fety valves' into compliance plans to eliminate compliance risk in certain circumstances, such as:

• Retiring a nuclear unit at the end of its licensed life; and/or

• Equipment failures and/or damage to a plant so exte nsive that repair and restart are not justified.

Commenters stated states should determine the level of risk they are willing to accept as it relates
to the level of inclusion of nuclear units in their targets and compliance plans; nuclear uprates
and license extensions should also be allowed in a state's compliance plan.

Commenters stated that the EPA's proposed treatmentof existing nuclear capacity is inappropriate and must be changed. Commenters state d in the first instance that a standard of performance for fossil fuel-fired EGUs cannot be ba sed on actions taken beyond the source
itself. Commenters said this would include the cons ideration of any amount of nuclear generation as BSER. Commenters said while nuclear power is the single greatest CO2 mitigation option available in the power sector, that fact does not a uthorize the EPA to use it in the setting of CO2
emission standards for fossil fuel-fired EGUs. Comm enters said with respect to setting emission standards for fossil fuel-fired EGUs, it is irrelev ant whether a state has or does not have nuclear capacity; it has nothing to do with controlling emi ssions from existing EGUs, nor should it.
Commenters said there is no basis under the CAA for setting different emission standards for identical EGUs that just happen to be in two differ ent states, one with nuclear capacity and the
other without.

Commenters stated in the second instance, putting a side the fact that the inclusion of generation from existing nuclear units as a component of BSER for fossil fuel-fired EGUs is not authorized477

by the CAA, the EPA's proposal to include 5.8 perce nt of existing nuclear capacity as BSER and reflect the associated amount of MWh generation in state goal calculations is without
merit. Commenters said the EPA must not finalize a ny guidelines for fossil fuel-fired EGUs that includes any amount of existing nuclear generation in its BSER determination and calculation of state goals.

Commenters stated the notion that 5.8 percent of an y existing nuclear plant is at risk of premature retirement is irrational. Commenters said the EIA's Annual Energy Outlook cited in the EPA proposal which projected an additional 5.7 GW of unspecified nuclear capacity
reductions to the nuclear fleet is not evidence tha t any amount of any existing nuclear unit is at risk of premature shutdown and therefore neither su pports nor authorizes the EPA's proposal in this regard. Commenters said even if one were to a ssume for sake of argument that the EIA projection is reasonable, it is certainly not reaso nable for the EPA to then take that information and assume that 5.8 percent of every existing nucle ar unit in the country is at risk of premature
retirement.

Commenters stated it is generally understood that t hose existing nuclear generating units potentially at risk of premature retirement are con centrated in a relatively small number of states where the units operate in competitive electricity markets and are exposed to low wholesale electricity prices.

Commenters stated the majority of existing nuclear capacity is not exposed to those economic pressures and are not at risk of premature shutdown . Commenters said to be correct, the 5.8 percent factor should be higher in states with unit s "at risk" and zero elsewhere. Commenters said it appears the EPA simply took the 5.8 percentvalue as a convenient way to provide some incentive for continued operation of nuclear power plants; ironically, most plants are not in need of such an incentive and the ones that are potentia lly "at risk" are not helped by the arbitrary 5.8 percent factor.

Commenters stated the EPA's GHG Abatement Measures Technical Support Document states that [I]ncreasing the amount of nuclear capacity re lative to the amount that would otherwise be available to operate is a technically viable and ec onomically efficient approach for reducing CO2
emissions from affected fossil fuel-fired EGUs. Com menters said this statement suggests that the EPA's proposed treatment of existing nuclear capaci ty would in fact avoid the premature retirement of existing nuclear capacity; there is, however, no basis for such an assertion. Commenters said in the first place, the EPA has not identified any existing nuclear unit that it believes is at risk of premature shutd own; in the second place, the EPA can provide no evidence that its proposal, if implemented, woul d avoid the premature shutdown of a single MW of existing nuclear capacity in the country; buteven if the EPA were able to make such a demonstration, it would still not be authorized to include existing nuclear in its BSER
determination for fossil fuel-fired EGUs or factor any amount of existing nuclear capacity into the state goal calculation. Commenters said section 111(d) of the CAA applies to existing fossil
fuel-fired EGUs.

Commenters stated Duke Energy owns and operates the largest fleet of regulated nuclear units in the country. Commenters said the 11 operating units are located in North Carolina and South Carolina and are the first units to dispatch becaus e they are their lowest cost base load478

generation; these units are not currently at risk o f premature retirement and it is inappropriate for the EPA to include any portion of this nuclear capa city in the goal setting for North Carolina or
South Carolina.

Commenters stated the only thing the EPA proposal a chieves is to make the goals for North Carolina and South Carolina, and every other state with existing nuclear, more stringent than they otherwise would be, and introduce in those sta tes an additional compliance risk if an existing nuclear unit or units are not able to oper ate at the assumed 90 percent annual capacity
factor. Commenters said there is also the issue of whether any existing nuclear units will be granted a license extension beyond the expiration o f their current licenses. Commenters said nuclear power reactor license extension beyond sixt y years has not been done in the United States, so there is uncertainty associated with the technical and economic feasibility of doing so. Commenters said with the EPA proposal, if an ex isting nuclear unit's current license is not extended for whatever reason, the practical effect would be to make a state's goals more stringent because the state would lose a significant amount o f non-CO2 emitting generation that was factored into its goal computation. Commenters said if a license were not extended, the lost generation would have to be replaced with an equal amount of new non- emitting generation, and/or other steps would have to be taken to offset the loss of the nuclear generation. Commenters said a similar situation wo uld arise if an event occurred at an existing
nuclear unit that could not be overcome and the uni t was forced to shut down. Commenters said
the additional cost to consumers in states that wou ld need to comply with essentially a more stringent goal could be significant. Commenters sai d factoring any amount of existing nuclear generation in a state's goal computations inappropr iately builds compliance risk into the program when the units eventually shut down.

Commenters stated under the EPA's Proposed Guidelin es (absent the contribution of "nuclear at risk" in Building Block 3), there is already an inc entive for states to keep nuclear power plants operating; absent the adjustment for nuclear at ris k, the actual effect of a nuclear plant closure would be an increase in the numerator of the greenh ouse gas emissions rate equation, if it resulted in more generation from affected coal and/ or NGCC units to make up for the missing nuclear generation, resulting in a higher emissions rate. Commenters said therefore, there is no need to include the arbitrary 5.8 percent factor to the calculation to make shutting down nuclear more undesirable from a CO2 emissions perspective b ecause it already is undesirable.

Commenters stated if the EPA finalizes its proposal and continues to include existing nuclear units in state goal computations, it must include s afety valves that would allow for a state's goal to be recalculated without the existing unit if the unit continued to operate through the end of its current license period but its license was not exte nded for whatever reason, in the event of premature shutdown due to equipment failure and/or damage to the plant where repair cost is not justified, or where the cost of maintaining the pla nt in compliance with regulation is not economic given the unit's remaining useful life.

Commenters stated with respect to the assumption of a 90 percent capacity factor for nuclear power plants going forward, it is challenging but g enerally consistent with recent performance of nuclear power plants in the United States as a whol e; however, there is no guarantee of maintaining that performance in the future with an aging fleet of plants. Commenters said obviously a major equipment failure or regulatory s hutdown at one or more units can adversely479

and significantly impact capacity factor; any final guidelines that include existing nuclear in state goal calculations at a 90 percent capacity factor s hould make allowances in compliance in the event of unanticipated losses of nuclear generation . Commenters said for example, states should not be penalized for a nuclear unit's failure to op erate at 90 percent capacity factor unless the plant was intentionally shut down or operated at le ss than full power when more power could actually have been generated from the unit.

Commenters stated since EPA only give 6 percent to nuclear, that is a perverse incentive to say, okay, if we shut down a plant, we're only losing th is like marginal percentage of its megawatt hours; and if we replace it with natural gas, then you're adding extra CO2, but you're adding more megawatt hours; and you could actually achieve your goal more easily by doing so, which would, in effect, increase CO2 emissions.

Commenters stated so this way you're looking at the carbon intensity could actually be used by states to meet their goals by shutting down clean p ower plants like nuclear and replacing it with natural gas.

Commenters stated that the use of 6 percent "at ris k" value, given the math, will give utility companies an incentive to replace the nuclear plant s with natural gas plants or other fossil-fuelburning plants, thus raising the carbon emission, b ut lowering their pounds of CO2 per megawatt, based on this equation.

Commenters stated for over 30 years, however, Alaba ma Power's two nuclear units at Plant Farley have operated safely, providing affordable c arbon-free electricity to customers. Commenters said recently, both units, a long with other nuclear units in the state of Alabama, received 20-year operating license renewal s, which clear indicate they are not at-risk nuclear units. Commenters said to generically incl ude such an assumption in Alabama's emission rate goal calculation results in more stri ngent targets, thus limiting operational flexibility across the entire generation fleet.

Commenters stated as a practical matter, the EPA's approach is arbitrary and the proposed "atrisk" nuclear provision results in more stringent g oals for states with existing nuclear capacity
than for states without. Commenters said in additio n, EPA's approach fails to recognize that even if a nuclear unit does not shutdown prematurely, it will still be required to shut down upon expiration of its operating license creating a need for replacement generation.

Commenters said excluding existing nuclear from the goal-setting calculation, but allowing states to take credit for a portion of their nuclea r generation for compliance purposes, would provide such an incentive. Commenters said if the a t- risk nuclear provision is retained in the final goal-setting calculation, the EPA should allo w states' goals to be adjusted upon expiration of nuclear plant operating licenses.

Commenters stated that EPA's treatment of nuclear g eneration in Arizona is arbitrary.
Commenters further stated there is no evidence what soever that the Palo Verde Generating Station is at risk of closing prematurely, certainl y not before the expiration of its extended operating licenses in 2047. Commenters said the eff ect of EPA's adjustment in the Proposed480

Carbon Rule is to lower Arizona's lbs. CO2/net MWH goal by 3 percent; EPA's assumption that the Palo Verde Nuclear Plant is at risk for purpose s of goal calculation is arbitrary.

Commenters recommended a better way to incent the c ontinued operation of existing nuclear plants is to allow states to include the output fro m existing nuclear plants above an established threshold as a compliance option in state complianc e plans, thereby giving states with existing nuclear generation additional flexibility in develo ping their compliance plans. Commenters said one way to do this would be to establish a threshol d capacity factor for existing nuclear plants. Commenters said to the extent the nuclear plant is able to operate above that capacity factor, the incremental generation would be included as a compo nent of Building Block 3. Commenters said operation below the threshold capacity factor would have no impact on the state's compliance. Commenters stated they are aware that other parties may be suggesting an approach like this and may include specific recommendations with respect t o the threshold to be used.

Commenters stated based on an EIA report, EPA has c oncluded that approximately six percent of nuclear capacity is 'at-risk' of shutdown due to continued economic challenges; therefore, EPA proposed to allow approximately six percent of the nuclear capacity within any state in which nuclear plants are located to be counted towards ac hievement of the state emission rate goals.

Commenters continued however, EPA also used the 'at -risk' nuclear to set the state's emission rate goals; therefore, nothing is really gained fro m use of this carbon-free source of generation. Commenters said all existing nuclear power plants w ill eventually close. Commenters said when this occurs, states will have to find ways to repla ce a large amount of zero-carbon generation with other zero-carbon generation or be at risk of being in non-compliance with meeting their 111(d) goals. Commenters said because there current ly are no cost-effective mechanisms to achieve this, the 'at-risk' nuclear generation shou ld not be included in states' carbon emission rate goals; the six percent of 'at-risk' nuclear generat ion should be eliminated from the final rule, and for states with nuclear generation, the state goals should be adjusted upward by approximately six percent.

Commenters also stated EPA clearly recognizes the i mportance that nuclear generation has on reducing and avoiding carbon emissions; in the Prop osal, EPA stated that "[i]ncreasing the nuclear capability relative to the amount that woul d otherwise be available to operate is therefore a technically viable approach to support reducing c arbon emissions from affected fossil fuel-fired EGUs. Commenters stated they are in full agreement and offer the following as a means of ensuring nuclear generation is incentivized to redu ce carbon emission rates. Commenters said while EPA states in the Proposal that it estimated a 90 percent average utilization rate for U.S. nuclear units, APS has different information. Comme nters said based on industry data, the average lifetime capacity factor of the 100 nuclearplants currently operating is 81.6 percent. Commenters said of these, based on the three-year a verage between 2011to 2013, the plants in the fourth quartile only operated at an average cap acity factor of 70.8 percent.

Commenters concluded therefore, to encourage nuclear generation to operate at peak performance, EPA should allow the energy from any n uclear power plant in excess of the 80.3 percent average lifetime capacity factor for all cu rrent nuclear plants to be used for compliance with the states' carbon emission rate goals. Commen ters said but because this is meant to be an incentive for peak performance of the U.S. nuclear fleet, none of the nuclear generation should481

be used to calculate the states' goals. Commenters said this nuclear generation, like renewables, is a zero carbon-emitting generation resource; this approach adds flexibility to the program and assists the states that have nuclear capability in achieving their final carbon emission rate goals.

Commenters stated that this BSER block does not hav e the effect of reducing emissions, and is instead simply a method of avoiding potential incre ases in emissions. Therefore, it is not an emission reduction system, and should not be includ ed. Commenters stated the EPA has designated 'At Risk' nuclear as a part of Building Block 3 and concluded that preserving that nuclear generation would help reduce CO2. Commenter s said EPA has thus factored in the zero
emissions from these at risk units to reach the fin al state goals. Commenters said in South Carolina, the costs of nuclear are already included in rates by Public Service Commission order and are not at risk, which is a primary reason for retirement; additionally, the CO2 emissions limit provides ample incentive not to retire nuclea r plants as any retirement will require replacement with non-carbon generation. Commenters said inclusion of the 5.8 percent 'At Risk' component into state plans will simply provide a pe nalty to states which do opt to retire nuclear generation. Commenters said unlike the other BSER b locks, this block does not have the effect of reducing emissions; it is simply a method of avo iding potential increases in emissions. Commenters said it is not an emission reduction sys tem and should not be included.

Commenters stated EPA proposes to make states' emis sion rate goals more stringent by factoring six percent of states' nuclear generation into stat es' emission rate goals. Commenters said this would penalize states and companies that invested i n nuclear generation because existing nuclear plants will eventually retire and be replaced by em ission-generating plants. Commenters said States would be required to find a way to offset th ese unavoidable increases in emissions. Commenters said to eliminate this penalty, EPA shou ld allow states to review and amend their emission rate goals based on circumstances arising after finalization of the rule, such as when a
nuclear license is not renewed.

Commenters stated over the past decade, there has b een a renewed interest in nuclear power as an alternative to fossil fuels; yet despite greater acceptance of this emissions-free energy resource, nuclear power faces a host of obstacles a nd uncertainties that could not only inhibit its expansion, but will accelerate retirements from the existing fleet. Commenters said EPA's modeling fails to adequately consider the challenge s facing our existing nuclear fleet.

Commenters recommended that the EPA remove the "At- Risk" nuclear generation from the goal setting methodology. Commenters stated however, exp erience in the RGGI region also suggests
that financial and other issues need to be taken in to consideration when evaluating or forecasting the contribution of nuclear resources, particularly in light of the transformation of the natural gas market in recent years. Commenters said in the rate -based goal-setting methodology at issue here, EPA's proposal attempts to incentivize states to retain existing nuclear generation through the inclusion of an at-risk assumption in the goal computation methodology.

Commenters concluded while additional incentives ma y be necessary (especially at the federal level) EPA should remove the at-risk assumption fro m the goal computation methodology since its design neglects to account for the full range o f possible circumstances - including safety (e.g. safety upgrades such as those required in response to the Fukushima flooding and reactor meltdown) and environmental concerns (e.g. effluentlimits and cooling water intake structure482

requirements under Clean Water Act Sections 316(a) and 316(b), respectively) - in which a nuclear resource may be pressed into retirement.

Commenters recommended that the EPA remove the "At- Risk" nuclear generation from the goal setting methodology. Commenters continued if EPA, h owever, opts to retain its proposed approach, then EPA should consider providing an 'of f-ramp' by which the nuclear generation component would be removed from a state's goal comp utation upon expiration of an existing license or following an accident that translates in to cost-prohibitive repairs.

Commenters recommended that the EPA remove "At-Risk " nuclear generation from the goal setting methodology. Commenters stated although a s ignificant portion of Connecticut's generation comes from nuclear generation, Connectic ut objects to crediting existing or underconstruction nuclear generation as an off-set to ex isting fossil generation; such a proposal would significantly reduce the stringency of the CPP and is unnecessary.

Commenters stated that the EPA assumes that 5.8 GW of existing nuclear capacity is 'at-risk' and
that it is reasonable to think states can cause tha t at-risk capacity to continue to operate in 2029 and beyond; however, EPA does not identify the spec ific reactors, or even the states in which this at-risk capacity resides. Commenters said inst ead they simply factor the 5.8 GW of capacity at a national level into each state's goal calculat ion by multiplying the state's existing nuclear generation by 6%. Commenters said this leads to the absurd result that the amount of 'at-risk' nuclear capacity in any state is much less than the smallest reactor in the state. Commenters said as with the RE and EE goals, EPA failure to do stat e-specific analyses of its nuclear component results in illogical and inequitable results.

Commenters stated significant uncertainty remains a s to whether existing nuclear units would be permitted to operate beyond their licensed 60 year lifetimes; permitting of nuclear reactors is under the authority of the NRC and is not under the control of the states.

Commenters stated that the Proposed Rule does not p rovide adequate incentives for states to support the continued operation of zero emission so urces, in particular nuclear generation.

Commenters recommended changes to the rule, includi ng:

• Remove the 6% "at risk" MWh calculation from each applicable state's emission goal calculations, and instead create a meaningful goal-setting incentive for states to support the continued operation of existing nucl ear units; 2)

• Count all post-2012 new plants and uprates toward c ompliance (for new plants or uprates with an in-service date during or after the baseline year or period); in other words, grant compliance credit (add MWh of ge neration to the denominator of a state's compliance demonstration) for the unit 's output once its license extension is effective;

• Treat all units relicensed during or after the base line year or period as new units during their license renewal period; and483 • Allow states to include all nuclear generation from existing units above a reasonable historic industry capacity factor, such as 81.6%, in the denominator of compliance calculations, so that high-performing un its gain compliance credit

Commenters stated the scientific consensus makes itclear that a ton of CO2 (or GHG emissions) avoided today is as important as the ton avoided to morrow (either in 2020 or in 2030); as a consequence, the retention of zero-CO2-emitting pow er generation resources currently operating is as important as the introduction of new zero-CO2 -emitting power generation resources in the future. Commenters said conversely, the potential l oss of nuclear zero-CO2-emitting power generation resources (through failure of EPA rulemakings such as this, or markets, to reflect the value of the zero emissions attribute) means that t he addition of new zero-CO2-emitting supply serves only to offset or replace the lost nuclear z ero-CO2 generation rather than to help put the state on a pathway toward significantly lowering th e overall carbon profile of its power supply.

Commenters stated realistically, replacing one MW o f nuclear capacity likely would require much more than a single MW of nameplate capacity fr om another zero-carbon resource to provide equivalent energy and capacity to the syste m. Commenters said in light of the high capacity factor and baseload character of existing nuclear plants and the intermittent character of wind and solar, to obtain the same amount of energy and capacity from wind and solar as the energy and capacity of a 1,000 MW nuclear plant wou ld require approximately 1,700 MW of wind plus another 2,600 MW of solar. Commenters sai d this amount of replacement capacity would only offset the zero-carbon power lost by a n uclear unit that were to retire, whether ahead of or concurrent with the end of its operating lice nse. Commenters said to make actual progress toward reducing the overall GHG emissions from powe r generation would require more renewables beyond the amount identified above; ther efore, the cost of reducing GHG emissions from the power sector will be mitigated to the exte nt that safely-operating nuclear plants remain in operation as long as possible under NRC regulati on. Commenters said because one of the important axioms of climate change is that emission s of GHG are long-lived in the atmosphere, the goal of protecting the continued existence of z ero-carbon supply today and avoiding its replacement with fossil-fueled electricity in the n ear term will reduce the cumulative amount of emissions into (and concentrations of GHG in) the a tmosphere from United States power plants. Commenters said to that end, it is essential that i f the Proposed Rule incorporates zero-emission source deployment as part of BSER, it also provides support for the retention of existing nuclear units throughout the country.

Commenters urged EPA to make the following changes in its treatment of nuclear power in the Proposed Rule, if Building Block 3 remains a part o f the proposal:

• Remove the 6% "at risk" MWh calculation from each applicable state's emission goal calculations, and instead create a meaningful goal-setting incentive for states to support the continued operation of existing nucl ear units;

• Count all post-2012 new plants and uprates toward c ompliance (for new plants or uprates with an in-service date during or after the baseline year or period); in other words, grant compliance credit (add MWh of ge neration to the denominator of a state's compliance demonstration) for the unit 's output once its license extension is effective;484 • Treat all units relicensed during or after the base line year or period as new units during their license renewal period; and

• Allow states to include all nuclear generation from existing units above a reasonable historic industry capacity factor, such as 81.6%, in the denominator of compliance calculations, so that high-performing un its gain compliance credit for
their host states.

Commenters recommended if the EPA nonetheless does decide to retain credit for uneconomic nuclear capacity in Building Block 3, that EPA requ ire states to include in their state plans a very high showing that the claimed nuclear capacity: (1) is actually 'at risk' of closing early, and (2) will be predominantly replaced by fossil-fuel gener ation.

Commenters continued first, many factors go into ea ch nuclear plant's viability, including nuclear waste management and disposal costs, and re gulatory requirements outside of Section 111(d). Commenters said electricity market dynamics are constantly changing. Commenters said EPA should require clear proof from states that spe cific nuclear capacity represented by a specific nuclear power plant is truly "at risk" of closing early before allowing states to claim credit for saving that capacity. Commenters said th e assessment of "at risk" should not include costs associated with managing, transporting and re mediating nuclear waste or consider costs associated with nuclear plant decommissioning.

Commenters stated second, EPA assumes for the purpo ses of this rule that the 5.7 GW of projected capacity reductions at nuclear power plan ts would be replaced by "new" natural gas combined-cycle capacity with an assumed emissions i ntensity of 800 lbs. of CO2/MWh, or by the national 'power system,' using a projected 2020 average U.S. power sector emissions intensity of 1127 lbs. of CO2/MWh. Commenters said these assumptions are inappropriate; the
avoided emission rate should be determined based on the least-cost generation alternative, not on general assumptions about natural gas combined-cycl e capacity or national average emission intensities. Commenters said for example, nuclear g eneration could likely be replaced more cheaply through renewable energy than by building n ew coal-fired power plants or re-dispatch of coal or gas-fired power plants. Commenters said sav ed nuclear capacity should not be credited as though it would be replaced by carbon-intensive gen eration if that is not actually the case.

Commenters stated if a state is permitted to earn c redit for avoiding retirement of more than 5.8% of nuclear generating capacity based on EPA's determination that a higher level of generation is truly 'at risk,' the target for the s tate must be strengthened to reflect that higher le vel of nuclear generation being included in the adjuste d baseline calculation; in other words, if BSER is expanded to include greater opportunities f or compliance credit based on saving more nuclear capacity, states cannot avoid making the em ission reductions that reflect the level achievable under the original BSER; states should r educe emissions based on the original BSER, as well as what is achievable by saving the extra n uclear capacity.

Commenters stated EPA should remove the preservatio n of nuclear capacity from Building Block 3. Commenters said EPA should not encourage s tates to prop up old and uneconomic nuclear plants, which produce highly radioactive wa ste material and catastrophic nuclear risk, as a means of meeting their Section 111(d) goals; inst ead, the EPA standards should encourage485

states to look toward the future and focus on renew able energy and energy efficiency development and implementation. Commenters said thr ough increased focus on RE and EE, states can meet their goals without relying on savi ng 'at risk' nuclear capacity. Commenters said
if EPA nevertheless decides to allow states to save 'at risk' nuclear capacity, then the state should have to conclusively prove that the capacity is tru ly 'at risk' of closing soon and being replaced by much higher carbon-polluting fossil-fuel generat ion.

Commenters stated it is generally understood that e xisting nuclear generating units at risk of premature retirement are concentrated in a relative ly small number of states where the units operate in competitive electricity markets and are exposed to low wholesale electricity prices. Commenters said the majority of existing nuclear capacity is not exposed to those economic pressures and is not at risk of premature shutdown; in addition, EPA's proposal, if implemented, likely would not avoid the premature shutdown of an existing nuclear unit.

Commenters stated EPA's assumptions regarding nucle ar energy assets at risk appears to be based on the prorated average of electric output of nuclear facilities in danger of ceasing operations. Commenters said EPA has incorporated at -risk nuclear in the calculation of the mandatory state emission limiting goals; however, i n the case of Florida, the proposed closing of Crystal River Unit #3 is an established fact and th erefore inclusion of a nuclear at-risk variable in the Florida emission reduction goals is inappropria te.

Commenters stated that the EPA's treatment of exist ing nuclear capacity was inconsistent with the agency's treatment of other large existing sour ces of zero-carbon energy such as hydroelectric
dams and RE facilities. Commenters recommended thatthe EPA should simply exclude all existing zero-carbon facilities (including nuclear, hydroelectric, and RE facilities) from its calculation of states' emission goals. Commenters a lso stated that preserving existing nuclear capacity will not allow existing EGUs to reduce the ir emissions; therefore, under the language of section 111, the preservation of existing nuclear g eneration cannot be considered a "system of emission reduction." Commenters concluded by recomm ending that, if the EPA does not remove the at-risk component from state goals, the EPA sho uld establish a mechanism to reduce the stringency of states' emission rate goals at the ti me of license expirations, or where an existing nuclear plant is forced off-line for extended perio ds of time.

Commenters stated EPA's proposal to incorporate app roximately 5.8% of each state's existing nuclear capacity (which EPA calls 'at risk' capacit y) in calculating the state's emission goal is inappropriate for a number of reasons. Commenters s aid EPA's treatment of existing nuclear capacity is inconsistent with the agency's treatmen t of other large, existing sources of zerocarbon electricity such as hydroelectric dams and R E facilities. Commenters said both hydroelectric facilities and existing RE facilities also face market and non-market challenges that could lead to reduced capacity or shutdown in futur e years. Commenters said despite this similarity, EPA has not proposed to penalize states that retire existing hydroelectric or RE capacity by incorporating an assumption about 'at r isk' hydroelectric or RE generation into state goals. Commenters said as with under construction n uclear generation, EPA should not arbitrarily treat zero-carbon generation from exist ing nuclear facilities differently from other zero-carbon generation; to fix this discrepancy, EP A should simply exclude all existing zerocarbon facilities (including nuclear, hydroelectric , and RE facilities) from its calculation of states ' emission goals.486

Commenters stated EPA's proposal to penalize states that fail to preserve their nuclear capacity is also flawed because many states have little or no c ontrol over the decision as to whether nuclear capacity will continue to operate. Commenters said states have no control over whether the Nuclear Regulatory Commission (NRC) grants or denie s an existing facility's application for a
license extension. Commenters said the NRC is curre ntly issuing 20-year license extensions to
facilities that have reached the end of their initi al 40-year license, but has yet to determine whether it may issue longer extensions under existi ng federal law.

Commenters stated furthermore, EPA's designation of 'at risk' nuclear generation as a component of BSER exceeds the agency's authority under the Ac t; even under EPA's reading of the statute, the preservation of existing nuclear capacity canno t even meet EPA's strained definition of the term. Commenters said simply put, preserving existi ng nuclear capacity will not allow existing EGUs to reduce their emissions; rather, the preserv ation of existing nuclear capacity will only allow existing EGUs to continue operating at the sa me levels as in the past; therefore, under the plain language of section 111, the 'preservation' o f existing nuclear generation cannot be considered a 'system of emission reduction.'

Commenters stated finally, the inclusion of at-risk nuclear generation in states' emission goals is unnecessary to encourage states to preserve their e xisting capacity; the imposition of CO2 emission limits on the power sector will naturally incentivize states and affected entities to favor lower-carbon power sources, including existing nucl ear facilities. Commenters said in addition, states that fail to preserve their nuclear capacity will be incentivized to replace that lost capacity with other low-carbon generation or EE because repl acement of lost zero-carbon generation with fossil-fueled generation would make it more difficu lt for the state to meet its emission target.

Commenters concluded that, for these reasons it is inappropriate to include 5.8% of existing nuclear capacity in the goal computation for each s tate and Commenters urged this assumption to be removed from building block 3. Commenters said i f EPA does not remove the at-risk nuclear component from building block 3, EPA should establi sh a mechanism to reduce the stringency of states' emission rate goals at the time of license expirations; similarly, the same adjustment mechanism should be available to adjust the stringe ncy of the states' emission targets in those cases where an existing nuclear plant is forced off -line for extended periods of time.

Commenters stated keeping existing nuclear electric ity generation operating and building new
facilities is vital. Commenters said the units unde r construction should count toward future compliance. Commenters said the decision to recogni ze only 6% of the existing fleet as "at risk" is too general and too conservative, and puts those utilities that own nuclear units at more risk of future compliance problems.

Commenters stated that the EPA's approach to quanti fying emission reductions from "at-risk" nuclear generation is problematic for several reaso ns. First, "although retirement of nuclear units in some states could lead to increased generation f rom existing or new fossil fossil-fueled generation sources, the mere preservation of some e xisting nuclear capacity cannot reduce
emissions below the historic baseline emission leve ls." Commenters also stated that the EPA's approach of proportioning "at-risk" nuclear generat ion equal across all states with nuclear reactors was problematic, because: 1) it does not m atch the economic and regulatory reality in most, if not all states, and 2) nuclear facilities often serve customers and utilities in neighboring487

states, so that the decision to retire a nuclear fa cility may not be entirely under the control of the
state in which it is located. Commenters recommende d that the EPA "abandon this component of the Proposed Rule, even if it retains its questionable 'beyond-the-unit' interpretation of BSER."

Commenters stated EPA's approach to quantifying emi ssion reductions from preservation of 'atrisk' nuclear generation is problematic for several reasons; first the commenters fail to see how 'preserving' existing nuclear capacity can meet the statutory definition of a 'system of emission reduction.' Commenters said at best, the preservati on of nuclear capacity at historic levels would
allow affected units to maintain their own historic emission levels. Commenters said although
the retirement of nuclear units in some states coul d lead to increased generation from existing or new fossil-fueled generation sources, the mere pres ervation of some existing nuclear capacity
cannot reduce emissions below the historic baseline emission levels. Commenters said EPA's inclusion of this component of BSER introduces addi tional legal risk for the proposal.

Commenters continued just as problematically, EPA's approach to 'at-risk' nuclear generation would apportion the risk of nuclear retirement prop ortionally across all states with nuclear reactors, regardless of the actual risk that genera tion in that state would retire. Commenters said this approach is flawed for at least two reasons; f irst, due to wide differences in economic and regulatory conditions in different parts of the cou ntry, units in many states are not at any risk of retirement, while units in other states are more cl early at risk. Commenters said thus, EPA's proposed approach does not match the economic and r egulatory reality in most, if not all, of the
states with nuclear reactors. Commenters said secon d, nuclear facilities often serve customers and utilities in neighboring states; therefore, the decision to retire a nuclear facility for economic reasons may be entirely beyond the control of the s tate in which the facility is located. Commenters said thus, the interstate nature of elec tricity markets and the widespread inability of
individual states to control whether a nuclear faci lity in their state will remain in operation make EPA's approach unfair and untenable. In light of th ese flaws, the commenters urged EPA to abandon this component of the Proposed Rule, even i f it retains its questionable 'beyond-the-unit' interpretation of BSER.

Commenters stated historically low natural gas pric es coupled with energy policy that favors renewable energy have priced nuclear generation outof some markets. Commenters said the CPP is an example of energy policy clearly favoring ren ewable energy. Commenters said the EPA has calculated emission standards under the CPP using a Best System of Emission Reduction (BSER). Commenters said the BSER provides 5.8% cred it to a generator's 2012 nuclear capacity in states with nuclear generating facilities; a tho rough analysis of this portion of the CPP conducted by the University of Tennessee found thatthe CPP incentivizes at least 15 states to close nuclear capacity and replace it with natural gas generation.

Commenters stated that the BSER "six percent factor " should be removed from the state goal calculation. Commenters stated that the Callaway an d Wolf Creek nuclear units in Missouri and Kansas, respectively, were both expected to remain in service, and that the 6 percent factor is a detriment should either nuclear unit in any given y ear generate less energy than what EPA assumed in setting either state's emission rate tar get, requiring the state, more specifically the units in the state, to offset any shortfall.488

Commenters recommended that nuclear power uprates b etween 2012 and 2020 should be treated similarly to renewable energy added in this period, and credited towards state goals. Commenters also recommended that the EPA should encourage cont inued operation of all existing units by defining as 'new' nuclear capacity any nuclear plan ts that have been relicensed to operate beyond 60 years, and any plants that have not received lic ense extensions to operate beyond their original 40-year license term as of the date on whi ch the proposed guidelines were issued, rather
than assume that nuclear units will continue to run forever.

Commenters stated in developing BSER, EPA's view wa s that including a small percentage of nuclear energy in the rate targets would provide st ates an incentive to avoid premature nuclear shutdowns; the approach, however, will not achieve the intended effect and is legally vulnerable. Commenters said EPA calculates the generation (in M Wh) of electricity from 'at risk' nuclear plants and then adds this generation to the denomin ator of the goal, resulting in a lower 2030 emission rate. Commenters said EPA explains that th e proposed rule counts only six percent of existing nuclear facilities because (according to E PA) six percent of nuclear capacity nationwide is 'at risk' for premature retirement.

Commenters further stated if EPA is going to contin ue with its broad interpretation of BSER, the Agency should remove the "6 percent factor" from th e goal calculation. Commenters said the EPA included 5.8% of Callaway and Wolf Creek nuclear units in Missouri and Kansas, respectively; since both units are expected to rema in in service, EPA's treatment has little impact on either state's ability to meet its emission rate reduction targets; instead, the 6 percent factor i s a detriment should either nuclear unit in any given year generate less energy than what EPA assumed in setting either state's emission rate tar get, requiring the state, more specifically the units in the state, to offset any shortfall. Commen ters said EPA should consider a requirement for state plans to include a discussion of how states w ould preserve existing nuclear generating capacity, such as any necessary policy changes thro ugh legislation or regulation, or other marketbased mechanisms, or a combination thereof; this wo uld be a relatively straightforward showing for nuclear units in traditionally regulated states

.

Commenters stated EPA also proposes that the emissi on reductions achievable by retaining in operation approximately six percent of each state's historical nuclear capacity [i.e., "at risk" units] should be factored into the state goals for the respective states. Commenters said the proposed guidelines further notes that the nuclear generating capacity reflected in building block 3 is already in operation or under construction. Co mmenters said based on EPA's assumption that the so-called "at risk" units will continue to oper ate until 2030 and that the state reduction goals could be sustained beyond 2030, it is reasonable to conclude that EPA assumes that the remainder of the existing nuclear fleet will contin ue to be available through 2030, as no state goal appears to reflect any assumption by EPA of ex isting units coming off line, other than those already committed to retire.

Commenters stated this assumption ignores the fact that, unlike fossil plants, nuclear plants are only licensed for an initial term of 40 years; and while many plants have obtained, or are in the process of obtaining, a first license extension for an additional 20 years, the process for obtaining a subsequent license extension is still evolving. C ommenters said the NRC has "begun a regulatory framework and technical justification re view of the operating power reactor license489

renewal process to be prepared for anticipated subs equent license renewal applications that will request approval to renew a facility's operating li cense," but it has not yet decided on the terms under which it may grant second license renewal app lications. Commenters said even if NRC does grant additional license renewals, EPA has no valid basis to assume that every plant currently operating will continue to receive repeat ed license renewals into the indefinite future, as its current approach implicitly does.

Commenters stated that no output from the Wolf Cree k nuclear plant was "at risk," and the
amount labeled as "at risk" should be removed from the denominator of the CPP's mathematical
formula. Commenters also recommended that the EPA s hould revise its formula so that existing nuclear generation would count towards compliance.

Commenters stated Kansas currently has one nuclear plant, Wolf Creek, with an output of 1,205 MW that is owned jointly by three Kansas utilities. Commenters said the EPA's proposed plan does not recognize the significant zero-carbon emis sions from Wolf Creek that serve to lower Kansas's overall carbon footprint. Commenters said in fact, the CPP, as structured, penalizes states with nuclear generation by including "at ris k" nuclear generation in the denominator of the CPP's mathematical formula. Commenters said the pe nalty resulting from inclusion of "at risk" nuclear generation in the formula is derived by the denominator's effect of lowering EPA's proposed emission rates. Commenters said the impactof the formula is created by the EPA's use
of a basic ratio of:

Carbon emissions / megawatt hours of production.

Commenters stated the EPA's definition of the basic ratio above requires generation resources with zero emissions to increase only the denominato r of the ratio; because there is no effect on the numerator, each megawatt hour of zero-carbon ge neration added by EPA for "at risk" nuclear resources lowers the emission limit goal and thus r equires greater carbon emission reductions.
Commenters said this is counterintuitive and reflec ts either the EPA's lack of understanding of electric generation or is simply an attempt to deri ve a lower emission limit. Commenters said penalizing Kansas for zero-carbon generation is inc onsistent with the EPA's espoused goal of lowering carbon emissions; a rule designed to reduc e carbon emissions should reward, not penalize, the use of nuclear generation.

Commenters stated because Kansas has no nuclear gen eration under construction and no part of their single nuclear plant, Wolf Creek, is 'at risk ', this element is eliminated from their
calculation.

Commenters stated that the EPA should revise its fo rmula so that existing nuclear generation can count towards compliance.

Commenters stated that assuming 5.8% of nuclear gen eration in every state was at risk was unreasonable, because nuclear units in many states are incorporated into the rate base and are not at market risk, while nuclear units at risk of reti rement are merchant generators located in wholesale electricity markets. Commenters also stat ed that the EPA's treatment of nuclear capacity is arbitrary, because other existing sourc es of zero-carbon electricity such as hydroelectric dams and renewable energy facilities, are not treated as "at risk," even though490

market and non-market forces could lead to shut-dow n or reduced utilization of those sources in future years. Commenters recommended that the EPA r emove the "at-risk" existing nuclear generator factor from its calculation of states' em ission goals. Commenters also stated that the assumption of a 90% capacity factor was inappropria te, and recommended that, if the EPA does not remove the "at risk" generation from the goal c alculation, that the capacity factor used should reflect actual capacity factor averages within a st ate.

Commenters 2 stated in calculating a state's emissi on goal, EPA's proposal incorporates 5.8% of the state's existing nuclear capacity (EPA refers t o this capacity as 'at risk '). Commenters said including at-risk nuclear capacity in a state's emi ssion goal is unreasonable for a number of reasons; first, the assumption that all existing nu clear capacity is at risk of retirement is unreasonable because in many states these units are incorporated into the rate base and are not at
market risk. Commenters said the U.S. nuclear units at risk of retirement are for the most part merchant generators located in competitive wholesal e electricity markets.

Commenters stated EPA's treatment of existing nucle ar capacity is also arbitrary because it is inconsistent with the agency's treatment of other l arge, existing sources of zero-carbon electricity such as hydroelectric dams and renewable energy fac ilities. Commenters said all types of nonCO2-emitting generation face market and non-market challenges that could lead to shut-down or reduced utilization in future years. Commenters sai d EPA has not proposed to penalize states that retire other existing, non-CO2-emitting generation by incorporating an assumption about ’at risk' hydroelectric or renewable energy generation into s tate goals. Commenters said EPA should not arbitrarily treat non-CO2 generation from existing nuclear facilities differently from other nonCO2 generation; to remedy this discrepancy, EPA sho uld remove the 'at-risk' existing nuclear generator factor from its calculation of states' em ission goals in accordance with the National Association of Regulatory Utility Commissioners' (N ARUC) resolution on this topic.

Commenters stated EPA's proposal to penalize states that fail to preserve their nuclear capacity is also flawed because many states have little or no c ontrol over the decision as to whether nuclear capacity will continue to operate. Commenters said states have no control over whether the Nuclear Regulatory Commission (NRC) grants or denie s an existing facility's application for a
license extension. Commenters said the NRC is curre ntly issuing 20-year license extensions to
facilities that have reached the end of their initi al 40-year license, but has yet to determine whether it may issue longer extensions under existi ng federal law. Commenters said for these reasons, if EPA does not remove the at-risk nuclear component from building block 3, EPA should make states' emission rate goals less string ent at the time of license expirations for units that have already received a 20-year license extens ion from the NRC.

Commenters did not believe that the use of a 90% capacity factor for the at-risk nuclear capacity in calculating a state's goal is appropriate. Comme nters said EPA cites EIA's Annual Energy Outlook report on the 2013 nationwide nuclear fleetaverage as the basis for that number; however, there are issues with EIA's report: that a verage includes 21 plants with capacity factors over 100%, which skews the average high. Commenters suggested that EPA examine EIA's methodology to correct for this error. Commenters s aid in addition, on a rolling average basis for 2011-2013, one quarter of the units had an average capacity factor of 70.8% and the lifetime average capacity factor for the nuclear units curre ntly operating is 80.3%. Commenters said nuclear units typically refuel at least every 18 mo nths: an outage that usually lasts at least six491

weeks. Commenters said outages for maintenance, upr ates, or safety issues can last significantly longer; the use of a national average capacity numb er is not appropriate in the calculation of an individual state's goal. Commenters said the averag e number represents operations across a fleet of about 100 units; a single state will have a much lower number of units and outage schedules among that smaller number will result in much lower capacity factors during many compliance periods. Commenters said if EPA does not remove the at-risk nuclear component from building block 3, EPA must also adjust the assumed capacity factor and, subsequently, the overall emissions goal, to reflect actual averages within t he state.

Commenters disagreed with the Proposed Rule's treat ment of 'at risk' nuclear generation. Commenters agreed that continuing operation of exis ting nuclear capacity is a key component of U.S. climate policy; however, trying to implement t his policy through punitive measures directed at states in which those plants are operating is in appropriate. Commenters said instead, EPA should work with the Federal Energy Regulatory Comm ission (FERC), Regional Transmission Organization (RTOs), and the states to ensure that FERC's regulation of wholesale markets provides adequate cash flow to those nuclear units that are truly at risk of shutdown for economic reasons, and should provide appropriate recognition to states that successfully keep units running rather than penalizing those states in which shut-d own may occur (usually because of factors beyond a state's control).

Commenters stated that Louisiana has two nuclear fa cilities in operation with a combined capacity of 2,134 MW (net summer capacity), and tha t the EPA included 984 GWh of generation from these facilities in its target emission rate c alculation for Louisiana.

Commenters stated the EPA uses its Building Block 3 (a) to include a factor for "preserved" nuclear generation that might otherwise be retired. Commenters said the EPA identifies a number of factors that could put nuclear EGU's at risk: fa cility age; increased fixed O&M costs; low wholesale electricity prices; and additional capita l investment associated with ensuring plant security and emergency preparedness. Commenters sai d using an estimate published in the EIA's Annual Energy Outlook for 2014, the EPA assumes tha t six percent of each state's nuclear generating capacity is "at-risk." Commenters said L ouisiana has two nuclear facilities in operation with a combined capacity of 2,134 MW (netsummer capacity). Commenters said EPA included 985 GWh of generation from these facilitie s in its target emission rate calculation for
Louisiana.

Commenters stated that neither of Louisiana's nucle ar facilities are "at-risk" and no new nuclear is under construction, so this component should notbe included in the denominator of the state goal equation.

Commenters stated the EPA's proposal effectively pe nalizes states with operable nuclear facilities by adding nuclear generation to the deno minator of its equation thereby lowering a state's emission rate. Commenters said the EPA's pr oposed formula is basically a ratio of carbon emissions-to-generation; thus adding to the equatio n a zero-carbon emissions generation value increases the denominator while holding the numerat or constant. Commenters said the result is a reduced target emission rate, requiring greater car bon emission reductions; penalizing a state for zero-carbon generation seems contradictory to the E PA's goals. Commenters said the rule should be designed to reward a state for utilizing zero-ca rbon emitting generation, not penalize it.492

Commenters stated this issue is highlighted by NERC in its reliability assessment:

'The nuclear retirement assumptions add pressure to states that will need to retire nuclear units. For these states, more CO2 reductions from other me asures than originally estimated by the EPA may be required.'

Commenters stated because neither of Louisiana's ex isting nuclear facilities are 'at-risk' and no new nuclear is under construction, this component s hould not be included in the denominator of the equation.

Commenters stated that the basis for EPA's 'at risk ' nuclear capacity estimates is weak and not well supported. Commenters further stated that no n uclear units in Louisiana are considered to be vulnerable to the type of economically-forced closu re described by EPA in the proposed rule.

Commenters stated the EPA based its assumption of ' at-risk' nuclear capacity on an estimate published in the EIA's Annual Energy Outlook for 20 14. Commenters said the EIA however, does not provide any detailed calculations, nor doe s it identify specific plants, timeline or
rationale for this estimate other than 'continued e conomic challenges.' Commenters said the EIA simply states:

"Additionally, the AEO2014 nuclear projection assum es a decrease of 5.7 GW by 2020 in several regions where existing nuclear units appear at risk of early closure due to a combination of high operating costs and low electricity prices. "

Commenters stated while the Companies do not know w hich units the EIA had in mind, the Companies do not consider any of their nuclear unit s in Louisiana to be vulnerable to the type of economically-forced closure described by the EPA in this proposed rule.

Commenters stated the EPA also notes the lack of sp ecific retirement assumptions, but yet determines that the 5.7 GW retirement projection 'i s a reasonable proxy' and applies it to all states with nuclear generation regardless of region or fleet characteristics (e.g., age of facility, historic capacity factor, economic dispatch, and re gulatory environment).

Commenters stated that the EPA's "at risk" nuclear proposals are ambiguous on how nuclear generation will be treated for compliance purposes. Commenters said for example, if the two units in Louisiana operated at below a 90 percent c apacity factor for one year (as a result of refueling or an outage, Commenters stated that it w as unclear if Louisiana would be able to claim "credit" for the entire 985 GWh used in calculating the state goal, or if some adjustment would be applied.

Commenters stated the EPA's "at-risk" nuclear compo nent is not a compliance requirement and no specific monitoring or verification is required. Commenters said this portion of the EPA's BSER seems only to serve as a method for reducing a state's target emission rate; it is unclear how actual net generation values will be accounted. Commenters said for example, if the two units in Louisiana operate below a 90 percent capac ity factor in one year (as a result of refueling or outage), it is unclear if Louisiana would still be able to claim 'credit' for the entire 985 GWh used in calculating the state goal, or if some adju stment would be applied.493

Commenters stated that the EPA's at-risk nuclear as sumption is not expected to impose a cost on Louisiana customers at this time; however, if the c osts of operating nuclear power exceeded the wholesale market rates, Louisiana could be compelle d to assume "above-market" cost in order remain compliant with CPP provisions.

Commenters stated the nuclear component of EPA's pr oposed rule is not expected to impose a cost to Louisiana ratepayers. Commenters said if th e EPA allows a state to use the same 6 percent of nuclear generation for compliance of the target emissions rate, and nuclear generation remains constant, then it should impose no cost; th is could change, however, over time, if the costs associated with operating nuclear power excee d wholesale market rates. Commenters said at that time, Louisiana could be compelled to assum e an 'above-market' cost in order to remain compliant with CPP provisions.

Commenters stated that the BSER used in calculation s of state goals has a flaw in that the EPA has not justified the decision not to tally 100% of nuclear generation. Commenters also stated that the BSER calculation was flawed because hydroe lectric generation was not included in any
form in the BSER.

Commenters stated in addition, the Best System of E mission Reduction used in calculations of state goals has at least three major flaws, regardl ess of what assumptions are made regarding the evaluation of State Plans and ultimate compliance:

1. EPA has not justified the decision not to tally 100 % of nuclear generation.

2. EPA does not include hydroelectric energy in any fo rm in the BSER.

Commenters stated these technologies are the two largest generators of very-low-carbon electricity in the United States (making up over 82 % of total very-low-carbon electricity in 2012). Commenters said omitting most or all of the electricity generated by the technologies that have already made the greatest contributions to acc omplishing the stated goal of the Clean Power Plan requires justification. Commenters said althou gh the EPA has quite reasonably explained why they do not expect any new hydroelectric capaci ty to be built in the foreseeable future, clear and compelling overall justification for omitting t his generation from the state goal-setting formula is not present in the proposed rule.

Commenters urged the EPA to ensure that electricity generation from nuclear power plants is counted fully and fairly in all parts of the final rule.

Commenters stated that Building Block 3 includes 5. 8% of the generation capacity for the Grand Gulf Power plant in Mississippi. Commenters stated that this facility is not at risk and the inclusion of output in this manner will have no eff ect on the future operation of the plant.
Commenters recommended that the inclusion of "at ri sk" generation should be dropped from the goal setting.

Commenters stated building Block 3 includes 5.8% of the generation capacity for the Grand Gulf Power plant in Mississippi, which equals 631,874 MW h, to be included in the denominator of the goal calculations. Commenters said this is to accou nt for at risk generation and to encourage continued utilization of the nuclear generation fac ilities. Commenters said this facility is not at494

risk and the inclusion of the output in this manner will have no effect on the future operation of the plant. Commenters said the inclusion of the 'atrisk' nuclear generation should be dropped from the goal setting.

Commenters stated that states with existing nuclear generation have stricter goals, because a percentage of that nuclear generation is included i n the denominator of the calculation of the state goal. Commenters stated that this adds pressu re to states with nuclear generation that is not felt by states with nuclear generation, even though nuclear generation is carbon neutral and should be considered a beneficial prior investment.

Commenters stated EPA proposes that states encourag e more carbon-neutral generation, such as renewable and nuclear generation, in Building Block 3; the commenters are concerned about the proposed rule's calculation of the renewable targetand treatment of nuclear units.

Commenters stated although EPA recognizes the value of nuclear generation, the proposed rule
does not reward states that have invested in nuclear generation; rather, these states have stricter goals, because a percentage of existing nuclear gen eration is included in the denominator of the calculation of the state goal. Commenters said this adds pressure to states with nuclear generation - even though that generation is carbon neutral and should be considered a beneficial prior investment - that is not felt by states witho ut nuclear generation.

Commenters stated that the proposed rule penalizes prior investment in nuclear generation and does not incentivize new investment in nuclear powe r. Commenters also stated that the EPA fails to recognize that states often have little control over whether a nuclear plant remains operational. Commenters stated that the Nuclear Regulatory Commi ssion is responsible for licensing and, barring a safety or operational issue, the owners o f nuclear plants largely exercise control over
the decision to shut down the unit.

Commenters stated EPA fails to recognize that state s often have little to no control over whether a nuclear unit remains operational. Commenters said the Nuclear Regulatory Commission is responsible for licensing, and barring a safety or operational issue, the owners of nuclear plants largely exercise control over the decision to shut down a unit. Commenters said although a state may very much want a nuclear plant to remain operat ional as a source of zero-carbon electricity, the state may be limited in its ability to affect t he market revenues that a nuclear unit receives in organized markets. Commenters said EPA's inclusion of any existing nuclear generation in the denominator merely serves to penalize states that a lready have this zero-carbon, relatively climate-resilient resource, and it is out-of-touch with any understanding of how nuclear units are planned and operated.

Commenters stated the proposed rule treats existing nuclear generation and new nuclear generation differently. Commenters said per the pro posal, generation from new nuclear capacity can be credited at 100% of its generation during th e compliance period. Commenters supports this treatment for new nuclear generation.

Commenters stated that the proposed rule does not g ive net credit for nuclear generation because it includes 5.8% of the existing capacity both in t he baseline when establishing goals and in counting nuclear generation toward compliance with the state goal. Commenters suggested two495

alternatives options for treatment of nuclear gener ation in the final rule: 1) Do not include "at risk" nuclear generation in the baseline when devel oping the state goal, but allow it to be used for compliance, and 2) Award compliance credit for "at risk" nuclear generation if investments are made to extend the life of existing nuclear gen eration.

Commenters stated preserving existing nuclear's car bon-free generation will help to keep total average CO2 emission rates down for the country's e nergy portfolio. Commenters said Missouri has one existing nuclear generating facility in the state, a 1,200 megawatt facility. Commenters said the proposed rule describes 'at risk' nuclear generating capacity as nuclear capacity that is at risk of retiring in the near future. Commenters sai d the proposed rule does not give net credit because it includes 5.8% of existing nuclear capaci ty both in the baseline when establishing the goals and in counting nuclear generation toward com pliance with the state goal. Commenters said if an existing nuclear facility is retired, un der EPA's proposed method, a state would have to develop zero-emitting generation to replace 5.8% of existing nuclear generation just to get back to the baseline level of the state's adjusted avera ge CO2 rate. Commenters suggested two alternative options for the treatment of existing n uclear generation in the final rule:

Option 1: Do not include 'at risk' nuclear generati on in the baseline when developing the state goal, but allow it to be used for compliance. Comme nters said under this option, 'at risk' nuclear generation would not be included in the state goal calculation, but states would be allowed to take credit for their "at risk" nuclear generation. Commenters said this method would still provide incentive to invest in prolonging the life of existing nuclear capacity by giving a net credit to states with existing nuclear capacity. Co mmenters said it also would not penalize a state that retires existing nuclear capacity at the end o f its useful life. Commenters said although the state would lose the compliance credit from the ret ired nuclear generation, the state would be back at its starting point, as opposed to needing t o develop new zero-emitting generation just to get back to its baseline level.

Option 2: Award compliance credit for 'at risk' nuc lear generation if investments are made to extend the life of existing nuclear generation. Com menters said under this option, 'at risk' nuclear generation would be included in the state goal calc ulation and the state would be allowed to take credit for the 'at risk' nuclear generation in the same manner that the proposed rule describes; however, if a utility were to make an investment to prolong the life of existing nuclear generation, such as replacing a reactor head, a cre dit would be granted beyond the 5.8% allowed for in the proposed rule. Commenters said the state would not only avoid the penalty of needing to replace 5.8% of their retired nuclear capacity, but it would also receive a credit for their investment to extend the life of their existing nuc lear capacity. Commenters said this would increase the incentive to preserve existing nuclearcapacity and would generally be consistent with EPA's proposed treatment of existing nuclear g eneration.

Commenters stated that Ameren (owner of the Callawa y Energy Center) does not believe Callaway is "at risk" for closure. Commenters also stated that Ameren estimates that if, under the proposed rule methodology, Callaway does not achiev e a 90 percent capacity factor, Missouri will necessarily be required to meet its goals from other building blocks.

Commenters stated the EPA also notes that, '[n]ucle ar generating capacity facilitates CO2 emission reductions at fossil fuel-fired EGUs by pr oviding carbon-free generation that can496

replace generation at those EGUs', yet no net credi t is given for the remaining useful life of the Callaway Energy Center (Callaway), presumably becau se 'the generation from [this] unit is currently helping to avoid CO2 emissions from fossi l fuel-fired EGUs. Commenters said in its comments, Ameren indicated it does not believe Call away is 'at risk' for closure. Commenters said the EPA should allow a percentage of nuclear g eneration to be used in meeting a state's goal
for CO2 emission reduction. Commenters said Ameren estimates that if, under the proposed rule methodology, Callaway does not achieve a 90 percentcapacity factor, Missouri will necessarily be required to meet its goals from other building b locks.

Commenters stated first, EPA's assumption that 'at risk' nuclear generation will continue to operate is unsupported. Commenters said this genera tion is obviously "at risk" for a reason, yet EPA does not examine why this generation is at risk or what impediments would have to be removed in order for this generation to keep operat ing; for example, Exelon, the largest owner of nuclear power in the United States, has warned thatthe United States nuclear fleet is aging and faces severe challenges in avoiding large-scale clo sures in the future. Commenters said Exelon is also taking the public position that nuclear power has become unprofitable in light of low natural gas prices and subsidized wind power and that three of its six Illinois nuclear plants are 'on the bubble' of closing. Commenters said EPA, however, s imply assumes that these types of impediments can be removed without explaining why.

Commenters continued EPRI explains the fallacy of E PA's approach.

Commenters stated indeed, EPA performs almost no an alysis at all. Commenters said the extent of EPA's analysis is (a) an EIA estimate that 5.7 G W of existing nuclear capacity is likely to be lost, (b) an article by two EIA analysts that refer red to this reduction in capacity as occurring because of 'continued economic challenges,' and (c) a February 2013 Credit Suisse report that nuclear units may be experiencing up to a $6 MWh sh ortfall in covering their operating costs. Commenters said EPA translates these speculations i nto the conclusion that at a $12-$17 carbon price, a price EPA finds reasonable, this capacity would continue to be available. Commenters said to characterize this analysis as scanty unders tates the point. Commenters said one quotation from one brief article by two EIA analysts plus a c herry-picked quotation from a single 23-page investment report hardly qualifies as 'substantial evidence' that all at risk nuclear generation can be preserved; indeed, even a cursory glance at the Credit Suisse article indicates that the nuclear industry faces issues that are more than merely mon etary, including a large number of aging units experiencing very high levels of service outa ges.

Commenters stated that the assumption that 6 percen t of every state's nuclear power is at risk is arbitrary, because specific nuclear units in specif ic states are at the risk of retirement or derating

, while others are not. Commenters also stated that t he six percent assumption has the absurd result that the amount of nuclear generation to be 'saved' in meeting the state's rate goal is less than the smallest nuclear reactor in any state. Com menters said for example, Texas is assigned 290 MW of at-risk capacity, while the smallest unitin the state is 1195 MW, four times as large. Commenters said to match its goal, Texas would need to determine somehow that 24 percent of the capacity of its smallest unit was 'at risk' and that it had taken some measures to retain it in operation.497

Commenters stated second, having utilized EIA's fig ure of 5.7 GW of nationwide nuclear capacity that is likely to be lost, and having dete rmined that this number represents about 6 percent of nationwide nuclear power, EPA then arbit rarily assumes that 6 percent of every state's nuclear power is at risk and can be saved. Commente rs said EPA has no basis for making this assumption; specific nuclear units in specific stat es are at risk of retirement or derating; others are not. Commenters said as an example, Arkansas El ectric Cooperative Corporation reports that no nuclear generation is at risk in Arkansas, yet E PA's inclusion of that assumption in calculating Arkansas' goal artificially makes that goal more st ringent. Commenters said there is thus absolutely no reason to assume that because one sta te has nuclear generation at risk, every other state that has nuclear generation has the same prop ortion of nuclear generation at risk; EPA's assumption that they do is the definition of arbitr ary.

Commenters stated nor does EPA have a rational basi s to conclude that new nuclear generation will come on line as scheduled; indeed, witnesses f or the staff of the Georgia Public Service Commission recently testified that the already-dela yed Plant Vogtle faces further delays and indeed lacks an integrated project schedule beyond 2015.

Commenters stated under EPA's approach, states with nuclear power are left with a lower emission rate goal relative to states that do not e mploy nuclear power, thereby limiting states' options to demonstrate compliance. Commenters also stated EPA should reconsider this 6 percent 'penalty' for 'at risk' nuclear generation. Commenters said existing or new nuclear generation should not affect a State's emission rat e goal, but rather some portion should be acceptable as an eligible action toward meeting tha t goal. Commenters also recommended that a 100 MW uprate at the Seabrook Station in 2005 and 2 006 should be credited, because it helped to avoid future fossil fired generation.

Commenters stated second, the Seabrook Station nucl ear plant completed an early 100 MW uprate in 2005 and 2006. Commenters said this uprat e has helped to avoid future fossil fired generation and should be credited. Commenters said the proposed rule fails to properly promote or recognize the importance of base-load nuclear ge neration for large-scale reductions in CO2 emissions. Commenters said nuclear energy is the largest existing source of carbon free electricity generation in the United States, accoun ting for 19 percent of all electricity generation in 2012 and 63 percent of our nation's carbon free power, greater than all renewables combined. Commenters said some nuclear power plants are at ec onomic risk of shut-down, given the low cost of natural gas and the increase in constructio n and operation of natural gas-fueled generation. Commenters said while Building Block 3 is intended to encourage the continued operation of nuclear units, instead states with exi sting nuclear capacity are penalized in the calculation of emission rate goals. Commenters said under EPA's approach, states with nuclear power are left with a lower emission rate goal rela tive to states that do not employ nuclear power, thereby limiting states' options to demonstr ate compliance. Commenters said EPA should reconsider this 6 percent "penalty" for "at risk" n uclear generation. Commenters said existing or new nuclear generation should not affect a State's emission rate goal, but rather some portion should be acceptable as an eligible action toward m eeting that goal. Commenters stressed the importance of setting standards that preserve optio ns (e.g., nuclear) for fuel diversity and maintain grid reliability.498

Commenters recommended that: a) existing nuclear ge neration should not be considered in setting a State's emission rate goal, but instead s hould only be considered as an eligible action for compliance purposes; and b) maintaining existing nu clear power should be an eligible action, which receives full credit for reducing the CO2 emi ssions intensity (lb/MWh) of a state.
Commenters stated that the second recommendation is warranted under a plain reading of EPA's definition of 'affected entity' in proposed definit ions at 40 CFR 60.5820.

Commenters stated the proposed rule fails to proper ly promote, or recognize the importance of, base load nuclear generation for large-scale reduct ions in CO 2 emissions. Commenters said too
little CO 2 emissions reduction credit is allowed for nuclear energy in the proposed rule. Commenters said it is appropriate to provide creditto maintain existing nuclear power, as well as for new nuclear power.

Commenters had the following recommendations:

a) Existing nuclear generation should not be considere d in setting a State's emission rate goal, but instead should only be considered as an e ligible action for compliance purposes.

b) Maintaining existing nuclear power should be an eli gible action, which receives full credit for reducing the CO2 emissions intensity (lb /MWh) of a state; this result is warranted under a plain reading of EPA's definition of "affected entity" in proposed
definitions at 40 CFR 60.5820.

Commenters stated EPA's treatment of existing nucle ar generation does not fully credit states that have supported the development of one of the m ost significant forms of carbon-free electricity generation in the United States, nuclea r power. Commenters said instead, states with existing nuclear capacity are penalized in the calc ulation of emission rate goals. Commenters said under EPA's approach, states with nuclear powe r are left with a more stringent emission rate goal relative to states that do not employ nuclear power, thereby limiting states option(s) to demonstrate compliance.

Commenters stated that reducing CO2 emissions goals in only those states with nuclear generation by assuming a uniform amount of 'at risk ' nuclear generation that could be preserved, without any assessment of whether this is the case, is arbitrary and capricious and has unwarranted and inequitable impacts on state target s. Commenters said furthermore, this approach fails to recognize that retention and reti rement decisions rest largely with generation owners and the Nuclear Regulatory Commission, rathe r than the states. Commenters also stated this element of Building Block 3 will have no effec t in the majority of states that do not have nuclear generation facilities. Commenters said in s tates that do, the EPA's assumption regarding preservation of 'at risk' nuclear will increase the burdens of the Clean Power Plan, effectively penalizing those states for their use of these non- emitting resources. Commenters recommended that the EPA should not incorporate any 'at risk' n uclear generation into New York's target CO2
emissions rate.

Commenters stated Building Block 3 assumes the pres ervation of 5.8% of nuclear generation across the country that the EPA considers to be 'atrisk' for retirement. Commenters said the EPA applies Building Block 3 by incorporating 5.8% of a state's nuclear capacity into its target CO 2499

emissions rate. Commenters said the target rates in states that do not have any nuclear generators are not similarly adjusted; this adds 2,410,637 MWh of generation into the denominator of the formula for New York's target CO 2 emissions rate, having the effect of lowering it.

Commenters stated reducing CO 2 emissions goals in only those states with nuclear generation by assuming a uniform amount of 'at risk' nuclear gene ration that could be preserved, without any assessment of whether this is the case, is arbitrar y and capricious and has unwarranted and inequitable impacts on state targets. Commenters sa id furthermore, this approach fails to recognize that retention and retirement decisions r est largely with generation owners and the Nuclear Regulatory Commission, rather than the stat es.

Commenters stated this element of Building Block 3 will have no effect in the majority of states that do not have nuclear generation facilities. Com menters said in states that do, the EPA's assumption regarding preservation of "at risk" nucl ear will increase the burdens of the Clean Power Plan, effectively penalizing those states for their use of these non-emitting resources.

Commenters stated when a nuclear unit ceases to ope rate, the affected state must replace the nuclear unit's output. Commenters said in the near term, the needed replacement energy likely will come from existing units and an RSV may have t o be triggered. Commenters said in the longer term, some portion of the replacement energy would have to come from non-emitting
resources in order to meet the state's Clean Power Plan target. Commenters said lowering state target rates in this manner penalizes states that c urrently operate non-emitting nuclear facilities by requiring them to deploy additional renewable ge neration and energy efficiency in the event
that their nuclear facilities are later decommissio ned. Commenters said the EPA should not incorporate any 'at risk' nuclear generation into N ew York's target CO 2 emissions rate.

Commenters stated furthermore, while the State reco mmends removing the 'at risk' nuclear provision, it is also important to note that many o f EPA's apparent objectives regarding existing
nuclear can still be realized within a mass-based s ystem. Commenters said in a mass-based system such as RGGI, nuclear plants need not bear t he cost of emission allowances; therefore, they realize an economic advantage over fossil fuel -fired plants. Commenters said in addition, in a mass-based system, any increase in CO2 emissions resulting from the retirement of nuclear plants is automatically accounted for under the emi ssions cap; because all CO2 emissions from affected fossil fuel-fired plants must be under the mass- based cap, assuming the cap is federally enforceable, any increase in emissions resulting fr om nuclear retirements could not cause a state or region to exceed the cap. Commenters said instea d, such increases in emissions would correspondingly increase pressure on the cap and th ereby the cost of compliance. Commenters said in New York, for example, several existing nuc lear plants may retire prior to 2030, due to NRC relicensing, economic considerations, or marketforces. Commenters said if this occurs and the State is complying with the proposed rule throu gh RGGI or another mass-based program, then compliance costs could increase for regulated entities within the State, but emissions would have to remain below the cap.

Commenters recommended removing any provisions regarding existing nuclear generation from
the final CPP rule. Commenters stated the final rul e should altogether remove consideration of a state's existing nuclear capacity - whether 'at ris k' or otherwise - from both the calculation of a state's target and from compliance. Commenters reco mmended this modification because the500

dispositive factors in whether a nuclear plant cont inues to operate are generally the NRC licensing process and economic considerations, not state programs or policies.

Commenters recommended that EPA remove 'at risk' nu clear from the building block calculations. Commenters said in the proposal, EPA characterizes approximately six percent of existing nuclear capacity nationwide as 'at risk' o f retirement; because EPA states that preserving such 'at risk' nuclear that might otherwise be reti red would result in CO2 emission reductions from fossil fuel- fired power plants, the proposal incorporates the six percent of nuclear capacity in both the calculation of a state's target emissio n rate and in a state's compliance with the target. Commenters said the final rule should altogether re move consideration of a state's existing nuclear capacity - whether 'at risk' or otherwise - from both the calculation of a state's target and from compliance.

Commenters recommended this modification to the pro posal primarily because the ultimate determination regarding whether an existing nuclear power plant continues to operate or retires is largely a business and/or Nuclear Regulatory Commis sion (NRC) licensing decision and beyond
a state's control. Commenters said while EPA ostens ibly included the 'at risk' nuclear provision as a means of encouraging states to incentivize the preservation of existing nuclear capacity, the reality is that a state has limited ability to prov ide such incentives. Commenters said instead, under the Atomic Energy Act of 1954, the federal go vernment, through the NRC, has primary responsibility for ensuring the safety of nuclear p ower plants and licensing their operation. Commenters said while there are a number of possibl e circumstances in which a nuclear plant may be forced to retire, these would generally incl ude safety, radioactive leaks, or other issues associated with NRC relicensing, or economic condit ions that make a plant too costly to continue to operate. Commenters said on the other hand, a st ate may regulate various aspects of operation of a nuclear power plant, including those that rela te to compliance with environmental laws, mitigating environmental impact, and protecting wat er quality, but generally cannot dictate whether a plant continues to operate altogether.

Commenters concluded in other words, the dispositiv e factors in whether a nuclear plant continues to operate are generally the NRC licensin g process and economic considerations, not state programs or policies. Commenters said even be yond the six percent of 'at risk' plants, a nuclear plant may end up retiring despite a state's best efforts to preserve the plant's operation. Commenters said given the dominant role of the fede ral government through NRC licensing, and of economic factors, EPA's proposal should not acco unt for actions by states that may be impossible for states to implement; therefore, espe cially given the leadership role EPA envisions for states under the proposal, New York strongly su pports the removal of the 'at risk' nuclear provision from the final rule.

Commenters supported EPA's proposal to credit 6% of existing nuclear generation to help avoid early retirements and to recognize the importance o f nuclear power in meeting greenhouse gas emission reduction goals; however, Commenters did n ot believe that a higher percentage (up to 100%) of nuclear generation should be used for dete rmining the state emission targets. Commenters also did not recommend EPA requiring sta te compliance plans to include a discussion of how states would preserve existing nu clear generating capacity, such as any necessary policy changes through legislation or reg ulation, or other market-based mechanisms,
or a combination thereof.501

Commenters stated existing nuclear generation shoul d benefit significantly from the increased power prices resulting from the increased costs imp osed on fossil fuel-fired electric generation under this and other EPA rules such as the mercury and Air Toxics Standards Rule which coaland oil-fired EGUs must begin complying with in 201 5. Commenters said increasing the percentage of existing nuclear generation in the st ate targets would drive less gas re-dispatch and less demand for new nuclear or renewable capacity. Commenters said if states that have a significant amount of nuclear generation want to vo luntarily take legislative, regulatory or other action to preserve existing nuclear generating capa city, that is their prerogative; however, actions of this nature should be pursued outside the Clean Power Plan framework.

Commenters stated that North Carolina does not have nuclear units that would be considered atrisk, yet 6% nuclear is added into North Carolina's denominator, thus making the state's emission rate target arbitrarily more stringent. Commenters said inclusion of the 6% penalizes North Carolina despite the state's significant investmentin a zero carbon generation resource. Commenters requested that EPA not include the 6% at -risk nuclear generation in its formula.

Commenters stated the Proposed Rule counts 6% of a state's nuclear capacity as being 'at-risk' and includes the related zero-carbon energy in the goal-setting formula; this results in a lower (more stringent) emission rate target for states th at host nuclear power plants. Commenters said including the 6% at-risk nuclear generation is arbi trary and bears no relation to the nuclear generation located in any state. Commenters said EP A justifies its inclusion of 6% nuclear generation to give states 'credit' for at-risk nucl ear units, however this one-size fits all approach is inappropriate. Commenters said EPA's generic 6% calculation assumes that all nuclear plants
located within the United States are deemed at-risk of closure, which is erroneous. Commenters said consistent with this concern, the National Ass ociation of Regulatory Utility Commissioners ("NARUC") passed a resolution at its annual meeting on November 19, 2014 urging EPA:

"to the extent it regulates carbon from existing po wer plants under Section 111(d) of the Clean Air Act, to adopt final GHG rules and regulations t hat: 1) will encourage States to preserve, lifeextend, and expand existing nuclear generation; and 2) remove the generic approximately 6 percent at-risk nuclear and nuclear under construct ion from the calculation of State-specific emissions targets ... [and] ... to the extent the E PA regulates carbon from existing power plants under Section 111(d) of the Clean Air Act, that Sta tes may include in compliance plans and thus receive emissions credit related to all output of n ew nuclear capacity (including uprates of existing plants) that begins operating after the is suance date of the proposed rule."

Commenters stated North Carolina does not have nucl ear units that would be considered at-risk, yet 6% nuclear is added into North Carolina's denom inator, thus making the state's emission rate target arbitrarily more stringent. Commenters said inclusion of the 6% penalizes North Carolina despite the state's significant investment in a zer o carbon generation resource. Commenters supported the resolution approved by NARUC and requ ested that EPA not include the 6% at-risk nuclear generation in its formula.

Commenters stated North Carolina continues to great ly rely on nuclear generation; as nuclear generation has significantly higher up-front capita l costs than fossil generation, North Carolina's electric rate payers have already invested heavily in this carbon free generation source; as of calendar year 2012, North Carolina's nuclear profil e.502

Commenters stated that based on a compilation of da ta from EIA-906, EIA-920, and EIA-923, for calendar year 2012, the total net generation fr om IOU sources of capacity in North Carolina was 107,715,547 MWh. Commenters said of this total, 39,385,592 MWh was from in-state nuclear capacity, representing 36.6% of all net gen eration. Commenters said North Carolina utilities made this significant investment in carbo n-free generation resources between 1975 and 1987. Commenters said EPA's regulations should reco gnize the substantial installed investment in existing zero carbon nuclear energy by ensuring that, in setting state emissions targets, a state's existing or planned nuclear generation is not incor porated in such a way as to result in a more stringent emissions requirement.

Commenters stated nuclear retirement is a binary ou tcome - either a plant retires, or it does not; further, nuclear power plants are so large and dist ributed in such a manner than many states with aging nuclear power plants face the risk of a subst antial fraction of their entire existing power supply disappearing, far beyond the 5.8% of nuclear capacity unrealistically assumed by EPA.
Commenters said EPA also assumes unrealistic and un founded state capabilities - a state may be unable to do anything under clean air policy or any other policy to prevent the retirement of a particular nuclear plant, simply because the costs and risks facing aging nuclear plants can far exceed the ability or authority of a state to manag e. Commenters said finally, while states cannot really prevent the loss of a nuclear plant, such a loss will unavoidably increase CO2 emissions from existing fossil plants in the host state and, potentially, many surrounding states.
Commenters said thus EPA attributes emission reduct ion potential to something states can't do (preventing nuclear retirement), instead of giving them something they need (compliance flexibility to deal with emissions increases states cannot prevent in the event a nuclear plant does retire or fail). Commenters said further, states ma y be unable to assure that new nuclear plants are completed. Commenters recommended the EPA to re move nuclear capacity from the BSER entirely.

Commenters stated that in addition to disregarding the EIA's clear characterization of the economic challenges facing merchant reactors, a fur ther inaccuracy in the draft rule's evaluation of existing reactors is that nuclear generating cap acity does not come in gradated percentile increments. Commenters said the average generating capacity of nuclear reactors is relatively large compared to other sources; also, reactors are designed to operate as baseload generators, and even among those types of plants, they are the most inflexible. Commenters said reactors take hours to power up or down, and can take days t o restart from cold shutdown; as a result, they must run at 100% of their rated capacity to op erate economically; for all practical purposes, they are either on or off, in discrete quantities o f generation capacity. Commenters said the US's one-hundred (soon to be 99) operating reactors rang e in size from 476 MW to 1,478 MW; the average size is 1,003 MW, and the median is 1,048 M W. Commenters said by contrast, the rule shows the average size of the 1,266 coal-fired unit s as 250 MW, and the median size between
150-250 MW.

Commenters stated the EPA recognizes that the econo mic conditions for existing nuclear have changed, and that some reactors are at risk of reti rement due to financial pressures. Commenters said the Agency did not conduct a thorough analysis of the issue to understand the implications for the rule; instead, the Agency relied upon an es timate by EIA that 6% of existing nuclear capacity is at risk of retirement for economic reas ons (without identifying specific plants), and a Credit Suisse report estimating the average economi c margin influencing closure decisions at503

$6/MWh. Commenters said the EPA then used the gener ic EIA and Credit Suisse figures as proxies for evaluating the feasibility of preservin g existing nuclear capacity, concluding that the 6% of existing capacity could be preserved at a cos t of $6/MWh, or a cost of $12-17 per metric ton of CO2. Commenters said on that basis, the draf t rule the EPA recommends that 6% of each state's nuclear capacity be included in the goals.

Commenters referred to an EIA estimate that 6% of t he nation's existing nuclear capacity is at risk of retirement for economic reasons, and a Cred it Suisse report estimating the average economic margin influencing closure decisions. Comm enters stated it is not at all clear that EPA interpreted these two documents correctly. Commente rs said the EIA report is very clear that the
reactors at risk of retirement for economic reasons are in states in which utility restructuring resulted in their operating as merchant power plant s. Commenters said the EPA had no reason to
assume that the risk retirement of nuclear units fo r economic reasons would be distributed evenly throughout the country. Commenters said the Credit Suisse document is a slide presentation and includes no statement that the cost margin for reac tors at risk of retirement is $6/MWh. Commenters said there is a chart on page 11 of the presentation which shows free cash flow margins for a number of reactors at different marke t price levels, and the range of shortfalls generally ranges between $4 and $10/MWh in the PJMW market; there is also a statement that "Layering in typical parent overhead of $5-7/MWH, u nit economics look even worse." Commenters said the EPA is at pains to explain wher e it derived the $6/MWh figure.

Commenters stated because the rule offers states a high degree of latitude in developing their implementation programs, this shortcoming (referrin g to EPA's proxy of at-risk nuclear is unrepresentative) of the rule actually provides a s trong rationale for states to include measures in their implementation plans that go far beyond what the rule contemplates. Commenters said for example, Illinois could aver that it agrees wholehe artedly with the intent of rule, but 25% of its nuclear capacity is at direct risk of closure and a ll of the reactors have suffered economic losses for five years. Commenters said the EPA may not giv e Illinois full credit toward meeting the mandated emissions goal, but the state could still divert substantial resources from renewables and efficiency under the rationale provided by the draft rule.

Commenters continued what is more, the economic margin affecting the most at-risk units is far greater than $6/MWh, so Illinois may propose incent ives greater than that. Commenters said even if the EPA's insufficient $6 rate were applied to 100% of Illinois' nuclear capacity - as the state is now considering doing, and with the draft rule's provisions as one of the primary policy rationales 24 - it would cost ratepayers at least $ 548 million/year, while not preventing a single reactor from closing. Commenters said nationally, s uch a subsidy could total $4.6 billion/year, without producing any net benefit.

Commenters stated despite the availability of detai led information, the EPA opted not to consider which reactors were actually at risk of closure. Co mmenters said the factors placing reactors at risk are both plant-specific and locationally speci fic; as a result, the draft rule's proxy for at-ris k nuclear is entirely unrepresentative of the nature and scope of the issue it purports to address. Commenters said even in Illinois, with more nuclear reactors than any other state, the smallest single reactor (Dresden 2, at 869 MW) is 7.5% of th e total nuclear capacity in the state; but Dresden 2 is actually one of the reactors least at economic risk in Illinois. Commenters said those at greatest risk are Clinton (1,065 MW) and Quad Ci ties 1 and 2 (912 MW each), which add up504

to over 25% of the state's nuclear capacity. Commen ters said the reactors' owner, Exelon, has also stated that its Byron 1 and 2 reactors could c lose, which, if true, would raise the total to over 45% of Illinois' nuclear capacity. Commenters said in New York, as in Illinois, over 25% of nuclear generation is at risk of closure; in MA, itis 100%; in Ohio 42%, etc. Commenters said as a result, the rule as construed literally would notsave a single at-risk reactor, and therefore would not serve the intended purpose.

Commenters stated U.S. EPA cannot assume Ohio's, or any other states nuclear capacity can be maintained at any percentage level, indefinitely. C ommenters noted that Ohio has two nuclear facilities that would be affected by this provision , Davis-Besse and Perry. Commenters stated if these facilities are unable to maintain operational status, Ohio EPA will not be able to preserve 6% of their generation and would have to make up fo r that shortfall with other zero emitting generation. Commenters said Ohio would need to repl ace 993,077 MW-hrs of generation; this is equivalent to doubling their wind generation (985,4 85 MW-h), notwithstanding the fact other renewable sources could never fully replace nuclear capacity due to their intermittent nature. Commenters said U.S. EPA is over stepping the bound s of Section 111(d) and this element of the proposal should be removed.

Commenters stated U.S. EPA states RE in 2012 repres ented 12% electricity generation nationally (including hydropower) which is up from 9% in 2005. Commenters said in addition,

U.S. EPA found more than half of the states have es tablished state-level RE with an average of almost 20% of 2020 generation supplied by renewable s; however, in Ohio, 2012 RE represented only 2% of generation (including hydropower) and Oh io is expected to have 9% of 2020 generation from renewables.

Commenters continued as part of this proposal, U.S. EPA intends to force states to preserve nuclear capacity that is 'at risk' even though U.S. EPA recognizes factors such as 'increasing fixed operation and maintenance costs, relatively l ow wholesale electricity prices, and additional capital investments associated with ensuring plant security and emergency preparedness' have

altered nuclear outlook. Commenters said U.S. EPA a cknowledges increasing costs are associated with nuclear capacity and undoubtedly th is is one of the reasons six nuclear EGUs at five plants have retired or been announced for reti rement since 2012. Commenters said a nuclear lifespan is considered to be 40 years and they are licensed as such; recognizing a nuclear plant's design can allow for operation beyond the 40 years, the Nuclear Regulatory Commission will grant renewal licenses for 20-year periods. U.S. EP A acknowledges 'according to a recent report, nuclear units may be experiencing up to a $6/MW-h s hortfall in covering their operating costs with electricity sales.' Commenters said erroneousl y, U.S. EPA has determined it is costeffective and appropriate to require their estimate d 6% 'at risk' nuclear capacity to be maintained, indefinitely. Commenters disagreed, and had several concerns with the inclusion of nuclear capacity, 'at risk' or otherwise, as part of a BSER

.

Commenters concluded U.S. EPA cannot assume Ohio's, or any other states nuclear capacity can be maintained at any percentage level, indefinitely . Commenters said Ohio has two nuclear facilities that would be affected by this provision , Davis-Besse and Perry; Davis-Besse is currently attempting to obtain a license renewal wh ile Perry's operating license expires in March505

of 2026, prior to when the final goals would have t o be achieved. Commenters said the process of re-licensing by the Nuclear Regulatory Commissio n is a multi-year highly detailed process; if these facilities are unable to maintain operational status, Ohio EPA will not be able to preserve 6% of their generation and would have to make up fo r that shortfall with other zero emitting generation. Commenters said Ohio would need to repl ace 993,077 MW-hrs of generation; this is equivalent to doubling the wind generation (985,485 MW-h), notwithstanding the fact other renewable sources could never fully replace nuclear capacity due to their intermittent nature. Commenters stated U.S. EPA is over stepping the bou nds of Section 111(d) and this element of the proposal should be removed.

Commenters stated it is arbitrary and capricious to simply assume that each unit of nuclear capacity is equally likely to be able to avoid reti rement. Commenters also stated in particular,
EPA fails to evaluate differences in the risk of re tirement between competitive and noncompetitive States. Commenters stated that EPA fail s to include any safety valves to permit the retirement of nuclear capacity at the end of its li censed life. Commenters stated a significant portion of the nuclear fleet has already obtained 2 0-year extensions from the NRC that will expire before or shortly after the 2030 compliance date. Commenters said EPA must at least consider how to change its analysis if FERC and/or the facility operators determine that those facilities have reached the end of their operating life and should be retired. Commenters also stated at a minimum, the 'at risk' capacity should be tied to the size of particular nuclear facilitie s as a percentage of a given state's total nuclear fl eet.

Commenters stated:

a. EPA does not justify the feasibility of its assu mptions regarding new nuclear capacity
and avoided retirements in the administrative recor d.

b. EPA's assumptions regarding new nuclear generati ng capacity and avoided retirements are arbitrary, capricious, and unreasonable.

c. At risk nuclear facilities are not spread evenly throughout the nuclear fleet. It is arbitrary and capricious to simply assume that each unit of nuclear capacity is equally likely to be able to avoid retirement.

(i) In particular, EPA fails to evaluate difference s in the risk of retirement between competitive and non-competitive States.

d. EPA fails to include any safety valves to permitthe retirement of nuclear capacity at the end of its licensed life; a significant portion of the nuclear fleet has already obtained 20-year extensions from the NRC that will expire be fore or shortly after the 2030 compliance date; EPA must at least consider how to change its analysis if FERC and/or the facility operators determine that those facilit ies have reached the end of their operating life and should be retired.

e. A 6% 'at risk' capacity is arbitrary and caprici ous because it fails to address the binary nature of nuclear retirements; at a minimum, the 'a t risk' capacity should be tied to the size of particular nuclear facilities as a percenta ge of a given state's total nuclear fleet.506

Commenters stated in order to comply with Section 1 11(d)'s mandate to set achievable standards based on BSER and to adequately incentivize the pre servation of existing nuclear generation, EPA must remove existing nuclear generation from th e state goal setting calculation and must allow states to include all nuclear generation in t he compliance demonstration component of their state compliance plans.

Commenters stated in the third building block of th e Agency's BSER determination, EPA is proposing to include six percent of each state's hi storical nuclear capacity in setting the state goals. Commenters said six percent represents the p ercentage of nuclear generation that EPA has determined is currently 'at risk' for early retirem ent based on DOE's Energy Information Administration's ("EIA") projections. Commenters sa id at the same time, the CPP would not allow states to account for existing nuclear genera tion in demonstrating compliance with state targets. Commenters said in order to comply with Se ction 111(d)'s mandate to set achievable standards based on BSER and to adequately incentivi ze the preservation of existing nuclear generation, EPA must remove existing nuclear genera tion from the state goal setting calculation and must allow states to include all nuclear genera tion in the compliance demonstration component of their state compliance plans.

Commenters stated EPA's own statements in this cont ext clearly establish that, even if the six percent figure had some legitimacy on a national sc ale, its relevance to any individual source, or for that matter any individual state, is entirely u nsupported.

Commenters stated EPA has not demonstrated that acc ounting for preservation of six percent of a state's existing nuclear generation capacity in s etting the state goals is consistent with an appropriate determination of BSER under Section 111 (d); instead, Section 111(d) requires EPA to set standards of performance that reflect the 'd egree of emission limitation achievable through the application of the best system of emission redu ction.' 42 U.S.C. sections 7411(a) & (d). Commenters said in the CPP and supporting documents , EPA has failed to provide an adequate analysis that suggests that preservation of six per cent of the existing nuclear generation capacity - defined by EPA as 'at risk' - is achievable in ea ch state.

Commenters continued in explaining the basis for it s determination that preservation of six percent of existing nuclear capacity constitutes BS ER, EPA itself notes the challenges inherent in quantifying the amount of "at risk" nuclear capacit y. Commenters said EPA recognizes that "each [nuclear plant] retirement decision is based on the unique circumstances of that individual unit and that a host of factors - increasing fixed operation and maintenance costs, relatively low wholesale electricity prices, and additional capita l investment associated with ensuring plant security and emergency preparedness - have altered the outlook for the U.S. nuclear fleet in recent years." Commenters said despite acknowledgin g the varied circumstances facing the nation's existing nuclear fleet, EPA relies on a si ngle assessment from EIA as the basis for concluding that six percent represents the amount o f nuclear generating capacity at risk for retirement that states will be able to preserve. Co mmenters said EPA's entire analysis is based on EIA's 2014 Annual Energy Outlook, in which EIA "pro jected an additional 5.7 GW of capacity
reductions to the nuclear fleet" - reductions which EIA described as "necessary to recognize the continued economic challenges faced by the higher-c ost nuclear units." Commenters said incredibly, EPA concludes its analysis by stating t hat without making any judgment about the likelihood that any individual EGU will retire, the y view this 5.7 GW, which compromises an507

approximately six percent share of nuclear capacity , as a reasonable proxy for the amount of nuclear capacity at risk of retirement. Id. (emphas is added) Commenters said EPA's own statements in this context clearly establish that, even if the six percent figure had some legitimacy on a national scale, its relevance to an y individual source, or for that matter any individual state, is entirely unsupported.

Commenters also stated in addition to providing no justification for its determination that six percent of the existing nuclear fleet is at risk fo r retirement, EPA has not shown that preservation of the identified six percent even would be 'achiev able,' a finding which is expressly required by Section 111(d). Commenters said in fact, EPA's enti re analysis is as follows: because Nuclear EGUs have low variable operating costs, Nuclear EGU s 'typically are dispatched before fossilfuel fired EGUs,' Id. at 34780. Commenters said the refore, '[i]ncreasing the amount of nuclear capacity relative to the amount that would otherwis e be available to operate is a technically viable approach to support reducing CO2 emissions f rom affected fossil fuel-fired EGU.' Id. Commenters said one 'way to increase the amount of available nuclear capacity is to preserve existing nuclear EGUs that might otherwise be retir ed.' Id. Commenters said this analysis completely fails to consider the achievability of p reserving six percent of the existing nuclear fleet, as EPA simply assumes such preservation can be achieved.

Commenters concluded the inclusion of existing nucl ear generation in the state goal-setting calculation is inconsistent with the concept of BSE R because it would penalize states that have already made significant investments in reducing GH G emissions by prioritizing zero-emitting nuclear generation. Commenters said Section 111(d) prohibits an approach to BSER that fails to differentiate the relative performance levels of th e states in regards to limiting CO2 emissions; therefore, to the extent that inclusion of existing nuclear generation in the state goal setting calculation would penalize states that emit less CO 2 because of the existing nuclear assets already contained within the states, such approach would violate Section 111(d). Commenters said in light of EPA's failure to demonstrate that preservation of six percent of existing nuclear capacity constitutes BSER, and the fact that inclus ion of existing nuclear generation in state goal-setting is inconsistent with Section 111(d)'s mandate to set performance standards based on BSER, EPA must set final state goals without consid eration of this factor.

Commenters stated that Section 111(d) allows for, a nd the objectives of the rulemaking effort demand that, existing nuclear generation be applied towards state compliance demonstrations.
Commenters noted that the CPP authorizes states to include new nuclear generation as a component in state compliance plans, and states tha t it is inconsistent with Section 111(d) and the purpose of the CPP to distinguish new from exis ting nuclear generation in this context.

Commenters stated that both the language in Section 111(d) and EPA's repeated statements in the context of rulemaking development confirm that the final rule may not have the effect of requiring the states to implement all emission redu ction techniques considered by EPA in determining BSER for the regulated source category; rather, Section 111(d) mandates that the Emission Guidelines developed by EPA preserve to st ates a range of alternative compliance methodologies for ensuring the application of BSER- equivalent performance by the regulated sources. Commenters said therefore, regardless of t he propriety of EPA's consideration of existing nuclear generation for purposes of setting the state goals, Section 111(d) allows for, and508

the objectives of the rulemaking effort demand that , existing nuclear generation be applied towards state compliance demonstrations.

Commenters stated the CPP proposes to authorize sta tes to include new nuclear generation as a component of state plans. Commenters supported this approach; however believed that it is inconsistent with Section 111(d) and the purpose of the CPP to distinguish new from existing nuclear generation in this context. Commenters said any future nuclear EGUs would be providing the same zero-emissions generation capaci ty as existing EGUs; thus, there is no reason to allow future nuclear generation to count towards state compliance demonstrations, but then in the same vein disallow inclusion of existing nuclear technology that has been consistently employed to reduce GHG emissions. Commenters said i ndeed, EPA does not even offer an explanation for the proposed rule's disparate treat ment of existing nuclear generation.

Commenters stated failure to allow for existing nuc lear generation in state compliance plans also would have the effect of penalizing states which ha ve already achieved reduced carbon footprints through existing nuclear fleets; under the CPP, sta tes with existing nuclear units would not be allowed to benefit from the zero-emitting generatio n of these units, whereas states that construct new units would secure compliance benefits from the same technology. Commenters said this outcome is inconsistent with Section 111(d) and act ually serves to disincentivize the continued operation of existing nuclear EGUs.

Commenters stated most importantly, the final rule must allow for existing nuclear generation as a component of state plans in order to continue pro moting reliable and affordable electric generation with decreased GHG emissions; existing n uclear generation accounts for roughly 20% of the United States' electric output. Commente rs said in addition, existing nuclear generation is essential to the reliability of the e lectric grid and affordability of electricity to consumers. Commenters said nuclear generation accom plishes all of this while contributing zero GHG emissions; the CPP, however, is contrary to Sec tion 111(d) in failing to recognize that current implementation of this "emission reduction" technology must be deemed fully equivalent to new nuclear generation relative to any BSER dete rminations for carbon emissions from electricity generation. Commenters said allowing st ates to account for all of their existing nuclear generation in their compliance demonstrations is co nsistent with the CPP as it will promote electric generation while decreasing GHG emissions.

Commenters stated that they do not support an optio n where the EPA could establish a process that, in the event of a nuclear unit's premature sh utdown, the lost nuclear kilowatt-hours would be removed from the state's compliance calculation.

Commenters stated full compliance credit should be given to existing nuclear generation because such generation avoids GHGs that may otherwise be e mitted from fossil fuel-fired units; at a minimum, the final rule must treat the following ty pes of nuclear generation in a manner consistent with new nuclear generation for purposes of state compliance demonstrations. Commenters stated they do not support the option pr oposed by some in the industry - where EPA could establish a process that, in the event of a n uclear unit's premature shutdown, the lost
nuclear kilowatt-hours would be removed from the st ate's compliance calculation.509

Commenters stated that the CPP's nuclear capacity c onsiderations reflect an inherent bias toward new nuclear generation, and that the national six p ercent proxy for the amount of nuclear capacity at risk of retirement is inappropriate.

Commenters opposed the CPP's approach toward nuclear energy; as proposed, the CPP's nuclear capacity considerations reflect an inherent bias to wards building new nuclear capacity. Commenters said the CPP acknowledges that new nucle ar capacity is extremely costly, which translates into a bias towards traditional, vertica lly-integrated states that utilize rate of return regulation. Commenters said all five nuclear EGU's that are currently under construction are in traditionally regulated states; consequently, the s uperficial nuclear considerations penalize deregulated states such as Ohio which depend on market conditions to develop new generating
units.

Commenters stated not only do the CPP's nuclear cap acity considerations disadvantage deregulated states, the CPP again overgeneralizes b y using a national six percent proxy for the amount of nuclear capacity at risk of retirement. C ommenters said while the six percent figure is derived from the US EIA Annual Energy Outlook, it f ails to reflect the fact that Ohio's nuclear generation fleet accounts for almost 12 percent of the state's electricity generation portfolio>

Commenters stated that states should not be penaliz ed for existing nuclear generation that is not
at risk.

Commenters stated Arizona Public Service (APS), the operator of PVNGS, developed a concept for how EPA could provide even more meaningful cred it to nuclear generation in its Proposed Rule that would not dramatically change Arizona's e missions rate goals, but would provide better recognition to Arizona for its nuclear resource. Co mmenters supported APS's proposed approach as a more appropriate methodology for incorporating nuclear generation into the CO2 goals; the proposal has two components:

1. Remove the 5.8% nuclear component from the denomina tor of the EPA's CO2 goal calculation.

2. When demonstrating compliance with the CO2 goals, a llow states to take credit for a portion of annual nuclear generation in exces s of the average historical performance of the fleet; the average capacity fact or of a nuclear unit over its lifetime is approximately 80%; therefore, beginning in the first compliance year associated with the rule (2020), and in each year t hereafter, if a nuclear unit exceeds 80% capacity factor, allow any generation i n excess of that 80% capacity

factor threshold to be included in the denominator of the CO2 emission rate calculation, which would provide credit towards com pliance with the state's CO2 goals.

Commenters urged EPA to consider adopting the metho dology proposed by APS to credit Arizona's investment in PVNGS, and similar investme nts in other states. Commenters said this approach would ensure states with nuclear generatio n like Arizona are not unduly penalized, as well as provide those states with a meaningful ince ntive to keep nuclear EGUs online and operating.510

Commenters stated instead of applying a generic 'at -risk' factor to all existing nuclear generation, EPA should apply a site-specific 'at-risk' factor w here nuclear generation is really at risk. Commenters said with the current approach, EPA is d iluting impacts where nuclear generation is actually 'at risk' and creating issues where it is not at risk, such as in Arizona; EPA should remove the 'at-risk' nuclear component from the goa l calculation for Arizona."

Commenters stated EPA's proposal fails to fully rec ognize the large percentage of carbon-free generation resources already present in Arizona; Ar izona is home to the Palo Verde Nuclear Generation Station (PVNGS), the largest nuclear pow er generating station in the United States.
Commenters added that SRP owns 17.49% of this facil ity and it is an important provider of baseload generation in the company's resource portf olio.

Commenters stated for the purposes of goal-setting, EPA claims that a certain percentage of the U.S. nuclear fleet is at risk of retiring for vario us reasons and that 'preserving the operation of at

risk nuclear capacity would likely be capable of ac hieving CO2 reductions from affected EGUs
at a reasonable cost.' Commenters said EPA has ther efore proposed to include an 'at-risk' nuclear component in the CO2 goals for all states with nucl ear generation; this 'at-risk' nuclear component is calculated as 5.8% of the nuclear capa city in each state, assuming a 90% capacity
factor.

Commenters stated EPA's incorporation of a percenta ge of PVNGS's 2012 generation into Arizona's goals based on a presumption that 5.8% of U.S. nuclear capacity is at risk of retirement provides no substantive recognition of the fact tha t this facility comprises approximately onethird of the generation produced in Arizona and is not at risk of near-term retirement. Commenters said the U.S. Nuclear Regulatory Commiss ion approved the extension of all three PVNGS units by an additional 20 years; Unit 1 is pe rmitted to operate through 2045, Unit 2 through 2046, and Unit 3 through 2047.

Commenters stated instead of applying a generic "at -risk" factor to all existing nuclear generation, EPA should apply a site-specific "at-ri sk" factor where nuclear generation is really at risk. Commenters said with the current approach, EP A is diluting impacts where nuclear generation is actually "at risk" and creating issue s where it is not at risk, such as in Arizona; EPA should remove the "at-risk" nuclear component from the goal calculation for Arizona.

Commenters stated for the purposes of compliance pl anning, EPA proposes that nuclear generation would count towards compliance with a st ate goal only if this generation meets or exceeds a 90% capacity factor. Commenters said if t he nuclear generation does not meet the 90% capacity factor threshold in a given compliance year, the state would have to implement more renewable generation or energy efficiency measures to offset the shortfall in nuclear generation. Commenters said this approach is problematic as it could be routine that the capacity factor of a nuclear plant falls below 90% in any given year due to outages required for refueling, regular maintenance, or to address certain regulatory requi red modifications. Commenters said by relying on a 90% capacity factor, EPA is penalizing rather than rewarding states that have nuclear generation.

Commenters stated that EPA's treatment of existing nuclear capacity is also arbitrary because it is inconsistent with the agency's treatment of othe r large, existing sources of zero-carbon511

electricity such as hydroelectric dams and renewabl e energy facilities. Commenters said yet both hydroelectric facilities and renewable energy facil ities also face market and non-market challenges that could lead to reduced capacity or s hutdown in future years. Commenters said despite this similarity, EPA has not proposed to pe nalize states that retire existing hydroelectric or RE capacity by incorporating an assumption about"at risk" hydroelectric or RE generation into state goals. Commenters said as with under-con struction nuclear generation, EPA should not arbitrarily treat zero-carbon generation from exist ing nuclear facilities differently from other zero-carbon generation. Commenters said to fix this discrepancy, EPA should treat all existing zero-carbon facilities (including nuclear, hydroele ctric, and RE facilities) identically in its calculation of states' emission goals.

Commenters stated that EPA's proposal to incorporat e approximately 5.8% of each state's existing nuclear capacity (which EPA calls "at risk " capacity) in calculating the state's emission goal is also arbitrary and capricious for a number of reasons; to begin with, the assumption that South Carolina may retire some of its existing nucl ear capacity is unreasonable in light of the fact that the state's utilities, including Santee C ooper, have recently invested billions of dollars i n building additional nuclear capacity in the state. Commenters said it is also unreasonable because
the U.S. nuclear units that are at risk of retireme nt are largely located in competitive wholesale electricity markets. Commenters said in South Carol ina's case, the costs of past utility investments in nuclear are already included in cust omers' rates under terms approved by the Santee Cooper Board or, in the case of SCANA Corpor ation, the South Carolina Public Service Commission; therefore, future electricity market fl uctuations-such as those that generators in competitive wholesale markets may experience-will n ot put South Carolina's units at risk of
retirement.

Commenters recommended removing the 5.8% "at risk" adjustment in calculating a state's emission goals. Commenters also recommended allowin g South Carolina to include 100% of its actual on-line generation towards compliance. Comme nters stated that none of South Carolina's existing operational nuclear units were scheduled f or retirement prior to 2030, and that none of the existing operational nuclear generation was "at risk."

Commenters stated over 6,500 MW of nuclear capacity is presently operational in South Carolina; this capacity is supported by South Carol ina ratepayers and represents sizeable investments by South Carolina electric utilities. C ommenters said these electric utilities, with the approval of the state's regulators, made decisions years ago to make significant investments in reliable, non-carbon emitting nuclear generation, a nd South Carolina should receive the benefit
of those decisions.

Commenters stated the Proposed Rule does not recogn ize South Carolina's commitment to noncarbon emitting generation that has resulted in a l ower carbon footprint in South Carolina for over thirty years; instead, the Proposed Rule inclu des an adjustment based on 5.8% of a state's existing nuclear capacity. Commenters said the EPA states that this adjustment represents an amount of nuclear capacity at risk of retirement ac ross the country. Commenters said the practical effect of this "at risk" factor drives do wn the emission rate goal of South Carolina and other states with existing nuclear generation there by making compliance more expensive for

consumers.512

Commenters stated South Carolina has a proven histo rical (and future) commitment to non-GHG emitting nuclear generation; none of South Carolina 's existing operational nuclear units are scheduled for retirement before 2030; therefore, th e 5.8% 'at risk' factor intended to preserve existing nuclear generation clearly does not apply to South Carolina and should be removed from the goal calculation. Commenters said rather than p enalize South Carolina by including this 5.8% 'at risk' factor, South Carolina should be all owed to include 100% of its actual on-line generation toward compliance with the state goal. T herefore, the commenters recommended the removal of the 5.8% penalty for 'at risk' nuclear g eneration in determining the state goal.

Commenters stated that the Grand Gulf Nuclear Stati on represents almost 75% of the zero carbon generation used in the goal calculation for Mississippi in 2020 and almost 50% of the zero carbon generation in 2030. Commenters asked wh en a single source represents such a large percentage of the zero carbon generation used to ca lculate a state's goal, what is a state supposed
to do in the event that source is unavailable for a n extended period of time or has a catastrophic failure that results in the plant never being place d back into service?

Commenters stated also with building block 3, the E PA adds 631,874 MWh to the denominator of the Mississippi CO2 goal calculation for "at ris k" nuclear generation. Commenters said the EPA derives this number by multiplying the nuclear capacity in the relevant state by 6%; adding
these MWh to the CO2 emissions rate denominator fur ther exacerbates the already extremely low emissions rate goal for the state. Commenters s aid there is no justification for this arbitrarily being added to the denominator of the CO2 goal calc ulation, as there is no nuclear generation in Mississippi that is "at risk", and the EPA should e liminate it.

Commenters stated additionally, the EPA did not giv e adequate credit to states with nuclear generation nor take into account recent investments in these facilities; as an example, SMEPA invested $77.5 Million in the Extended Power Uprate project at the Grand Gulf Nuclear Station thereby achieving additional zero carbon generation . Commenters said the EPA's handling of nuclear generation has in effect penalized SMEPA fo r early action; further, this investment in zero carbon generation means that SMEPA has less capital to invest in other generation options.

Commenters stated they understand that the EPA assu med that the average annual nuclear plant generation availability of capacity factor is appro ximately 90% on a national basis; this does not reflect reality. Commenters said the national avera ge lifetime capacity factor through 2013 for nuclear plants is 80.3%. Commenters said the Grand Gulf Nuclear Station located in Mississippi has outperformed the National Average with a lifeti me Capacity factor of 86.6%; however, the difference between 86.6% and 90% represents an annu al average of 377,066 MWh of zero carbon generation that the EPA assumes to be available and in operation in Mississippi and it simply is not.

Commenters stated additionally, Grand Gulf represen ts almost 75% of the zero carbon generation used in the goal calculation for 2020 an d almost 50% of the zero carbon generation in 2030. (This is viewing the MWh used for EE in the g oal calculation as zero carbon generation.) Commenters said when a single source represents suc h a large percentage of the zero carbon generation used to calculate a state's goal, what i s a state supposed to do in the event that source is unavailable for an extended period of time or ha s a catastrophic failure that results in the plant never being placed back into service?513

Commenters stated that at-risk" nuclear generation should not be included as a component of BSER. Commenters stated unlike incremental generati on from new nuclear facilities or uprated reactors, the preservation of existing nuclear gene ration does not appear to be a 'system of emission reduction,' because preservation of this c apacity does not reduce CO2 emissions below historic levels; rather, preservation of existing n uclear generation will, at best, allow fossil fuele d EGUs to continue emitting at the same level that th ey emitted in the past; therefore, from a legal perspective, it appears that inclusion of at-risk n uclear generation fails to satisfy the statutory an d regulatory requirements that state performance stan dards and the EPA guidelines must be based on application of the 'best system of emission redu ction.'

Commenters had concerns over the EPA's proposed inc orporation of a uniform 5.8% of expected generation from existing 'at-risk' nuclear reactors in calculating state goals; unlike incremental generation from new nuclear facilities or uprated reactors, the preservation of existing nuclear generation does not appear to be a 'system of emission reduction,' because preservation of this capacity does not reduce CO2 e missions below historic levels; rather, preservation of existing nuclear generation will, a t best, allow fossil fueled EGUs to continue emitting at the same level that they emitted in the past.

Commenters stated in addition, the EPA's assumption that 5.8% of each state's existing nuclear capacity is at risk of retirement is supported neit her by the Energy Information Administration (EIA) study cited in the Proposed Rule nor by the a ctual reality of the electric system in many parts of the country, including the West. Commenter s said although certain nuclear facilitiesparticularly those in competitive wholesale electri city markets-are at risk of retirement for economic or other reasons, units in others states are likely to continue operating for many years. Commenters said for example, the Palo Verde Nuclear Generating Station in Arizona, in which SCPPA members own partial interests, recently had i ts license extended until 2042, and is highly unlikely to retire due to its importance in maintai ning grid reliability in the West. Commenters
said if the EPA decides to include at-risk nuclear generation in the final rule, the agency should
review the status of nuclear facilities in each sta te or region, and only apply this assumption to states or regions where there is a real risk of ret irement.

Commenters stated that, if the EPA decides to inclu de at-risk nuclear capacity in the goal calculation, up to 5.8% of a state's annual nuclear generation should count toward compliance, regardless of whether nuclear facilities in the sta te operated at the assumed 90% capacity factor
or some other level. Commenters said if a state can increase utilization of existing nuclear generation such that 5.8% of its generation exceeds the amount of MWh included in the goal calculation, it should be able to count the full 5. 8% toward compliance. Commenters said similarly, if nuclear generation falls below the le vels assumed in the goal calculation, 5.8% of the actual MWh generated by the state's nuclear fleet s hould still count toward compliance.

Commenters stated that the four nuclear units in Vi rginia are expected to continue operated at above 90 percent capacity through 2030.

Commenters stated under building block 3, EPA appli ed the assumption that 6 percent of 'at-risk' nuclear capacity would be retained and the units wo uld operate at a 90 percent capacity factor;
this resulted in the retention of 187 MW of nucleargeneration in Virginia. Commenters said the four nuclear units in Virginia, which are all owned by Dominion, are expected to continue514

operating at above a 90 percent capacity factor thr ough 2030. Commenters said the licenses on these four nuclear units are not set to expire befo re 2030 (Surry 1 in 2032, Surry 2 in 2033, North Anna 1 in 2038, and North Anna 2 in 2040). Commente rs said as such, Dominion already has plans to retain this 6 percent of nuclear generatio n.

Commenters stated applying the 6 percent assumption to Virginia's existing nuclear fleet in the same manner that EPA applied the assumption in its formula results in a reduction from 1,031 lbs/MWh to 998 lbs/MWh, a decrease of 33 lbs/MWh.

Commenters stated that Georgia's nuclear fleet is e xpected to be retained through 2030.

Commenters stated Georgia's existing nuclear fleet provided 28.7 million MWh of generation in 2012; EPA assumes that 5.8 percent of this generati on will remain on-line through 2030, and provides a credit for the amount of generation this would represent: 1.8 million MWh. Commenters said this lowers Georgia's emission rate by 29 lbs/MWh or approximately 4 percent of the target reduction. Commenters said EPA's assu mption is conservative in light of the utility's most recent resource plan, which shows it retaining all of its current nuclear fleet through 2030.

Utility plans regarding under-construction nuclear

Commenters stated Georgia Power is in the process o f constructing two new nuclear units, totaling 2,200 MW, at its Plant Vogtle facility nea r Waynesboro, Georgia. Commenters said the two units have expected operation dates of December 2017 and December 2018, respectively. Commenters said assuming, as EPA does, a 90 percentcapacity factor, these units would produce more than 17 million MWh of zero-carbon gen eration annually.

Commenters stated that the assumption 5.8% at risk lowers North Carolina's target emission rate by 38 lbs/MWh.

Commenters stated with respect to at-risk nuclear g eneration, Illinois urges USEPA to reconsider making Illinois' goals more stringent in comparison to states that have a lesser amount or no nuclear generation. Commenters said this presents a n equitability issue wherein states with less nuclear generation than Illinois find themselves wi th a less stringent goal adjustment.
Commenters said if USEPA desires to incentivize the preservation of nuclear generation it must consider doing so in a manner that does not make a state's goals more stringent on the front-end, but instead rewards states for preserving nuclear g eneration in the back-end compliance demonstrations; for example, USEPA could allow stat es to credit an additional amount of generation and/or CO2 reductions in a back-end comp liance demonstration as a bonus for preserving nuclear generation. Commenters said USEP A should consider giving states the flexibility and option for determining the appropri ate amount of nuclear credit available in compliance calculations.

Commenters stated that existing nuclear capacity is not "at-risk" in Tennessee, recommended
that the EPA remove 'at-risk' nuclear from BSER as this strategy has not been adequately demonstrated, the cost may very well not be reasonable, and EPA's regulation of carbon at affected EGUs will, in-and-of-itself, provide incen tive for states and utilities to preserve nuclear capacity if the cost is reasonable.515

Commenters stated EPA believes that another way to increase the amount of available nuclear capacity is to preserve existing nuclear EGUs that might otherwise be retired. Commenters said EPA recognizes that nuclear unit retirement is dete rmined by a number of factors. Commenters said despite that fact, EPA cites to recent announc ements for retirements of some nuclear units as reasonable data from which to premise the need to i nclude some amount of existing nuclear within BSER. Commenters said further, EPA indicates that EIA's Annual Energy Outlook projecting an additional 5.7 GW of capacity reducti ons in the nuclear fleet, not tied to projections of actual retirements, is a reasonable proxy for th e amount of nuclear capacity at risk of
retirement. Commenters said EPA also indicates the cost to retain this approximate 6 percent of capacity is reasonable, based on one report's indic ation that aging nuclear units may be experiencing up to a 6 dollar/MWh shortfall in cove ring their operating costs with electricity sales, which EPA translates into approximately 12 d ollar to 17 dollar per metric ton of CO2. Commenters asserted EPA's assumption that "at-risk" nuclear is adequately demonstrated as an appropriate strategy for BSER and that its cost is reasonable are unfounded; also, existing nuclear capacity is not "at-risk" in Tennessee.

Commenters stated as with under-construction nuclear, EPA's inclusion of "at-risk" nuclear disproportionally impacts only certain states with existing nuclear units, although the relative size of the impact is much less than with under-con struction nuclear; more importantly, inherent
in EPA's inclusion of "at-risk" nuclear in BSER is the belief that by the addition of about 6 percent existing nuclear capacity in mandatory stat e goals, states and utilities will be incentivized
to retain nuclear units that are otherwise not econ omically viable. Commenters said this assumes that the value of that capacity would spur further investment in or additional operational capital to operate a nuclear unit that is not currently viable; however, to date, Commenters is unaware, and EPA has not provided evidence, of any state or utility that has actually retained nuclear capacity due to either (1) the projection of carbon regulation or (2) the additional stringency of other, relevant, EPA air regulations. Commenters as serted the regulatory environment already exists to incentivize investment in and preservatio n of nuclear capacity and believes it would have already occurred if the cost was reasonable. C ommenters said EPA relies on a shortfall in covering operating costs as a proxy to determine th e cost of including "'at-risk" nuclear in BSER, but it may very likely be that other costs, includi ng daunting capital investment costs are also impacting the decisions around certain nuclear unit s, among other factors. Commenters said given the little supporting documentation and thoug htful consideration EPA has provided for the
inclusion of "at-risk" nuclear within BSER and its relative cost, the commenters asserted this particular strategy has not been adequately demonst rated, nor has EPA proven its cost is
reasonable.

Commenters stated nuclear capacity is not "at-risk" in Tennessee; none of the nuclear facilities in
Tennessee are scheduled for retirement within the c ompliance period. Commenters said in fact, the retirement year for Tennessee's oldest unit (Se quoyah 1) is slated for 2041, nearly a decade after the proposed compliance period; to suggest th at Tennessee's nuclear units are "at risk" of retirement simply does not align with reality. Comm enters said furthermore, it is inconsistent to
assume that units are "at risk" of retirement in a state that is currently pursuing, and is heavily invested in, construction of a new nuclear unit. Co mmenters said to assume that nuclear units are at risk in a state that will be the first to bring on a new nuclear unit in a very long while is contradictory. Commenters recommended EPA remove "a t-risk" nuclear from BSER as this strategy has not been adequately demonstrated, the cost may very well not be reasonable, and516

EPA's regulation of carbon at affected EGUs will, i n-and-of-itself, provide incentive for states and utilities to preserve nuclear capacity if the c ost is reasonable.

Commenters stated that although there are nuclear p lants at risk, they are generally located in states with competitive markets, not evenly distrib uted among all states with nuclear capacity. Commenters said EPA's approach is thus arbitrary, i ndefensible analytically, and provides no incentive for states to preserve nuclear capacity a t risk. Commenters said EPA should work with NEI to properly account for existing nuclear capaci ty at risk of premature shutdown.

Commenters stated with 25 to 40 percent of the exis ting operating nuclear plants that are at risk of shutting down by 2040, there is no basis for EPA 's assumed 6 percent 'at-risk' assumption for existing nuclear plant capacity; moreover, since 10 0 percent of existing renewable generation capacity is recognized in Building Block #3, the EP A should recognize 100 percent of the U.S. nuclear operating capacity.

Commenters recommended that nuclear power should be excluded from the rule entirely. Commenters stated that the 6 percent reduction in t he state goal is far too small to provide any meaningful incentive to keep them existing nuclear units operating. Commenters supported a proposal that nuclear generation should not be part of the goal calculation but could serve as a component of the state's compliance with the goal i f the plant's capacity factor exceeds an industry-wide historical threshold.

Commenters believed nuclear power should be exclude d from the rule entirely. Commenters said the EPA's purported objective for including nuclear energy in the state goal calculation is to provide an incentive for nuclear plants that are 'a t risk' of being prematurely retired due to
financial considerations.

Commenters stated unfortunately, the EPA's solution to this objective is fundamentally flawed; first, for states that actually have 'at risk' nucl ear power plants, a modest 6 percent reduction in the state goal is far too small to provide any mean ingful incentive to keep them operating. Commenters said in fact, what the EPA has done by d istributing the "at risk" component of the goal calculation across all states with nuclear gen eration is to dilute the incentive to the point of being meaningless for those "at risk" plants.

Commenters suggested the EPA to consider a pragmati c solution put forward by Arizona Public
Service that states should be allowed to take credi t for the portion of annual nuclear generation in excess of the average historical performance of the nuclear fleet.

Commenters supported a proposal being offered by Ar izona Public Service Co., operator of Palo Verde. Commenters said APS has proposed that nuclear generation should not be part of the goal calculation but could serve as a component of the s tate's compliance with the goal if the plant's capacity factor exceeds an industry-wide historical threshold. Commenters referred the EPA to the comments of APS for details relating to this pr oposal.

Commenters stated that the Palo Verde Nuclear Gener ating Station (Palo Verde) in Arizona is not by any means 'at risk' of early retirement. Com menters supported a proposal that nuclear generation should not be part of the goal calculati on but could serve as a component of the state's517

compliance with the goal if the plant's capacity fa ctor exceeds an industry-wide historical
threshold.

Commenters stated the methodology punishes states l ike Arizona that have made prudent investments in nuclear energy. Commenters said the Palo Verde Nuclear Generating Station (Palo Verde) in Arizona is not by any means "at ris k" of early retirement. Commenters said it is fully licensed past 2040, and its output is essenti ally fully subscribed for decades. Commenters said the EPA's inclusion of a portion of the genera tion from Palo Verde in calculating the Arizona goal does nothing more than create unnecess ary compliance risk for the state; the owners of Palo Verde will not modify their operatio n of the unit based on the inclusion of a portion of its generation in the Arizona goal calcu lation, as any incentive to do so is dwarfed by existing economic considerations to operate at the highest reasonably possible capacity factor.

Commenters supported a proposal that nuclear genera tion should not be part of the goal calculation but could serve as a component of the s tate's compliance with the goal if the plant's capacity factor exceeds an industry-wide historical threshold.

Commenters stated that the EPA fails to consider th e possibility that an economic or other operational circumstance might exist by which the unit owner or the NRC - the federal body with regulatory authority over nuclear units - might determine that a facility has reached
the end of its useful life.

Commenters stated in building block three, EPA assu mes that no "at-risk" nuclear energy power plants will be retired and that all units currently under construction will come online. Commenters said EPA assumes that six percent of the entire nuclear fleet is at-risk and by keeping those units in operation, states can achiev e additional emission reductions. Commenters said EPA fails to consider the possibility that an economic or other operational circumstance might exist by which the unit owner or the NRC - th e federal body with regulatory authority over nuclear units - might determine that a facility has reached the end of its useful life. Commenters said the record is insufficient to support EPA's as sumptions in building block three as it relates to
nuclear units.

Commenters stated the Proposed Regulation fails to recognize Virginia's significant investment in and utilization of zero-carbon nuclear generatio n and instead arbitrarily and capriciously penalizes Virginia by including "at risk" nuclear g eneration in the calculation of Virginia's Mandatory Goals.

Commenters stated more than 3,500 MW of nuclear cap acity is located in Virginia and supported by Virginia ratepayers; through capacity uprates, approximately 150 MW of nuclear capacity has been added since 2010, at a cumulative initial capi tal cost of approximately $500 million dollars.

Commenters stated as a result of Virginia's histori c and continuing investment in this nuclear fleet, a significant amount of the electric generat ion that provides reliable electric service in Virginia is zero-carbon nuclear generation; for exa mple, 40% of the electricity generated in Virginia was provided from nuclear facilities in th e 2012 base year used by the Proposed Regulation to calculate Virginia's Mandatory Goals.518

Commenters stated yet, the Proposed Regulation does not recognize this significant investment in the nuclear fleet or the substantial resulting z ero-carbon energy production in Virginia that has historically lowered Virginia's carbon footprint. C ommenters said to the contrary, the Proposed Regulation illogically penalizes Virginia for its n uclear fleet by including "at risk" nuclear production in the denominator of its mathematical f ormula and basing the Mandatory Goals on 2012 generation levels. Commenters said including a n "at risk" nuclear component in the formula for Virginia - along with other unlawful co mponents of the formula has the effect of driving the Proposed Regulation's emission rates fo r Virginia unreasonably and unlawfully low.

Commenters stated including higher than normal zero -carbon energy production in EPA's formula drives down the emission rates that Virgini a and other States must achieve, making compliance more difficult to achieve; this is becau se the Mandatory Goals are calculated by adjusting a basic ratio of:

Carbon emissions / megawatt hours of production

Commenters stated adding into this formula producti on from resources that have no carbon emissions only increases the denominator of the rat io, and has no effect on the numerator.

Commenters stated so each megawatt hour of zero-car bon production added by EPA for "at risk" nuclear and renewable resources, as well as the ene rgy efficiency added in by EPA, lowers the Mandatory Goals and requires deeper carbon emission reductions.

Commenters stated penalizing Virginia for its zero- carbon generation in this way is flatly inconsistent with the Proposed Regulation's purport ed goal of reducing carbon emissions (much less doing so without compromising reliability or r easonable costs). Commenters said continued use of existing (in addition to new) nuclear genera tion capacity, which provide reliable base load generation that is carbon-free, should be allowed t o count for compliance with the Proposed Regulation. Commenters said the 3,500 MW of zero-ca rbon nuclear capacity in Virginia dispatches ahead of fossil-fuel facilities, thereby massively reducing the carbon emissions associated with providing reliable electric service . Commenters said a rule intended to reduce carbon emissions should reward - not penalize - Vir ginia customers for their significant investment in this carbon-free nuclear generation.

Commenters stated EPA's calculation of each state's baseline emissions rate is skewed by the adjustments made for hydropower and at-risk nuclear . Commenters asserted these adjustments provide more confusion than clarity for states and utilities.

Commenters stated EPA should give more support to h ydropower and nuclear as valuable, carbon-free resources in its Building Block 3. Comm enters encouraged EPA to recognize that hydro and nuclear power provide added benefits to g rid operations by providing load following and base load power, respectively.

Commenters stated that it is unreasonable to assume that all at-risk nuclear generation will not
retire.

Commenters stated with respect to the nuclear assum ptions, EPA assumes that five nuclear plants currently under construction will be complet ed and become fully operational. Commenters519

said EPA also assumes that the 5.8% of existing nuc lear capacity considered "at-risk" for closure will remain open. Commenters said EPA then takes th is one step further and assumes that the
new nuclear units and retention of 5.8% of its at-r isk nuclear capacity will reduce CO2 emissions by operating at 90% capacity. Commenters said with respect to these assumptions, however, EPA performs almost no analysis; it is simply unrea sonable to assume that all under-construction nuclear facilities will come on-line, let alone ope n on schedule. Commenters said it is also unreasonable to assume that all at-risk nuclear gen eration will not retire. Commenters said West Virginia does not have any nuclear facilities, but it and the members of the WVCA will see a drop in demand for coal exports as states with nucl ear facilities move to replace coal energy with
nuclear.

Commenters stated that EPA's decision to count 5.8% of nuclear generation in each state as "at risk" and including it in that state's goal is arbi trary and inappropriate.

Commenters stated that the EPA's decision to count 5.8% of nuclear generation in each state as "at risk" and including it in the state's goal is arbitrary and inappropriate. Commenters stated Wisconsin currently only has one nuclear power plan t that has two reactors, and if this plant were to shut down, it would do so unit-by-unit, mea ning that 100%, 50% or 0% of its generation is at risk. Commenters said it would actually be im possible for the plant to lose 5.8% of its capacity; accordingly, requiring the state to prese rve that 5.8% of 'at risk' generation is arbitrary.

Commenters stated that using 5.8% as the level of ' at risk' nuclear was derived based on national data; while this percentage may be meaningful at th e national level, it has no relevance at an
individual state level. Commenters said Wisconsin c urrently only has one nuclear power plant that has two reactors, and if this plant were to sh ut down, it would do so unit-by-unit, meaning that 100%, 50% or 0% of its generation is at risk. Commenters said it would actually be impossible for the plant to lose 5.8% of its capaci ty; accordingly, requiring the state to preserve that 5.8% of 'at risk' generation is arbitrary.

Commenters stated generation from Wisconsin's PointBeach Nuclear Plant should not be considered 'at risk' at all until its licenses expi re, at which point EPA should recalculate the state's goal as discussed below. Commenters said th is facility has long-term power purchase agreements for its power and it is in a rate-regula ted state, meaning that its generation should be considered secure until its scheduled retirement; i n addition, its owner (NextEra Energy) recently invested in an extended power uprate to increase th e capacity of the plant supported by a longterm power purchase agreement with WPPI Energy, mak ing it even less likely that this plant will close prematurely. Commenters said accordingly, Wis consin does not have any "at risk" nuclear generation and should not have a goal for this part of building block 3.

Commenters stated that by assigning states with exi sting nuclear capacity more stringent goals, EPA's proposed 'at-risk' nuclear provision penalize s Wisconsin.

Commenters stated by assigning states with existing nuclear capacity more stringent goals, EPA's proposed "at-risk" nuclear provision penalize s Wisconsin.

Commenters stated that EPA's decision to allow a ma ximum of 5.8% of the at-risk nuclear generation to be used in compliance calculation pro vides an insufficient incentive for units to520

continue operation. Commenters urged EPA to remove all existing nuclear from the goal calculation, while allowing states the flexibility to use 5.8% or more of this nuclear generation when meeting state CO2 targets. Commenters mentione d that this alternative approach is entirely consistent with the NARUC Resolution passed on Nov. 19, 2014 compared to the original approach which incentivizes the continued use of ex isting nuclear that might bring unforeseen
future circumstances that could force retirement of existing nuclear unit. Commenters suggested that if EPA insists on keeping the 5.8% in the goal calculation, then it should significantly increase the amount of existing nuclear generation available for use in complying with the state
target rates.

Commenters recommended removing the 5.8% "at risk" nuclear component from goal setting, but allowing compliance credit for new nuclear and nuclear uprates. Commenters stated that the "at risk" percentage was arbitrary and not well sup ported. Commenters also stated that presumably a state would be able to include generat ion from the "at risk" portion in its compliance demonstration after 2020, although the p roposed rule did not make this explicit.

Commenters stated that the current language means i ndividual states that close existing nuclear plants must replace only 5.8% of the energy generat ed with clean sources to maintain the same level of compliance, and that this was not good eno ugh for our environment, our children, or our
air.

Commenters stated that the most cost-effective non- emitting generation options for the Southeast are hydro and nuclear, and that in the Southeast re gion, as defined by the EPA, 7 of 8 states have nuclear capacity, corresponding to 29% of the natio n's nuclear capacity in 2012. Commenters stated that there are only certain regions of the c ountry where new nuclear units are technically achievable (e.g., the Southeast) and only certain r egions where existing nuclear units are at risk of premature retirement (e.g., generators bidding i nto the capacity market).

Commenters suggested the EPA to consider the total generation from all nuclear energy sources in calculating carbon emission intensity, not only 5.8% of the existing installed base.
Commenters stated that if the EPA consider nuclear energy in its entirety, then every reactor in the nation must keep running or be replaced with ot her clean energy sources for a state to meet its goals, making currently operating nuclear units valuable to states since they do not produce
carbon emissions.

Commenters pointed out that the EPA's plan elects t o disregard the production from the other 94.2% of facilities and instead focuses solely on t he preservation of the 5.8% of the current nuclear facilities that are currently at-risk for c losure. Commenters criticized the application of 5.8% at-risk nuclear generation as that will leave most generation unprotected from closure. Commenters stated that at-risk power plants identif ied by the EIA are unique cases local to only a few states, and the application of a uniformly di stributed risk factor will not successfully preserve these individual plants. Commenters noted that for all states with nuclear power, 5.8% of total nuclear generation is less than the genera tion of one nuclear unit.

Commenters supported the EPA's proposal to include only a small amount of states' at-risk nuclear generation to establish state goals in orde r to limit downside risk if existing nuclear generation declines during the compliance period.521

Commenters stated that existing nuclear generating units at risk of premature retirement are concentrated in a relatively small number of states where the units operate in competitive electricity markets and are exposed to low wholesal e electricity prices. Commenters stated that the majority of existing nuclear capacity is not ex posed to those economic pressures and is not at risk of premature shutdown. Commenters mentioned th at EPA's proposal, if implemented, likely would not avoid the premature shutdown of an existi ng nuclear unit.

Commenters stated, regarding at risk nuclear, it is clear that the EIA had in mind only nuclear capacity that operates in merchant markets; hence t he EIA's retirement analysis applies only to those markets and not to regulated markets (for ins tance in California, Arizona, and the Southeastern United States), where regulated utilit ies retain generation assets and therefore have a guaranteed income stream and rate of return on th ose assets (presuming prudent management). Commenters stated that the EPA took the phrase "con tinued economic challenges" out of context and applied a six percent factor to every reactor w ith nuclear generation in 2012, which is incorrect. Commenters stated that, if the EPA wants to include existing nuclear generation in its Clean Power Plan, it must first identify the reacto rs at risk of retirement and estimate the cost of keeping them online in the face of deteriorating ec onomics. Commenters stated the EPA should then make a judgment about the relative economic me rits of including at-risk nuclear generation
in the rule.

Commenters recommended that the EPA either (a) elim inate altogether the inclusion of any nuclear capacity in the computation of the state st andards and their achievement, or (b) allow an adjustment for nuclear capacity (which would be gre ater than 6 percent) only in those states which have at-risk nuclear power plants (i.e. Illin ois, Ohio, Michigan, Pennsylvania, New Jersey, New York, Connecticut, Massachusetts, New Hampshire , Vermont, Maryland and Texas).

Commenters noted that, in Illinois, upstate nucleargenerators participate in the PJM market while the downstate generators participate in the M ISO market. Commenters stated that, because the state must meet the goal, Illinois would need t o enact pricing mechanisms across the entire
state. Commenters recommended that nuclear should b e taken out to the state goal entirely, and
the PJM and MISO markets should be allowed to funct ion as they should. Commenters stated that having "at risk" nuclear in the state goal cre ates an unneeded compliance risk for all states that, if realized, can result in customers being re quired to subsidize the nuclear plants in the state

. Commenters also recommended that nuclear power shou ld be included as a compliance option
for states. Commenters stated that the BSER formula was based on an EIA estimate that six plants, comprising 5.8% of the U.S. generation capa city, are "at-risk" of closure before 2030, but that these are unique cases local to a few states. Commenters stated that other DOE scenarios envision retirement rates of as high as 33% by 2030 and Commenters was aware of an impending decision to close an 816 MWe plant in NY which was not considered at-risk. Commenters stated that, as such, the data the EPA are using are flawed.

Commenters stated that, in situations in cases wher e a state's target emission rate is greater than the emission rate of the generation source that wou ld replace retired nuclear, the Proposal actually serves to encourage retirement. Commenters specifically related the case of Illinois, where Commenters stated that, because of the many c oal-fired units in the state, retiring a 1 GW nuclear unit and replacing that unit with natural g as would actually lower the state's emissions from 1,838 lbs CO2/MWh to 1,774lbs CO2/MWh. Comment ers suggested that EPA explore the522

option of including 100 percent of existing nucleargeneration, rather than 6 percent of nuclear generation, in the state's target rate calculation. Commenters stated that this would also make treatment of nuclear and non-hydro renewable genera tion logically consistent.

Commenters requested that the rule incentivize more than 5.8% of nuclear generation to stay online. Commenters stated that using 100% of nuclear capacity in compliance is appropriate, but that if 100% is not a palatable proposal, Commenter s suggested an allowance for up to 70% of existing nuclear for compliance.

Commenters stated that multiplying each state's exi sting nuclear capacity by 6 percent leads to
the absurd result that the amount of "at risk" nucl ear capacity in any state is much less than the
smallest reactor in the state. Commenters stated th at, as with the RE and EE goals, the EPA's failure to do state-specific analyses of its nuclear component results in illogical and inequitable
results.

Commenters stated that Texas is assigned 290 MW of at-risk capacity, while the smallest unit in the state is 1195 MW, four times as large. Commente rs stated that, to match its goal, Texas would need to determine that 24 percent of the capa city of its smallest unit was "at risk" and that it had taken some measures to retain it in operatio n. Commenters continued that, on the other hand, if a state truly has an at-risk unit, and doe s take steps to retain it, it would gain a compliance benefit that is much greater than the am ount used in the goal calculation.

Commenters stated that the EPA creates a compliance obligation to protect at-risk nuclear capacity in all 30 states that have nuclear capacit y without any attempt to determine if those
states' nuclear units are at risk of retirement. Co mmenters then stated that, alternatively, if retention of at-risk nuclear capacity is an action that could be taken in all 30 states, the level of the effect that EPA assigns to it (5.8 percent) is much too small; if only the smallest unit in each of the 30 states is considered, the hypothetical am ount of at-risk capacity is 26 percent of the
current nuclear fleet.

Commenters stated that the EPA does not attempt to seek a retention figure reflective of actual projected retirements in each state, and that the d efault 5.7% retention figure deliberately and arbitrarily increases the state's overall performan ce goal. Commenters stated that one possible means to preserve operation of a higher-cost nuclear plant that otherwise would retire due to market forces would be for the state to provide it with an out-of-market contract or other subsidy.
Commenters stated that such a bailout would undermi ne the electricity market in competitive states, such as Illinois, where market participants depend on a level playing field and equal treatment in order to compete. Commenters stated th at, as the owners of nuclear plants have demonstrated, direct government subsidies provided to renewable generation (e.g., the federal wind production tax credit) are putting financial p ressure on nuclear generation by paying renewable power to generate when uneconomic, and th at providing nuclear plants a subsidy or other financial incentive in response would have th e perverse effect of providing a second government subsidy to moot the effects of the first , and that the most straightforward solution is simply to eliminate all subsidies for generation.

Commenters stated that the EPA assumes that EPA ass umes that six percent of the entire nuclear fleet is at-risk and by keeping those units in oper ation, states can achieve additional emission523

reductions. Commenters stated that the EPA fails to consider the possibility that an economic or other operational circumstance might exist by which the unit owner or the Nuclear Regulatory Commission might determine that a facility has reac hed the end of its useful life. Commenters stated that the record is insufficient to support E PA's assumptions that no "at-risk" nuclear energy power plants will be retired and that all un its currently under construction will come
online.

Commenters stated that the limitation of the approa ch of assigning 5.7 GW (or roughly 6% of the nuclear fleet) as a proxy for risk of nuclear retir ement is that it avoids the highly regionalized reliance on nuclear energy. Commenters stated that avoiding the retirement of one of Illinois' six nuclear plants requires a different market and poli cy intervention than retaining 6% of, for instance, Kansas' one nuclear facility. Commenters stated that, given the concentration of nuclear fleet, the flat inclusion of a 6% nuclear retention target within each state goal applies unequal
burdens to states and does little to advance the st ated goal of nuclear fleet preservation. Commenters recommended that the EPA might better be served creating a national mechanism for retaining nuclear capacity that could smooth ov er the most significant local market obstacles to preserving certain units.

Commenters stated the EPA's 6% at risk estimate is unrealistically conservative, and that the EPA should consider increasing its "at risk" percen tage. Commenters stated that nuclear facilities are under increasing competitive pressure from gas- fired and wind generation. Commenters stated that nuclear facilities have had difficulty in clearing the most recent PJM BRA that procures capacity on a three year forward basis. Co mmenters noted that, in the most recent PJM BRA, several Exelon units including Oyster Creek in New Jersey and the Byron and the Quad City units in Illinois failed to clear the auction, and that subsequently, industry spokesmen indicated that these factors may force premature re tirement of nuclear facilities in the PJM region
in advance of normal retirement dates. Commenters a lso recommended that the EPA should consider the implications of license expirations on its BB3 proposal, including increasing the percentage of nuclear plants "at risk" for retireme nt.

Commenters stated that the EPA makes no effort to i ndependently verify the EIA's data regarding projected reductions in the nuclear fleet , and does not attempt to seek a retention figure reflective of actual projected retirements in each state as opposed to one serving as a mere representation of an economic downturn. Commenters stated that Illinois has the largest nuclear fleet in the nation, but the smallest nuclear plantmakes up 7% of the nuclear capacity, so the "national average" is nonsensical, because no one s huts down a portion of a nuclear plant. Commenters stated that, when making important proje ctions such as this, the EPA should at least use a factually based value for each state.

Commenters stated they do not support including the approximately six percent of "at-risk" nuclear to determine the state emission rate goals or compliance with such goals, and for states with nuclear generation, the state goals should adj usted upward by the approximately six percent. Commenters stated that all existing nuclear power p lants will eventually close, and when this occurs, states will have to find ways to replace a large amount of zero-carbon generation with other zero-carbon generation or be at risk of being in non-compliance with meeting their goals in the 111(d) Plan. Commenters stated that, since ther e currently are no cost effective mechanisms524

to achieve this, the "at risk" nuclear generation s hould not be included the states' carbon emission rate goals.

Commenters stated that the EPA should amend the bui lding block 3 to account for at risk units specifically and not apply a blanket average to all states that have nuclear generation. Commenters stated that the Palo Verde nuclear gener ation station in Arizona is not viewed as at
risk.

Commenters recommended that, rather than penalizing states in which nuclear plants shut down, the rule should provide an incentive for nuclear un its to continue to operate, and, if possible, to increase their output and capacity factor, and thatexcluding existing nuclear from the goalsetting calculation, but allowing states to take cr edit for a portion of their nuclear generation for compliance purposes, would provide such an incentiv e. Commenters also recommended that the EPA recognize early action taken to increase nuclear plant output, such as the 2011 extended power uprate at the Point Beach Nuclear Plant. Comm enters concluded that, at a minimum, if the at-risk nuclear provision is retained, it should be applied only to nuclear units that are truly at
risk.

Commenters stated that nuclear plants which are at risk are not equally dispersed throughout the country, so if the goal was to avoid closing these facilities, as building block 3 clearly states, the n accounting for all nuclear generation would be the effective way to achieve this.

Commenters stated that only accounting for 5.8% of nuclear means that states with large
amounts of nuclear do not have to do much to hit em issions targets. Commenters noted that certain states, Illinois being one of them, could c lose all of their nuclear facilities and replace them with natural gas plants, and their emissions r ate would be less than the 2030 goal. Commenters stated that this would lead to higher em issions, but would be perfectly fine according to the rule.

Commenters stated that, as the Clean Power Plan is written, targets are made extremely easy for states with nuclear plants, such that in some state s, nuclear plants can be shut down with little or no consequence, even though actual emissions will b e much higher.

Commenters stated that nuclear power provided 35 pe rcent of Pennsylvania's electricity in 2013, the second highest in the Nation, and that nuclear power may be at greater risk of closure in Pennsylvania, because of the Commonwealth's competi tive (deregulated) market. Commenters stated that by giving Pennsylvania credit for only 6 percent of nuclear power (at-risk nuclear), the EPA is not providing an incentive for the other94 percent to remain in operation.

Commenters stated that the proposed guidelines fail to recognize the critical role of nuclear in reducing CO2 emissions. Commenters stated that all zero-emissions generation sources (e.g., nuclear, wind, solar, and hydropower) are equivalen t for present purposes and EPA cannot achieve its carbon-reduction goals without the exis ting nuclear fleet - without the nuclear fleet, carbon emissions will be higher, as will the cost o f electricity, of natural gas, and of carbon allowances under a carbon-control regime. Commenter s stated that nuclear plants also are critical to the reliability of the electric grid; yet, the p roposed guidelines create no real incentive to maintain existing nuclear power plants. Commenters stated that although EPA notes that some525

existing nuclear facilities are at risk of prematur e retirement, the proposed guidelines greatly underestimate the quantity of nuclear generation th at is actually at risk in some states, while overstating the amount at risk in other states. Com menters recommended that if EPA is going to continue with its broad interpretation of BSER, the y should remove the six percent at risk factor from the goal calculation and, instead, consider al ternative approaches for incenting the continued operation of existing nuclear generation capacity as noted in EEI's comments.

Commenters stated that the EPA should consider its approach to at-risk nuclear facilities, because assuming that 5.8% of nuclear generation is "at risk" of shutdown and crediting states with 5.8% for their compliance plans has as neutral izing effect at best. Commenters urged the EPA to remove all existing nuclear from the goal ca lculation, while give states the flexibility to use some percentage-at least 5.8% and possibly more -of this nuclear generation when meeting state CO2 targets. Commenters also stated that if t he EPA insists on keeping 5.8% of the existing generation in the goal calculation, then it should significantly increase the amount of existing nuclear generation available for use in complying w ith the state target rates; the larger percentage the EPA makes available for use in compliance the l arger the incentive for the preservation of such generation.

Commenters stated that EPA provides no substantive discussion of how adding six percent of nuclear generation to tighten the target emissions rate for the year 2030 would work to keep nuclear capacity operating. Commenters stated that nuclear power plants are all-or-nothing devices; one cannot keep six percent of a reactor o pen and if a nuclear reactor is uneconomical, it would be completely shut down and there would be ze ro electricity generation. Commenters stated that by including this six percent in its ca lculation of the target rate, the EPA has provided the nuclear industry in deregulated markets with a tool to extract financial concessions for 100 percent of the reactor. Commenters provided an exam ple involving Exelon and the state of Illinois to illustrate their point.

Commenters stated that in order to understand that the proposed credit is insufficient, consider the case whereby one of the six at-risk plants clos es in a particular state. Commenters contended that ten percent of the resulting loss in output is replaced by wind and solar generation and the remaining 90% is replaced by natural gas plants. Co mmenters stated that under the proposed rule, the state could claim a "reduction" in carbon emissions, even though the actual output of carbon dioxide would increase substantially. Commen ters cited a recent study showing that at
least 15 states could claim a fictitious reduction in carbon emissions under the BSER formula
should all nuclear reactors close.

Commenters stated that the 800 MW Palisades Power P lant in Colvert, Michigan, due to a stretch of safety concerns, could be considered "atrisk" for shutdown. However, the commenters stated the entire 800 MW reactor would shut down, n ot just 6% of the reactor, so that clearly the
6% blanket factor does not fit well within a state where specific nuclear units are at risk in their entirety.

Commenters noted the EPA's approach of using includ ing 5.8 percent of a state's existing 2012 nuclear generation in the calculation of the state targets, and that the EPA also allows states to include 5. 8 percent of the total generation from i ts existing nuclear generation fleet in a given526

year for compliance purposes as an incentive for th e continued operation of existing nuclear
units. Commenters instead recommended each of the f ollowing:

1. Remove the "at risk" existing nuclear megawatt hour s from the state emission target calculation; to the extent EPA retains an "at risk" adjustment it should only be applied in states where "at risk" nuclear generation has been identified rather than applying this adjustment universally across all states;

2. Provide appropriate flexibility and incentives to u se incremental existing nuclear generation for state compliance; EPA should conside r a baseline capacity factor for nuclear units using either a national average lifet ime capacity factor for all operating units, or each unit's historical average capacity f actor; the incremental annual capacity factor for each unit above the baseline period woul d be eligible for compliance in a state plan;

3. Allow existing nuclear units that are relicensed by the NRC to operate beyond 60 years to be treated as new units and their full generation i ncluded in the state's compliance calculation; and

4. Allow the recalculation of a state's emissions goal to account for nuclear safety outages, outages for failures of long lead time equipment, p ermanent retirements and economic constraints as mentioned previously in this section

.
Commenters stated that the CPP, as currently propos ed, would incent each state to preserve approximately 6% of its nuclear capacity at risk fo r retirement to help meet the state's CO2 emissions reduction target. Commenters stated that the incentive to preserve a state's nuclear generation capacity that might otherwise be retired is a simple, broad-brush approach and raises numerous market issues that must be carefully consi dered.

Commenters remarked that it is unclear exactly whatconstitutes an "at-risk" nuclear plant; rather than arbitrarily assuming that 6% of a state's nucl ear capacity is at risk for retirement, each nuclear plant's operational and financial performan ce should be examined relative to a pro-forma nuclear plant to ensure that the plant is not rewar ded for poor performance.

Commenters noted that some owners of nuclear genera tion have stated that they do not need or want a subsidy; rather, they simply want credits orsome other ability to monetize the unique characteristics of their nuclear plants. Commenters stated that in the case of Illinois, because there is only one nuclear generation owner, any reg ulatory approach that would grant credits to nuclear generation needs to be carefully evaluated so as not to provide the state's sole nuclear generation owner with unintended market power or ot her unilateral advantage.

Commenters suggested one possible means to preserve operation of a higher-cost nuclear plant

that otherwise would retire due to market forces wo uld be for the state to provide it with an outof-market contract or other subsidy. Commenters con tended that such a bailout would undermine the electricity market in competitive states, such as Illinois, where market participants depend on a level playing field and equal treatment in order to compete.527

Commenters stated that as the owners of nuclear pla nts have demonstrated, direct government subsidies provided to renewable generation (e.g., t he federal wind production tax credit) are putting financial pressure on nuclear generation by paying renewable power to generate when uneconomic. Commenters contended that providing nuc lear plants a subsidy or other financial incentive in response would have the perverse effec t of providing a second government subsidy to moot the effects of the first, and the most stra ightforward solution is simply to eliminate all subsidies for generation.

Lastly, commenters stated that EPA relies upon the EIA Annual Energy Outlook, which projected a 5.7% capacity reduction to the nuclear fleet. Commenters remarked that this projected reduction is not tied to the projected re tirement of any specific unit, but rather "to recognize the 'continued economic challenges' faced by the higher-cost nuclear units."
Commenters stated that EPA determines that retentio n of this 5.7% would achieve CO2 reductions at a reasonable cost. EPA offers no expl anation as to the regulatory path for extending
the useful life of such "at-risk" nuclear units. Co mmenters contended that EPA makes no effort to independently verify EIA's data, nor does it att empt to seek a retention figure reflective of actual projected retirements in each state as oppos ed to one serving as a mere representation of an economic downturn. In fact, Commenters contended , EPA failed to consult with the Nuclear Regulatory Commission regarding the validity of its assumptions or as a policy or safety matter,
whether such "at risk" nuclear unit should continue to operate; moreover, the extension of the licensing life of a nuclear facility is highly cont entious and uncertain, and EPA provides short shrift as how such "nuclear retention goals" can be achieved. Commenters stated that by including as a default this 5.7% retention rate, EP A has deliberately and arbitrarily increased the state's overall performance goal.

Commenters remarked that EPA also does not prove th at there is substantial evidence that its projected increases in zero emission sources are "f easible" and will "produce the improved performance necessary to achieve" the goal. Comment ers stated that with respect to renewable sources, EPA relies on state RPSs as achieved, with out regard to economic or market barriers to achieving portfolio targets and without regard to w hether an RPS target is legally required to be
achieved.

Commenters stated that Kansas currently has one nuc lear plant (i.e., Wolf Creek) with an output of 1,205 MW that is owned jointly by three Kansas u tilities. Commenters remarked that the EPA's proposed plan does not recognize the signific ant zero-carbon emissions from Wolf Creek that serve to lower Kansas's overall carbon footpri nt.

Commenters stated that, in fact, as structured the CPP penalizes states with nuclear generation by including "at risk" nuclear generation in the denom inator of the CPP's mathematical formula. Commenters contended that the penalty resulting fro m inclusion of "at risk" nuclear generation in the formula is derived by the denominator's effe ct of lowering EPA's proposed emission rates, and the impact of the formula is created by the EPA 's use of a basic ratio of:

(Carbon emissions / megawatt hours of production)

Commenters stated that the EPA's definition of the basic ratio above requires generation resources with zero emissions to increase only the denominator of the ratio. Commenters stated528

that because there is no effect on the numerator, e ach megawatt hour of zero-carbon generation added by EPA for "at risk" nuclear resources lowers the emission limit goal and thus requires greater carbon emission reductions. Commenters cont ended that this is counterintuitive and reflects either the EPA's lack of understanding of electric generation or is simply an attempt to
derive a lower emission limit. Commenters stated th at penalizing Kansas for zero-carbon generation is inconsistent with the EPA's espoused goal of lowering carbon emissions. Commenters remarked that a rule designed to reduce carbon emissions should reward and not penalize the use of nuclear generation.

Commenters stated that because Kansas has no nuclear generation under construction and no part of their single nuclear plant (i.e., Wolf Creek) is "at risk", this element is eliminated from their calculation. Commenters suggested that the EPA shou ld revise its formula so that existing nuclear generation would count towards compliance.

Commenters attached a 103 page Hatch, Ltd report da ted October 9, 2014 that strongly makes the case that electric power generated by nuclear e nergy causes vastly lower amounts of greenhouse gases (GHGs) to be emitted into the atmo sphere than scenarios that couple inherently intermittent sources of electrical power such as wi nd turbines with natural gas powered generation. Commenters stated that such a coupling is necessary for electrical grid stability. Commenters remarked that the Hatch, Ltd. report, wh ich is based on 246 studies covering various power generation scenarios and constraints, concluded that nuclear power is superior to wind and natural gas for battling climate change. C ommenters contended that the clean air contributions of nuclear power should be counted at100% in the proposed regulation, not the pitiful 5.8% proposed.

Commenters recommended that the EPA exclude existin g "at-risk" nuclear generation from the formula for setting state emission reduction target s. Commenters stated that existing nuclear reactors have been facing economic pressures due pr imarily to low natural gas and wholesale electricity prices, and expensive age- or safety-re lated repairs, and gave examples of recent reactor closures. Commenters recommended excluding existing "at-risk" nuclear generation from the state emission reduction target formula, as the number of at-risk reactors is limited, site specific, and will likely decline over time as natu ral gas and wholesale electricity prices rise.

Commenters contended that the EPA's methodology of applying EIA's estimate of at-risk nuclear plants to the states is flawed. Commenters stated t hat the EPA's methodology for quantifying atrisk nuclear generation is based on EIA projections from its Annual Energy Outlook 2014
reference case. Commenters noted that the EIA's ana lysis assumed an additional 6 GW of generic retirements would occur between 2012 and 20 19, and represented this by assuming a reduced capacity for all existing plants in vulnerable regions (primarily in restructured markets with merchant plants). Commenters contended that th e EIA did not assume retirements of specific plants, and it also did not assume plants are at-risk of early retirement in every state that has existing nuclear plants, which the EPA does ass ume in its methodology. Commenters remarked that EIA also does not clearly explain how it came up with the additional 6 GW of retirements; however, EIA does indicate that they d id not include any retirements after 2020 because natural gas prices in its reference case ar e projected to be high enough to "support the continued operation of the U.S. nuclear fleet and l imit retirements from 2020 through 2040."529

Commenters stated that additional fuel switching fr om coal to natural gas under the Clean Power Plan could increase natural gas prices above EIA's reference case projections before 2020, which in turn would increase the profitability of existin g nuclear plants and potentially offset EIA's assumed retirements. Commenters stated that, in fac t, under the CPP, the EPA's IPM modeling projects a 10.2 percent to 14.3 percent increase in power sector natural gas use in 2020 that results in a 7.5 percent to 11.5 percent increase i n delivered natural gas prices to the electric power sector by 2020. Commenters also remarked thatthe EPA's modeling also does not show any difference in nuclear generation or capacity in 2020, 2025, or 2030 under any of the CPP scenarios compared to their Base Case. Commenters c oncluded that the EPA's own modeling does not show that existing nuclear generation is a t risk of early retirement, which is consistent with EIA's projections after 2020.

Commenters stated that recent UCS modeling using a modified version of EIA's AEO 2013 National Energy Modeling System (NEMS) and NREL's 2 014 version of the Regional Energy Deployment System (ReEDs) model also does not proje ct any near-term or long-term retirements of existing nuclear plants beyond the six reactors that recently closed or are projected to close in the next few years. Commenters remarked that this i s not surprising as both the EPA and UCS modeling use EIA's natural gas price projections.

Commenters stated that the spikes in natural gas an d wholesale electricity prices last winter due to extremely cold weather and the competition for n atural gas for electricity generation and home heating are another example of how natural gas pric es have already exceeded EIA projections. Commenters also noted that existing nuclear plants made considerable profits between 2005 and 2008 when annual wholesale electricity prices range d from $43-93/MWh (2013$) due to record high natural gas prices, and this is illustrated in data from Exelon, which shows a strong correlation between their share price and natural g as prices over the past decade.

Commenters stated that because early retirements of nuclear plants appear to be a temporary issue, and would likely be limited to a few specifi c plants and locations, they do not believe the EPA should include "at-risk" nuclear generation in the formula for setting state emission reduction targets. Commenters further stated that t he emission reductions from existing plants are already reflected in state's base emissions and generation mix, and for similar reasons, they are also recommending that existing renewables be e xcluded from the EPA's formula for setting
state targets.

Commenters remarked however, that if a limited numb er of existing nuclear plants are retired early and replaced with natural gas, it could resul t in net increase in a state's emissions, all other things being equal; although, it's also possible th at existing plants could be replaced with a combination of new renewables and energy efficiency without increasing emissions. Commenters cited recent analyses by UCS, the Nation al Renewable Energy Laboratory (NREL), and Rocky Mountain Institute that all show that the U.S. could gradually phase out existing nuclear reactors by the time they reach 60-years of operation and replace them primarily with renewables and energy efficiency, while saving cons umers money, maintaining reliability, and significantly reducing carbon emissions and water u se. Commenters concluded that they believe the determination of existing at-risk nuclear plant s should be addressed on a case by case basis in state compliance plans and supported by a comprehen sive analysis of the costs and benefits of530

keeping existing plants open vs. retiring and repla cing them with other low and zero carbon generation.

Commenters asserted that this approach would also h elp limit the potential for providing additional subsidies and windfall profits to existi ng nuclear plants that do not need them to continue operating. Commenters cited a 2011 UCS rep ort that shows that existing nuclear plants have already received generous subsidies that have cost taxpayers more than the market price of power they helped generate, and they continue to re ceive ongoing subsidies ranging from 1 to 6 cents/kWh. Commenters remarked that when nuclear po wer was an emerging technology, public support made sense, but more than 50 years (and two public bailouts) after the opening of the first U.S. commercial nuclear plant, nuclear power is a mature industry that should be expected
to stand on its own. Commenters concluded that the best policy mechanism to value the low carbon benefits of nuclear power is to put a price on carbon. Commenters contended that this would remove a market price distortion by internali zing a cost currently not factored into the price of coal and natural gas that would benefit nu clear, renewables and other low carbon options equally.

Comment 6: Commenters urged the EPA to preserve existing nuc lear capacity, provide credit for 'new' nuclear generation and remove the 6 perce nt 'at risk' nuclear capacity from the goal
calculation.

Response 6: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include the proposed provisions for e xisting and under construction nuclear units in the setting of state goals, and allows incremental generation from new and uprated units to be considered in state plans to comply with the rule. The provisions of the final Clean Power Plan provide incentives to maintain current levels of nu clear generation, and if a state or affected EGU chooses to do so, allow incremental nuclear capacit y to apply towards compliance. Please see sections VIII.K and VIII.G of the preamble for furt her discussion of the flexibility states have in developing state plans to ensure compliance, as wel l as, the requirement that states consider system reliability in plan submittal.

The following are summaries of the specific public comments under this comment:

Commenters stated, regarding the Clean Power Plan R ule that the proposal is designed to reduce carbon emissions by 30 percent from 2005 levels by 2030. Commenters said this goal cannot be achieved without preserving the 100 nuclear power r eactors that provide approximately 20 percent of America's electricity, and almost two-th irds of America's carbon-free electricity. Commenters said EPA's proposal recognizes this fact , and attempts to provide states with an incentive to preserve existing nuclear generating c apacity.

Commenters stated in its proposed rule, EPA estimat es that the cost of keeping 'at risk' nuclear plants operating is $12-$17 per metric ton of CO2 abated; this is lower than EPA's estimate that:

• Adding renewable capacity costs $10-$40 per metric ton of CO2 abated;531 • Increasing natural gas combined cycle power plant u tilization rates to 70 percent costs $30 per metric ton of CO2 abated; and

• Implementing demand-side management programs costs $16-$24 per metric of
CO2 abated.

Commenters continued stating the U.S. nuclear energ y industry commends EPA for recognizing the importance of nuclear energy to any credible pr ogram to reduce carbon emissions, but EPA's treatment of nuclear energy in the proposed rule is fundamentally flawed. Commenters said despite the agency's intent, the proposed rule will not preserve nuclear power plants at risk of premature shutdown, and creates a significant penal ty for those states that have taken steps to maintain a diversified portfolio of generating asse ts and reduce carbon emissions by building new nuclear power plants.

Commenters recommended that the EPA's 111(d) Rule s hould send states an unequivocal signal to preserve existing nuclear capacity, and provide credit for 'new' nuclear generation. Commenters stated if EPA continues with its propose d interpretation of Best System of Emission Reduction (BSER), the agency should remove the six percent 'at risk' nuclear capacity from the goal calculation. Commenters said various stakehold ers will doubtless offer alternative approaches to the treatment of existing nuclear gen eration in their comments. Commenters said one approach that EPA could consider, however, is f or a state to demonstrate in its plan reasonable assurance that it will preserve its exis ting carbon-free generating capacity, particularly nuclear generating capacity. Commenter s said for operating nuclear generating units in regulated states, such assurance already exists because integrated utilities have a reasonable opportunity to recover costs, plus a reasonable ret urn. Commenters said in competitive states with nuclear generating units potentially at risk, this assurance could involve a commitment to policy changes through legislation or regulation, o r other market-based mechanisms, or a

combination that would create incentives for contin ued operation of these zero-emitting
generators.

Commenters concluded creating ways for states to capture limited compliance value for existing nuclear generating units would directly serve and s upport EPA's principal objective, ensuring continued operation of the nation's largest source of carbon-free generating capacity.

Commenters stated the nation's nuclear generating c apacity is licensed for an original 40-year license term, with an option (under the Atomic Ener gy Act) for license renewal for additional 20- year periods; approximately three-quarters of the r eactors operating today have received Nuclear Regulatory Commission (NRC) approval to operate to 60 years. Commenters said starting in approximately 2030, existing nuclear power plants r each the end of 60 years of operation; although the industry and the NRC are now developin g the framework for an additional 20-year license renewal (past 60 years), it is not certain that all of today's nuclear power plants will take advantage of this option. Commenters said some of t his capacity will likely seek a second license renewal to operate past 60 years, but some will not . (In fact, some of today's capacity may not reach 60 years.) Commenters said additional capital investment will almost certainly be required to operate past 60 years and, in some cases, marketconditions or other factors may not justify that capital investment.532

Commenters concluded this situation places a high p remium on (1) preserving existing nuclear generating capacity by ensuring workable regulatory requirements for second license renewal (i.e., past 60 years), and (2) building new nuclear generating capacity to maintain, at a minimum, nuclear energy's current 20-percent share of U.S. e lectricity supply.

Commenters concluded these challenges require an in tegrated, internally consistent energy and environmental policy, involving both federal and st ate governments. Commenters said the federal government could provide the leadership nec essary to develop such an integrated policy, but energy policy and environmental policy remain b alkanized, scattered among several Executive Branch agencies, each pursuing separate, and not necessarily consistent objectives. Commenters said EPA's proposed rule to reduce carbo n emissions from existing power plants continues that pattern; if it is appropriate to red uce the electric power sector's carbon footprint, that objective should be part of a larger set of en ergy and environmental policy initiatives that provide the policy conditions necessary to achieve those carbon reductions.

Commenters stated that the Obama Administration has embraced an "all of the above" energy strategy and a commitment to reduce carbon emission s from the electric power sector, as evidenced by the proposed rule under Section 111(d) . Commenters stated that 100 nuclear power plants provide approximately 20 percent of the nati on's electricity, and approximately two-thirds of the nation's carbon-free electricity, and provid e a uniquely valuable set of attributes. Commenters stated that the attributes included gene rating large quantities of electricity provided reliably around the clock, providing of price stabi lity, "reactive power" essential to controlling voltage and frequency, portfolio value contributing to fuel and technology diversity, and compliance value through avoiding Clean Air Act "cr iteria" pollutants, hazardous air pollutants,
and carbon dioxide. Commenters stated that other so urces of electricity have some of these attributes, but none of the other sources have them all.

Commenters stated that nuclear plants are also crit ical to the reliability of the electric grid because they operate continuously and generally ind ependently of weather conditions; for example, during the 'Polar Vortex' event, which occ urred during the week of January 6, 2014, the nation's nuclear power plants operated at daily ave rage capacity factors of 95 percent to approaching 98 percent. Commenters said no other so urce of electricity approached that level of reliability; in fact, approximately 25 percent of t he generating capacity in the PJM Interconnection and 20 percent of the capacity disp atched by the Midcontinent System Operator (MISO) was forced out of service by the severe weat her (generally because power plants could not obtain fuel or because fuel-handling equipment froze). Commenters said nuclear energy's high reliability will become increasingly importantas the nation's electricity system becomes less reliant on coal, and more reliant on gas-fired generating capacity and on renewable technologies that are intermittent and weather-depe ndent.

Commenters stated nuclear energy is America's large st source of low-carbon electricity; in 2013, nuclear energy produced 19 percent of U.S. electric ity supply (789 billion kilowatt-hours) and prevented 589 million metric tons of CO2 emissions.

Commenters stated nuclear energy accounted for 63 p ercent of America's carbon-free electricity in 2013, three times more carbon-free electricity t han hydropower and nearly five times more than wind energy; for perspective, one gigawatt of nuclear generating capacity (out of the 100533

GW operating) would avoid more carbon than all U.S. solar energy capacity in 2013 (4,500 megawatts at 17-percent capacity factor). Commenter s said the amount of CO2 emissions avoided by nuclear energy facilities is equal to th e CO2 emissions from 113 million passenger cars, more than all the passenger cars in the Unite d States. Commenters said without nuclear power plants operating in 31 states, carbon emissio ns from the U.S. electric sector would be approximately 25 percent higher.

Commenters stated that a major expansion of nuclear generating capacity over the next 15-30 years is essential, and that absent such expansion, carbon emissions will be higher. Commenters
stated that closure of Units 2 and 3 at the San Ono fre Generating Station in southern California had caused an increase in electricity costs of $350 million for the first year, equivalent to a 13- percent increase in total generation costs for the state. Commenters also stated that closing the San Onofre units more than negates the carbon abate ment impact of all the state's wind and solar resources, noting that in 2011 (the last full year of operation) San Onofre generated 18,709 GWh of carbon free electricity; in 2013, the state's wi nd and solar generating capacity produced 16,985
GWh.

Commenters stated that, according to NEI calculatio ns using protocols developed by the Energy Information Administration, nuclear energy avoided generation of approximately one million
tons of sulfur dioxide and half-a-million tons of n itrogen oxide emissions annually. Commenters stated that, to address future growth in energy dem and, the U.S. must have a portfolio of electricity generating technologies, particularly l ow-carbon technologies. Commenters then stated that America's electricity generating techno logies are unfortunately narrowing dramatically, stating that the consensus is that ap proximately 60,000 MW of the 300,000 MW of coal fired power will shut down by 2020, while natu ral gas-fired generating capacity is growing dramatically. Commenters stated that renewables wil l play an increasing role, but cannot displace the need for baseload generating capacity, absent dramatic advances in energy storage. Commenters stated that, between 2029 and 2055, all 100 operating reactors in the U.S. will reach 60 years of life, and that extending the operating lives of these facilities, or replacing them with new ones will be a capital-intensive, multi-decade proposition.

Commenters stated that four nuclear reactors shut d own permanently in 2013, and that Entergy
announced it would shut down Vermont Yankee in 2014 . Commenters stated that large multiunit nuclear power plant producing electricity in t he low-$30-per-megawatt-hour range are at
risk of shutdown in MISO and western PJM either bec ause of actions by the Regional Transmission Organizations (RTOs) that suppress pri ces and inhibit appropriate price formation; state and/or federal policies that suppress power p rices and enable low or negative pricing; and systemic weaknesses in market design, which do not sufficiently value baseload capacity that can be dispatched when needed, do not provide value for fuel and technology diversity, and do not provide additional value for the carbon-free attrib utes of these plants. Commenters stated that natural gas prices are not likely to remain below $ 4 per million Btu for the next 20 years, and there is no rational economic reason or public poli cy rationale for shutting down nuclear power plants like Kewaunee and Vermont Yankee. Commenters said sooner or later, they must be replaced and, when they are, they will be replaced with generating capacity that will likely produce higher-cost electricity, and will certainly emit more carbon.534

Commenters reviewed two scenarios: (1) if all today 's reactors operate to 60 years, then retire; and (2) if all today's reactors operate to 80 years . Commenters stated that reality, of course, will
lie somewhere between these two extremes. Commenter s said these calculations start with the projections in EIA's 2014 Annual Energy Outlook, wh ich assumes 0.7-percent annual growth in electricity demand. Commenters then made the follow ing observations:

• Simply because of load growth, maintaining nuclear energy at 20 percent of U.S. electricity supply would require 13.2 gigawatts (GW ) of new nuclear capacity by 2025 (in addition to the Watts Bar 2, Vogtle 3 and 4, and Summer 2 and 3 reactors already under construction).

• If today's nuclear plants retire at 60 years of ope ration, 22 GW of new nuclear generating capacity would be needed by 2030, and 55 GW by 2035, to maintain a 20 percent fuel share.

• If today's reactors operate to 80 years, 18 GW of n ew nuclear capacity would be needed by 2030, and 23 GW by 2035, to maintain a 20 percent share of U.S. electricity supply.

• Much larger amounts of new nuclear generating capac ity would be needed to drive nuclear energy to 25 percent of U.S. electric ity supply.

Commenters stated "unless the industry and the fede ral and state governments work cooperatively to put in place the policy initiative s necessary to replace the reactors that do not reach 60 years or retire at the end of 60 years of operation, and expand the size of the U.S. nuclear fleet beyond today's 100 GW of capacity, th en nuclear energy's share of U.S. electricity supply could gradually decline. If that were to hap pen, then U.S. energy and environmental goals would be seriously compromised. A continuing, growi ng contribution from nuclear energy is essential to produce baseload electricity at stable prices and to sustain reductions in emissions of carbon and other criteria pollutants."

Commenters stated there are practical reasons not t o use a snapshot-in-time figure of nuclear capacity at risk as the basis for a rule that will govern for decades; market conditions are dynamic, and a plant that is not at risk today may be at risk tomorrow, and vice versa.

Commenters stated that EPA must revise its proposal to ensure that states have a sufficient incentive to preserve the existing nuclear fleet an d recommended that if the EPA continues with its proposed interpretation of BSER, they should re move the 6 percent at risk nuclear capacity from the goal calculation. Commenters stated that E PA could consider having states demonstrate in their plans reasonable assurances that they will preserve existing carbon-free generating capacity, particularly nuclear generating capacity. Commenters stated that for operating nuclear units in regulated states, such assurance already e xists because integrated utilities have a reasonable opportunity to recover costs, plus a rea sonable return; in competitive states with nuclear units potentially at risk, this assurance c ould involve a commitment to policy changes through legislation or regulation, or other market- based mechanisms, or a combination that would create incentives for continued operation of these zero-emitting generators.535

Commenters recommended that EPA consider ways to pr ovide at least some limited compliance value for existing nuclear generating capacity, as an additional incentive to the states to preserve that capacity. Commenters provided the following ex ample stating that in all its calculations, EPA assumes a uniform 90-percent capacity factor fo r all nuclear power plants and while it is true that the U.S. nuclear fleet, on average, has c onsistently achieved capacity factors in the 90- percent range for the last 15 years, the average li fetime capacity factor of the 100 nuclear plants now operating is 81.6 percent through 2013. Comment ers stated that given this:

1. States could be allowed to count megawatt-hours pro duced by any nuclear plant above an 81.6-percent capacity factor to be counted toward c ompliance; or

2. Alternatively, the same model could be applied on a state-by-state basis: All nuclear megawatt-hours above the lifetime capacity factor o f a state's nuclear generating units could be counted toward compliance; or

3. A single-year baseline may not be appropriate for n uclear power plants, which typically shut down only every 18-24 months for refueling and maintenance outages. If the baseline year happens to be a refueling outage year , it may understate a nuclear generating unit's long-term performance. For this r eason, the industry typically uses three-year rolling averages when evaluating nuclear plant performance. Given this, another option might be to allow a state to count t oward compliance any nuclear megawatt-hours produced above the industry's three- year rolling average.

Commenters stated that in addition to new nuclear g enerating capacity, the 111(d) rule should also recognize two other means of increasing zero-c arbon nuclear generation: power uprates and license renewal - both represent incremental genera tion, involve detailed planning and regulatory approvals, require substantial capital investment - and both should count towards compliance. Commenters recommended that power uprates and licen se renewals be considered new nuclear capacity and credited towards compliance. Commenter s stated that the NRC defines three types of power uprates:

• Measurement Uncertainty Recapture (MUR), which uses advanced techniques to more accurately calculate reactor power, and typica lly achieve up to two percent additional output;

• Stretch Power Uprates (SPR), which usually involve changes to instrumentation set-points but do not involve major plant modificat ions. These uprates typically yield up to 7 percent additional output; and

• Extended Power Uprates (EPU), which require signifi cant investment in major plant equipment, like turbines, pumps, motors, main generators and transformers, and can yield as much as 20 percent additional outp ut."

Commenters stated that as of April 2014, the NRC ha s approved 154 uprates that added generating capacity equivalent to about seven new r eactors. Commenters stated that planning, conducting the engineering work and obtaining NRC approval for a power uprate takes several years. Commenters provided examples of time require ments and expenses for license renewals.536

Commenters stated that any nuclear reactors that re ceive NRC approval to renew their licenses during and after the 2012 baseline year in the 111( d) rule should be treated as new generating capacity, including any first license extensions is sued during and after 2012 as well as all second license extensions (since none have yet been issued ). Commenters stated that states should be able to credit this capacity toward compliance.

Commenters stated that like the process for power u prates, the NRC's license renewal review includes significant capital investment and safety reviews, which typically take about 30 months. Commenters stated that by 2029, several nuclear pow er reactors in the U.S. will have been generating electricity for 60 years with approximat ely 31,000 MW of nuclear generating capacity reaching the end of their 60-year licenses between 2029 and 2035, thus requiring plant shutdown unless NRC approves a second license extension. Com menters stated that by 2040, half of the nation's nuclear fleet will have turned 60; the ele ctric power industry is approaching a period, the decade starting in 2020, when it must consider how to replace this nuclear generating capacity. Commenters stated that some of this capacity will l ikely seek a license renewal to operate past 60 years, but some will not; additional capital invest ment will likely be required to operate past 60 years and, in some cases, market conditions or othe r factors may not justify that capital
investment. Commenters stated that without further significant financial investments and licensing action by the licensee, these carbon-free power generation sources are at risk of shutdown. Commenters stated that the impact of the loss of nuclear generation on carbon emissions in such a short period of time should be reason enough for the 111(d) rule to provide an incentive for continued operation of these units , provided they can meet the necessary safety requirements.

Commenters stated that the NRC and industry are bot h examining what will be required to operate a nuclear plant beyond 60 years. Commenters gave the example of the NRC licenses for Dominion Resources' existing nuclear stations that begin to expire in 2032. Commenters stated the scoping analysis shows costs in the range of $5 00 million to $1.5 billion, depending on the components that must be replaced to extend the oper ational performance required for a second 20-year license extension. Commenters stated that n uclear power plant operation beyond 60 years cannot be treated as a foregone conclusion an d EPA should not assume that nuclear units will be relicensed in perpetuity or that existing n uclear plants will continue to run forever. Commenters recommended that the final rule should p rovide an incentive for the continued operation of all existing reactors by defining as n ew nuclear capacity that may be used for compliance purposes as: (1) any nuclear plants thathave not received license extensions to operate beyond their original 40-year license term at the beginning of the 2012 baseline year, and (2) any nuclear plants relicensed to operate beyond 60 years."

Comment 7: Commenters urged the EPA to remove all subsidies a nd support for nuclear power.

Response 7: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include either of the proposed provis ions for existing and new nuclear units in the setting of state goals. While the rule allows inc remental generation from new and uprated units to be considered in state plans to comply with the rule, the decisions to invest in nuclear537

generation over other types of power are made by co rporations who weigh numerous factors in making a determination, along with extensive oversi ght of public safety by the Nuclear Regulatory Commission and in coordination with stat e regulators.

The following are summaries of the specific public comments under this comment:

Commenters requested that the EPA, remove all subsi dies and support for nuclear power for reasons of health, security, and lack of storage. C ommenters stated that encouraging new nuclear energy magnifies the health dangers posed by radiat ion, especially in the case of nuclear reactors located close to urban centers; increases the safet y and national security issues from transporting radioactive materials, both before and after they are used to generate electricity; and leaves as unresolved the dangers of storing high-level (and e ven low-level) radioactive waste.

Commenters stated that by encouraging states to rel icense existing nuclear reactors and complete the construction of new ones, the rule reduces thos e states' incentive to focus on renewable energy resources. Commenters stated that there are opportunity costs when governments choose to invest their finite resources in new energy reso urces; safe renewables risk being a lost opportunity when governments instead choose to focu s their resources on expanding or keeping nuclear energy options despite the latter's regular ly ballooning costs. Commenters stated increasing costs, for example, were a primary reaso n why a few years ago the city of San Antonio decided against adding two nuclear reactors to the energy portfolio owned by its municipally-owned utility, CPS Energy.

Commenters also stated the health impacts of emissi ons from such coal-fired plants and the climate effects of their greenhouse gas emissions are problems that recent EPA regulations have meant to address. Commenters applauded those regula tory efforts just as strongly as the commenters applaud the slogan that encapsulates the desires of many central Texas residents: 'Solar Yes, Nuclear No.' Commenters criticized the misguided support for nuclear energy in the currently proposed Clean Power Plan Rule.

Commenters added the proposed rule encourages the c reation of state-level cap-and-trade programs that could have the effect of allowing nuc lear energy plants to sell their emissions credits to fossil fuel-generators, thereby sustaini ng facilities that emit massive amounts of criteria pollutants of concern for areas in nonattainment wi th the Clean Air Act and greenhouse gases of
worldwide concern. Commenters said that scenario is directly contrary to the purpose of a regulation named the 'Clean Power Plan Rule.' Fossi l fuels are not the only dirty energy source that this proposed rule, as written, indirectly sus tains.

Commenters requested for nuclear power to not be in cluded in this proposed rule's clean energy standards or in a cap-and-trade program; most impor tantly, nuclear reactors should not qualify for any subsidies under this rule.

Commenters stated that the EPA estimated costs of C O2 reductions achievable through this building block to be from $10 to $40 per metric ton . Commenters observed that Block 3 utilizes the same general concept as Block 2, as it shifts g eneration from an unfavored source (fossil-fuel fired) to a favored source (renewables, nuclear, et c.). Commenters stated that the difference here538

is that the favored generators under Block 3 are no t existing EGUs under the proposed rule, and to make Block 3 work, states would be required to e stablish renewable energy requirements, and/or ensure continued availability of nuclear gen eration. Commenters concluded stating that again, USEPA is relying on parties that are not the targeted existing source.

Comment 8: Commenters stated concerns regarding the use of nu clear energy and its impact on public health and the environment.

Response 8: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include either of the proposed provis ions for existing and new nuclear units in the setting of state goals. While the rule allows incr emental generation from new and uprated units to be considered in state plans to comply with the rule, the decisions to invest in nuclear generation over other types of power are made by co rporations who weigh numerous factors in making a determination, along with extensive oversi ght of public safety by the Nuclear Regulatory Commission and in coordination with stat e regulators. Both State Plans and decisions by the Nuclear Regulatory Commission unde rgo a public process to consider potential impacts on citizens.

The following are summaries of the specific public comments under this comment:

General Opposition

Commenters stated that EPA should not support nucle ar energy in the Clean Power Plan. Commenters stated that nuclear energy is not a solu tion to climate but is part of the climate change problem. Commenters added that nuclear power is not a clean energy resource because of the unresolved nuclear waste and uranium mine pollu tion and remediation issues. Commenters
stated that nuclear costs and environmental issues associated with nuclear power make it an unacceptable option for long-term health and enviro nmental sustainability. Commenters stated
that nuclear is not a sustainable or renewable form of energy as it relies on finite natural
resources of uranium for fuel. Commenters stated th at the EPA should assess the consequences of utilizing nuclear power in the context of enviro nmental protection, and concluded that if the EPA does this, they will come to the conclusion tha t nuclear power is too great of a risk to consider as an option for power generation. Comment ers asked if the EPA is willing to endanger the lives of millions of Americans, to be complicitin destroying the economic health and infrastructure of the nation, to make thousands of square miles of land and water uninhabitable, and to destroy thousands of species. Commenters obj ected to the use of nuclear reactors to generate electricity primarily because of the link between the so-called peaceful use of nuclear reactors and nuclear weapons. Commenters stated tha t there would be no effective medical response to a nuclear war, and the threat of a "lim ited" nuclear war between, for example, Pakistan and India, remains.

Thermal Impacts

Commenters stated that EPA did not consider the the rmal impacts of nuclear energy production, including the impacts of nuclear waste heat. Commen ters stated that nuclear fission reactions539

continue burning hot for thousands of years, includ ing both radioactively and thermally hot. Commenters stated that nuclear fission produces the rmal pollution impacts on the earth's atmosphere, rivers, oceans and lakes, and exacerbat es the greenhouse gas effect. As an example, commenters stated that heated cooling water from th e Indian Point power plant is dumped in the Hudson River, negatively impacting tens of millions of fish, including the short nose sturgeon-- an endangered species. Commenters stated that the c ooling water and steam released from nuclear generation contains radioactive tritium, wh ich continuously warms the atmosphere and water sources and compounds over time. Commenters s tated that the EPA did not consider the potential impacts of tritium emissions, including t ritium leaks to water sources and emissions to the atmosphere. Commenters added that neither the E PA nor the NRC require routine measurements of tritium in offsite private water we lls that are used for drinking and irrigation.

Nuclear Energy is Not Carbon Free

Commenters stated that nuclear energy is not carbon -free. Commenters stated that nuclear energy production results in emissions of CO2, meth ane, and carbon 14, and observed that carbon 14 is produced in the coolant at boiling wat er reactors (BWRs) and pressurized water reactors (PWRs) and is released in the form of CO2 at BWRs and methane at PWRs. Commenters referenced a 2010 technical report by th e Electric Power Research Institute to support their argument that Carbon-14 is produced i n the reactor coolant during power operation. Commenters stated that nuclear power produces elect ricity at an average rate of 66 grams of equivalent life-cycle carbon dioxide emissions per kWh.

Impacts of the Full Nuclear Fuel Cycle

Commenters stated that the EPA did not consider car bon emissions from the full nuclear fuel cycle, including mining, milling, processing, conve rsion, enrichment, transportation, and storage.
Commenters added that all states of the nuclear fue l cycle must be considered along with their hazards and provided a description of each process: uranium recovery to extract uranium ore; concentrate (or mill) the ore to produce "yellowcak e"; conversion of yellowcake into uranium hexafluoride (UF6); enrichment to increase the conc entration of uranium-235 (U235) in UF6;
deconversion to reduce the hazards associated with the depleted uranium hexafluoride (DUF6);
fuel fabrication to convert enriched UF6 into fuel for nuclear reactors; use of the fuel in reactors; interim storage of spent nuclear fuel; reprocessing of high-level waste (currently not done in the U.S.); and final disposal of high-level waste.

Commenters stated that mining of nuclear fuels and other front-end operations negatively impacts human health and water resources. Commenter s stated that EPA failed to protect communities near uranium mines, especially Native A merican communities, and added that the
EPA failed to list the thousands of contaminated ur anium mining waste sites as superfund sites.
Commenters listed hazards associated with uranium m ining, including: risks to workers, such as exposure to dust and radioactive gas; the large vol umes of contaminated water that are pumped from the mine and released to rivers and lakes; rel eases of radioactive dust and gas from mine vents, which can increase lung cancer risk to nearb y residents; the piles of radioactive waste rock, which can threaten people and the environmentafter the mine is closed; and uranium mill tailings, which contain radioactive materials and c an leach into the groundwater. Commenters added that lung cancer is the most serious health h azard associated with uranium mining.540

Commenters stated that two hundred million tons of uranium mill tailings need to be disposed of
and over ten thousand abandoned uranium mines need to be remediated. Commenters suggested
that EPA should consider the hazards associated wit h uranium conversion processes, and outlined specific incidents (including references) of leaks of uranium materials associated with such processes.

Commenters suggested that EPA should consider the hazards associated with uranium enrichment, deconversion and fuel fabrication and p rovided detailed information on these processes. Commenters stated that hazards from the uranium conversion and enrichment processes come from the handling of uranium hexaflu oride, which is toxic and radioactive, and reacts with moisture to release toxic hydrofluoric acid. Commenters stated that the health and environmental risks of blending and fuel fabricatio n facilities are similar to those for uranium
conversion and enrichment. Commenters stated that c hemical exposure is the primary hazard at
deconversion facilities.

Leaks of Radioactive Material

Commenters stated that radioactively contaminated g ases, liquids, and solids are byproducts of nuclear power plant operation. Commenters opined th at leaks of toxic radioactive materials occur at a large number of power plants across the country. Commenters provided a chart that lists ongoing and uncontrolled toxic leaks at 45 of 63 US nuclear power plants. Commenters
referenced a list that summarizes more than 400 leaks and spills reported for individual plants. Commenters stated that the NRC has repeatedly toler ated unmonitored and uncontrolled leaks of radioactively contaminated water into the ground an d nearby waterways, which negatively impacts human health. Commenters stated that radion uclides are leaking into groundwater and
into the Hudson River from the Indian Point nuclear plant in New York. Commenters added that the EPA should protect groundwater to prevent conta mination from nuclear facility emissions. Commenters stated that trading plutonium and other radioactive waste nuclides for carbon is poor energy policy.

Health Risks and Radiation

Commenters stated that nuclear poses a health risk and the EPA did not consider the health costs
of nuclear emissions. Both commenters stated that t he proposed rule does not consider the hazards of low level nuclear emissions, including c ancer and genetic effects. Commenters referenced a 1990s National Academy of Sciences stu dy ("BEIR VIII report") that found cancers at low radiation doses in cases of in utero exposur e, an increase in occurrence of cancers as the level of radiation exposure increased, and evidence for the heritable genetic effects of radiation.
Commenters added that nuclear emissions can also ha ve a negative impact on reproductive health. Commenters stated the report confirmed thatthere is no safe radiation dose. Commenters
stated that woman and children are most vulnerable to nuclear emissions. Commenters provided data to support their claim that there is an increa sed risk of cancer in children living near nuclear power plants, including a 2008 KiKK Study commissio ned by the German government, which
found a 1.6 increase in the relative risk of total cancers and a 2.2 fold increase in leukemias among children under 5 years of age living within 5 km of all 16 nuclear plants in Germany.541

Commenters stated that the EPA's current rules do n ot provide radiation emission standards.
Commenters further stated that different divisions within the EPA rely on inconsistent lists of carcinogenic chemicals and some of the EPA lists do not include radionuclides as carcinogens.
Commenters stated that unless the current Radiation Protection Standards are strengthened, EPA will continue to have lower standards of protection from radioactivity than from other pollutants.

Water Demand

Commenters stated that the proposed rule does not t ake into account the large water demand required by nuclear reactors to cool hot radioactiv e elements. Commenters questioned EPA's support of nuclear considering that water resources are becoming increasingly limited due to rising temperatures and droughts caused by climate change. Commenters stated that the EPA did not consider the vulnerability of nuclear reactors to extreme weather events, including severe storms, warm water temperatures, draughts, and cool ant water scarcity, and did not consider the
likelihood that these events could cause nuclear re actors to be derated or even shut down. Commenters noted that shut downs during periods of hot weather will result in declines in power output during times of high electricity demand.

Commenters mentioned concerns about handling and us e of uranium, as well as nuclear waste disposal.

Commenters stated that the EPA should prioritize w orking with other federal agencies to develop long-term nuclear waste disposal options pr omptly.

Effect of Shut-Downs/Inflexibility of Nuclear

Commenters stated that EPA did not consider the pot ential that reactors may experience prolonged or permanent shutdowns due to accidents o r other external factors, and how shut downs could affect state's ability to meet CO2 redu ction goals. Commenters recommended that the EPA consider the relative risks of various appr oaches to reducing power sector emissions.

Commenters stated that the EPA did not consider the inflexibility of nuclear power. Commenters stated that reactors must operate close to 100 perc ent output and it takes a long time to change the power level significantly or bring reactors bac k on line. For these reasons, both commenters stated that nuclear plants are a poor match for var iable power sources. Commenters added that nuclear power is not resilient and requires an exte rnal power source to operate, requires large amounts of water, and is vulnerable to severe weath er events.

Cost

Commenters stated that nuclear power plants should not be supported because they are too expensive. Commenters opposed any Federal program t o guarantee loans to finance nuclear reactors, as such a program would be unaffordable c onsidering the limited available federal resources. Commenters added that tax payers should not be asked to subsidize nuclear reactors.
Commenters stated that EPA should calculate the tru e cost of nuclear power using recent marginal and levelized costs rather than overnight costs, which would show that nuclear is not cost-effective. Commenters stated that nuclear plan ts would not be considered cost effective if the real costs of uninsured liabilities were paid, instead of being governmentally capped by the542

Price-Anderson Act, and if the real costs of waste management and long term disposal and storage were included. Commenters disagreed with th e EPA's assumption of zero cost for nuclear plants under construction. Commenters state d that the EPA did not consider the huge costs of constructing new plants and decommissionin g old ones or the cost of treating and storing
waste. Commenters stated that the EPA did not consi der the added cost of spinning reserves by large reactors and associated CO2 emissions where t hose reserves are in the form of gas
turbines.

Commenters stated that as the price of renewable en ergy decreases and capital and O&M costs of nuclear rises, it will be impossible for nuclear energy to survive. Commenters added that the
Clean Power Plan does not address how states are su pposed to maintain the viability of their existing nuclear reactors in the face of the econom ic reality of the phase-out of nuclear power.
Commenters further stated that the EPA does not ind icate how it determined that nuclear power
could achieve carbon reductions at a reasonable cos t. Commenters stated that it appears EPA's assumption of reasonable cost is based on their ass umption that nuclear has no carbon emissions,
which is erroneous.

Commenters referenced a Union of Concerned Scientis t study, which reported that the estimated value of legacy subsidies to nuclear power were at least 7.5 cents/kWh. Commenters opposed the
artificial subsidization of nuclear. Commenters add ed that the existence of public subsidies for nuclear, which include capital formation, shifting of accident risks, and the costs of waste management, is evidence that nuclear is not based o n efficient market-based determinations for energy options. Commenters stated that the costs re presented by nuclear subsidies for retaining nuclear generation have not been analyzed. Commente rs added that subsidies result in huge costs to tax payers. Commenters stated that the Ginna nuc lear reactor in Rochester, NY, which is threatening to close, could cost households $1,000 each if it is subsidized to remain operational.

Nuclear Waste Disposal/Storage

Commenters stated that the EPA has no clear disposa l plan for spent fuel from nuclear reactors. Commenters stated that EPA should ensure long term/ permanent containment of nuclear waste is
established. Commenters stated that there is no sol ution for radioactive waste disposal. Commenters opined that there are no guarantees thatradioactive chemicals will not be released
into the environment. Commenters stated that nuclear waste has been accumulating in unsafe and unsecured storage for over 70 years. Commenters add ed that spent fuel is stored on-site or at temporary sites near metropolitan areas. Commenters stated that the solution to the nuclear waste problem is to stop generating it.

Commenters stated that EPA should consider the hazards of interim storage, reprocessing, and final disposal, and provided a list of references r elated to these hazards. Commenters expressed concern about the high radioactivity of spent fuel. Commenters listed various risks of nuclear waste storage, including: groundwater seeping into the repository, corrosion of waste containers, leaching of radionuclides, and migration of contami nated groundwater towards areas where it might be used as drinking water or for agriculture. Commenters stated that the NRC refused to require hardened dry cask storage requirements, whi ch would be safer, because of the financial burden this would impose on the nuclear power indus try. Commenters added that the NRC and Blue Ribbon Commission put off any solution to the problem of nuclear waste to the distant543

future and recommended that the NRC and the EPA pro vide advice to the administration and to congress to chart a more aggressive path to proper handling and disposal of spent nuclear fuel
and other radioactive wastes.

Disproportionate EJ Impacts on EJ Communities

Commenters stated that the impacts from nuclear ene rgy production result in disproportionate health and environmental costs to environmental jus tice communities, including Native Americans. Commenters stated that mining and millin g operations in the U.S. disproportionately affect indigenous populations. Commenters added tha t the majority of workers in mines are Native Americans who are employed in low paying pos itions, and Native American populations have suffered disproportionality from uranium relat ed activities.

Renewable Energy and Energy Efficiency Over Nuclear

Commenters stated that states can increase their us e of renewable energy and energy efficiency to meet their targets, and reliance on nuclear is u nnecessary. Commenters suggested that
renewables can be used to meet carbon reduction tar gets faster and at a lower cost than nuclear. Commenters referenced an analysis from Sovacool, Ra mana, Jacobson et al, which concluded that wind energy is 96 times more effective at disp lacing carbon than nuclear power, and other renewable sources range from 20 times to twice as e ffective. Commenters stated that nuclear power produces electricity with a mean of 66 grams of equivalent life-cycle CO2 emissions per kWh, compared to renewable generators, which produc e 9.5 to 38 grams of CO2 per kWh. Commenters added that although nuclear power produc es less carbon emissions than fossil fuels, renewable energy is 2 to 7 times more effective at fighting climate change. Commenters
referenced and summarized studies that show that re newable energy, when interconnected with adequate transmission infrastructure, can replace c onventional base-load power. Commenters stated that the term base-load, as viewed by utilit ies and power companies, is an outdated concept, and renewable energy and energy efficiency can meet energy and capacity demand needs. Commenters stated that it is technologicall y and economically feasible to phase out CO2 and nuclear power at the same time, and it can be d one at a reasonable cost by 2050.
Commenters described investments that were made tow ards expensive nuclear power plants in Texas, and stated that the investment money could h ave been used for renewable energy and energy efficiency programs.

Commenters stated that the EPA underestimated the p otential of renewable energy in the proposed rule, and referenced a report from the Uni on of Concerned Scientists to support their conclusion. Commenters provided a chart showing inc reasing future energy consumption by renewable energy sources. Commenters recommended th at the EPA include realistic (more stringent) renewable standards in the proposed rule to encourage states to prioritize renewables
over nuclear.

Commenters stated that by including nuclear in rene wable energy standards and cap-and-trade programs, the growth of renewables would be discour aged. Commenters recommended that the EPA should encourage the shut down and decommission ing of nuclear power plants to incentivize the installation of renewable power gen erating capacity and energy efficiency. Commenters stated that EPA should conduct a compreh ensive assessment among alternative544

electric generating options, and such assessments c onducted by others have shown that renewables, including wind and solar, and energy ef ficiency programs are preferable. Commenters stated that while it may appear less exp ensive to replace nuclear generation with natural gas than to use renewables, the EPA's task is to curb greenhouse gas emissions, which means reshaping market rules where necessary. Comme nters added that, when setting targets for the Clean Power Plan, the EPA must look at cost and feasibility, and energy efficiency measures and renewables are generally cheaper than natural g as for that purpose.

Potential of a Nuclear Disaster

Commenters stated that support for nuclear is unacc eptable considering the potential of catastrophes. Both commenters stated that the EPA s hould not trade greenhouse gas pollution from fossil fuel sources for the high risk of disas ters that can occur with nuclear.

Commenters stated that the EPA's proposal to creditnuclear power plants at risk of closure keeps older nuclear reactors online longer and increases the risk of an accident, Commenters stated that EPA cannot ignore the risks posed by prolonged oper ation of nuclear reactors. Commenters stated that the EPA provides no substantive analysi s of the implications of supporting an aging fleet of nuclear reactors with significant safety p roblems. Commenters stated that the uranium fuel in nuclear reactors melts quickly without cool ing water, and containment structures surrounding the reactors were not designed to hold melted fuel, as safety regulators previously considered a meltdown impossible. Commenters stated that the Nuclear Regulatory Commission decided not to impose requirements on nuclear plant s that would protect the public from radioactive releases, such as the placement of filt ers on reactors.

Commenters stated that off-site releases of fission products comparable or worse than those estimated to have taken place at Chernobyl and Fuku shima could occur at U.S. plants. Commenters provided Chernobyl and Fukushima as evid ence that nuclear power is dangerous and dirty, and should be excluded from the clean po wer plan. Commenters provided detailed information on the large scope and magnitude of the Chernobyl and Fukushima nuclear disasters, including their health and environmental effects. Commenters asserted that Fukushima illustrated the weaknesses of the "defense in depth " design. Commenters provided a list of nuclear disasters with references and suggested tha t EPA should consider the hazards posed by
nuclear reactors.

Commenters stated that U.S. nuclear plants are vuln erable to accidents caused by natural disasters such as earthquakes, flooding, and extrem e storms. Commenters stated that nuclear power plants are vulnerable to terrorist attacks, a nd government plans to defend nuclear plants
from such attacks would not be effective. Commenter s listed the potential impacts of a terrorist attack on a nuclear facility if terrorists had deci ded to attack a nuclear plant on 9/11. Commenters stated that spent fuel facilities at nuc lear sites are particularly vulnerable to terrorist attacks. Commenters opined that no remedial actions have been required to fortify spent fuel storage facilities, and even those measure may not be adequate. Commenters provided references on the potential consequences of various modes of t errorist attacks on spent fuel facilities.

Commenters stated that the EPA failed to describe t he risks and consequences of nuclear
failures. Commenters stated that the EPA should con sider a report by the National Academy of545

Sciences (NAS) on Lessons Learned from Fukushima, a nd even the NAS understated the risks to
human health and the environment of a nuclear disas ter. Commenters referenced a detailed risk and consequence assessment that Commenters submitte d to NRS in December, 2013, which uses Indian Point Nuclear Power Plant as an example case of the potential impacts of a nuclear
disaster. Commenters submitted a list of deficienci es of the NRC Draft Generic Environmental Impact Statement (DGEIS) which also apply to the EP A.

Commenters stated that the EPA failed to acknowledg e the consequences of a spent fuel fire or release, and the NRC failed to properly assess the magnitude of the consequences. Commenters stated that even a partial loss of cooling water or pool level could create a disastrous radioactive plume, and a zirconium fuel rod cladding oxidation fire could release far more radioactivity than exists in the reactor core. Commenters provided ref erences and detailed information concerning the potential impacts of spent fuel releases. Comme nters stated that the spent fuel pool
inventories at Fukushima were far less than exist a t almost all U.S. spent fuel pools. Commenters provided results of a RASCAL 4.3 modeling of a spen t fuel pool release from Indian Point Unit 2. Commenters detailed the results and potential wi de-spread impacts of a nuclear spent fuel pool
release based on the RASCAL model. Based on the ana lysis, the commenters concluded that the Chernobyl disaster was actually much smaller in imp act contamination and land area than the possible impact from a single spent nuclear fuel po ol release from any US nuclear power plant
site. Commenters stated that due to certain conserv ative aspects of the RASCAL model, the actual contamination levels and doses may be much l arger than calculated.

Commenters recommended that the NRC and EPA correcttheir methods of risk assessment, particularly to account for events with high conseq uence. Commenters stated that the NRC employed flawed methodology in its assessment of ri sk to on site spent nuclear fuel, which incorrectly concluded that risk was low. Commenters opined that the NRC assigns low probabilities of occurrence to events with high con sequences. Commenters stated that the NRC acknowledged that the probability of a nuclear even t is unquantifiable or is subject to extreme uncertainty, and concluded that the analysis should therefore should be based solely on consequences. Commenters added that terrorist actio ns are virtually impossible to predict.
Commenters further stated that the NRC did not incl ude the full time span of exposure to risk that exists with nuclear, especially considering th e issue of delays in managing nuclear wastes, and the NRC incorrectly applied an annual risk fact or. Further, the commenters stated that population growth will continue to bring urban area s closer to nuclear power plants, and many nuclear plants are already located near metropolita n areas.

Comments Related to At-Risk Nuclear Plant s

Commenters opposed the EPA's inclusion of six perce nt of at risk nuclear generation in the goal setting equation. Commenters stated that the six pe rcent at risk factor is not a good estimate in states where specific nuclear units are at risk in their entirety, and a shut-down would result in a much greater percentage of lost nuclear generation than six percent. Commenters stated that
nuclear units are not a fossil EGU covered under th e CAA. In addition, the commenters stated that utilities investing in nuclear are at a greate r financial and regulatory risk due to the capital cost and permitting and construction timeline assoc iated with nuclear. To solve these issues, the
commenters recommended that the EPA remove nuclear from the Clean Power Plan, which546

would make the goal setting and compliance processe s much simpler, and would make compliance less risky for the EPA, states and utili ties.

Commenters stated that at risk nuclear generation s ources may fail, and they are not reliable enough for including in state target emission rates

.
Advances in Nuclear Technologies

Commenters opposed EPA's support of new technologie s and advances in nuclear power. Commenters stated that small modular reactor (SMR) technologies present unique safety problems, including inspection of manufacturing and foreign plants, access to below ground facilities, integrated systems, waste management, r etrieval of materials with potentially higher levels of radiation, flooding of belowground facili ties, and common designs that create potential product-side failure. Commenters suggested that mas s recall of these technologies is likely. Commenters stated that the EPA would be misguided t o believe that SMR technologies will be a viable alternative to coal-fired production of elec tricity. Commenters further stated that a Generation III reactor design received approval fro m the NRC, but not without objection from
the NRC commissioners and technical staff.

Studies/Monitoring

Commenters stated that the EPA cannot promote nucle ar energy as emissions free when it does not engage in any meaningful or comprehensive monit oring of nuclear emissions, including greenhouse gases and radionuclides. Commenters stat ed that the BSER must include an analysis of the non-air quality impacts of nuclear. Commente rs stated that the EPA must conduct meaningful studies on the impacts of nuclear energy before supporting it in the proposed rule.

Miscellaneous

Commenters supported EPA's proposal to recycle heatwith Combined Heat to Power (CHP), but recommends that EPA include CHP electricity product ion for the waste at every U.S. power plant, including nuclear plants, which produce a di sproportionate amount of waste heat. Commenters stated that about 63 percent of the ener gy generated in the U.S. is wasted in
conversion losses.

Commenters stated that nuclear operators should notbe allowed to sell carbon offset credits, as these credits could then be sold to utilities opera ting coal facilities, which would defeat the purpose of the proposed rule.

Commenters stated that the EPA assumed that new rea ctors will be licensed and old ones relicensed; however, some plants may not receive li censes or extensions for technical and
economic reasons.

Commenters stated that nuclear generation should no t be an acceptable control measure for purposes of state compliance with a BSER standard. Commenters stated that nuclear generation is a control measure that will generally fail to me et EPA's criteria for a state plan to be approvable, and if EPA finds that nuclear generatio n is not practically enforceable, and thus ineligible for inclusion in a state compliance plan , then it should not be included in the building547

blocks. Additionally, the commenters stated that th e costs associated with nuclear energy generation as a control technology under the BSER b uilding block framework are unreasonable and far exceed costs of other technologies included in the BSER. Commenters recommended that EPA remove nuclear generation as a compliance optio n under BSER.

Commenters stated that campaign contributions and p olitical favors are the reason that the EPA supports nuclear.

Comment 9: Commenters recommended removing all existing non-f ossil fuel generation from

the BSER in a manner that treats low- and zero-emit ting sources similarly.

Response 9: EPA acknowledges the comments and has decided to t reat all low- and zeroemitting sources similarly in the final rule. As s uch, the BSER for the final rule will not include either of the proposed provisions for existing and under construction nuclear units in the setting of state goals. Please see section V.A of the pre amble for further discussion of the decision to exclude nuclear power from BSER. Also see sections VIII.K and VIII.G of the preamble for further discussion of the flexibility states have i n developing state plans to utilize nuclear generation and ensure compliance.

The following are summaries of the specific public comments under this comment:

Commenters recommended removing all existing non-fo ssil generation from the BSER formula and starting with a fossil intensity standard that is adjusted by the new resources and changes delivered by the 4 building blocks. Commenters said this has the effect of removing both existing non-hydro renewables and the partial inclusion of n uclear and allows all non-fossil resources to be treated the same. While Commenters stated they u nderstand the concern of increased CO2 emissions if existing nuclear plants retire, and th ey asserted each plant should be evaluated by state and federal regulators individually. Commente rs said public safety is the institution's foremost concern regarding nuclear power. Commenter s said many NRDC members live within the emergency planning zones (i.e., within a ten mi le radius) of nuclear power plants. Commenters said existing nuclear plants need to imp lement the full set of post-Fukushima accident safety upgrades and complete the intensifi ed flood and seismic risk reviews required on a rolling basis since the Fukushima accident- as we ll as any subsequent plant safety
modifications. Commenters were concerned about heav y reliance on nuclear energy, given its consistently poor economics and the longstanding, u nsolved problems for nuclear energy: reactor safety, radioactive waste, and nuclear weapons prol iferation.

Commenters recommended that states and regions can choose to adopt policy approaches that
assist older non-fossil resources to remain economi c, taking into account public safety impacts.

Commenters supported the inclusion of under-constru ction nuclear plants in target setting.548

Comment 10 : Commenters recommended the EPA remove support for nuclear energy in the
Clean Power Plan.

Response 10 : EPA acknowledges the comments and has determined that the BSER for the final rule will not include either of the proposed provis ions for existing and new nuclear units in the setting of state goals.

The following are summaries of the specific public comments under this comment:

Commenters opposed the use of nuclear energy due to nuclear costs, extensive legacy subsidies,
and future environmental issues.

Commenters provided general opposition to nuclear e nergy due to its cost, risk of usage, and potential waste storage and cleanup concerns.

Commenters opposed the use of nuclear energy as a p art of the answer for carbon pollution due to concerns of radiation and waste storage.

Commenters suggested the EPA to exclude nuclear ene rgy as alternatives to be encouraged, because of the concerns of nuclear waste storage, p ollution from uranium and immense water

usage.

Commenters opposed nuclear energy as an option for CO2 emission reduction due to nuclear energy's risks to human health and communities.

Commenters opposed the use of nuclear reactors as a dangerous source of energy because of the concerns for unsafe and improper storage of radioac tive material and waste.

Commenters disagreed that nuclear power is a soluti on to reduce carbon emissions. Commenters believed that nuclear power production could be rep laced by renewables and conservation/efficiency efforts. Commenters suggest ed the EPA to consider broader environmental harms caused by the nuclear industry, and also periodically reassess generators
for the Clean Power Plan.

Commenters stated that nuclear power should not be continuously supported since it is the most expensive, the most delayed, and dangerous power. C ommenters mentioned the concerns in uranium mining and processing, nuclear plant buildi ng, transportation of uranium and used
radioactive wastes.

Comment 11: Commenters stated power purchase agreements should be included as a compliance option when power is purchased outside o f a given state’s boundaries.

Response 11: EPA acknowledges the comments and provides a detail ed discussion of provisions for the treatment of interstate effects in state pl ans in section VIII.L of the preamble.

The following are summaries of the specific public comments under this comment:549

Commenters recommended that power purchase agreemen ts be allowed as a compliance option. Commenters said in addition to RE in Buildi ng Block 3, zero-emitting nuclear energy is a compliance option afforded to states; however, in-s tate nuclear energy remains unavailable in several states due to bans on nuclear electricity g eneration. Commenters said in Kentucky, KRS 278.600-610 states that a nuclear power reactor can not be certified by the state Public Service Commission (PSC) unless a disposal site for the hig h-level nuclear waste is available by the time the plant needs disposal capacity. Commenters said the PSC also could not certify the project unless it finds that the cost of high-level nuclear waste disposal 'is known with reasonable certainty.'

Commenters concluded Kentucky's only viable option for nuclear energy to reduce CO2 emissions from the electricity sector is the utiliz ation of imported nuclear capacity. Commenters said until such time that nuclear generating capaci ty is an in-state option, the commenters recommend that EPA allow states to utilize power pu rchase agreements (PPAs) from zero/low emitting sources such as nuclear as a compliance op tion. Commenters said this same recommendation applies to PPAs for imported renewab les; this approach appropriately provides credit for GHG reductions at the point of consumpti on. Commenters stated EPA should include allowing nuclear PPAs to be considered toward the i nvesting utility's compliance determination; this approach supports efficient compliance and rec ognizes that customers' utility rates funded these resources. Commenters said specifically, Alli ant Energy's subsidiary IPL currently has a nuclear PPA through February 2025 for energy from t he DAEC. Commenters said allowing IPL to include the DAEC PPA as a compliance measure wou ld incent possible continued operation of
DAEC and future extension of this PPA contract.

Commenters stated JEA, in anticipation of future en vironmental regulations, secured a 20-year PPA for 200 MW of capacity and energy from the two under construction units at Vogtle Nuclear Plant in Augusta, Georgia, expected to be a vailable in 2017-18. Commenters said JEA has also purchased an option for up to 440 MW of nu clear capacity and energy from a plant
under consideration in South Carolina. Commenters said under the proposed Clean Power Plan,
JEA would not see the CO2 benefits of either of the se, as the zero-carbon credits would stay in the states where they are generated (Georgia and So uth Carolina). Commenters said this aspect of the regulation greatly reduces the value of any clean energy source not located within Florida.

Commenters continued JEA remains involved in discus sions with other Florida utilities regarding siting and constructing new nuclear plant s in Florida; with the current lead-time for nuclear construction, no new assets can be expected in the state before the mid-to-late 2020s, too late to support the CPP required ramp down beginnin g in 2020.

Commenters stated while the initial capital cost fo r a nuclear plant is high, it compares favorably to other generation on a Levelized Cost of Energy ( LCOE) basis, due to the low and steady price of fuel. Commenters said municipal utilities such as JEA cannot however make a commitment to an alternative energy supply, such as nuclear, u ntil there is a clear and final regulatory mandate, because any additional costs directly impa cts their customers. Commenters said with a final approved state plan conceivably no earlier th an June 2018 (assuming applicable extensions), there is not enough time to implement any plan before the mid-2020s for a conventional energy source (NGCC), and 2030 if nucl ear is a component of the solution.550

Commenters stated EPA should clarify the expected a ccounting for interstate transfer of energy and CO2 emissions and provide multiple options to s tates for dealing with those interstate energy
transfers. Commenters said EPA should also work for streamlined approval of new nuclear units to demonstrate support for zero carbon baseload gen eration.

Commenters stated that the rule offers no "credit" or recognition of nuclear power plants' zeroemissions generation to owning partners outside of the states in which these plants are located. Commenters stated that the rule does not appropriat ely recognize nuclear assets as a whole or to its owner and their customers who pay for these zer o-emitting generation units. Commenters stated that their customers pay for the investment in nuclear, and they deserve the zero-emissions
credit for this commitment. Commenters stated that the final rules should ensure that the states establish credit for compliance purposes by allowin g the MWh obtained from nuclear power, as delivered based on ownership, to those correspondin g states; such an approach would directly serve and support EPA's principal objective - ensur ing continued operation of the nation's largest source of carbon-free generating capacity.

Commenters stated that states that own and import g eneration from a nuclear facility that is located in another state should get credit as if th e nuclear generation is located within the state receiving the import. Commenters remarked that util ities and customers in the importing state have made significant financial investments in thes e nuclear units and should receive appropriate credit for developing nuclear generation. Commenter s contended that this treatment of nuclear units, located outside the state such units serve, also ensures that the customers who are actually using the generation will receive benefits associat ed with nuclear generation under the Proposed
Rule. Commenters contended that this is a fair meth odology that would credit those states that made an investment in carbon-free nuclear generatio n without harming exporting states.

Comment 12: Commenters stated EPA should consider the relicensi ng process for existing nuclear units when setting the final goal in 2030.

Response 12: EPA acknowledges the comments and has determined t hat the final rule will not include nuclear generation in the goal-setting meth odology. Relicensed units are part of the fleet of existing power generation and relicensing at the current generation level will not result in any decrease in fossil-fuel fired generation. However, the final rule allows relicensed facilities to count towards compliance if there is an associated uprate in their capacity. Preamble sections V.A and VIII.K provide a discussion of how increme ntal generation from new and uprated nuclear power is addressed as approvable actions to include in state plans.

The following are summaries of the specific public comments under this comment:

Commenters recommended that license extensions shou ld not be assumed to be automatic, particularly for nuclear plants beyond 60-year lice nse limits.

Commenters recommended that the EPA consider the li fetime of existing nuclear units where many units will reach their 60-year license limit b y 2029. Commenters said three units with551

licenses scheduled to expire prior to 2030 are alre ady in their extended period of operation and
would need to obtain additional license extension t o extend their operating lives to 80 years (known as subsequent license renewal). Commenters s aid though it is expected that many reactors will apply for and receive license extensi ons out to 80 years, there is no level of certainty at this time.

Commenters stated there is significant uncertainty as to whether the Nuclear Regulatory Commission (NRC) will extend the operating licenses for each nuclear unit as assumed. Commenters stated license renewal is a long and mul tifaceted process which is based on submittals of complex studies to the NRC and its de tailed review. Commenters encouraged EPA to consider evaluating a lower bound case and devel op a sensitivity analysis on the potential future of nuclear power generation capacity.

Commenters stated the current U.S. fleet of operati ng nuclear reactors stands at 100 units; these reactors were originally licensed for 40 years. Com menters said license extension (for an additional 20 years) has been applied for and grant ed in many cases, although a number of plants have shut down prior to the end of their licensed l ifetime.

Commenters stated there are 28 units that have lice nses scheduled to expire before 2030; of these, 18 units have pending applications submitted to extend their license from 40 to 60 years.

Commenters stated due to on-going economic pressure s and the need for many plants to obtain license extensions, there is significant uncertaint y as to the number of reactors that will be operating in 2030; several nuclear plants have alre ady shut down prior to their license end date. Looking beyond 2030, an additional 50 units have li censes expiring between 2030 and 2040.

Commenters stated there also is uncertainty that ei ther companies will decide not to seek license extensions due to economic considerations, or that the Nuclear Regulatory Commission may not approve further extending the lifetimes of these un its. Commenters said as a consequence, the estimate EPA developed of available non-emitting nu clear power may be an overestimate.

Commenters recommended that EPA consider a lower bo und case and a sensitivity analysis on the potential nuclear power capacity.

Commenters stated given the important role nuclear generation plays in providing zeroemissions power, the final guidelines should help i ncent the continued operation of all existing units by defining as "new" nuclear capacity any nuc lear plants that have been relicensed to operate beyond 60 years-and any plants that have no t received license extensions to operate beyond their original 40-year license term before 2 012-and allowing their full generation to be included in the state's compliance calculation, rat her than assume that every nuclear unit will operate through at least 2030.

Commenters stated over two-thirds of the nuclear fl eet will reach the end of their first license extension period soon after the 2030 compliance dea dline for this program; currently, seventyfour of the 100 operating nuclear units have alread y received NRC approval to operate after 40 years, with the remaining 26 units either under NRC review or expected to file for review. Commenters said approximately 31 GW of nuclear gene rating capacity will reach the end of their 60-year licenses between 2029 and 2035-thus r equiring plant shutdown unless NRC552

approves a second license extension. Commenters sai d without further significant financial investments and licensing action by the licensee, t hese units represent a power generation source with carbon-free emissions that are truly "at risk" of shutdown. Commenters said as states are legally obligated to demonstrate continued complian ce with the final state goals, sustaining these emission reduction targets will rely heavily on the continued operation of the existing nuclear facilities. Commenters said recognizing these relic ensed units as new units will not delay or dilute a state's 2030 emission reduction targets, b ut it will contribute to ensuring that the state goals can be maintained; the impact on U.S. CO2 emi ssions of losing so much nuclear generation in such a short period of time should be reason enough to incent the continued operation of these units provided they can meet the necessary requirements.

Commenters stated much like the process for power u prates, NRC's license renewal review is a detailed process that includes significant capital investment and safety reviews, and typically takes about 30 months. Commenters said according to the NRC's 1995 license renewal rule, extensions of up to 20 years can be granted, provid ed the company demonstrates to NRC that it will manage aging issues effectively during the ren ewal term. Commenters said the review also addresses the potential environmental impacts of co ntinued plant operation. Commenters said in order to continue to run beyond their initial 40-ye ar license, nuclear plants must operate as if they were new plants, subject to the same safety an d operational requirements. Commenters said it is also likely that over the course of their 60- or 80-year lives, nuclear plants will have had most if not all of their operating components and s ystems replaced, effectively rendering them

new.

Commenters stated the NRC Commissioners recently en dorsed the use of existing, well understood 10 CFR 54 regulations to establish a bas is for nuclear units to apply for a subsequent license extension to operate beyond 60 years; these existing regulations will be supported with enhancements to existing license renewal tools and guidance documents, adding additional aging-related system reviews and associated upgrade s.

Commenters stated as a specific example, the NRC li censes for Dominion's existing nuclear stations begin to expire in 2032; Dominion has init iated an evaluation of the life of critical components, necessary equipment upgrades to preserv e unit efficiencies and other modifications needed to ensure the safe and reliable long-term op eration of these facilities beyond the current license period. Commenters said the preliminary cos t estimate for Dominion's Surry nuclear power station provides early evidence of the lead t ime and equipment upgrades needed to secure NRC relicensing to operate beyond the current 60-ye ar period. Commenters said while costs will vary for each type of reactor design and location, Dominion's projections for the Surry station, a typical pressurized water reactor, are comparable t o the costs of constructing a new combined cycle natural gas unit.

Commenters stated the scoping analysis shows costs in range of $0.5 billion to $1.5 billion, dependent upon the actual components needing to be replaced to extend the operational performance required for a subsequent twenty-year l icense extension; it is reasonable to expect that such items may include (1) major components, s uch as steam generators and heat exchangers; (2) aging systems, such as analog contr ol systems and ventilation systems; (3) high voltage power cables; and (4) aging structures.553

Commenters stated EPA's plan recognizes the contrib ution of new nuclear units to help achieve the reductions in carbon dioxide in the power secto r by allowing states to use generation from these facilities in their 111(d) compliance plans; the identical policy justifications are applicable to nuclear units relicensed to operate past 60 year s.

Commenters stated the continued operation of these zero-emitting resources require significant financial investments that are comparable to buildi ng new combined cycle gas units, yet without
the associated carbon emissions that would be assoc iated with the gas units. Commenters said Dominion has under construction two 1,300-megawatt natural gas combined cycle units; those facilities cost an estimated $1.2 billion, required less than two years to obtain the necessary permits, and will be constructed within three years

.
Commenters stated the NRC relicensing time horizon requires that utilities begin planning today to determine if a subsequent license renewal is a v iable option; without an appropriate incentive to proceed with the NRC process, the lowest cost op tion for new or replacement base load generation, without regard to carbon emissions, is a new natural gas combined cycle unit. Commenters said as such, these relicensed nuclear u nits deserve to be eligible for compliance in 111(d) plans because of their zero carbon profile a nd their significant contribution to maintaining the stability of the electric grid.

Commenters stated that the EPA should be cautious about taking the new, under-construction nuclear power for granted. Commenters also stated t hat it may be impossible to solicit subsequent license renewal for the old facilities o ut to 80 years for compliance.

Commenters suggested that EPA should assume that no existing nuclear unit will operate beyond 60 years, and consider any generation from an exist ing nuclear unit that in fact does receive a license extension beyond 60 years as new nuclear an d allow the states to include 100 percent of that generation in compliance demonstrations. Comme nters stated that while adopting this approach will not guarantee that existing nuclear u nits can or will be able to continue operation beyond 60 years, it would provide a significant eco nomic incentive to do so.

Commenters supported re-licensing efforts at operat ing nuclear plants that will allow them to operate beyond 60 years, and stated that the produc tive lifetime of nuclear plants must be
maximized.

Commenters stated that significant uncertainty rema ins to whether existing nuclear units would be permitted to operate beyond their licensed 60-ye ar lifetimes, and that permitting of nuclear reactors is under the authority of the NRC and is n ot under the control of the states.

Commenters stated that the EPA assumes that the sta tes can cause about 6 GW of "at risk" nuclear plants to continue to operate in 2029 and b eyond. Commenters stated that an analysis of existing nuclear power plants shows that 28 units h ave licenses which will expire before 2030, and only the NRC has authority to approve license e xtensions, so keeping those 28 plants running is something that a state cannot control. C ommenters stated that these 28 units represent considerably more than 5.8 percent of the nuclear f leet, and recommends that the EPA should at least consider a case in which a large amount of ex isting nuclear capacity is forced to retire before assuming that base-load coal capacity can be eliminated.554

Commenters stated that in the development of the st ate goals through application of BSER, the EPA assumed the license renewal of all existing nuc lear units up to a final life span of 60 years; however, EPA cannot and should not presume a licens ing outcome that is presently unknown. Commenters stated that the EPA's final 111(d) rule should exclude nuclear units whose license expires prior to 2030 from its calculation of BSER; further, consistent with the EPA's treatment of new nuclear plants, any unit whose license expir es prior to 2030, and receives a license renewal approval after 2012 should be considered a "new" nuclear unit for the purpose of compliance.

Commenters stated that the EPA has made a huge, tho ugh implicit, assumption about future licensing actions of the Nuclear Regulatory Commiss ion (NRC) in relation to existing nuclear power plants, by assuming that essentially all exis ting nuclear plants whose licenses expire
before 2030 will have their licenses extended. Comm enters stated that, in reality, reactors representing about 30 percent of nuclear generation capacity, are not currently licensed to operate in the year 2030 or beyond. Commenters stat ed that the EPA is basically making assumptions about nuclear safety and spent fuel gen eration in an area that is reserved by law for the NRC - without any discussion of its rationale. Commenters also stated that the costs of spent fuel storage over 300 years, including repackaging of the nuclear waste are estimated to be about $180 billion, and that the EPA is obliged to consid er the costs of indefinite storage of nuclear wastes in its consideration of whether existing nuc lear plants should be included in the best system of emission reduction. Commenters concluded that to be technology neutral and to respect the separation of functions of the EPA and the NRC, the EPA should assume in its electricity generation analysis for the purpose of the Clean Power Plan that licenses of existing plants would expire as presently scheduled. Comment ers also stated that the EPA should drop existing nuclear power plants from its method of co mputing target rates of CO2 emissions for
future dates.

Commenters stated that the EPA should refuse to acc ept reactors whose licenses have not been extended beyond 2029 in state implementation plans, because states can no more presume to second guess NRC license extension decisions than c an the EPA. Commenters stated that this should be explicit in the final rule. Commenters al so stated that states that use existing nuclear units whose licenses expire after 2030 will be face d with the possibility of sudden increases in CO2 emissions at that time, and that the EPA should put states on notice that they will be expected to maintain compliance immediately in the postreactor shutdown period. Commenters recommended that the EPA include the following guid elines to states that include reactors whose licenses are due to expire after 2030: "- States wi ll be expected to plan in advance and implement measures to maintain the target emission rates afte r the shutdown of nuclear power reactors. For instance, states could do this by implementing rene wable portfolio standards and efficiency measures beyond those used to calculate the target rates."

Commenters stated that the age of the nuclear fleetis a key factor in the operating cost and maintenance issues contributing to retirement decis ions, but EPA cannot assume that every aging nuclear plant will be granted additional licenses b y the NRC to operate past sixty years.
Commenters stated that because the second license r enewal is beyond the control of any given operator or state, it would be unfair to build such an assumption into state goals. Commenters stated that it may also be useful for EPA to includ e in its nuclear preservation compliance all units granted license renewals to operate beyond fo rty years; as of June 2, 2014, 73 of 100555

operating units had received such NRC approval and 27 units were under review or expected to
file.

Commenters stated that under building block three, the EPA cannot implement the nuclear provisions because the NRC has authority over the p ermitting, re-permitting, commissioning and decommissioning of nuclear power plants; nor does E PA have authority to extend the permitting life of a nuclear power plant, and further it is eq ually misguided to assume that all existing nuclear power plants will ultimately be relicensed. Commenters stated the opposite is true as demonstrated in, the recent decommissioning of the Vermont Yankee nuclear power plant, growing public concern of the safety of nuclear pow er plants after the Fukushima Daiichi nuclear disaster in Japan and the relative age of their nuc lear power plants. Commenters stated that the average age of U.S. commercial reactors is approxim ately 33 years and commercial nuclear reactors are licensed to operate for 40 years by NR C; New York has one of two of the oldest operating reactors in the United States, Nine Mile Point 1, which entered commercial service on December 1, 1969.

Commenters stated that according to EIA, the nuclear power industry is considering submitting applications to extend the operating licenses of ex isting plants for an additional 20 years that would allow them to continue operating beyond 60 ye ars. Commenters observed that to date, no reactor has applied for or received a license exten sion from the Nuclear Regulatory Commission (NRC) beyond 60 years, as most U.S. reactors will n ot reach this point until after 2030. Commenters stated that extending reactor licenses b eyond 60 years raises important safety issues that will need to be carefully considered by the NR C, and are outside of the EPA's jurisdiction in this venue. Commenters concluded that if any existi ng reactors do receive an additional license extension, they do not believe these should be coun ted as new generation for the purposes of compliance.

Comment 13: Commenters expressed general support for nuclear p ower.

Response 13: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include the provisions we had propose d for nuclear units in the setting of state goals, and will allow incremental generation from new nucl ear units and uprated units to be applied towards compliance. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER. A lso see sections VIII.K and VIII.G of the preamble for further discussion of the flexibility states have in developing state plans to incentivize nuclear generation and ensure complianc e, as well as, the requirement that states consider system reliability in plan submittal, and a discussion of a Reliability Safety Valve.

The following are summaries of the specific public comments under this comment:

Commenters expressed general support for nuclear po wer as a contributor towards
decarbonization. Commenters stated that the continu ed use of existing nuclear power plants, as well as the completion of those under construction, will provide significant quantities of zerocarbon generation, displacing fossil fuel generatio n and reducing emissions. Commenters also stated that nuclear power is a critical zero-carbon generation source that provides baseload556

electricity. Commenters stated that nearly 115 GW o f nuclear capacity in the U.S. avoids carbon emissions of around 245 million metric tons per year, so closing just one third of these nuclear plants would cause CO2 emissions to rise by 8 perce nt.

Commenters stated that the impact of nuclear plant closures can have significant emission repercussions. For example, commenters noted that t he San Onofre nuclear facility in California generated an average of 16,000 GWh per year of zero -carbon electricity, representing 8 percent of electricity generation in California. Last year, the facility's two generators were shut down, and the commenters stated it would require nearly 7 ,200 MW of zero-carbon generation to replace San Onofre. Commenters stated that, in the near term, the mix of resources covering for the plant is adding 6 million metric tons of carbon emissions per year.

Commenters stated that the proposed Clean Power Pla n recognizes the critical contribution that existing nuclear facilities make to lowering CO2 em issions from what they would otherwise be without this source of zero-emission generation. Co mmenters stated allowing states to take credit for keeping in place the 5.8 percent of the country 's nuclear fleet that the Energy Information Agency (EIA) has deemed to be "at risk" made possib le by also including 5.8 percent of a state's nuclear generation as part of that state's target, the Proposed Rule creates an important incentive for states to find ways to keep existing nuclear fa cilities operational.

While commenters took no position on the particular ities of the proposed approach, the commenters applauded the Clean Power Plan's inclusi on of nuclear power as a significant factor in the decarbonization equation and to provide stat es an incentive to develop policies that allow facilities that otherwise might close to safely sta y open as an emission prevention measure.

Comment 14: Commenters asked the EPA to consider providing som e limited compliance value for existing nuclear generating capacity as an ince ntive.

Response 14: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include either of the proposed provis ions for nuclear units in the setting of state goals, and allows incremental generation resulting from uprated power and new nuclear generation to count towards compliance. Please se e section V.A of the preamble for further discussion of the decision to exclude nuclear gener ation from BSER and section VIII.K for consideration of nuclear units in state plans.

The following are summaries of the specific public comments under this comment:

Commenters proposed ways that the EPA could provide additional compliance value by altering the assumption of a 90 percent capacity factor for nuclear power plants. Commenters recommended that the EPA should consider ways to pr ovide at least some limited compliance value for existing nuclear generating capacity, as an additional incentive to the states to preserve that capacity. Commenters noted that its calculatio ns, EPA assumes a uniform 90 percent capacity factor for all nuclear power plants, exist ing and new. Commenters stated that, while the U.S. nuclear fleet, on average, has consistently ac hieved capacity factors in the 90 percent range for the last 15 years, the average lifetime capacit y factor of the 100 nuclear plants now operating557

is 81.6 percent through 2013. Given this, Commenter s recommended that the EPA consider as an option allowing states to determine an appropriate baseline level of existing nuclear generation against which they could provide limited compliance value, such as:

• Counting toward compliance MWh produced by any nucl ear plant above an 81.6 percent capacity factor; or

• Allowing nuclear MWh above the lifetime capacity fa ctor of a state's nuclear generating units to be counted toward compliance; o r

• Allowing a state to count toward compliance any nuc lear MWh produced above the industry's three-year rolling average. Commente rs noted that a single-year baseline may not be appropriate for nuclear power p lants, which typically shut down only every 18-24 months for refueling and main tenance outages; if the baseline year happens to be a refueling outage year , it may understate a nuclear generating unit's long-term performance. For this r eason, the commenters stated the industry typically uses three-year rolling aver ages when evaluating nuclear plant performance.

Commenters concluded that creating ways for states to capture limited compliance value for existing nuclear generating units would directly se rve and support EPA's principal objective--- ensuring continued operation of the nation's larges t source of carbon-free generating capacity.

Commenters believed that EPA must revise its propos al in order to value nuclear power appropriately, and to ensure that states have a suf ficient incentive to preserve the existing nuclear fleet and to build the new nuclear energy capacity that will be required to achieve meaningful reductions in CO2 emissions. Commenters recognized that it is a challenge to recognize and incorporate existing nuclear generating capacity in to the structure of the 111(d) rule as proposed. Commenters said nuclear power plants are unique and uniquely valuable among carbon-free sources of electricity because they typically produ ce very large quantities of carbon-free electricity compared to other carbon-free sources. For this reason, commenters said incorporating the output from operating nuclear power plants into any carbon control program based on emission rates would create potential compliance ch allenges. Commenters believed these issues warrant further consideration and discussion among EPA and stakeholders as EPA develops the final rule, and commenters looked forward to workin g with the Agency.

Comment 15: Commenters stated that nuclear facilities are crit ical to the reliability of the electric grid.

Response 15: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include either of the proposed provis ions for existing and under construction nuclear units in the setting of state goals. Please see sec tions VIII.K and VIII.G of the preamble for further discussion of the flexibility states have i n developing state plans to incentivize nuclear558

generation and ensure compliance, as well as, the r equirement that states consider system reliability in plan submittal.

The following are summaries of the specific public comments under this comment:

Commenters stated that nuclear power is the largestsource of zero-carbon electricity and is vital to grid reliability. Commenters also stated that nu clear power produces about 20 percent of U.S. electricity, and according to the EIA, it made up m ore than 60 percent of zero-carbon electricity
sources in 2013. Commenters stated that without nuc lear power plants operating in 31 states,
carbon emissions from the U.S. electric sector woul d be approximately 25 percent higher.
Commenters stated that nuclear facilities are criti cal to the reliability of the electric grid because they operate continuously and are available under a wide range of weather conditions. Commenters cited one example: the deep freeze brou ght on by the polar vortex in January 2014 resulted in more than 35,000 megawatts of outages, and during this time nuclear units accounted for only three percent of forced outages despite making up 12 percent of total capacity that operated at 90 percent capacity through the polar v ortex event.

Commenters stated that the EPA has correctly acknow ledged that nuclear facilities across the country are at risk of premature retirement. Comme nters concluded that a key reason for this risk is the absence of a carbon policy that would v alue the carbon-free electricity that nuclear plants produce, thereby avoiding emissions from fos sil-fired plants.

Comment 16: Nuclear power is the largest zero-carbon electricit y source and is vital to grid reliability.

Response 16: EPA acknowledges the comments and has determined th at the BSER for the final rule will not include either of the proposed provis ions for existing and under construction nuclear units in the setting of state goals. Please see sec tions VIII.K and VIII.G of the preamble for further discussion of the flexibility states have i n developing state plans to incentivize nuclear generation and ensure compliance, as well as, the r equirement that states consider system reliability in plan submittal.

The following are summaries of the specific public comments under this comment:

Commenters stated that the proposed guidelines fail to recognize the role of nuclear in reducing CO2 emissions and to the reliability of the electri c grid. Commenters stated that EPA's goals cannot be achieved without existing nuclear fleet, yet the proposed guidelines do not create real incentive to maintain existing nuclear plants. Comm enters mentioned that the proposed guidelines greatly underestimate the quantity of nu clear generation that is actually at risk in some states, while overstating the amount at risk in oth er states. Commenters suggested EPA to remove the 6% at-risk factor from goal calculation based on its interpretation of BSER. Commenters also suggested EPA to consider EEI's com ments regarding alternative approaches for incenting the continued operation of existing n uclear generation capacity.

Commenters supported that nuclear energy, as Americ a's largest source of low-carbon electricity, must be part of the solution for reducing carbon em issions. Commenters also suggested that the559

final rule must give states flexibility to utilize existing and new nuclear units in an effective manner to comply with carbon emission reduction.

Commenters mentioned that EPA did not include grid reliability measures that could reduce operating reserve requirements in the BSER, which w ould directly reduce CO2 emissions. Commenters also suggested that incorporation of sto rage technologies, such as super-capacitors, compressed air, and battery storage, all of which h ave rapid ramp time characteristics, could reduce the need for spinning reserves, improve foss il fuel efficiency, and reduce CO2 emissions.

Commenters stated that nuclear energy is America's largest source of low-carbon electricity. Commenters stated that today, nuclear energy accoun ts for approximately 63 percent of America's carbon-free electricity - three times mor e carbon-free electricity than hydropower, nearly five times wind energy and about 85 times th at contributed by solar generated electricity.

Commenters stated that by 2040, U.S. nuclear genera tion could decline by over 40 percent as nuclear units reach the end of their operating lice nses and are retired. Commenters stated that such a major reduction in low-carbon generation wou ld make it exceedingly difficult to meeting the nation's climate goals. Commenters also stated that the CPP as proposed only marginally recognizes the importance of maintaining the existi ng nuclear generation capacity and fails to strongly encourage the expanded use of the nation's largest source of low-carbon electricity generation.

Commenters stated that nuclear energy has numerous attributes including round-the-clock production of large amounts of electricity to help stabilize the electric grid; clean-air compliance; forward electricity price stability; fuel and techn ology diversity; and high-paying jobs at facilities
that can withstand extreme natural and man-made eve nts.

Commenters stated that the EPA fails to recognize t he significance of all zero carbon emitting generation sources including existing nuclear and h ydroelectric generation in the proposed rule, and as a result, many states that have historically invested in zero or low carbon emitting generation sources have to meet goals that are lowe r than those for states that have not made
these investments. Commenters stated that South Car olina, the only U.S. state that generated the majority of the electricity used within its borders from nuclear power, has to meet the third largest percent reduction in CO2 emissions (51 perc ent).

Commenters stated that the EPA plan should continue to have generation from existing nuclear as a component of the low emission building block a s nuclear generation has essentially zero CO2 emissions. Commenters stated that nuclear gener ation also provides important fuel diversity and electric system reliability benefits and are an important part of the state's portfolio, in terms of maintaining lower overall CO2 intensity of the g eneration fleet.

Comment 17: Commenters stated preservation of existing "at-ris k" nuclear capacity is not a valid system of emission reduction.

Response 17: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include the proposed provisions for e xisting nuclear units in the setting of state560

goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER.

The following are summaries of the specific public comments under this comment:

Commenters stated that the preservation of existing "at-risk" nuclear capacity is not a valid system of emission reduction. Commenters stated EPA may not determine the stringency of state guidelines based on the application of beyond-the-u nit systems of emission reduction, such as increased generation from nuclear generators and ot her non-stationary sources. Commenters said consequently, neither generation from under-constru ction nor generation from existing nuclear reactors may be used to determine the stringency of state goals; however, even assuming that EPA is not prohibited from basing the stringency of state guidelines on beyond-the-unit measures, EPA's proposal to include 'at-risk' nucle ar generation in the state goal calculation would violate the plain language of section 111.

Commenters continued stating as EPA admits in its r ate-to-mass goal conversion technical support document, 'the continuing operation of exis ting resources under building block three (RE and at risk nuclear) is not assumed to affect histo rical generation levels.' Commenters said in other words, preserving existing nuclear capacity t hat was operating in 2012 does not enable existing EGUs that were operating in 2012 to reduce their emissions below the baseline; rather, at best, the preservation of existing nuclear capac ity only allows existing EGUs to continue operating at the same levels as in the past. Commen ters said therefore, 'preservation' or continued operation of existing nuclear reactors cannot be co nsidered a 'system of emission reduction' for existing EGUs, as defined under the CAA; consequent ly, EPA's proposal to incorporate supposed emission reductions from preserving existi ng nuclear capacity into state emission guidelines violates the plain language of the Act a nd should be withdrawn.

Commenters stated that the EPA's designation of "atrisk" nuclear generation as a component of BSER exceeds the agency's authority under the CAA. Although the commenters disagreed with the EPA's approach to determining BSER, they stated that under EPA's reading of the statute, the addition of new nuclear generation could be thoughtof as a "system of emission reduction" because it could allow existing fossil-fueled EGUs to reduce their CO2 emissions relative to their historic emissions, but the preservation of existin g nuclear capacity cannot even meet the EPA's
strained definition of the term. Commenters stated that, as the EPA admits in its rate-to-mass guidance document, "the continuing operation of exi sting resources under building block three (RE and at risk nuclear) is not assumed to affect h istorical generation levels." In other words, the commenters stated, preserving existing nuclear capa city will not allow existing EGUs to reduce their emissions; the preservation of existing nucle ar capacity will only allow existing EGUs to continue operating at the same levels as in the pas t. Commenters concluded that, under the plain language of section 111, the "preservation" of exis ting nuclear generation cannot be considered a "system of emission reduction."

Commenters stated that the EPA's state goal setting methodology based on retaining at-risk nuclear capacity is flawed and inappropriate. Comme nters stated that the EPA is double counting the benefits from retaining at-risk nuclear capacit y, 1) by including 2012 nuclear generation to calculate states' 2012 baseline emission rates; and 2) the EPA reduces states' emission rate requirements based on the assumption of retaining 6 % nuclear power that is currently considered561

as at-risk. Commenters pointed out that retention o f 6% of that power will not reduce the state's emission rate, but instead will just prevent the em ission rate from increasing relative to 2012
levels.

Commenters stated that nuclear generation should no t be included in the CPP rule. Commenters
mentioned that EPA's consideration of at-risk and u nder-construction nuclear generation would result in dramatic reduction in the emission rate g oals for states which threatens the completion
of the nuclear reactors. Commenters also mentioned that including at-risk and under-construction nuclear generation also introduces unmanageable com pliance risk, since for nuclear plants with operational issues, the state nor the owner have vi rtually no opportunity to comply. Commenters
stated that inclusion of at risk or under-construct ion nuclear generation does not reduce CO2
emissions.

Commenters pointed out that the EPA's inclusion of at-risk nuclear component based on its conclusion that preserving nuclear will help reduce CO2 is not an emission reduction standard because it only avoids potential increases in emiss ions while failing to account for the inclusion
of nuclear costs. Commenters mentioned that the EPA arbitrarily and capriciously favors wind and solar over nuclear by including at-risk nuclearcomponent but no other types of zero-emitting

sources.

Commenters stated that, due to cost-effectiveness c onsiderations, preservation of at-risk nuclear capacity should be disqualified as a component of t he BSER. Commenters suggested that the EPA should provide a more accurate analysis to assi st states in evaluating the economic feasibility of subsidizing uncompetitive reactors. Commenters suggested that if states were to extend subsidies to reactors other than those truly at risk of closure, they would be providing
subsidies to reactors that don't need them.

Commenters stated that the nuclear generation deeme d to be at-risk is within the range of the wind capacity being developed in U.S. within 1-2 ye ars, and at much lower cost than the construction of new nuclear units. Therefore, the c ommenters suggested to replace the at-risk nuclear generation within the compliance period or before it begins through increased deployment of sustainable resources.

Commenters stated that the Clean Power Plan's treat ment of nuclear generation is not wellfounded technically or economically, and the EPA's rationales for the treatment are weak and inconsistent. Commenters disagreed with the EPA's 6 % at-risk assumption because the value is zero for the states that have no nuclear generation . Also, the commenters asserted that existing units do not increase available nuclear capacity, s ince keeping them open just maintains existing generation, while on the other hand, if units are r etired, that decreases the available nuclear capacity.

Commenters stated that the CPP's inclusion and excl usion of 2012 non-fossil fuel generation sources has nothing to do with actual emission redu ctions, and EPA's rationales for its treatment
of these sources are weak and inconsistent. Comment ers stated that the EPA includes about 6 percent of the existing nuclear generation in 2012 in each state to calculate the 2030 target rate of CO2 emissions; for the states that have no nuclear generation, this value is zero. Commenters stated that they do not agree with the EPA's logic for the simple reason that existing units do not562

increase the amount of available nuclear capacity; keeping them open just maintains existing generation and if units are retired, available nucl ear capacity decreases.

Commenters stated that based on the description in the Goal Computation Technical Support Document, EPA is double counting the benefits from retaining at-risk nuclear capacity; accordingly, reducing a state's goal based on retai ning at risk nuclear capacity is not appropriate.

Commenters stated that the at-risk nuclear componen t is not an emission reduction standard because it only avoids potential increases in emiss ions. Commenters stated that it also fails to
account for the inclusion of nuclear costs in the c urrent rate base in South Carolina. Commenters stated that by including at risk nuclear, but not o ther types of non-emitting sources, the EPA arbitrarily and capriciously favors wind and solar over nuclear, despite the fact that nuclear is base-load and does not require back-up generation.

Comment 18: Commenters said the EPA should allow states to adju st their state-wide emissions goals to reflect the next best resource option thatthe state is able to develop to replace any nuclear plant that may close.

Response 18: EPA acknowledges the comments and has determined th at the BSER for the final rule will not include the proposed provisions for n uclear units in the setting of state goals.

The following are summaries of the specific public comments under this comment:

Commenters stated that the EPA must permit states t o adjust their state-wide emission goals to reflect the next best option that the state is able to develop to replace any nuclear plant that may
close. Commenters stated in those States that are h eavily dependent on nuclear generation to comply with the existing power plant rule, there is an inherent risk that these units will fail to produce electricity. Commenters said in that event, there will be no way for those States to comply with the proposal's emission rate targets wi thout the construction of back-up zeroemission technology. Commenters said many States wi ll and can use gas-generated electricity in combined cycle combustion turbines as a failsafe me thod to guarantee compliance with state goals well into the future; however, those States t hat are heavily dependent on zero-emission generation such as nuclear generation and additiona lly have federally mandated state emission goals below the known emission level of combined-cy cle combustion turbines must have backup generation of additional zero-emission technolog y to ensure meeting both FERC n+1 standards of redundancy and the proposed EPA rule. Commenters said if under-construction and at-risk nuclear units are considered in the propose d state emission limits, these States may be forced to have available back-up zero-emission tech nology that may be both high cost and nondispatchable.

Commenters stated this is clearly not a feasible ap proach; not only would it cost consumers an unconscionable sum to invest in gigawatts of unneed ed renewable capacity simply to provide back-up in case they should lose a nuclear resource , but no realistic amount of intermittent renewable resource could provide the same consisten t and reliable energy as a nuclear generator. Commenters said moreover, that very investment woul d ensure that the nuclear generators would close, as that investment in renewable resources wo uld flood the energy and capacity markets,563

driving prices down to the level that nuclear plantoperators could never recover enough money to justify keeping the power plants open.

Commenters stated states simply cannot control whet her nuclear plants shut down and cannot contract in advance to fully insulate themselves fr om the environmental impacts of such shut downs; that is why EPA must permit States to adjusttheir state-wide emissions goals to reflect the next best resource option that the State is abl e to develop to replace any nuclear plant that may close.

Commenters stated that, if the EPA retains the at-r isk provision in the goal-setting calculation, the EPA should allow state goals to be adjusted upo n the expiration of nuclear plant operating licenses to remove the at-risk nuclear generation f rom the denominator of the goal-setting calculation. Commenters stated that any other resul t would penalize a state that currently has nuclear generation over a state that has no nuclear generation.

Commenters stated that there was not sufficient nat ural gas infrastructure in Wisconsin to replace lost nuclear generation due to license expiration a fter 2030, so the EPA should allow states to offset lost nuclear generation with existing capaci ty, including existing coal-fired plants.

Commenters stated that the EPA should allow state g oals to be recalculated when nuclear power plants reach the end of their planned lifetime, exc luding this building block from the new calculation and allowing some portion of fossil gen eration to replace the retiring nuclear.

Commenters stated that even if a nuclear unit is pr evented from shutting down prematurely, it will still be required to shut down upon expiration of its operating license, and the state in which
the unit is located will have to add additional car bon-free generation or implement other
emission reduction measures in order to maintain em issions relative to the state's goal.
Commenters recommended that: if the at-risk nuclearprovision is retained in the final goalsetting calculation, the EPA should allow states' g oals to be adjusted upon expiration of nuclear plant operating licenses; and, to encourage the con tinued operation of existing nuclear plants, EPA should allow states to claim compliance credit for nuclear plants that have their licenses renewed beyond 60 years.

Comment 19: Commenters asserted the definition of new nuclear s hould be expanded.

Response 19: EPA acknowledges the comments and has determined th at the BSER for the final rule will not include the provisions we had propose d for nuclear units in the setting of state goals, and will allow incremental generation from new and uprated nuclear units to be applied towards compliance. Please see section V.A of the preambl e for further discussion of the decision to exclude nuclear generation from BSER. Please see se ction V.A of the preamble for further discussion of the treatment of new and uprated nucl ear plants, and section VIII.K of the preamble for further discussion of provisions in st ate plans of allowable actions that result in an adjusted CO 2 emission rate of an affected EGU.

The following are summaries of the specific public comments under this comment:564

Commenters stated that the definition of new nuclear should be expanded to include all plants
now under construction or constructed in the future , power uprates at existing plants, and plants relicensed to operate beyond 40 years. Commenters s tated as EPA proposes, the final guidelines should allow states to include generation from 'new ' nuclear generating capacity in state compliance plans. Commenters said however, the fina l guidelines should include an expanded definition of 'new' nuclear that would encompass:

• New nuclear power plants (those currently under con struction or others that might be built between now and 2030 and beyond); and

• Power uprates at existing nuclear plants, including those undertaken during or after 2012 or a modified baseline period; and

• Nuclear plants relicensed to operate past their ini tial license terms (i.e., beyond 40 years) that have not received their renewed license s from NRC before the baseline year or period, and nuclear plants relicensed to op erate beyond 60 years (subsequent license renewal).

Commenters stated the proposed guidelines should al so recognize major capital investments undertaken between 2012 and 2020 to uprate nuclear units; these uprates provide additional zero emission generation and should be treated similar t o renewable generation built during the same timeframe by allowing states to include this additi onal generation in its state plan to meet the final goals.

Commenters stated according to NRC, utilities have used power uprates since the 1970s as a way to generate more electricity from their nuclear pla nts, and as of April 2014, NRC had approved 154 uprates that added generation capacity equivale nt to about seven new reactors. Commenters said undertaking a power uprate is a complex and ti me consuming process. Commenters said some uprates may involve major plant modifications, such as the replacement of the main turbines, or the modification or replacement of var ious components in order to accommodate a higher power level. Commenters said the licensee mu st then submit a license amendment request for the uprate to NRC. Commenters said NRC's techni cal and legal staffs review these complex technical analyses before approving an uprate reque st. See id. Commenters said the final guidelines should allow states to include any such uprates in their compliance plans.

Comment 20 : Commenters stated the EPA should credit nuclear g eneration for the lifetime of operation.

Response 20 : EPA acknowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for n uclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER. Please see section V. A of the preamble for further discussion of the treatment of new and uprated nuclear plants, an d section VIII.K of the preamble for further discussion of provisions in state plans of allowabl e actions that result in an adjusted CO2
emission rate of an affected EGU.565

The following are summaries of the specific public comments under this comment:

Commenters suggested that the EPA provide full cred it for nuclear generation that has its licensing renewed to an overall 80-year facility li fe.

Commenters stated that extension of a nuclear power plant's lifetime or operation at greater than assumed capacity should count as a credit towards a t a state's goal.

Comment 21: Commenters suggested that new nuclear not be inclu ded in the BSER.

Response 21: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include the proposed provisions for n uclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER.

The following are summaries of the specific public comment under this comment:

Commenters stated that future new nuclear should no t be included in the BSER determination and goal-setting calculation. Commenters stated EPA was correct in not including future new nuclear in the BSER determination and goal setting calculation, but solicits comments on whether these hypothetical future nuclear units sho uld be included. Commenters said excluding future new nuclear units is appropriate. Commenters said predictions about new nuclear units involve substantial uncertainty; historical project ions of future nuclear construction in the US have proven to be inaccurate, with many fewer units currently under construction than what was projected only five years ago. Commenters said buil ding new nuclear plants requires financial and organizational capacity that realistically is l imited to larger utilities. Commenters said adding to this uncertainty is the opposition of advocacy g roups to nuclear generation; many of the same advocacy groups that are supporting EPA's Clean Pow er Plan in this rulemaking forum actively oppose nuclear generation in the permitting and lic ensing forum.

Comment 22: Commenters asserted that future new nuclear, as we ll as nuclear under construction, should not be included in the BSER de termination and goal-setting calculation.

Response 22: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include the proposed provisions for n uclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER.

The following are summaries of the specific public comments under this comment:

Commenters supported the EPA's proposal to allow bo th new nuclear units and uprating of existing units to be counted towards state complian ce. Commenters recommended an end of base year be used for the purpose of recognizing additio nal nuclear capacity and uprating of existing nuclear units. Commenters opposed the EPA's inclusi on of any amount of additional nuclear566

capacity in the state goals, because it is not poss ible today to make any determination regarding what additional nuclear capacity might be brought o n line in the future, putting aside the fact that the EPA is not authorized by the CAA to use any nuc lear generation in its BSER determination for fossil fuel-fired EGUs. Commenters pointed out that doing so inappropriately penalizes states where new nuclear is being considered, and would cr ipple the state's ability to meet its goal.

Commenters stated that a third nuclear generation u nit at North Anna Power Station in Virginia was being studied, but that given enormous costs an d hurdles to constructing and operating nuclear units under today's regulatory and economic conditions, it is far too early to factor such a prospect into Virginia's 111 (d) plan. Commenters a lso stated that the time horizon for completion and operation of such a unit may extend past the 2030 date for compliance with EPA's final performance goal.

Comment 23: Commenters stated nuclear energy should be exclude d from state goal calculations, but remain an option for states to co nsider in developing their state plans to meet the proposed goals.

Response 23: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include the proposed provisions for n uclear units in the setting of state goals, and allows incremental generation resulting from uprate d power and new nuclear generation to count towards compliance. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER. P lease see section V.A of the preamble for further discussion of the treatment of new and upra ted nuclear plants, and section VIII.K of the preamble for further discussion of provisions in st ate plans of allowable actions that result in an adjusted CO2 emission rate of an affected EGU.

The following are summaries of the specific public comments under this comment:

Commenters stated nuclear energy should be excluded from the state goal calculations, but should remain an option for states to consider in d eveloping their state plans to meet the proposed goals. Commenters said consideration of at -risk and new nuclear generation unnecessarily introduces uncertainty into the goal setting methodology and compliance planning due to concerns regarding the short- and long-term viability of EPA's assumptions regarding the continued operation of the existing nuclear fleet a nd with respect to if/when the under construction nuclear capacity actually is commissio ned. Commenters said the implementation section identifies additional concerns for developi ng compliance requirements for nuclear capacity within state plans that further warrant ex cluding nuclear energy from the goal
calculation.

Commenters supported allowing nuclear generation to count towards compliance while not including nuclear in the target setting process. Sp ecifically, the commenters stated that the EPA should allow MWhrs in excess of an 81% capacity fac tor (the historical capacity factor of the existing nuclear fleet) to count toward compliance in the rate-based approach. Commenters also mentioned that output of plants that are relicensed after the 2012 baseline year or to operate in excess of 60 years should count towards compliance.567

Commenters stated that, in the first full complianc e year of 2030, the youngest nuclear plants in the current fleet will be 50 years old, and any eff ort to extend the lives of these units could not persist for more than a few decades. Commenters rec ommended that the EPA should therefore remove existing nuclear units from the equation alt ogether. Commenters also recommended that any new nuclear (units that have not commenced oper ation prior to the proposal date) should be counted as zero-emitting sources in the compliance calculus.

Commenters stated that the EPA's proposed treatmentof existing nuclear capacity, including the 6% at-risk factor and the estimated the 90% average utilization rate for U.S. nuclear units, is inappropriate. Commenters stated that EPA should no t include any amount of existing nuclear generating capacity in the state goal setting compu tation.

Commenters stated that nuclear generation should be eligible as a compliance option since it has essentially zero CO2 emissions; and the commenters suggested that the EPA's plan should continue to have existing nuclear generation as a c omponent of the low emission building block.

Commenters supported that nuclear generation should be included in state goal-setting computation. Commenters stated that for new constru ction consideration should be given to the newest and safest technologies, such as MIT/Transat omic's molten salt reactor, which produces energy at half the cost per megawatt than their sta ndard reactors, at least on paper.

Commenters stated that the draft rule could interfe re with the EPA's ability to structure statelevel implementation toward cost-effective and envi ronmentally sound practices because the
rule's evaluations of different resources are incon sistent and inaccurate. Commenters supported the flexibility of implementation set forth in the draft rule, but stated that the unequal treatment granted to nuclear compared to other energy sources , and the EPA's failure to fully consider the environmental impacts of the energy source, goes be yond providing the flexibility necessary to ensure effective implementation of the rule and ach ievement of its goals. Commenters pointed out that by encouraging states to view nuclear as a n acceptable clean energy resource, preserve existing capacity and complete capacity in construc tion, without accurately assessing its costs nor properly evaluating its environmental impacts a nd risks, the draft rule creates opportunities for states to implement it in manners that could be counterproductive.

Commenters supported the EPA's proposal that genera tion from new and uprated nuclear plants count towards compliance with state goals.

Commenters expressed concerns with the treatment of nuclear energy in Building Block 3, as it establishes a disincentive to nuclear development a nd appears inconsistent with the approach used with other energy generating sources. Commente rs stated that the under-construction nuclear units should be available to states for goa l calculation toward compliance rather than categorized as existing capacity. Commenters stated that the EPA's rationale for inclusion of these under-construction facilities in goal setting , "the decisions to construct these units were made prior to this proposal", is arbitrary in a pro posed rule whose timelines for establishing and reaching goals are tentative and debatable. Comment ers mentioned that a stronger incentive for nuclear investment would be signaled by allowing th e applicable states to apply, upon start up, the zero-emissions energy toward Building Block 3 g oals. Commenters suggested this principle be further applied to any nuclear unit whose construction or uprating will be started prior to the568

2030 compliance deadline, albeit with the obligatio n on the state to ensure compliance whether
or not such new units come online as scheduled. Com menters also suggested the EPA to additionally consider encouraging states to establi sh policies analogous to existing renewable energy portfolio standards to support the developme nt of new nuclear generating units. Commenters recommended that nuclear generation shou ld be granted some measure of policy parity, and must be more explicitly encouraged as p art of a reliable emission reduction strategy.

Commenters stated that the EPA should exclude exist ing nuclear from the goal-setting calculation, but allow states to take credit for a portion of their nuclear generation for compliance purposes. Commenters also stated that the EPA shoul d recognize early action taken to increase nuclear plant output, such as the 2011 extended pow er uprate at Point Beach. Finally, commenters recommended that, regarding the inclusio n of estimated new nuclear in the goal setting computation, only units that were in servic e at the end of the goal setting baseline years should be included, and that a multi-year period is desirable for setting state goals. Commenters stated that if the EPA uses the single (and due to abnormally low natural gas prices, unrepresentative) year of 2012 to set state goals, then the state goals should include only units that were in service as of the end of the 2012, and should exclude any units that were not in
service as of the end of 2012.

Commenters stated that the Proposed Regulation illo gically penalizes Virginia for its nuclear fleet by including "at risk" nuclear production in the denominator. Commenters recommended that continued use of existing (in addition to new) nuclear generation capacity, which provide reliable base load generation that is carbon-free, should be allowed to count for compliance with the Proposed Regulation.

Commenters stated that EPA fails to demonstrate tha t its projected increases in renewable energy are truly feasible. Commenters stated that many sta tes have adopted renewable energy standards that contain rate caps to control the cost of such programs; the CPP ignores the decisions made by the states to balance renewable energy objective s against consumer cost considerations. Commenters stated that EPA also incorrectly include s 6 percent of at risk nuclear in the target setting process in an effort to incent states to ke ep at risk nuclear units in operation. Commenters
recommended that EPA eliminate nuclear MWhrs from t he target setting process because this approach does not properly incent the desired outco me and creates unnecessary compliance risk. Commenters stated that while it is inappropriate to include nuclear in the target setting process, it is appropriate to allow nuclear generation to counttowards compliance. Commenters stated that to incent optimal performance of this zero-emitting resource, EPA should allow MWhrs in excess of an 81 percent capacity factor to count to ward compliance in the rate-based approach. Commenters stated 81 percent represents the histori cal capacity factor of the existing nuclear fleet and operation above that level should be ince nted to help reduce emissions from fossil-fired plants. Commenters stated that output of plants tha t are relicensed after the baseline year (2012) should count towards compliance, as well the outputof plants licensed to operate in excess of 60

years.

Commenters stated that the proposed regulation does not recognize the significant investment in the nuclear fleet or the substantial resulting zero -carbon energy production in Virginia that has historically lowered Virginia's carbon footprint. C ommenters stated the proposed regulation illogically penalizes Virginia for its nuclear flee t by including at risk nuclear production in the569

denominator of its formula and basing the Mandatory Goals on 2012 generation levels. Commenters stated that including an at risk nuclear component in the formula for Virginia - along with other unlawful components of the formula - has the effect of driving the proposed regulation's emission rates for Virginia unreasonab ly and unlawfully low. Commenters stated that including higher than normal zero-carbon energ y production in EPA's formula drives down the emission rates that Virginia and other states m ust achieve; this is because the Mandatory Goals are calculated by adjusting a basic ratio of carbon emissions/megawatt hours of production. Commenters stated that adding into this formula production from resources that have no carbon emissions only increases the denominator of the ratio, and has no effect on the numerator; so each megawatt hour of zero-carbon pro duction added by EPA for at risk nuclear and renewable resources, as well as the energy effi ciency added in by EPA, lowers the Mandatory Goals and requires deeper carbon emission reductions. Commenters stated that penalizing Virginia for its zero-carbon generation in this way is flatly inconsistent with the proposed regulation's purported goal of reducing carbon emissions (much less doing so without compromising reliability or reasonable costs). Comm enters stated that continued use of existing (in addition to new) nuclear generation capacity, w hich provide reliable base load generation that is carbon-free, should be allowed to count for comp liance with the proposed regulation.

Comment 24: Commenters stated the proposal does not provide en ough information regarding regulatory authority, enforcement responsibility an d compliance demonstrations requirements for state plans with regard to nuclear units.

Response 24: EPA acknowledges the comments and has provided al l the necessary provisions for requirements in state plan in section VIII of t he preamble.

The following are summaries of the specific public comments under this comment:

Commenters stated that the consideration of nuclear units in the implementation plan raises issues regarding regulatory authority, enforcement responsibility, and compliance demonstrations if the EPA intends the capacity fact or assumptions used in calculating state goals to become an enforceable requirement in order to cl aim a 'credit' in the state's compliance
demonstration. Commenters stated that these issues are inadequately addressed in the proposal.

Comment 25 : Commenters stated that credit should be given tow ard environmental compliance.

Response 25 : EPA acknowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for n uclear units in the setting of state goals. Please see section V.A of the preamble fo r further discussion of the decision to exclude nuclear generation from BSER. Please see section V. A of the preamble for further discussion of the treatment of new and uprated nuclear plants, an d section VIII.K of the preamble for further discussion of provisions in state plans of allowabl e actions that result in an adjusted CO2
emission rate of an affected EGU.570

The following are summaries of the specific public comments under this comment:

Commenters noted that nuclear units built in the 19 70s and 1980s will require ongoing investment to maintain power production into the mi ddle of the century. Commenters stated that if credit is not given toward environmental complia nce, one of the benefits of a potential large
carbon-free investment is removed. Commenters recom mended that rules should encourage investments into zero-emission, carbon-free resourc es.

Comment 26: Commenters asserted that the EPA has underestimated of the quantity of nuclear generation at risk of premature retirement.

Response 26: EPA acknowledges the comments and has determined th at the BSER for the final rule will not include the proposed provisions for n uclear units in the setting of state goals. Please see sections VIII.K and VIII.G of t he preamble for further discussion of the flexibility states have in developing state plans t o incentivize nuclear generation and ensure compliance, as well as, the requirement that states consider system reliability in plan submittal.

The following are summaries of the specific public comments under this comment:

Commenters stated that nuclear facilities are the l argest and most reliable source of carbon free electricity, but nuclear facilities are a risk of p remature retirement. Commenters also stated that the proxy used by EPA to estimate the quantity of n uclear generation that is at risk of premature retirement is a significant underestimate.

Commenters stated that nuclear plants generate larg e amounts of clean energy and play vital role in grid reliability, but nuclear facilities across the country are at risk for premature retirement - the commenters stated that Terry Boston, President and Chief Executive Officer of PJM, described this prospect as "unthinkable." Commenter s noted that approximately half of the nation's existing nuclear units are merchant genera tors in states with competitive electricity markets, in which wholesale prices are set by gener ators' bids. Commenters stated that nuclear plants have largely fixed costs and cannot vary the ir output in response to market signals; nor can they even affect the market price for generation - because nuclear facilities must run all of the time, they must accept the lowest market-clearing p rice offered by other generators. Commenters stated that unless wholesale electricity prices (an d capacity prices in RTOs that have capacity markets) are high enough to allow the nuclear plant s to cover their costs, they will retire.

Commenters also stated that nuclear units' market-b ased revenues have recently been insufficient for a number of reasons, threatening the economic v iability of a significant fraction of the
nation's nuclear fleet. Commenters noted that the E PA recognized this threat in the Proposed Rule, stating that "a host of factors - increasing fixed operation and maintenance costs, relatively low wholesale electricity prices, and additional ca pital investment associated with ensuring plant security and emergency preparedness - have altered the outlook for the U.S. nuclear fleet in recent years." Commenters specifically noted, as th e EPA also noted, that lower natural gas prices have reduced wholesale electricity prices an d thereby made it more difficult for nuclear plant owners to recover their fixed costs or to mak e new capital investments, such as those571

needed to meet new safety requirements adopted afte r the 2011 accident at Fukushima Daiichi Nuclear Plant in Japan.

Commenters stated that the economic pressure on nuc lear units has been exacerbated by subsidized wind power, which has placed further dow nward pressure on wholesale electricity prices. Commenters stated that subsidies allow wind generators to remain profitable even when they pay to put their electricity onto the grid; th ese units can therefore bid a negative price into the electricity markets yet still make money. Comme nters noted that, on breezy nights, the market-clearing price of electricity has become neg ative in locations where there is insufficient
transmission to relieve the local area of excess el ectricity production. Commenters stated that nuclear plants in those areas cannot cycle down the ir output during such times, and therefore
have no choice but to run and incur substantial los ses during those hours; thus, subsidies to encourage wind end up displacing nuclear generation , to no carbon benefit. Commenters concluded that, in other words, policies intended t o support renewable resources that are carbonfree have had unintended and deleterious consequenc es for nuclear power, by far the largest
carbon-free resource.

Commenters stated that in part because of these fac tors, the U.S. has recently lost two viable nuclear plants: the Kewaunee power station in Wisco nsin, and the Vermont Yankee nuclear unit in Vermont, which is set to close at the end of 201 4. Commenters observed that when Dominion announced in October 2012 that it would be closing the Kewaunee plant, it stated that the decision was "based purely on economics." Likewise, Commenters noted, Entergy's August 2013 announcement regarding the closure of Vermont Yanke e cited "sustained low power prices, high cost structure and wholesale electricity market des ign flaws" that result in "artificially low energy and capacity prices" that "do not provide ad equate compensation to merchant nuclear plants for the fuel diversity benefits they provide ."

Commenters noted Exelon is currently evaluating the continued economic viability of four nuclear stations - Byron, Quad Cities, and Clinton in Illinois; and Ginna in New York. Commenters noted Byron and Quad Cities are located in the PJM region, but were not selected in the last PJM capacity auction, and Clinton is lo cated in the Midcontinent ISO ("MISO"), which has no forward capacity market. With respect to Ginna, the commenters stated that Exelon
has certified to the New York Public Service Commis sion that it expects that revenues from the sale of energy and capacity in the New York ISO wil l not be sufficient to cover the costs of continued operation. Commenters stated that if any of these stations were to retire, it would be for purely economic reasons, because the current op erating licenses for these plants do not expire until 2024 for Byron at the earliest, and as late a s 2032 for Quad Cities. Commenters noted that collectively, these plants generate 48,295 gigawatt -hours ("GWh") and avoid 30.7 million metric tons of CO2 emissions annually.

Commenters noted Exelon had previously announced th e retirement of Oyster Creek in New Jersey, effective in 2019. Commenters stated that E xelon made that decision for economic reasons as well - the plant's operating license doe s not expire until 2029, but wholesale electricity prices did not support the construction of new cool ing towers that the State of New Jersey required for Clean Water Act compliance. Commenters noted that as a result, New Jersey will lose 5,102 GWh of carbon-free generation - eight pe rcent of the state's total annual electricity generation.572

Commenters noted that the EPA relied on national pr ojections from the Energy Information Administration ("EIA"), and estimated that six perc ent of the nation's nuclear capacity is at risk of premature retirement. However, the commenters st ated that Exelon has used industry analyst data and its own modeling to examine the economics of the nation's 27 nuclear plants operating in competitive markets. Commenters provided a chartthat indicated Exelon has determined that no fewer than 13 of the 27 nuclear plants in compet itive markets are expected to have revenue shortfalls in 2015. Therefore, the commenters concl uded that all of these plants are thus at risk of
retirement. Commenters further stated that if reven ues continue to fall due to low gas prices or an expansion of subsidized wind generation, an even gr eater number of nuclear plants may be endangered.

Commenters stated that the Proposed Rule has a pote ntial, paradoxically, to increase the financial pressure on existing nuclear plants. Comm enters noted that currently, NGCCs have higher variable costs than coal units, nuclear unit s, or renewables. Therefore, the commenters stated, electricity prices tend to reflect the marg inal costs faced by NGCCs, whose bids in competitive markets set the price paid to all gener ators. Commenters noted that the Proposed
Rule envisions that states will achieve EPA's emiss ions goals partly by shifting dispatch from existing coal plants to NGCCs. Commenters noted tha t a rate-based state that does not adopt Smart System Dispatch could seek to encourage this sort of redispatch by artificially increasing the marginal cost of higher-emitting generators (li ke coal plants) while reducing the marginal cost of lower-emitting generators (like NGCCs). For instance, the commenters noted that the rate-based state might adopt an emissions credit orrate-trading program that taxes higheremitting fossil fuel plants and subsidizes lower-em itting fossil fuel plants. As a result of such a subsidy, the commenters stated, an NGCC would be ab le to sell electricity for less than its true marginal cost, similar to subsidized wind today. Co mmenters stated that such a subsidy could have the effect of lowering the market price of ele ctricity for all generators - further undercutting the economic viability of existing nuclear plants i n the near term and muting the market signals to invest in clean generation. However, the comment ers stated that in the long run, the premature retirement of nuclear plants will result in increas ed electricity prices, as nuclear plants are replaced with higher-cost generation, such as NGCCs

.
Commenters stated that preventing early retirement of existing nuclear generation is essential in reducing carbon emissions from the power sector. Co mmenters strongly supported the EPA's inclusion of nuclear power as part of the BSER set forth in the Proposed Rule. Commenters stated that the EPA was correct when it recognized, "[n]uclear generating capacity facilitates
CO2 emission reductions at fossil fuel-fired EGUs b y providing carbon-free generation that can replace generation at those EGUs." Commenters also strongly supported the EPA's recognition that one "way to increase the amount of available n uclear capacity is to preserve existing nuclear EGUs that might otherwise be retired."

Commenters stated that maintaining the existing nuc lear fleet is in fact an essential precondition to reducing carbon emissions from the power generat ion sector. Commenters stated that FERC Commissioners, state public service and environment al commissioners, scientists, and others have all called upon environmental and energy polic ymakers to develop solutions to preserve nuclear energy's unique role among the nation's cle an energy resources. Commenters noted that former FERC Commissioner John Norris similarly obse rved that "[w]e need to maintain our nuclear fleet, as it is a valuable base load and carbon free resource."573

Commenters noted that in November 2013, four of the world's most respected climate and energy scientists - Dr. Ken Caldeira of Carnegie Me llon, Dr. Kerry Emanuel of MIT, Dr. James Hansen of Columbia University, and Dr. Tom Wigley o f the National Center of Atmospheric Research - acknowledged the critical importance of nuclear energy to addressing climate change.
Commenters noted that the scientists released a let ter calling on world leaders to support nuclear energy, concluding that "in the real world there is no credible path to climate stabilization that does not include a substantial role for nuclear pow er." Commenters also noted that the Center for Climate and Energy Solutions released a study ident ifying the challenges facing nuclear units and noting that retirements of nuclear units will h ave serious climate change implications. Finally, the commenters noted that the National Ass ociation of Regulatory Utility Commissioners ("NARUC") passed a resolution recogni zing that "[n]uclear energy has played a substantial role in the achievement of existing [gr eenhouse gas] State or regional emissions reduction goals to date, and continued operation of nuclear power plants is vital to States' ability to economically meet new federal regulation, and pr ovides an essential tool to manage risks associated with potential [greenhouse gas] emission s reduction requirements." Commenters stated that NARUC urged EPA to adopt rules encourag ing states to "preserve, life-extend, and expand existing nuclear generation."

Commenters stated that the premature retirement of a nuclear facility leaves an enormous hole to be filled: each nuclear facility dependably generat es so much electricity that, with current technology, it simply cannot feasibly be replaced b y alternative zero-emissions generation resources with much lower capacity factors, such as wind or solar. For example, the commenters noted that to produce the same 1,000 megawatts of e lectricity generated by a single nuclear unit, a solar farm operating at a 26 percent capacity fac tor would need to be spread across 30 square miles, more than the size of Manhattan, and a wind farm operating at 30 percent capacity would need to be spread across 300 to 400 square miles. C ommenters stated that, although California is the nation's leader in renewable generation product ion, the closure of the San Onofre nuclear plant in early 2012 resulted in the loss of more ze ro-emissions electricity than the combined production of all wind, solar, and biomass in the s tate. Commenters concluded that the loss of a just a single nuclear plant can have a devastating impact on a state's ability to reduce CO2
emissions.

Commenters stated that, even if it were feasible to replace a nuclear plant with an equal number of megawatts of wind or solar power, there would st ill be an adverse impact on the grid's reliability unless carbon-emitting plants (NGCCs or simple-cycle combustion turbines ("CTs")) are added to "firm up" the renewable generation sou rces, that is, to back them up to ensure electricity can be generated at night and in all we ather conditions. Commenters noted that, according to EIA data, so far in 2014, nuclear faci lities have had a capacity factor of approximately 90 percent; by comparison, wind facil ities have a capacity factor of approximately 30 percent, and utility-scale photovoltaic solar ge neration had a capacity factor of 33 percent. Thus, the commenters stated that wind and solar pow er cannot come close to replicating nuclear power's ability to generate electricity 24 hours pe r day, independent of weather conditions.

Commenters stated that, because of a nuclear facili ty's large size and unparalleled reliability, a retiring nuclear plant is most likely to be replace d by natural gas-fired plants; new NGCCs have the lowest entry costs to provide baseload power. C ommenters noted that NGCCs obviously emit carbon, so replacement of nuclear plants with NGCCs increases carbon emissions. Commenters574

stated, for example, California's annual CO2 emissi ons increased by 35 percent after the San Onofre nuclear reactors were shut down in early 201 2. Similarly, the commenters noted that when the Kewaunee nuclear plant in Wisconsin closed in 2013, the fossil fuel generation that took its place emitted an additional 3.6 million me tric tons of carbon dioxide annually.

Commenters stated that the dramatic increase in gre enhouse gas emissions that occurred in Japan following the closure of reactors in response to th e 2011 Fukushima Daiichi accident further demonstrates the critical importance of nuclear rea ctors to reduction of greenhouse gas emissions. Commenters noted that the CO2 intensity of the power sector in Japan in 2012 was 39 percent higher as compared to when the country's re actors were operating. Commenters stated that CO2 emissions from electricity generation incr eased 29 percent to 486 million metric tons of
CO2 in 2012 from 377 million metric tons in 2010.

Commenters concluded that these examples demonstrat e that every premature nuclear retirement moves the nation in the wrong direction when it com es to CO2 emissions. Commenters noted, as the Proposed Rule recognizes, retaining even the sm all portion of existing nuclear capacity that EPA deems at risk of premature retirement "could su pport avoiding 200 to 300 million metric tons of CO2 over an initial compliance phase-in per iod of ten years." Commenters stated that preventing premature nuclear retirements is essenti al to prevent CO2 emissions increases, let
alone to achieve emissions reductions.

Commenters also stated that preventing the early re tirement of nuclear facilities does not just avoid carbon dioxide emissions: as EPA has recogniz ed, it is one of the most cost-effective ways
to do so. Commenters stated that EPA determined in the Proposed Rule that, "based on available information regarding the cost and performance of t he nuclear fleet, preserving the operation of at-risk nuclear capacity would likely be capable of achieving CO2 reductions from affected EGUs at a reasonable cost." Specifically, the comme nters stated that the EPA estimated that the cost of keeping "at risk" nuclear plants operating is approximately $12 to $17 per metric ton of
CO2 avoided - which is more cost-effective than vir tually any other carbon abatement strategy. Commenters stated that the EPA estimated that preve nting the early retirement of "at risk" nuclear plants is more cost-effective than:

• Adding renewable capacity ($10 to $40 per metric to n of CO2 abated).

• Increasing natural gas combined cycle power plant u tilization rates to 70 percent state by state ($33 per metric ton of CO2 abated).

• Implementing demand-side management programs ($16 t o $24 per metric ton of CO2 abated).

Commenters noted, according to EPA's estimates, onl y improving the heat rate of coal plants would be more cost-effective than preventing the pr emature retirement of nuclear facilities. Commenters stated that while these heat-rate improv ements are important, they alone cannot
achieve the total carbon emission reductions necess ary. Indeed, the commenters stated that if implemented alone, heat-rate improvements could res ult in increased carbon dioxide emissions due to a "rebound" effect resulting from lower marg inal costs for coal-fired plants that would result in those plants being dispatched more freque ntly. Moreover, the commenters stated, the575

premature retirement of the existing nuclear fleet would also dramatically increase the cost of EPA's proposal in the long run.

Comment 27: Commenters stated that nuclear power does not refl ect the BSER.

Response 27: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include the proposed provisions for n uclear units in the setting of state goals. Please see section V.A of the preamble for further discuss ion of the decision to exclude nuclear generation from BSER.

The following are summaries of the specific public comments under this comment:

Commenters stated that the EPA should not accept nu clear generation as an emission reduction measure for purposes of compliance with a BSER stan dard because: a) Nuclear energy is extremely water-intensive; b) Nuclear energy produc es highly radioactive, long-lived nuclear waste; c) Nuclear energy is heavily subsidized resu lting in significant hidden costs; d) Nuclear energy poses nuclear proliferation and national sec urity risks; e) Nuclear power plant accidents can cause catastrophic consequences; f) Nuclear pow er plants produce and release harmful radiation; and g) The Uranium fuel chain is incredi bly damaging to the public health and the
environment.

Commenters stated that nuclear energy is not the "b est" energy system from any standpoint, including costs, reliability, non-air-related impac t, or compatibility with other-low carbon energy

sources.

Commenters stated that the reactors under construct ion or any new nuclear reactors do not meet the criteria for inclusion in the best system of em ission reduction due to their costs and non-air impacts. Commenters suggested that if the EPA wants to include nuclear in such a system, it must produce a technically and economically valid a nalysis that takes these facts into account and puts them in the perspective of the needs of CO 2 reduction until its target year of 2030.
Commenters stated that the EPA needs to address suc h issues substantively before including
under-construction or new nuclear reactors in the B SER. Commenters recommended that the EPA should explicitly indicate that reactors that a re not currently certified by the Nuclear Regulatory Commission would not be considered as vi able parts of state compliance plans.

Commenters stated that, by endorsing nuclear power as a BSER technology, the EPA would provide implicit support to efforts by the nuclear industry to persuade states to include nuclear energy in their renewable energy portfolios. Commen ters stated that nuclear energy undermines the growth of the renewable energy sector.

Commenters stated that retaining nuclear power as a BSER undermines the express purpose of the EPA's Carbon Rule, because nuclear utilities ar e already using the EPA Carbon Rule to subsidize unprofitable nuclear reactors, diminish i f not thwart the expansion of renewable energy, and maintain a "status quo" energy system. Commenters remarked that none of these goals will have the effect of lowering carbon inten sity of power generation.576

Commenters stated that low- or zero-carbon resource s should be included in BSER with modifications in the composition of Building Block 3 and in the formula for computing states' emission goals, and nuclear should be removed from BSER. Commenters also stated that in the BSER formula, the way in which renewables and effic iency are included in the draft rule is flawed, since increased deployment of Building Bloc ks 3 and 4 resources were added to the total generation supply (denominator), but were not assum ed to reduce emissions from fossil fuel sources (numerator) as coal and natural gas generat ion sources fall back in the dispatch order or are phased out. Commenters remarked that this appro ach did not take into account the true emissions-reducing potential of increased deploymen t of low-/zero-carbon resources, resulting in the calculation of artificially high emissions rate goals.

Commenters stated that the rule's inclusion of nucl ear power in Building Block 3 would be problematic in that it could enable the diversion o f economic resources from measures that would be more effective in reducing emissions of CO 2 and other air pollutants. Commenters suggested that the draft rule's evaluation that nuc lear power should be taken into account in the state goals, in terms of both new and existing reac tors, would set a precedent by codifying it as environmentally beneficial in the most significant piece of U.S. climate policy to date, however it does so by disregarding the significant environm ental impacts of nuclear without conducting an analysis to support such a conclusion. Commenter s stated that the draft rule also fails to conduct any meaningful analysis of the costs of nuc lear generation resources of any type (existing reactors, new reactors, and reactor poweruprates), and thereby fails to recognize that nuclear should be disqualified from the BSER as eco nomically infeasible. Commenters also
mentioned that the EPA's recommendation that states provide incentives to promote the preservation of existing nuclear reactors is incons istent with the treatment afforded other low- or zero-carbon energy resources.

Commenters disagreed with EPA's conclusion that con struction of new nuclear reactors would have a positive impact in encouraging technological innovation. Commenters pointed out that the degree of innovation as a result of increased deplo yment is extremely limited, and the reactors currently under construction utilize effectively th e same technology with very little improvement in thermal efficiency and no apparent economic impr ovement, suffering from the same problems with cost escalation and construction delays. Comme nters stated that a serious analysis of the opportunities for technological innovation in nucle ar power would reveal the facts, but the lack of rigor in the EPA's analysis results in inaccurat e conclusions that favor nuclear and its
unwarranted inclusion in the BSER.

Commenters stated that nuclear generation should be excluded from the BSER based on its economic and technical feasibility and its non-air quality impacts.

Commenters stated that the draft rule significantly underestimates the cost of including nuclear
resources in BSER. Commenters remarked that a more accurate estimation of that cost would lead to a different conclusion about the appropriat eness of subsidizing the preservation of nuclear

energy.

Commenters recommended that the EPA remove preserve d nuclear capacity from Building Block 3, as preserving uneconomic nuclear power pla nt capacity does not represent BSER because it does nothing to drive investment and inn ovation in new clean, renewable energy577

technologies that will permanently displace emissio ns from fossil-fuel generation. Commenters also mentioned that, in the short term, existing nu clear capacity will likely become more competitive as fossil-fired generators absorb the c ost of compliance with Section 111(d), removing any need for states to further subsidize n uclear power plants. Commenters stated that states can accomplish the proposed emission reducti on goals at a reasonable cost without getting credit from saving nuclear capacity, and this is true even if the targets are not adjusted upwards to account for removal of the 5.8% preserved nuclear capacity from the adjusted baseline, because states can make up the difference through g reater emphasis on renewable energy and energy efficiency. Commenters remarked that overrel iance on aging nuclear power plants will hamper investment in new and evolving cleaner energ y technologies that do not have the safety, environmental, and security risks of today's nuclea r power plant technology, and would also undermine the proposed rule's stated goal of drivin g technological advances and innovation in emissions control and clean energy technologies.

Commenters stated that the costs of cancelled nucle ar units should be attributed to the cost of carbon reductions from completed reactors, which wo uld further increase the disparity between the cost of using efficiency, onshore wind and util ity solar energy to reduce CO2 emissions on the one hand and using nuclear power on the other. Commenters stated that in view of these realities, history, and absolute and relative costs , the assumption that nuclear reactors are part of a best system of emission reduction is untenable. C ommenters stated that to these considerations one must add the EPA's own acknowledgement that cos ts and non-air-impacts need to be taken into account in designing a best system of emission reduction. Commenters stated that the CPP has no meaningful analysis of the relevant issues i n regard to nuclear plants under construction
and if the EPA wants to include nuclear in such a s ystem, it must produce a technically and economically valid analysis that takes these facts into account and puts them in the perspective of the needs of CO2 reduction until its target year of 2030. Commenters stated that the many non-air-quality considerations such as the plutoniu m and tons of spent fuel that the five reactors would generate each year, the vast amounts of water they would use, and other impacts should be
added to the list of considerations. Commenters sta ted that nuclear reactors are very inflexible and a poor complement for variable solar and wind g eneration. Commenters concluded that the reactors under construction, or indeed, any new nuc lear reactors, do not meet the criteria for inclusion in the best system of emission reduction. Commenters stated that the putative economics of small modular reactors are entirely de pendent on a supply chain in which major components would be mass manufactured and that this is highly unlikely in the United States without massive government subsidies or government orders or both. Commenters stated that the EPA needs to address such issues substantively befo re including nuclear reactors under construction or new nuclear reactors in the BSER; t he EPA should explicitly indicate that reactors that are not currently certified by the NR C would not be considered as viable parts of state compliance plans. Commenters stated that the EPA has not justified the inclusion of existing or new nuclear generation as part of the B SER. Commenters continued that, even if the EPA removes nuclear power from the BSER, it is poss ible that the states may include it in their implementation plans. Commenters stated that the EP A is required to satisfy the BSER criteria in setting its targets - and it is clear that nuclear power does not meet those criteria. Commenters stated that for inclusion of existing and under-con struction nuclear setting emission rate targets, the EPA did not evaluate the economic aspects corre ctly and also did not address a number of non-air quality impacts, which the Clean Air Act re quires it to consider. Commenters stated that the EPA did not consider a number of other importan t issues that preclude the consideration of578

nuclear generation as BSER, including the following : 1) The EPA's approach relies on the continuation of a heavily centralized electricity g rid; and 2) The EPA Clean Power Plan does not consider the economic impact on low income househol ds of the increasing use of natural gas for power generation.

Commenters stated EPA failed to properly "tak[e] in to account the cost" when it proposed to
treat under construction nuclear units as BSER. Com menters said the EPA's assertion related to "incremental costs" is inconsistent with the plain language of the statute, which requires EPA to consider the "cost." Commenters stated assuming "ze ro" cost for under construction "controls" is unprecedented in the section 111(d) context, and by ignoring the total value of their investment merely because they acted early in advancing the fi rst new nuclear power plants in nearly 30 years, the EPA's determination is fundamentally fla wed. Commenters said the EPA has never mandated such a large capital investment as BSER fo r affected units.

Commenters stated that nuclear power should not be considered as a BSER because the nuclear power industry has been unable to control construct ion costs after decades of significant subsidies while the federal government has not been able to license a long-term geologic repository for high level nuclear wastes; nor does the federal government know when a repository will be complete or how much it will cos t, which represents more than trivial problems for nuclear energy.

Commenters expressed concerns about the EPA's cost of CO2 emissions from nuclear generation; in general, there's not enough clarity on the costs of operating a nuclear reactor in deregulated versus regulated markets. Commenters st ated that the EPA anticipates approximately 6 percent of existing nuclear capacity will be deco mmissioned; they cite a report that estimates $6/MWh shortfall in covering a threatened nuclear r eactor from covering operating costs with electricity sales; and they estimates offsetting th e revenue loss of "at-risk" nuclear reactors as approximately $12 to $17 per metric ton of CO2. Com menters stated that they are concerned as to what EPA considers economically reasonable for k eeping at-risk nuclear reactors operating. Commenters stated that they wanted to know if there is a cost the EPA thinks is unreasonable. Commenters stated that they agree with IEER comment s on this issue. Commenters stated that CPP should not subsidize aging and unprofitable nuc lear reactors. Commenters stated that EPA allows for state flexibility to use carbon reductio n techniques that are not identified as BSER in the CPP; natural gas and nuclear can be used by sta tes if they choose while not being considered a BSER by the EPA.

Commenters stated that the EPA's reliance on under- construction nuclear as part of its BSER determination for setting the performance standard is not based on a system of emissions reduction, has not accounted for the costs associat ed with such construction and has not been adequately demonstrated to reduce emissions from fo ssil fuel-fired EGUs.

Commenters stated that the construction of nuclear generation has never been used by EPA (and, in the statute, was never viewed by Congress) as a system or method of emission reduction for other, unrelated EGUs. Commenters stated that Congr ess never envisioned EPA would graft such a sweeping interpretation on to the term "syst em of emission reduction" in section 111, and EPA's attempt to do so is arbitrary and capricious. Commenters stated that EPA has never required any type of replacement generation as a sy stem or method of emission reduction in a579

section 111 performance standard setting process as there is no authority under the CAA to require the development or operation of replacementgeneration as part of a BSER determination. Commenters stated that EPA's attempt to justify its approach by creating some distinction between under-construction nuclear and new (yet-to- be-planned) nuclear is equally unjustified, arbitrary and without precedent or statutory author ity. Commenters stated that EPA implies that because it historically has distinguished between a ffected sources that are under construction at the time of proposal and those that are not, that i t can similarly distinguish between underconstruction nuclear and new nuclear as part of its BSER determination for fossil fuel-fired EGUs. Commenters remarked that a gaping flaw to tha t approach is that neither new nor underconstruction (nor, for that matter existing) nuclear units are part of the affected facility under Section 111. and, thus, there is no legal rationale for EPA's approach. Commenters contended
that while the desire to include under construction nuclear may be fueled by the overriding policy goal of decreasing the utilization of existi ng fossil generating units by any means necessary, that goal cannot outweigh the limiting p arameters of EPA's authority - here bound by the CAA - to regulate under construction nuclear capacity within the confines of a performance standard setting process for several categories of fossil fuel-fired EGUs.

Commenters stated that it cannot be said that the V ogtle units are an "adequately demonstrated" system for purposes of section 111 as an adequately demonstrated system is one shown to be reasonably reliable, reasonably efficient and reaso nably able (and reasonably expected) to serve the interests of pollution control without becoming exorbitantly costly in an economic or environmental way. Commenters stated that nuclear u nits cannot be viewed as a mechanism for pollution control at another power plant; nor are t hey inexpensive, or within the cost level normally viewed as appropriate for purposes of establishing a section 111 performance standard.
Commenters stated that whether the nuclear fission process that will be used at Plant Vogtle is a proven technology is irrelevant to EPA's use of it in the proposal and as part of its BSER
determination. Commenters stated that EPA has not s hown that development of a nuclear power plant is a method of reducing emissions from one or more unrelated fossil fuel-fired EGUs, regardless of whether the new nuclear plant and the affected [under section 111] fossil fuel-fired EGUs are owned and operated by the same or separate entities. Commenters contended that absent the required technical basis, the BSER deter mination must fail. Commenters stated that, further, as EPA notes in the proposed guidelines, S ection 402(i) of the Energy Policy Act of 2005 [EPAct05] states: "No technology, or level of emission reduction, solely by reason of the use of the technology, or the achievement of the em ission reduction, by 1 or more facilities receiving assistance under this Act, shall be consi dered to be adequately demonstrated for purposes of [section 111 of the Clean Air Act]'". C ommenters stated that Congress crafted this limitation broadly; namely, with respect to "facili ties receiving assistance under this Act [i.e., the EPAct]." Commenters stated that the EPAct provided various forms of assistance for new nuclear reactors, including tax credits and loan gu arantees; the co-owners of Vogtle 3 and 4 have received, or will receive, assistance provided thro ugh that legislation, and as such, these units should not, as a legal matter in this context, be d eemed "adequately demonstrated."

Commenters stated that any discussion of the reason s nuclear power should not be part of BSER must include the impacts of the front end of the nu clear fuel cycle, i.e., the mining and processing uranium for fuel. Commenters excerpted s ections from a report by Fettus and McKinzie that describe the environmental impacts of uranium mining and processing and from a report that describe the health effects of uranium mining and processing. Commenters stated that580

there are other "nonair quality health and environm ental impact[s]" as envisioned by section 111(d). Commenters stated that the radioactive wast e from spent nuclear fuel is a dangerous problem for which there is no good solution and the re is also the danger to human health from leaks of radioactive tritium from nuclear power pla nts. Commenters listed several examples of
tritium leaks at several reactors. Commenters state d that based on the foregoing problems, it is clear that nuclear power is not a valid considerati on in a best system of emission reduction for greenhouse gases.

Commenters stated that the EPA has not justified it s reliance on nuclear power as an appropriate aspect of a best system of emission reduction. Comm enters stated that the EPA's assertions to the contrary, nuclear power is not carbonfree and does not provide an alternative to coal at a
reasonable cost. Commenters stated that EPA has min imized the impact of the radioactive waste from nuclear power as well as the economic challeng es that nuclear power faces. Commenters stated that EPA has touted new designs in nuclear r eactors without any discussion of those designs and their inherent flaws and has totally ig nored the impacts of the front end of the nuclear fuel cycle, uranium mining and processing. Commenters remarked that EPA has not given a fair analysis to renewable energy and energ y efficiency. Commenters stated that by failing to address all of these considerations, the Clean Power Plan is subject to being set aside pursuant to the Administrative Procedure Act.

Commenters stated that nuclear power in any form, i ncluding existing "at risk" reactors, should not be considered as a BSER technology: it is neith er a renewable generation resource, relying on a finite fuel source (uranium), nor does it pass any rational cost-effective test that will be employed for purposes of determining BSER alternati ves. Commenters stated that nuclear power is the most expensive currently available generatio n resource in the nation and its overall, levelized costs, including still-unsolvable waste m anagement and unknown disposal technologies, are incalculable. Commenters stated t hat the draft rule may actually encourage states where reactors are at some stage of construc tion to continue massive investments when far less expensive alternatives - notably renewable ene rgy and energy efficiency - are available.
Commenters stated that if the rule assumes there is no cost of completing any of the reactors regardless of massive cost overruns and delays, the n nuclear would irrationally be viewed as competitive as a resource as solar or wind; nor sho uld the rule suggest or assume that decommissioned reactors must be replaced with therm al, GHG-emitting resources. Commenters stated that they see no justification to provide st ates with operating or planned nuclear reactors a credit toward target compliance in exchange for fur ther massive investments in reactors, as has been suggested; regardless of whether the rule cons iders nuclear to be a BSER, it should be disqualified as a resource to help meet emission re duction targets.

Commenters presented evidence of extensive radioact ive contamination from the Chernobyl Nuclear Disaster, including the forced permanent ev acuation of over 116,000 people from homes and business and widespread contamination from Cesi um-137. Commenters stated that even the remote possibility of such widespread and enduring damage is reason enough to be a valid reason to exclude nuclear from any truthfully Clean Power Plan.

Commenters stated that over 60 epidemiological stud ies worldwide have examined the incidence of childhood cancer near nuclear power plants, and most of them have indicated leukemia increases. Commenters stated that nuclear power is dirty and a danger to our children.581

Comment 28: Commenters stated that nuclear power is expensive.

Response 28: EPA acknowledges the comments and has determined th at the BSER for the final rule will not include the proposed provisions for n uclear units in the setting of state goals. Please see section V.A of the preamble for further discuss ion of the decision to exclude nuclear generation from BSER.

The following are summaries of the specific public comments under this comment:

Commenters opposed the EPA's inclusion of nuclear p ower under Building Block 3 since it is unpredictable. Also, commenters remarked that nucle ar energy has become very expensive to matter according to a recent report produced by the Massachusetts Institute of Technology.

Commenters reviewed two current efforts of preservi ng at-risk nuclear reactors [Davis-Besse and Ginna] to illustrate that the EPA's estimate of the cost of preserving at-risk nuclear generation is
too low.

Commenters stated that the issue of continued opera tion of existing nuclear facilities needs a much deeper evaluation. Commenters stated that in u nregulated generation service areas where low cost generation is key it seems highly unlikely that owners would continue to maintain high cost existing nuclear facilities.

Commenters stated that the EPA's approach is not te chnology neutral; rather it sets the stage for the nuclear industry to extract concessions and sub sidies from states. Commenters stated that EPA's use of a formula for calculating allowable em ission rates with existing nuclear (at 6 percent of each nuclear power reactor) and all five reactors under construction puts pressure on states to subsidize the plants to keep them open an d in the case of the ones under construction to complete them at substantial risk and expense. Comm enters stated that a technology neutral rule is important because it allows the consideration of the merits of each technology that is used to
reduce emissions based on its attributes in relatio n to the criteria for a best system of emission reduction. Commenters stated that in contrast, the CPP's a priori decision that at-risk nuclear plants should be kept on-line led to a mis-estimati on of costs and an ignoring of a host of non-air quality impacts.

Commenters stated that the CPP assumes that the CO2 reductions due to the deployment of the reactors under construction in Georgia, South Carol ina, and Tennessee would have zero cost for
the CO2 reductions since the decisions to constructthese units were made prior to this proposal. Commenters stated that this assumption is not corre ct and noted the following:

• The reactors themselves are very expensive; the cum ulative cost of these five reactors, as currently estimated, stands at about $ 31 billion.

• Significant expenditures remain to be incurred on t hese units.582 • Demand for electricity is growing far more slowly t oday than anticipated at the
time the decision to build them was made.

• Costs have risen and schedules for all these reacto rs have slipped.

Commenters summarized the objections from the Envir onmental Protection Division of the State of Georgia (Georgia EPD) to the EPA's assumption of zero cost and its inclusion of nuclear generation in the EPA's rate calculation to tighten its allowed rate of emissions. Commenters referred to the objections expressed by the Georgia EPD, and stated that the actual costs undermine EPA's basic reason for including under-co nstruction nuclear in the baseline calculations and that these units are not an inexpe nsive opportunity to reduce carbon emissions from existing fossil units but are in fact quite co stly.

Commenters stated that the EPA itself noted that nu clear generating capacity is also relatively expensive to build compared to other types of gener ating capacity, and little new nuclear capacity has been constructed in the U.S. in recentyears. Commenters stated that underconstruction nuclear reactors do not meet the cost criteria for a BSER as they are an expensive way to reduce CO2 emissions, as even the State of G eorgia, which is encouraging nuclear development, has acknowledged; and as the EPA itsel f has commented, there is little reactor development taking place because of the high cost o f building nuclear power plants.

Commenters stated that in order to include nuclear power in a BSER, the EPA must show that the cost per metric ton of CO2 emissions reduced or avoided is comparable to or less than other potential components of such a system or that there is a good, statutorily authorized reason to accept higher costs; nuclear does not meet either t est. Commenters cited a 2014 analysis by Lazard that concluded that it was much cheaper to u se utility scale solar photovoltaic electricity than nuclear electricity to reduce CO2 emissions: $ 7 vs. $28, respectively, to displace coal generation at the lower end of the estimated leveli zed costs of the two technologies. Commenters stated that wind energy, being cheaper than coal ge neration, has negative costs of reducing CO2 emissions - that is using wind generated electricit y to displace coal results in money savings even
before the costs of CO2 emission abatement are take n into account; energy efficiency is the cheapest way to reduce CO2 emissions. Commenters st ated that even natural gas combined cycle plants are a cheaper way to reduce CO2 emissions co mpared to nuclear, if one does not take methane leaks into account or conclude, as the EPA has done, that methane leaks would not add to the CO2eq emissions by the year 2030. Commenter s included table of levelized cost of various technologies and corresponding costs to red uce CO2 when used to displace new coal generation. Commenters stated that new nuclear is a far more expensive way to reduce CO2 emissions than four major resources (efficiency, on shore wind, utility solar, and NGCC plants) in the EPA's framework and three in ours (onshore wind , utility solar, and efficiency). Commenters stated that the rapid decrease in cost of distribut ed solar systems will also very likely further increase their competiveness in comparison to new n uclear plants. Commenters noted that Georgia Power recently revealed that they selected utility-scale solar bid at a levelized price below $65 per MWh, far lower than the lowest estima ted cost of new nuclear in Lazard 2014 at $90 per MWh. Commenters stated that Lazard estimate s energy efficiency costs to be in the range of $0 to $50 per megawatt-hour compared to a range of $90 to $134 per megawatt-hour for nuclear; the average nuclear cost estimate is $112 per megawatt-hour compared to the average estimate of $25 for efficiency. Commenters stated t hat investments in efficiency would, on583

average, be preferred to nuclear even if the four r eactors were three-fourths complete. Commenters stated that the states of Georgia and So uth Carolina are far behind the rest of the country in efficiency investments, being ranked 35t h and 42nd among the states in this area by the American Council on an Energy-Efficient Economy and that same group estimates the average cost of energy efficiency measures to be $5 4 per megawatt-hour, including utility and participant expenditures. Commenters remarked that, the value of $54 per megawatt-hour is an unweighted average of the total cost of efficiency programs; the cost, weighted by generation in each state, which is more representative of the ove rall efficiency effort, is $49 per megawatt-hour and either number is far lower than the average cos t of new nuclear.

Commenters stated that the CPP has also underestima ted the potential cost of keeping at risk reactors open. Commenters remarked that the actual cost of keeping a specific unit operational that is losing money will be much higher than estim ated costs in CPP. Commenters provided examples to illustrate their point. Commenters stat ed that, if Davis-Besse gets a price of $65 per MWh in the purchased power agreement (PPA) it seeks , the subsidy would be about $26 per MWh or about $180 million per year, and the subsidy for the smaller Ginna reactor, which is also at risk, at about $20 per MWh would cost over $90 million per year. Commenters stated that, UBS Securities, a Wall Street firm, has estim ated that the purchased power agreement for the Ginna plant is $26 per megawatt-hour above mark et prices.

Commenters stated that EPA completely ignores cost when including under-construction nuclear into its BSER determination and disagrees with the assumption of zero cost for underconstruction nuclear. Commenters stated that EPA ig nores the plain language of the statute, requiring that costs be considered; assuming zero c ost for under-construction "controls" at nuclear units is unreasonable and arbitrary. Commen ters stated that there are no NSPS-based controls at Vogtle Units 3 and 4 because there are no regulated emissions at those units. Commenters stated that EPA provides no support for this zero-cost determination in the administrative record and has not explained how "in cremental cost" should be defined in this context, or how such costs should be calculated; EP A's entire justification is contained in a one paragraph discussion in the preamble regarding the lack of any "incremental cost" of completing these projects. Commenters stated that the Agency c ompletely ignores the $14 billion being spent to construct and begin the operation of these units, and commenters do not think any discretion a Court may extend EPA in the BSER deter mination extends to the complete disregard of such substantial expenses. Commenters stated tha t EPA's analysis is unjustified under the requirements of the statute and is not part of reas oned decision-making or the legitimate result of any discretion afforded the Agency in this regard; EPA should correct this serious flaw in its BSER determination and as part of its emission cont rol guidelines. Commenters stated that, in sum, at $20 to $26 per megawatt-hour, the total sub sidies required to keep 5.7 gigawatts of atrisk nuclear power on line would be between about $ 900 million and $1.2 billion per year (rounded); over a typical 15-year period of purchas ed power agreements, the cumulative cost would be between approximately $13.5 billion a nd $17.5 billion, using an average capacity factor of 90 percent.

Commenters stated that nuclear power generation is zero-carbon but is too expensive for development by a municipality like the City of Lake land and while additional nuclear capacity within the state could help with achieving the redu ction goal, to the extent that the state eventually mandates reductions by individual utilit ies, this is not a feasible option for the City.584

Commenters stated that there are serious errors in the EPA's analysis of the cost of nuclear generation that is important to correct as nuclear power is exorbitantly expensive and requires large subsidies, with consumers paying those subsid ies through their electricity bills. Commenters stated that the proposal encourages the preservation of nuclear generators that are likely to be taken offline because they are not cos t-effective, but the very reason these units are likely to be retired is that they would require lar ge subsidies to maintain in operation. Commenters stated that the agency states that a hos t of factors have altered the outlook for the U.S. nuclear fleet in recent years; but the common element among all of the factors is economic viability, including increasing fixed operation and maintenance costs, relatively low wholesale electricity prices, and additional capital investme nt associated with ensuring plant security and emergency preparedness.

Commenters stated that the agency is not justified in arbitrarily omitting the costs of building these plants merely because their construction is b ased on existing state policy. Commenters stated that the proposal relies on existing policie s in myriad ways, and in no other instance does the agency omit the costs of a particular policy me rely because it is in place already; in all cases, including the construction of new nuclear generatin g units, the policymakers could change course, or they might decide to stay the course as part of a compliance plan for this rule.

Commenters stated that the proposal dismisses the c osts from radioactive waste that would result from preserving or increasing the deployment of nuc lear generation, which creates significant additional costs from potential environmental conta mination events and the ongoing difficulty of developing and managing interim and long-term waste storage. Commenters remarked that the failure by the U.S. to site a permanent waste repos itory has resulted in nearly 80 lawsuits by utilities seeking to recover costs of waste storage ; these settlements and judgments paid from the taxpayer-funded Judgment Fund, have ballooned to $2 billion and could reach more than $20 billion if DOE begins accepting waste by 2020 and, if it does not, then the cost are projected to rise by hundreds of millions of dollars annually.

Commenters stated that the agency also ignores the potential economic and health costs from radiological accidents, which are massive; as of la te 2012, Tokyo Electric Power Co. estimated that the cleanup from the Fukushima nuclear disaste r in Japan might cost $137 billion and estimates of the total economic impact range from $ 250 billion to $500 billion. Commenters stated that the proposal also fails to consider the impact of nuclear generation's intensive water requirements on water resources. Commenters stated that the agency's partial and inaccurate treatment of nuclear generation costs is deeply pro blematic because a full and accurate accounting of the costs would lead to vastly differ ent conclusions about the propriety of including nuclear generation in the state targets, almost certainly leading to the omission of nuclear generation entirely. Commenters stated thatsubsidizing uneconomical nuclear generation burdens ratepayers with unnecessary costs and unwis ely depresses the expansion of safer, cheaper, and more sustainable renewable resources.

Commenters stated that nuclear power does not come within the definition of best system of emission reduction; nuclear power is dirty, dangero us and expensive. Commenters stated that nuclear power is not viable without significant rat epayer and taxpayer subsidies. Commenters stated that Exelon Corporation estimated that it wo uld require $580 million in government support to try to keep Exelon's fleet of nuclear re actors operating and that this would raise the585

price of energy by as much as eight percent; but ev en then, Exelon would not commit to keeping all of its Illinois reactors open. Commenters state d that the Nuclear Energy Institute reports that costs to maintain nuclear reactors are rising faste r than the rate of inflation; in 2012, the average cost was $44.17/MWh, more than 11 percent higher th an in 2010, an increase that continues a previous trend in which, between 2007 and 2011 cost s rose by one-third to $43/MWh.

Commenters stated that further evidence of the econ omic challenges for nuclear power was described in Mark Cooper, The Economics of Nuclear Reactors: Renaissance or Relapse. Commenters excerpted sections from this report desc ribing the costs and the environmental impact associated with electricity from nuclear rea ctors. Commenters stated that this report identifies three major factors that impact the econ omic analysis of nuclear power, and thus the point that nuclear power is not part of the best sy stem of emission reduction; these factors are risk, externalities, and subsidies. Commenters cite d excerpts from the report discussing the risk and externalities factors associated with nuclear p ower. Commenters stated that with regard to externalities, Mr. Cooper noted that the external c osts and impacts of nuclear power are ignored or minimized in analyses of energy alternatives; th ese externalities include the excessive cost of nuclear power in attempting to reduce carbon emissi ons; the actual carbon footprint of nuclear energy, primarily from the mining, processing and t ransportation of nuclear fuel; safety and security concerns; and the impacts of radioactive w aste. Commenters excerpted sections from the Cooper report that evaluated the demand for nuclear power subsidies for building additional reactors. Commenters stated that Mr. Cooper also di scussed why currently operating reactors are
at risk.

Commenters stated that regarding construction of ne w nuclear reactors, the CPP recognizes that nuclear reactors are expensive to build, but omits or glosses over, however, the overall economic factors working against nuclear power. Commenters s tated that first, it takes many years for the regulatory and construction process to be completed before a new nuclear reactor comes on line; second, the expense of building nuclear reactors ha s continued to increase over the past 40 years
and there is no indication that this trend will notcontinue.

Commenters stated that the CPP touts the technologi cal and design advances in nuclear reactors, although it is not clear what technological advance s are being referenced or how such advances factor into building block 3; in any event, the adv ances are overstated. Commenters stated that if the reference is to small modular reactors (SMRs), reliance on that technology is misplaced. Commenters remarked that there are currently four S MR designs being considered; these are all pressurized light water reactors, relying on the sa me underlying concept as the large commercial reactors currently in use. Commenters stated that S MR technology will suffer disproportionately from material cost increases because they use more material per MW of capacity; the untested design and the aggressive deployment strategy for S MR technology raise important safety questions and concerns; and cost estimates that ass ume quick design approval and deployment are certain to prove to be optimistic. Commenters s tated that SMRs are not economical as nuclear reactors are strongly sensitive to economic s of scale: the cost per unit of capacity goes up as the size goes down. Commenters remarked that the nuclear industry already acknowledges that non-fuel operating and maintenance costs are e xpected to be higher than present reactors and uranium resource and enrichment requirements are li kely to also be higher; in fact, two of the leading U.S. developers have announced that they ar e slowing down the development of SMR technology because they cannot find customers (West inghouse) or major investors (i.e., Babcock586

& Wilcox). Commenters stated that even nuclear indu stry executives and regulators believe the SMR technology will have costs substantially higher than the current reactor technology on a per unit of output basis with the higher costs resultin g from lost economies of scale on containment structures, dedicated systems for control, manageme nt and emergency response, and the cost of licensing and security; operating costs between one -fifth and one-fourth higher; and decommissioning costs between two and three times a s high.

Commenters stated that in evaluating whether nuclear generation is a cost-effective option in the BSER framework for reducing carbon emissions, EPA f ailed to consider the full range of costs of nuclear generation as a control technology. Comm enters noted that EPA has generally underestimated the general construction and operati on costs to build nuclear generation, as demonstrated by the trend of cost overruns at proje cts under construction. Commenters remarked that the costs to provide backup generation when a nuclear reactor goes offline along with the costs of securing standby control measures for redu cing carbon emissions in a state plan are far higher than the costs to backup other BSER control technologies like solar and wind generation, and the costs to mitigate water and other resource use, clean up any environmental harm, and address public health harm caused by nuclear genera tion are significant. Commenters stated that even if EPA views nuclear generation as practically enforceable, these incremental costs of nuclear generation to utility customers and to soci ety in general are, cumulatively, far greater than any incremental costs associated with cleaner and safer alternatives. Commenters stated that nuclear energy generation is an expensive, water-in tensive and risky energy choice when compared to other low carbon-emitting options withi n Building Block 3 and, by including it in Building Block 3, EPA is diverting resources away f rom the most cost-effective technologies for reducing carbon emissions and towards an unsafe ene rgy resource. Commenters stated that nuclear reactors produce toxic, extremely long-live d, highly radioactive waste for which no safe storage or management yet exists, require massive a mounts of water to operate and can have catastrophic human, environmental and economic cons equences should a severe accident occur.

Commenters stated that if EPA includes nuclear ener gy as a compliance option, states that rely significantly on nuclear energy for compliance will face serious challenges in meeting carbon emission reduction goals as nuclear reactors go off line or scale back power for various reasons, many of which are outside of a state's control. Com menters stated that droughts or summer heat waves can affect the water supply on which a reacto r relies to provide adequate cooling water and ensure safe operation of the plant; not enough water may be available, water supplies may be already too hot for reactor use, or the water being discharged by the plant may violate thermal discharge limits.

Commenters stated that states have no authority to direct operational decisions made by the NRC as the primary regulator of nuclear reactors. Comme nters stated that nuclear accidents or safety concerns can have fleet-wide implications that are outside of state regulatory control; it is reasonably foreseeable that regulatory decisions ma de by the NRC regarding safety issues could prevent compliance with the CPP if nuclear energy i s included in a state's compliance plan.

Commenters stated that present-day examples confirm that nuclear generation is expensive. Commenters remarked that currently all five reactor s under construction in the U.S. have experienced significant cost increases and scheduli ng delays; these alone provide ample evidence of why nuclear energy generation cannot be viewed a s a reasonable cost carbon reduction option.587

Commenters stated that proposed reactors, not yet u nder construction, have also experienced serious and costly delays including suspensions and cancelations; for example, Florida utilities have proposed up to four new nuclear reactors, all using the Toshiba-Westinghouse AP1000 design, located at two sites: Duke Energy Florida's (DEF) Levy County project (2 units) and FPL's Turkey Point 6 & 7 reactors (2 units). Commen ters stated that both of these projects are severely over budget and delayed.

Commenters stated that families, business and those on fixed budgets have been negatively impacted due in part to state legislation that allo ws utilities to charge customers in advance for costs associated with development of new reactors. Commenters stated that in the case of the capacity expansion at DEF's Crystal River 3 reactor (which presumably could have counted towards Florida's state compliance plan), customers will not receive refunds for the canceled project. Commenters stated that the costs associate d with these projects in Florida have shown that new nuclear energy it is not a cost-effective option for utility customers.

Commenters stated that at the scale of a nuclear ge neration plant, EPA must require that state compliance plans include immediate requirements for corrective measures upon a failure to achieve the required level of emission performance. Commenters stated that such a large inventory of ready-to-go contingency measures must be continuously maintained (e.g., if some measures are no longer feasible, or are not impleme nted, then new measures must be added). Commenters stated that due to the potential that th ese contingency measures were not selected for inclusion in the plan, and should not have leng thy development timelines so as to be available for immediate implementation, they would be more ex pensive than any measure in the plan that might be more methodically developed; the probabili ty that such costs will be incurred should be considered as a component of the cost of nuclear po wer.

Commenters stated that along with the high costs to develop new nuclear energy, the five under construction nuclear reactors will continue to requ ire significant expenditures on the road to completion. Commenters stated that EPA's assessmentof new nuclear energy generation as a "reasonable cost" or "zero cost" option to reduce c arbon emissions is not supported by the facts and could inadvertently push states towards restart ing canceled and uneconomic nuclear reactor proposals. Commenters stated that all five of the u nder construction nuclear reactors are located
in the Southeast and demonstrate that the cost of n ew nuclear generation is not reasonable or

zero.

Commenters stated that the two proposed Toshiba-Wes tinghouse AP1000 reactors now under construction at Plant Vogtle have experienced signi ficant cost increases and schedule delays; revised scheduling estimates of when they will come online represent a 21-month delay. Commenters stated that Georgia Public Service Commi ssion Public Interest Advocacy Staff filed testimony that the 21-month delay scenario is an un derestimate and that the Vogtle reactors will
not come online at the end of 2017 and 2018.

Commenters stated that while the schedule has slipp ed significantly, the costs have increased substantially as well. The commented stated that th e average Total Project and Production Cost impact caused by a delay increases to approximately$2.0 million per day. Commenters stated that the initial certified cost for Georgia Power's share of the project was approximately $6.1 billion; with a 21-month delay, the Company's cost estimate has increased to approximately $6.8588

billion. Commenters stated that Georgia Power has s pent $2.8 billion in cumulative construction and capital costs as of June 30, 2014, which means that Georgia Power has spent a little more than a third of the estimated project costs, leavin g significant risk that costs will increase further

. Commenters stated that Georgia Power is 45.7 percen t owner in the project, with the majority owned by three public utilities, Oglethorpe Power, MEAG and the City of Dalton. Commenters stated that apportioning Georgia Power's reported c osts to the full ownership indicates that the original $14.1 billion Vogtle project now costs at least $15.5 billion.

Commenters stated that federal taxpayers and utilit y ratepayers bear most of the risk from schedule delays and cost overruns. Commenters state d that in February 2010, $8.3 billion in federal conditional nuclear loan guarantees were of fered to the Vogtle project; Georgia Power and Oglethorpe finalized $6.3 billion in loan guara ntees in February 2014; MEAG has yet to finalize the remaining $1.8 billion. Commenters sta ted that the 2009 Georgia Nuclear Financing Act requires Georgia Power ratepayers to pay in adv ance for the financing costs associated with
the new reactors. Commenters stated that between Ja nuary 2011 and September 2014, $1.0 billion has been collected from customers through t he Nuclear Construction Cost Recovery rider (NCCR); the NCCR rider is currently over 9.3 percen t of a typical customer's bill and the longer the project takes, the more ratepayers are paying f or financing costs - placing the burden on Georgia ratepayers rather than the utilities. Comme nters stated that the substantial costs associated with the Vogtle project are acknowledged in Georgia Environmental Protection Division's (EPD) September 16, 2014 comments to the EPA.

Commenters stated that SCANA's subsidiary SCE&G has also demonstrated cost overruns and scheduling delays in the construction of two new AP 1000 reactors at the V.C. Summer nuclear plant. Commenters provided details of the increasin g and substantial cost overruns, the substantial unknown expenditures that remain and th e continued schedule delays. Commenters stated that SCE&G customers are paying for financin g charges for the project in advance under the 2007 Baseload Review Act (BLRA). Commenters sta ted that through October 2014, customers have faced an average 2.3 percent annual increase for the nuclear project since it was approved in February 2009 and approximately 13 perc ent of their monthly bill is now for the
nuclear costs.

Commenters stated that TVA's efforts to complete a second reactor at their Watts Bar nuclear plant in Spring City, Tennessee is unique in terms of under construction nuclear generation and illustrates the troubled history of the nuclear ene rgy industry. Commenters stated that Watts Bar 2 has been under construction since 1973; construct ion stopped in the 1980s due to fleet-wide safety and management concerns at TVA and construct ion did not resume until 2007 with operation originally expected in 2012. Commenters s tated that operation has been further delayed until December 2015 and may be delayed even further, and unlike the Vogtle and V.C. Summer reactors under construction, Watts Bar 2 doe s not have an Operating License (OL) from the NRC. Commenters stated that in addition to expe riencing an extremely extended construction and licensing schedule, Watts Bar 2 has encountered cost overruns. Commenters stated that one reason for the schedule delays and cost overruns is the need to address safety concerns exposed after the devastating nuclear accident at the Fukus hima Dai-ichi nuclear plant in March 2011; a full response for Watts Bar 2 has yet to be resolve d. Commenters stated that the NRC's Fukushima Near-Term Task Force report included a re commendation in the set of "near-term actions, that advises the NRC to order the licensee s to reevaluate the seismic and flooding589

hazards at their sites against current NRC requirem ents and guidance, and, if necessary, update the design basis and structures, systems and compon ents important to safety to protect against the updated hazards. Commenters stated that the Tas k Force also recommended that these issues be resolved for Watts Bar 2 in the course of the op erating license (OL) review: For the two plants with reactivated construction permits (Watts Bar Un it 2 and Bellefonte Unit 1), the Task Force recommends that those operating license reviews and the licensing itself include all of the nearterm actions and any of the recommended rule change s that have been completed at the time of licensing. Commenters concluded that any additional rule changes would be imposed on the plants in the same manner as for other operating re actors.

Commenters stated that responsible safety regulatio n by the NRC could prevent compliance with the CPP if nuclear energy remains an eligible compl iance measure. Commenters stated that at no point should a short-term CAA compliance requiremen t justify relaxed nuclear safety standards, but neither should EPA permit compliance plans thatunreasonably presume that nuclear plant construction will proceed on schedule, at projected costs, and without delays due to responsible safety regulation.

Commenters provided a list of citations to support their comments.

Commenters stated that windpower, industrial cogene ration, and other low- or no-emission resources are available at costs below nuclear oper ating costs, and referred to Bloomberg New Energy Finance's estimated unsubsidized windpower c ost of $37/MWh. Commenters stated that the conclusion that the EPA's analytic treatment of preserving at-risk nuclear units is unsound does not depend only on the empirical costs of nucl ear operation vs. efficiency, but also on the market prices of at least two supply-side alternati ves. Commenters stated that these three nonnuclear options together received more than $600 bi llion of global investment in 2013 alone, dwarfing all nuclear investment.

Commenters stated the EPA vastly under understated the achievable and cost-effective energy efficiency potential in Building Block 4 and the re newable potential in Building Block 3.
Commenters contended that this underestimates the a dditional carbon and money that can be saved by improving the EPA's analysis and further e ncouraging states to buy more efficiency and renewables, rather than paying the often higher ope rating costs of their existing nuclear plants, let alone making customers or ratepayers bail out u neconomic nuclear operations. Commenters stated that new-build nuclear plants' discouraging and worsening competitive landscape was described nine years ago in his Nuclear Engineering International article, and in 2011 in Reinventing Fire.

Commenters stated that the EPA's building-block met hodology would allow states to count in their compliance plan the carbon savings from conti nued operation of nuclear units at risk of premature closure making some states feel advised o r even obliged to bail out money-losing nuclear plants as operators have requested, for exa mple, in Illinois. Commenters stated that this would burden customers, leaving them less money to invest in more cost- and carbon-effective efficiency and renewable alternatives. Commenters r ecommended a least-cost approach by the states, saving the most carbon per dollar, is what the EPA rule should encourage, enabling the new energy system, not protecting the old one.590

Commenters described as odd that, as shown in Table 4.10 of the GHG Abatement TSD, the EPA pro rates the at-risk facilities across all sta tes' nuclear capacity, rather than just to the stat es with units actually at risk. Commenters stated thatthe EPA's analysis further assumes that the output from at-risk nuclear plants is required and that if closed, they must be replaced with other
EGUs. Commenters stated that these issues should be clarified, lest states interpret them in ways that yield perverse results, including lower carbon savings and higher costs. Commenters stated that the EPA's nuclear-power analysis has deeper fl aws, which, if corrected, could abate substantially more carbon emissions at lower cost t han the mix of proposed abatement measures.

Commenters stated that EPA's assumption that increa sing nuclear capacity as a means of reducing CO2 emissions is not desirable from an eco nomic or policy view for the following

reasons:

• Inflexible operation. Commenters stated that operat ion of nuclear units is

inflexible due to load-following constraints in ran ge and ramp-rate, scheduling requirements (e.g. for refueling and major maintena nce), thermal-fatigue and neutronic issues, and must-run regulatory designati ons; thus, dispatch of nuclear units are generally not considered economical.

• Economic unviablility in today's wholesale power market. Commenters stated that nuclear units are often exposed to negative wholesa le market prices. Commenters contended that relieving local transmission bottlen ecks may abate negative market clearing prices but the general result of grid and dispatch improvements will be to increase nuclear plants' exposure to even stiffer p rice competition, promptly from Midwestern windpower and increasingly from on peak photovoltaics.

• Long-run avoided costs can exceed short-run avoided costs, and must be counted. Commenters stated that where economic dispatch occu rs, it is typically based on short-run variable costs; however, if the operator decides to close a nuclear unit, then a range of longer-run variable costs can be av oided, increasing over time depending on schedules; those avoidable operating c osts can include periodic variable costs, fixed operating and maintenance cos ts and, ultimately, net capital
additions. Commenters stated that the nuclear indus try treats net capital additions as operating costs in this context. Commenters remarked that the Electric Utility Cost Group data show that the busbar costs avoidabl e by retiring a nuclear unit averaged $44.2/MWh in 2012 - seven times larger tha n the proposed less than or equal to $6/MWh typical shortfall between nuclear o perating costs and competing wholesale power prices. Commenters contended that t he statement, "Assuming that such a revenue shortfall is representative of the incentive to retire at-risk nuclear capacity, one can estimate the value of off setting the revenue loss at these at-risk nuclear units to be approximately $12 to $1 7 per metric ton of CO2,"would appear to be wrong by greater than or equal to 7 ti mes against fully counted average operating cost, or by greater than or equa l to 15 times against the higher operating cost to customers of the specific units a ctually most at risk of being closed as too costly to run. Commenters concluded t hat continuing to run such nuclear units misallocates customers' (and ultimate ly shareholders') capital from more- to less-effective carbon-abating investments. Commenters further591 concluded that, all the real operating costs, over all timescales, including their expected real escalation, are avoidable if a nuclea r unit is shut down.

Commenters stated that average nuclear operating co sts mask wide differences between units. Commenters stated that, for example, during 2010-12 , NEI's EUCG data show that the costliestto-run quartile of plants averaged $62.4/MWh to run (2012 $) - 41percent above the $44.2/MWh average for all nuclear units, and 2.2 times the ch eapest-to-run quartile; the EPA's analysis doesn't appear to count these large variations. Com menters stated that a paper they prepared comparing nuclear operating costs by quartile again st the general national range of wholesale power prices shows how even the $43/MWh average nuc lear operating cost nearly reached the upper end of typical U.S. wholesale electricity pri ces, while most of the 25 units in the high-cost quartile were generally uneconomic to operate..

Commenters stated that nuclear real operating costs are trending upwards and presented a supporting graph using data from the Electric Utili ty Cost Group. Commenters stated that with nuclear operating costs trending upwards while the wholesale power costs reported by FERC are generally trending downwards, the number of nuclear units already at risk of economic closure would appear many times larger than EPA's assumed 5 .7 GW or 5.8 percent of nuclear capacity, and likely to rise further in the future. Commenter s stated that EIA has found the same thing in a very plausible variant case, as have independent an alysts such as Prof. Mark Cooper and major financial houses. Commenters stated that operators' shutdown cost-benefit calculus should count all these avoidable costs specific to their region or grid, taking account of the risk of future escalation and of possible breakdowns as units age, vs. returns from often-below-market and sometimes negative-price electricity sales plus the opportunity cost of other (and more carboneffective) uses to which the saved costs could be a pplied. Commenters stated that the EPA's methodology should recognize such an approach to op erators' run-or-close decisions.

Commenters stated that nuclear generation is not ne eded to replace EGUs because other, lowercost, rapidly deployable, zero-emissions options ar e available. Commenters stated that the EPA's central thesis that preserving the operation of at- risk nuclear capacity would likely be capable of achieving CO2 reductions from affected EGUs at a re asonable cost, is incorrect. Commenters stated that the EPA assumption that continued nucle ar operation would displace new combinedcycle gas or existing grid-average generator (hence coal-heavy) operation is unsound, because
other investments with lower cost and zero carbon e missions are also available, proven, and rapidly deployable. Commenters stated that comparin g how fast a block of GW-y could be brought online isn't the right metric; a slower butcheaper or more reliable or more durable option could save more carbon, integrated over time , than one available immediately but at higher cost and/or lower assurance of sustained lon g-term persistence.

Commenters stated that total avoidable operating co st for the average U.S. nuclear plant probably exceeds $45/MWh (2012 $) and possibly now nearly $50; per MWh delivered to the customer, grid losses make these costs about7 perce nt or a few dollars higher. Commenters stated that utilities charge the grid's capital and operating costs to any offsite generation they
deliver to customers. Commenters stated that EIA's AEO analyses state that today's levelized cost of delivering a busbar kWh to retail meters av erages around $43; thus roughly $90 per delivered MWh is a reasonable and perhaps low estim ate of today's average nuclear operating
cost. Commenters stated that the costliest nuclear units to run, of course, have considerably592

higher operating costs, which the industry data sug gest probably average >$100 per delivered MWh for the top cost quartile - and within that quartile, even more for the units most at risk.

Commenters stated that nuclear operating costs arou nd $90-100+ per delivered MWh far exceed the delivered costs of important alternatives; for example, ACEEE and E Source data show that U.S. utilities actually pay average costs about 3-7 times less than this for efficiency; the National Academy of Sciences found about 3 times; and Reinve nting Fire found that nearly 4 times as much electricity as all U.S. nuclear plants produce could be saved at a technical cost an order of magnitude lower than the average delivered cost of operating a U.S. reactor - or an even greater advantage compared to the least competitive-to-run units. Commenters stated that this several fold higher delivered cost of nuclear operation tha n of equivalent efficiency means that closing a nuclear unit and investing its avoided operating co sts into electric end-use efficiency - both
carbon-free resources - will save several times mor e carbon than continuing to operate the
nuclear unit. Commenters stated that based on their data, this is also clearly true for the average nuclear unit, and with judicious choices of efficie ncy investments (not the costliest kinds), it
should also be true for the entire nuclear sector. Commenters stated that an optimal climate policy would encourage such smart investment shifts , which could be implemented by state utility commissions or by other subnational or nati onal means. Commenters stated that the EPA's assumption that closing a nuclear unit means genera ting more fossil-fueled electricity, so preserving at-risk units' operation is a cost-effec tive and desirable contribution to states' portfoli o of carbon-saving measures, is thus incorrect. Comme nters concluded that it misallocates capital
and diverts effort from the most carbon-effective i nvestments.

Commenters stated that the economic pressure due to low natural gas and wholesale electricity prices is not unique to nuclear power. Commenters f urther stated that the economic competitiveness of coal and oil-fired power plants, renewable energy facilities, and even energy efficiency investments are also affected by low market prices. Commenters remarked that like nuclear, many older coal plants have needed to make expensive capital investments to replace aging equipment, improve plant efficiency, and inst all pollution control and other equipment to reduce air pollution and water use, and were forced to retire; however, unlike existing nuclear plants, which have been experiencing increasing cos ts over the past 10 years, the costs of renewable energy technologies like wind and solar h ave been falling rapidly. Commenters
contended that this has allowed renewables to remai n competitive with new natural gas plants in states with high quality resources.

Commenters cited, as an example, a recent DOE repor t shows that the cost of new wind projects dropped by over 60 percent between 2009 and 2013, a llowing them to remain competitive with declining wholesale electricity prices in some part s of the country; however, this varies greatly by region, with weighted average wind power purchas e agreement (PPA) prices between 2011 and 2013 within the range of average annual wholesa le electricity prices in 2013 in the interior region of the country (i.e., Plains states), and sl ightly higher than average wholesale prices in the Northeast, Great Lakes and Western regions.

Commenters stated that determining whether an exist ing plant is "at risk" is very plant specific.
Commenters cited a discussion that was included in a 2013 paper by Amory Lovins, determining whether an existing nuclear plant is at-risk econom ically "depends on complex and shifting set of both market and plant-specific considerations, so n o comparison of average conditions in a593

specific year can support conclusions about any ind ividual plant." Commenters stated that these considerations include the location, size, age, con dition, and ownership of the plant. Commenters stated that wholesale prices vary widely across the country and over time, and they also reflect the existing generation mix, which could shift over time. Commenters remarked that nuclear plants located in states with below average market prices, excess capacity, high quality wind and solar resources, or strong energy efficiency progra ms tend to be more vulnerable, and merchant plants located in restructured markets tend to be m ore vulnerable than plants owned by regulated utilities. Commenters contended that smaller, singl e unit plants tend to be more expensive to operate than larger multi-unit plants, which are be tter able to spread out the costs of capital investments. Commenters stated that the age and con dition of the plant also makes a big difference, as older reactors tend to have higher o perating costs and face more costly repairs to replace aging and damaged equipment.

Commenters stated that the nuclear industry operati ng cost data, that divides the 104 operating U.S. reactors into quartiles, shows that at least t hree-quarters of U.S. reactors have 3-year average total generating costs that are within the lower to middle end of the range of 2013 wholesale electricity prices. Commenters also state d that while the average costs of the remaining 25 percent have been higher than wholesal e prices since 2009, they are in the middle of the range of wholesale prices between 2005 and 2 008 when natural gas prices were higher.

Comment 29: Commenters expressed miscellaneous comments.

Response 29: EPA acknowledges the comments and has determined th at the BSER for the final rule will not include the proposed provisions for n uclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER. Please see section V. A of the preamble for further discussion of the treatment of new and uprated nuclear plants, an d VIII.K of the preamble for further discussion of provisions in state plans of allowabl e actions that result in an adjusted CO2
emission rate of an affected EGU.

The following are summaries of the specific public comments under this comment:

Commenters stated that existing and new nuclear gen erated electricity would come under the EPA's regulatory umbrella although there is no emis sion.

Commenters expressed support for solar, wind and ge othermal power over nuclear.

Commenters stated that outside the fence line actio ns are detailed under building blocks two through four and necessary for states to comply wit h the proposal, and each of those building blocks is built on questionable assumptions. Commen ters remarked Building Block 3's assumptions that no units in the entire fleet of nu clear plants will retire regardless of market conditions is questionable as well.

Commenters stated that the proposal is unfair, unju stified and completely arbitrary, especially Building Block 3 relates to under-construction nucl ear and significant expansion of intermittent, renewable energy generation.594

Commenters mentioned that nuclear power requires mo re water than coal, and carbon capture and sequestration almost doubles coal's water requi rement.

Commenters stated that the EPA should allow North C arolina to receive credit for any out-ofstate nuclear construction that would be used to su pply electricity to North Carolina because a significant portion of those construction costs wou ld be allocated to North Carolina customers.

Commenters stated that the effect natural gas and m arket electricity prices are suppressed, as the draft rule suggested, would be marginal. Commenters recommended that the EPA regard plans based on claims that new nuclear capacity will lowe r natural gas and electricity market prices skeptically, and conduct a thorough analysis of the deployment cost and market projections.

Commenters stated that the EPA did not include an a nalysis of uprates in the draft rule, but did
exclude additional new reactors from the BSER due t o the cost of construction. Commenters remarked that it is presumed that EPA refers to ext ended power uprates among the three categories of power uprates authorized by NRC, but in fact, extended uprates may actually be counterproductive to the economics of existing nucl ear. Commenters remarked that half of the at-risk reactors implemented extended uprates sever al years ago, and in addition to the high capital cost of implementing a power uprate, the in creased material stress on reactor components may either increase maintenance costs on an ongoing basis, or shorten the mechanical life of the reactor. Given these, the commenters suggested EPA should only consider uprates on a casespecific basis, and with thorough scrutiny of the c alculated economic costs and benefits.

Commenters stated that Wisconsin Point Beach Nuclear Plant significantly increased its generation via an extended power uprate in 2011, an d this increase in carbon-free base-load power should be acknowledged.

Commenters stated that nuclear and hydro plants are typically non-dispatchable energy generating facilities these plants are not the ones that will be shut down as the system requires fewer peaking plants as load factor improves; dispa tchable units are always fossil fuel emitting units. Commenters stated that as these dispatchable units are no longer needed for peaking power, the average emissions rate per MWH of genera tion is decreased.

Commenters stated that using EPA's "at risk" value in Tennessee results in a reduction from 1645 lbs/MWh to 1580 lbs/MWh, a decrease of 65 lbs/MWh, and that using EPA's proposed
method for under construction nuclear lowers the fo rmula from 1577 lbs/MWh to 1293 lbs/MWh, a decrease of 287 lbs/MWh.

Commenters stated that generation from nuclear unde r construction Georgia in 2012 is expected to be 17.4 million MWh, and that new nuclear capaci ty would decrease Georgia's emission rate by an increment of 225 lbs per MWh.

Commenters examined EPA's Building Block 3 componen t closely and identified several defects with regard to its application to Pennsylvania.

Commenters recommended that, if the EPA finds that nuclear generation can be a practically enforceable measure in state compliance plans, ther e should be at least three specific requirements for states that choose to include nucl ear generation in their state compliance plans:595

(1) the EPA should require states to identify the r esponsible party when action (or inaction) by
the NRC results in a failure to reduce emissions as planned; (2) the EPA should require the state compliance plan to identify how that responsible party will implement timely emission reductions to compensate for any failure to reduce emissions as originally described in the plan, and the EPA may also wish to set a maximum percenta ge of the compliance plan (e.g., three percent) that may be at risk to a single project fa ilure as part of this requirement; (3) for purposes of determining the impact of these plants on the st ate's adjusted emission rate, the EPA should
treat under-construction nuclear in the same fashio n as it treats under-construction natural gas combined cycle (NGCC) plants as laid out in the dra ft rule; that is, the assigning a percentage of under construction nuclear generation capacity to t he "other" category and recognizing that this capacity was built to serve "other system needs." L ikewise, commenters stated EPA should credit a certain percentage of under construction n uclear generation capacity as displacing coal generation and allow the states with these under co nstruction nuclear reactors to include these in their compliance plans.

Commenters stated that EPA should consider encourag ing states to establish policies analogous to existing renewable energy portfolio standards (s uch as Clean Energy Standards inclusive of nuclear) to support the development of new nuclear generating units. Commenters stated that the proposed rule creates/incorporates market intervent ions - it establishes a clear incentive for the addition of natural gas power generation, and it re lies on existing renewable energy standards to drive zero carbon generating capacity as part of Bl ock 3. Commenters recommended that, given the market risk of natural gas prices on one hand a nd the capacity limitations of alternative renewable energy sources on the other, nuclear gene ration must be more explicitly encouraged as part of a reliable emission reduction strategy.

Commenters stated that the EPA's approach penalizes the significant effort that states and companies have made over the past decade or more to reduce GHG emissions. Commenters stated that the EPA's approach will impose greater costs on customers who already are paying for early reductions -- since their states already have harvested some of the lower-cost reduction opportunities -- while asking less of states where such opportunities still exist.

Commenters stated that Louisiana's two nuclear powe r plants are Riverbend Station, unit 1 and Waterford, unit 3, and that their permits are set t o expire in 2024 and 2025, respectively. Commenters contended that Entergy will successfully extend the operating permits of these two power plants. Commenters contended that emission re duction planning should model Louisiana's emission targets assuming both plants extend their permits successfully.

Commenters stated that the extended timeline of nuc lear plant construction, including the licensing and permitting process, should be acknowl edged in the Clean Power Plan. Commenters noted that according to recent history, the full pr ocess to construct a new nuclear power plant takes about ten years. Commenters cited a recently issued a report by the Center for Strategic & International Studies that cites 8-9 years for the combined design and construction of a new nuclear power plant. Commenters stated that since s tate plans will not be approved until 2017 at the very earliest and the Clean Power Plan runs unt il 2030, a new nuclear plant being considered as part of a state's compliance strategy would only have a few years of operation, at most, before the certainty of the plan expires. Commenters conte nded that without assurance of post-2030 targets, a nuclear developer may find the Clean Pow er Plan too uncertain to make an investment596

decision in the early years of the Plan's operation . Commenters suggested that a nuclear energy developer considering a new plant after 2020 would not be assured of any benefits from the Clean Power Plan's 2030 targets.

Commenters suggested that, to account for this, EPA explore a couple of options: (1) EPA could set a timeline for releasing post-2030 target emiss ion rates. Ideally, this timeline and the post2030 targets would be released as soon as feasible to enable nuclear developers and other relevant stakeholders an ample amount of time to pl an for new generation. (2) EPA could allow borrowing of credit from nuclear generation that oc curs after 2030 in cases where construction is well underway prior to 2030. Commenters stated thatthis would ensure that nuclear generation developers can benefit from helping states meet the ir 2030 target emission rate even if construction is not yet complete, and any credit nu clear plant owners claim through this approach would be debited from post-2030 generation to ensur e each megawatt-hour of nuclear generation is only counted once.

Commenters stated that if the Proposal's treatment of at-risk nuclear is maintained in the final rule, it is unclear to us how at-risk nuclear gener ation will be factored into a state's calculated emission rate. Commenters stated that, more specifi cally, it is not entirely clear whether the 6 percent at-risk figure is an average, such that a s tate will always include 6 percent of its existing nuclear generation into the denominator of its emis sion rate, or if it is marginal, such that all loss of existing nuclear generation, up to 6 percent, is to be removed from a state's emission rate denominator. Commenters requested additional clarit y on this point.

Commenters stated that the EPA targets for renewabl e energy and nuclear generation are modest, and appear to significantly underestimate the poten tial for cost-effective RE. Commenters submitted in support of this statement, and with re gard to nuclear generation, that all five of Pennsylvania's nuclear generating stations are curr ently licensed until after the 2030 compliance period. Commenters also stated that in addition, th e Peach Bottom Atomic Power Station's license was recently amended to authorize a 12.5 pe rcent increase in the thermal power level from units 2 and 3; this is an increase of 437 ther mal megawatts each.

Commenters stated that EPA's proposal supports nucl ear power as a key part of the carbon dioxide emissions reduction strategy. Commenters re marked that since renewables cannot replace the baseload generation attributes of retir ing coal plants, maintaining existing reactors and building new units is essential for many states to reach their assigned reduction targets; however, at least nine states (i.e., California, Co nnecticut, Illinois, Kentucky, Maine, New Jersey, Oregon, West Virginia, and Wisconsin ) have bans on new nuclear builds, which will remain in effect until the federal government, at l east to some degree, resolves the waste disposal issue. Commenters then stated a series of questions :

(a) Given your Administration's opposition to make use of the Yucca Mountain repository, will EPA bring forward a viable, long-t erm solution for disposal that would win public support and the necessary votes in Congr ess? And if so, when?

(b) If not, does your Administration expect the sta tes with bans on new nuclear facilities to revise their laws, despite the federal governmen t's failure to adequately address the
waste issue?597

Commenters cited the CPP and stated that the EPA re cognizes that nuclear energy and renewable energy displace fossil fuel generation and thereby reduce CO2 emissions: "nuclear generating capacity facilitates CO2 emission reductions at fos sil fuel-fired EGUs [Electric Generating Units] by providing carbon-free generation that can replace generation at those EGUs. Commenters stated that because of their relatively low variable operating costs, nuclear EGUs that are available to operate, typically are dispat ched before fossil fuel-fired EGUs." Commenters also cited the explanation in the Append ix, and commented that the arithmetic of the way the CPP emission targets are developed does not recognize this reality. Commenters stated that there were five nuclear power reactors under construction at the time of the publication of the draft CPP in June 2014: two in G eorgia, two in South Carolina, and one in
Tennessee. Commenters further noted that the EPA ha ndled the reactors under construction by adding the expected electricity generation from the se reactors to fossil and renewable generation, without assuming that nuclear would displace fossil fuel generation. Commenters concluded that
the CPP's calculation method undervalues new nuclear in terms of the extent to which emission rates would actually go down.

Commenters stated that they recognize removing nucl ear power from the calculation of target rates by itself would weaken the emission targets f or the states - moderately so for states with existing nuclear power plants and much more for the three states with nuclear reactors under construction. Commenters state that they did not ad vocate a weakening of the target emission rates; rather, the commenters advocated using highe r targets for efficiency and renewable energies in the best system of emission reduction i n amounts that would make the target emission rates more stringent than those on the Cle an Power Plan and reduce the mass of greenhouse gas emissions significantly more than ab out 30 percent reduction relative to 2005 estimated by the EPA for its plan. Commenters also stated that they recognize deriving rates in the way that the commenters propose (i.e., omitting reactors whose licenses are due to expire) opens up the possibility of the states with such re actors using them in their implementation plans. Commenters noted in that case, the requirement for renewable energy and efficiency would be reduced for those states; however, the EPA should d iscourage such compliance plans for a
number of reasons.

Commenters stated that the CAA Section 111 language appears to give EPA broad interpretative and expansive authority to determine which system o f emission reduction best serves the CAA statutory goals. Commenters recommended that EPA co ntinue to work with Nuclear Regulatory Commission to monitor nuclear plants, particularly after refueling. Commenters asserted this will help to minimize the health risks that are associat ed with radioactive gas plumes and which primarily affect children and vulnerable population s.

Commenters urged EPA to adopt these two changes whi ch will better reflect the advances North Carolina has already made in incorporating renewabl es and energy efficiency programs into the state's energy portfolio and will properly account for the significant investment North Carolina's citizens have already undertaken to develop nuclear power to meet the state's energy needs.

Commenters stated and awareness that many utilities have submitted technical comments proposing ways of building additional nuclear capac ity into the baseline computation, as well as ideas for credit provided for regulatory decisions, such as Nuclear Regulatory Commission re-598

licensing, that will lead inexorably to more zero-e mitting generation. Commenters asked that EPA consider these proposals.

Commenters stated that unlike EE and RE measures, n uclear generation is subject to the authority of the Nuclear Regulatory Commission (NRC ). Commenters noted that EPA is seeking comment whether the state plan must include additio nal measures that would apply if any of the other portfolio of measures in the plan are not ful ly implemented, or if they are, but the plan fails to achieve the required level of emission performan ce (Rule 40 Fed. Reg 34909; June 2, 2014).

Commenters contended that in the event of noncompli ance, EPA should find that it would be impractical to take enforcement action against some responsible parties and, based on the history of nuclear power, it is likely that nuclear project s are subject to substantial cost risk, numerous and extensive schedule delays, and unavoidable and lengthy outages due to operational limitations and safety concerns. Commenters stated that each of these circumstances is likely to lead to a failure to achieve the required level of emission performance.

Commenters further stated that in its evaluation, E PA should evaluate the unique character of the responsible parties with the authority to expedite, delay or cancel nuclear projects. Commenters noted that the NRC has statutory responsibilities t o ensure the safe operation of nuclear power plants, and EPA should evaluate whether the NRC cou ld be compelled to grant or extend an operating license to a nuclear reactor in order to implement the measures of a state compliance plan. Commenters contended that if the NRC refuses over the objection of other responsible parties, EPA should determine what obligation those other responsible parties would have to implement additional measures to achieve the requir ed level of emission performance.

Commenters suggested that given the singular magnit ude of emissions reduction associated with a single nuclear unit (as compared to a single wind turbine, for instance), it is implausible to expect that a state plan could practically maintain a sufficient inventory of cost effective measures that could be triggered in a timely manner to effectively address the failure of a nuclear reactor to achieve the required level of emission p erformance. Commenters stated that EPA has asked several questions regarding the steps that sh ould be taken "if reporting shows that the plan is not achieving the projected level of emission pe rformance."

Commenters noted that EPA has previously recognized that emission control strategies that rely on voluntary actions of individuals and other parti es (e.g., the NRC) may be considered "innovative methods in achieving emission reduction s" and, for such methods, EPA approval obligates the state to assure that the emission red uctions occur.

Commenters further noted that in the case of the Vo luntary Emission Reduction Program (VMEP), EPA recognized that the state's obligation to remedy any shortfalls from forecasted emission reductions in a timely manner created a ne cessity to limit the contribution of such methods to a maximum of three percent of the total reductions needed to meet any requirements. Commenters suggested that almost any individual nuc lear generation project is likely to exceed a "three percent" benchmark, and EPA should not allow a single project (i.e., if subject to the authority of the NRC or any other party not subjectto enforcement action pursuant to the Clean Air Act) to make up more than three percent of a st ate compliance plan.599

Commenters maintained that in the event that such a large project failed to achieve the required emission reductions, the delay in implementing an a lternative could make it difficult for the state to ever catch up at a reasonable cost. Commenters p rovided the example that, if EPA were to allow a state to then adopt new plan measures and r esubmit the plan to the EPA for review and approval, years of excessive emissions would accrue . Commenters stated that it would further compound this shortfall if the process were not tri ggered until "the end of a multi-year plan performance period if emission performance is not m et." Commenters noted that for smaller emissions reduction measures, such as the failure o f a single energy efficiency program, or renewable energy project, a report-and-correct proc ess could be timely enough due to the smaller scale; but if EPA views three percent as a threshol d for accepting responsible parties beyond the reach of enforcement under the Clean Air Act, then at the scale of a nuclear generation plant, EPA should certainly appreciate the need for immedi ate implementation of corrective measures upon a failure to achieve the required level of emi ssion performance. Commenters concluded that such contingencies could also have excessive c osts.

Commenters noted that EPA requested comment on whet her to include an estimated amount of additional nuclear capacity whose construction is s ufficiently likely to merit evaluation for potential inclusion in the goal-setting computation in the state goals (Proposed Rule 40 Fed. Reg. 34871; June 18, 2014). Commenters remarked that inc reasing the generation capacity at existing nuclear plants, also known as "uprates," that occurafter 2012 should not qualify as "new nuclear generation," and that uprates are not a new, innova tive technology but are fairly commonplace in the industry.

Commenters stated that by including uprates in the CPP, EPA may cause States to consider restarting cancelled and uneconomic nuclear energy projects as a compliance method. Commenters offered as example that Duke Energy Flor ida's now-closed Crystal River Unit 3 reactor was shut down in September 2009 in order to perform necessary upgrades to allow for an uprate of the plant. Commenters stated that Duke ul timately decided that the project was so severely botched that it could not be salvaged, and consequently, Duke decided to close the reactor in February 2013. Commenters also noted tha t before closure of Crystal River Unit 3, approximately $1.3 billion was spent and Duke custo mers are on the hook for years to come.

Commenters contended that if uprates are included a s a compliance tool, the State of Florida might consider resurrecting this failed project, as suming that some amount of MWs could be available for compliance (original reactor was 860 MWe with an additional 130MWe expected from the now-failed uprate. Commenters concluded th at expanding the jurisdiction of the Clean Air Act to incentivize nuclear energy projects coul d put pressure on the NRC to relax safety
standards. Commenters recommended that EPA should c arefully scrutinize the consequences of
its decision to ensure that it does not unintention ally contest the NRC's regulatory authority.

Commenters stated that EPA's BSER analysis does notprovide meaningful credit for existing nuclear generation and excludes existing hydropower generation entirely. Commenters remarked that this lack of appropriate credit will have sign ificant impact on States such as Arizona that generate a large percentage of their power from the se zero-emission sources.

Commenters stated that Alabamians are deeply troubl ed by the prospect that the EPA's proposal will further erode the primary role of the states i n managing electricity generation and600

determining the mix of energy sources that work bes t for them in their specific circumstances. Commenters submitted that in Alabama, electricity i s generated from a range of sources, including nuclear, coal, natural gas, hydropower an d renewables. Those decisions should not be dictated by EPA officials in Washington, D.C. Comme nters further remarked that perhaps ironically, the EPA's chosen formula for establishi ng CO2 emission reduction targets disadvantages states with nuclear power, which is t he nation's most significant source of emission-free electric generation.

Commenters stated that nuclear power is expected to play a significant role in the future because it's a carbon-free fuel source. However, the comme nters contended that there are many challenges in the licensing, siting, constructing a nd managing the risks of nuclear development. Commenters also stated that legislative support and federal oversight will be required to help overcome these development risks and increase the g eneration mix of this carbon-free source of electricity.

Commenters stated that to replace the lost coal gen eration, EPA makes a series of unrealistic assumptions about the availability of replacement r esources. Commenters remarked that all "at risk" nuclear would keep operating without any defi ned plan as to how that is to happen, and all under-construction new nuclear would be presumed to come on-line on time despite the long history of delays in nuclear construction.

Commenters remarked that EPA modeled compliance wit h its proposal on the projection that "atrisk" nuclear facilities will not shut down. Yet, c ommenters stated, EPA does not say whether it considered the Department of Energy's permit for th e Yucca Mountain nuclear Waste Repository facility as approved or denied, and EPA must provid e more information on the effect the Yucca Mountain permit may have on EPA's model.

Commenters stated that the plan predicts principal reliance on fossil fuels in 2030 with 30% coal & oil generators and 30% natural gas generators, wh ile building a few new nuclear reactors and retaining existing nuclear reactors that are at the end of their useful lives, with unaddressed safety vulnerabilities identified post Fukushima.

Commenters stated, in reference to expanding existi ng and under-construction nuclear, that in Step 1 EPA assumed that 6 percent of "at-risk" exis ting nuclear capacity would be retained and that all nuclear units currently under construction would be completed. Commenters remarked
that EPA first assumed that all "at-risk" units wou ld operate at a 90 percent capacity factor, and then it assumed that 6 percent of this "at-risk" ge neration would be retained. Commenters stated
that EPA also assumed that the nuclear unit current ly under construction at the Watts Bar facility would be completed and factored generation from tha t unit into the emission rate calculation, and EPA assumed that the unit would operate at a 90 per cent capacity factor and added that generation into the denominator of the emission rat e calculation. Commenters estimated that applying these assumptions results in a decrease fr om 1,798 lbs/MWh to 1,433 lbs/MWh, a
reduction of 365 lbs/MWh.

Commenters asserted that the cuts in heat-trapping emissions that the U.S. and the rest of the world need to make to limit the worst consequences of global warming are so large, and the need to take action is so urgent, that we need to consid er all potential options for reducing emissions,601

as described in their 2007 Nuclear Power in a Warmi ng World report. Commenters contended that nuclear power does not produce carbon emission s during operation, and has relatively low lifecycle carbon emissions that are comparable to m any renewable technologies; however, these benefits need to be weighed against the safety and security risks, the waste disposal challenges, and the water requirements of nuclear power. Commen ters stated that the high cost and long lead time required for large-scale deployment of new nuc lear plants must also be considered. Commenters suggested that other low- and zero-carbo n technologies like energy efficiency and renewable energy have fewer risks, are already cost -effective in many places, and can be deployed more quickly at a large scale.

Commenters is particularly concerned about the pote ntial impacts of the rule's treatment of nuclear power on the safety and security of both op erating nuclear plants and the five reactors currently under construction. While the commenters stated they understand that nuclear safety is not within the EPA's jurisdiction, the agency canno t ignore the potential indirect effects of the rule in providing incentives to keep "at risk" plan ts operating. Commenters remarked that an operating nuclear plant's "at risk" status depends on many factors, but one of them is the extent to which a plant's bottom line is affected by evolving safety and security requirements. Commenters stated that, for instance, the NRC incre ased security requirements after the 9/11 attacks, but it is well known that the industry lob bied heavily to keep them to a minimum because of their cost; similarly, in the wake of th e 2011 Fukushima accident, the industry has pushed back on certain proposed additional safety r equirements such as filtered venting systems for boiling-water reactors. Commenters contended th at the NRC has also waived certain postFukushima safety requirements for the AP1000 reacto rs now under construction based on a faulty assumption that those plants will be safer t han current plants. Commenters suggested that the EPA needs some mechanism - perhaps through a me morandum of understanding with the NRC - to help ensure that in mitigating the risk of climate change it does not increase the risk of a catastrophic nuclear accident or terrorist attack

.
Commenters argued that the rule as proposed will be costly and difficult to implement and does little to preserve and capitalize on nuclear energy 's carbon free qualities, because under Building Block #3, nuclear energy contributes about 90 milli on MWh, and this emission free generation contribution remains fixed throughout the complianc e period. Commenters noted that, in contrast, the EPA assumes contribution from renewab les and energy efficiency that increase every year throughout the compliance period. Commen ters stated that overall, by 2030,
renewables are credited with 525 million MWh of low carbon generation and energy efficiency about 425 million MWh equivalent low-carbon generat ion, as based on EPA's Technical Support Goal Computation Document. Commenters remarked thatall-in-all, along with the nuclear energy contribution, the EPA calculates that these carbon-free sources taken together provide over 1 billion MWh, however, nuclear energy contrib ution amounts to no more than 8.6 percent.

Commenters stated that a key portion of their trans ition plan to low-carbon energy production was extending the operating license of the Callaway Nuclear Energy Center.

Comment 30: Commenters expressed their general support for nucl ear power.602

Response 30: EPA acknowledges the comments and details the provi sions for nuclear generation in section V.A of the preamble which dis cusses the decision to exclude nuclear generation from BSER, section V.A of the preamble w hich discusses the treatment of new and uprated nuclear plants, and section VIII.K of the p reamble which discusses the flexibility states have in developing state plans to address nuclear g eneration.

The following are summaries of the specific public comments under this comment:

Commenters stated that the EPA has no leverage to r everse the planned closings of the at-risk nuclear generations. Commenters suggested that any realistic plan for carbon reduction needs to include more new generation from nuclear power.

Commenters supported the use of nuclear power.

Commenters supported nuclear energy to play a major role in future carbon emission reduction plans. Commenters stated that according to the anal yses of the Energy Information Administration, Intergovernmental Panel on Climate Change, International Energy Agency and even EPA itself, meaningful carbon emission reducti ons cannot be achieved without preservation of existing nuclear assets and large-scale construc tion of new nuclear plants.

Commenters provided general support to nuclear ener gy as an option for carbon emission
reductions.

Commenters stated that the Clean Power Plan should include nuclear energy as an integral and vigorous part of the overall clean energy portfolio that is to be relied on to achieve emission reduction rate goals, and that this proposed rule c learly falls short in this respect.

Commenters stated that the EPA should revise its Pr oposed Clean Power Plan to provide stronger incentives fostering both existing and new nuclear plants.

Commenters recommended that the final rule create t he appropriate incentives to continue the operation of existing nuclear units.

Commenters stated that the EPA needs to consider th at nuclear energy delivers large amounts of reliable, economically competitive electricity with no carbon emissions during reactor operations, and has among the lowest life-cycle car bon emissions of any energy source. Commenters also stated that nuclear energy is the o nly energy technology with a proven capability of delivering large amounts of clean bas e-load electricity essential for the sustainability of modern industrial societies. Comm enters asserted that any rule that is developed concerning limits of carbon emissions should be per formance-based, technology neutral, and should not mandate a particular mix of energy sourc es or arbitrarily favor one source over another. Commenters recognized, however, that such legislation is not in the offing and that the EPA has set forth the proposed regulations to accom plish the goal of lowering greenhouse gas emissions in its absence. Commenters agrees with th e position of the ANS that the proposed rule contains two major flaws that, unless corrected, wo uld render the rule at best ineffective and at worst counterproductive to the goal of reducing pow er plant carbon emissions. Likewise, commenters also agreed with the two ANS recommendat ions that, if adopted, would rectify603

some of the rule's shortcomings and provide an impo rtant incentive for preservation of the existing fleet of nuclear power reactors and the de ployment of new nuclear generating capacity.

Commenters agreed that Building Block 3 pertains to sources that are an important part of an overall strategy to reduce CO2, and that nuclear ge neration is a carbon free source like
renewables. Commenters further stated that the rule should provide incentives for at least 70% existing nuclear generation as well as for nuclear generation that is under construction and recognize it as a compliance strategy for reaching state goals. Commenters asserted that early action investment in all low to no carbon sources, such as renewables and nuclear, should receive
credit under this rule.

Commenters stated that Idaho has long recognized th at nuclear energy must be part of the solution for reducing carbon emissions, and that nu clear energy is America's largest source of low-carbon electricity. Commenters cited a study re porting that, in 2013, nuclear energy produced 19 percent of the U.S. electricity supply (789 billion kilowatt-hours) and prevented 589
million metric tons of CO2 emissions. Commenters ci ted another reference, which stated that nuclear energy accounted for 63 percent of America' s carbon-free electricity in 2013; three times more carbon-free electricity than hydropower and ne arly five times more than wind energy. Another study cited by the commenters reported thatwithout nuclear power plants operating in 31 states, carbon emissions from the U.S. electric sector would be about 25 percent higher. Commenters further stated that analyses by mainstre am, independent organizations, in the United States and around the world, show that reducing car bon emissions will require that nuclear energy must be part of the portfolio, and that majo r expansion of nuclear generating capacity over the next 15-30 years is advantageous. Commente rs stated that, importantly, nuclear energy is a carbon-free electricity generating source thatsupplies stable, reliable and affordable electricity around the clock as needed, and that ca rbon emissions and electricity costs will increase unless nuclear generating capacity expands . Therefore, commenters asserted the Final Rule must give states flexibility to utilize existi ng and new nuclear units in an effective manner which includes granting all nuclear generation full credit towards compliance in carbon
emissions reduction.

Comment 31: Tribal and Territorial - Commenters expressed conc erns regarding nuclear waste.

Response 31: The EPA outlines in the Community and Environment al Justice Considerations section of the preamble, the actions that the agenc y is taking in this final rulemaking to help ensure that vulnerable communities are not dispropo rtionately impacted by this rulemaking. Please see section IX and section XII.J for the age ncy’s response to this comment.

The following are summaries of the specific public comments under this comment:

Commenters pointed out that EPA does not list nucle ar energy as a renewable energy source at its State and Local Climate and Energy Program webp age, although it proposes the use of nuclear energy as a source having zero-carbon gener ation that can substitute energy from EGUs. Commenters expressed concerns with nuclear energy's continued use, specifically in light of the close proximity of FCPC tribal lands in northeaster n Wisconsin to the Wolf River Batholith, one604

of the two sites considered for storage of spent nu clear waste. Commenters mentioned that the Indian Tribes were concerned about transporting nuc lear waste across and near their lands, and storing the nuclear waste at Yucca Mountain. Commen ters recommended that EPA engage in a government-to-government consultation with Tribes a nd to include other federal agencies such as DOE, to discuss and address the prospective issu es of transporting and/or storing nuclear waste across or near Tribal lands, and legacy waste

.
Commenters stated concerns related to transportatio n of nuclear waste across and near Indian Tribe lands, and storage of waste near or in those lands.

Commenters stated that the NTAA strongly supports t he use of renewable energy as a way to

reduce carbon emissions. Commenters stated that EPA proposes the use of nuclear energy as a source having zero-carbon generation that can subst itute energy from EGUs (Proposed Rule at 34870). Commenters observed that the Proposed Rule indicates that five nuclear power plants

are under construction and six others are near reti rement which could realistically continue to operate (Proposed Rule at 34870). Commenters remark ed that the NTAA does not have specific position on the use of nuclear energy as a renewabl e energy source; however, the commenters pointed out that EPA does not list nuclear energy a s a renewable energy source at http://www.epa.gov/statelocalclimate/ local/topics/ renewable.html . Commenters stated that their organization takes this opportunity to identify con cerns with nuclear energy's continued use. Commenters noted that a few years back, the U.S. De partment of Energy (DOE) convened a Transportation External Coordination (TEC) Working Group whose purpose was to "improve coordination with external groups interested in DOE transportation activities," largely related to the transportation of nuclear waste to a long-term nuclear waste storage site. Commenters stated that Indian Tribes were concerned about transportin g nuclear waste across and near their lands, and storing the nuclear waste at Yucca Mountain, la nd culturally important to the Western Shoshone and Southern Paiute peoples. Commenters re marked that on more than one occasion, DOE representatives mentioned during TEC Working Gr oup meetings that there were at least 56 lawsuits pending against the federal government, fi led by the owners and/or operators of nuclear energy facilities who had been promised their nucle ar waste would be stored in a long-term storage site. Commenters contended that Congress ca ncelled federal government plans to use Yucca Mountain as a long-term nuclear waste storage site; however, a location for such storage remains necessary and will eventually occur.

Comment 32: Commenters offered suggestions related to nuclear power plant shutdowns.

Response 32: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include the proposed provisions for n uclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER. Please see section V. A of the preamble for further discussion of the treatment of new and uprated nuclear plants, an d section VIII.K of the preamble for further discussion of provisions in state plans of allowabl e actions that result in an adjusted CO2

emission rate of an affected EGU.605

The following are summaries of the specific public comments under this comment:

Commenters stated that the way existing at-risk nuc lear plants are treated under the current rule does not encourage such plants to continue operatin g. Commenters pointed out that if these units shut down, this would result in significant increas es in emissions as fossil units ramp up to make up for the lost generation. Commenters also mention ed that, to the extent that nuclear plants are not relicensed in the future, this would also have a significant impact on emissions and compliance. Commenters suggested to evaluate altern ative approaches to treat nuclear generation. Commenters specifically suggested the E PA to consider allowing some portion of relicensed nuclear generation to meet compliance in addition to new nuclear power and nuclear uprates. Commenters also suggested that states shou ld not be penalized for nuclear capacity that shuts down due to safety reasons.

Commenters recommended that if a state chooses to i nclude nuclear generation as an eligible action in compliance determination, the state's pla n should address any anticipated shutdown of nuclear generation. Commenters stated that in case a state has a nuclear plant which closes unexpectedly, the state should be allowed to adjustits plan to account for the closure.

Commenters stated that another flawed assumption un dergirding EPA's analysis is that, if a reactor closes, it will necessarily be replaced by fossil-fuel generation. Commenters stated that
EPA does not assume the same about the retirement o f renewable energy resources during the compliance period, which could also be substantial, and this leads the Agency to ignore the total cost of offering incentives to preserve nuclear. Co mmenters suggested that a more sensible solution would be to recommend that states plan to replace retired Building Block 3 and 4
resources with similar resources. Commenters stated that there will continue to be instances - like the San Onofre and Crystal River nuclear plant s - where the cost of repairing reactors is far above what is reasonable for ratepayers to absorb o r for merchant operators to invest, and states might have a hard time meeting the goals if they ha ve planned on keeping old nuclear plants around forever and not begun preparing to accommoda te renewables and demand-side management. Commenters suggested that a better inve stment of ratepayer dollars to prepare for such contingencies would be to begin investing in i nfrastructure to support renewables and distributed generation, such as transmission lines, smart-grid, electric vehicle charging stations and vehicle-to-grid connections. Commenters mention ed that the amount of nuclear capacity estimated to be at risk could easily be replaced by other low-carbon resources, such as wind, so there is no need to make a special case of preservi ng existing nuclear. Commenters stated that recommending that states collect a fee to plan for reactor closures and invest in renewable energy deployment, efficiency, and transmission system upg rades would be a more prudent hedge against the possibility of unannounced reactor clos ures. Commenters pointed out that such a provision need not apply only to nuclear; the rule should simply recognize the reality that low- /zero-carbon resources will face retirements, along with nuclear and fossil fuel generation

sources.

Commenters quoted data from the Nuclear Energy Inst itute's report, and stated that the phase-out of some base-load capacity, without loss of reliabi lity, is entirely feasible in many areas with low market prices, and would result in prices moderatin g upward to a level that would reduce economic pressure on the remaining plants. Commente rs stated that such a dynamic could even606

incentivize further growth in wind, efficiency, and other low-carbon resources that can compete effectively in a low-price environment.

Commenters recommended that the EPA eliminate the 5 .8% at-risk provision from state goals,
but in the event that the EPA retains the 5.8% at-r isk provision, the EPA should recognize the
effects of the retirement of a nuclear unit at the end of its operational license on a state's goals.

Commenters recommended that, if the at the at-risk nuclear provision is retained in the final goal-setting calculation, the EPA should allow stat es' goals to be adjusted upon expiration of nuclear plant operating licenses. To encourage the continued operation of existing nuclear plants,
that commenters recommended that the EPA should all ow states to claim compliance credit for nuclear plants that have their licenses renewed bey ond 60 years.

Commenters stated that in the first full compliance year of 2030, the youngest nuclear plants in the current fleet will be 50 years old. Commenters remarked that EPA requires state plans to include measures that are permanent and enforceable but keeping existing nuclear units fails both of those tests. Commenters contended that any effor t to extend the lives of these units could not persist for more than a few decades. Commenters fur ther stated that to the extent that states are penalized in any compliance period that sees less t han 90% capacity factor from these nuclear units, they would have to be replaced by some other zero-emitting source. Commenters asserted this would provide a back-door for EPA to require a dditional renewable energy in the future and increase the stringency of the standard far beyond the extent claim to be adequately
demonstrated.

Commenters stated, in reference to the treatment of nuclear shutdowns, that continued operation of a nuclear plant is contingent on many factors th at go well beyond economic consideration. Commenters noted that these include safety and loca l environmental considerations.

Commenters recommended that if a state chooses to i nclude nuclear generation as an eligible action in compliance determination, the state's pla n should address any anticipated shutdown of nuclear generation. Commenters further recommends t hat in the event that a state has a nuclear plant that closes unexpectedly, the state should be allowed to adjust its plan to account for the
closure. Commenters asserted that these recommendat ions would provide incentive for maintaining and developing nuclear power.

Comment 33: Commenters stated the rule should consider shut-dow ns or failure to come on-line circumstances that could affect the assumption of t he number of nuclear units covered by the
rule.

Response 33: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include either of the proposed provis ions for existing and new nuclear units in the setting of state goals. Please see section V.A of the Preamble for further discussion of the decision to exclude existing and new nuclear power from BSER. Please see sections VIII.K.1 and VIII.G.2 of the preamble for further discussion of the flexibility states have in developing state plans to ensure compliance, as well as, the r equirement that states consider system607

reliability in plan submittal. The final rule is n ot premised on any assumption regarding nuclear unit operation.

The following are summaries of the specific public comments under this comment:

Commenters stated that, in building block three, th e EPA assumes that no "at-risk" nuclear energy power plants will be retired and that all un its currently under construction will come
online. Commenters stated that the EPA fails to con sider the possibility that an economic or other operational circumstance might exist by which the unit owner or the NRC - the federal body with regulatory authority over nuclear units - might determine that a facility has reached
the end of its useful life. Commenters concluded th at the record is insufficient to support EPA's assumptions in building block three as it relates t o nuclear units.

Comment 34: Commenters enumerated reasons to exclude nuclear power from the Clean Power
Plan.

Response 34: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include the proposed provisions for n uclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER.

The following are summaries of the specific public comments under this comment:

Commenters stated Building blocks two to four, as p roposed by the Agency are outside the fence line and the Agency does not have the expansive sta tutory authority to recognize them as BSER.

Commenters also stated that Building Block 3 assume s that there will be no additional retirements of existing nuclear reactors, regardles s of market conditions that may make it
uneconomic for some nuclear units to run.

Commenters stated in the rules, EPA states that nuc lear power provides carbon-free generation. Commenters added that certainly, compared to coal, there are less CO2 emissions at the plant itself; but the mining, extensive processing, trans portation of the fuel before it ever gets to the reactor is not emission-free by a long shot. Commen ters said nuclear power emits 10 to 20 times more CO2 than, say, wind; further, climate disrupti on will keep nuclear plants from operating, as already witnessed in the TVA system. Commenters sa id when the water gets too warm in the summer, nuclear plants must shut down, and that has happened at Brown's Ferry.

Commenters stated the plan states also that EPA doe sn't want to count construction emissions for Watts Bar 2 in Tennessee, Vogtle 2 through 4 in Geo rgia, and Summer 2 and 3 in South Carolina, since they got permission to construct pr ior to this proposal; but they are not completed yet, and thus they will be contributing to carbon e missions when these rules go into effect.

Commenters generally supported the proposed rule, h owever recommended changes to specific aspects of the rule: the proposed inclusion of new and preserved nuclear capacity is a substitute608

for carbon intensive generating capacity does not a dequately reflect the future life cycle greenhouse gas emissions of nuclear facilities.

Commenters stated while wind generation has a consi stently small greenhouse gas profile, the impact of nuclear facilities is dependent upon the uranium mining technologies used, the quality of the uranium ore, the enrichment method and the c arbon intensity of the electricity used for enrichment. Commenters said the future quality of u ranium ore in particular may degrade as higher quality mines are depleted, resulting in a g reater processing and a higher emissions in the future from nuclear generation. Commenters said add itionally, the cost of disposing of nuclear waste, as well as the cost associated with the pote ntial of a nuclear accident needs to be taken into account when estimating the cost of reducing c arbon emissions through increasing nuclear capacity.

Commenters had great concern about nuclear plants; in Fukushima, there is a disaster ongoing; over 300 tons of nuclear radioactive water is being spilled in Pacific Ocean, and the nuclearcontaminated radiated water has now reached and has long now reached the California shore.

Commenters stated the folks near the Fukushima Daii chi plant would certainly have a cautionary tale about increasing our reliance on nuclear energ y; particularly given that a number of America's nuclear reactors are built on earthquake fault lines.

Commenters stated the plan indicates the desire to increase the amount of available nuclear capacity by preserving existing nuclear EGU's that might otherwise be retired; the risk for accidents in nuclear plants increases as age increa ses. Commenters said these nuclear plants are all ready for retirement; no matter how much money it saves or how much finagling of how we count the CO2 emissions, saving old nuclear plants is not worth the risk.

Commenters stated nuclear is not clean energy, but in the proposed rule, EPA acknowledges the worst issue with nuclear, and according to the hist ory of nuclear, there are potential health hazards that, as an environmental health scientist, should be considered, so that we take precaution. Commenters said there is evidence that this may cause harm, and the precautionary principle says when you have evidence; you take pre cautionary measures, even if you can't prove
it.

Commenters stated EPA's proposed rule for reducing carbon dioxide emissions from existing electrical generating units is an important and his toric step toward addressing climate change; however, EPA's support of nuclear power and under p laying of the importance of renewables and efficiency is of serious concern.

Commenters stated the EPA Clean Power Plan Proposed Rule supports building new nuclear reactors and maintaining existing reactors as an al ternative to burning fossil fuels.

Commenters stated the proposed rule encourages stat es to prevent even the most uncompetitive nuclear reactors from closing.

Commenters stated the rule underestimates the advan tage of renewable energy and energy efficiency as the best alternatives for reducing carbon emissions. Commenters said the rule should acknowledge that renewables and efficiency c an produce the power we need without the609

use of fossil fuels or nuclear power, and they can remove more carbon per dollar spent in a
shorter time.

Commenters stated numerous studies have shown that this transition needs only the political will to make it happen; new nuclear reactors cost billio ns of dollars and take many years to bring online. Commenters said renewable energy, and espe cially efficiency are much cheaper and their development is already underway.

Commenters stated EPA incorrectly claims that nucle ar power is reliable; this ignores the many times nuclear reactors have had to shut down for ye ars due to warm water temperatures, flooding and extreme weather events, all of which will worse n as the climate warms.

Commenters stated nuclear power is far from carbon free; fossil fuels are used for uranium mining, milling, processing, conversion enrichment, transportation and construction of reactors. Commenters said huge amounts of energy will be need ed to isolate nuclear waste for millennia, a
task which science so far has not been able to addr ess.

Commenters stated large amounts of water are also u sed to operate and cool the reactors; this water use can compete with other water needs in an era of increasing freshwater scarcity.

Commenters stated EPA seriously minimizes the probl em of radioactive waste; in fact, EPA erroneously contends that radioactive waste avoids the problem of waste from coal fired generation. Commenters said waste from coal is a se rious problem, but radioactive waste is extremely dangerous and remains so for millions of years.

Commenters stated EPA also ignores the routine radi oactive releases at all reactors, and the
several U.S. close calls to nuclear meltdown.

Commenters stated that the first step toward dealin g with nuclear waste and radioactive pollution is to stop generating it.

Commenters stated they hope that EPA will not, by d efault, look at nuclear power or fracking as the mainstay of America's energy future.

Commenters stated currently, EPA has out an advance notice for comments on environmental radiation protection standards for nuclear power op erations. Commenters said unless the current radiation protection standards are strengthened, EP A will continue to have lower standards for protection from radioactivity than it has standards for protection from other pollutants.

Commenters stated EPA's acceptable cancer risk is o ne in a million to one in ten thousand for other pollutants. The allowable limit for radioacti ve exposure is 25 milligrams per year. Commenters said if a person's life span is 70 years , that risk translates to one cancer per 500 persons, which is as many 2000 more allowable cance rs.

Commenters stated don't want the EPA to lower those , certainly, they should raise those standards, and strongly approve of reducing carbon dioxide, but thinks inclusion of reactors as a
solution is a mistake.610

Commenters stated electricity is not some sort of e lective utility service, but a human - an essential human rights service; have got to ensure that standards with universal service are prioritized, particularly for very low-income consu mers.

Commenters stated energy efficiency standards shoul d be cost effective and demonstrate specific and verifiable energy savings. Commenters said roof top solar requirements should be equitable; and the 6 percent credit for existing nuclear powerplants should not be allowed to qualify for the state implementation plans because of the severe en vironmental and risks associated with nuclear

power.

Commenters stated nuclear energy also brings with i t significant problems, not least is that there is no known way to safely dispose of spent fuel rod s - not in Germany, not in Japan, not anywhere. Commenters said these highly radioactive rods will present major problems for future generations and would also prefer that we move away from the mining of uranium.

Commenters stated, the proposed regulations have in dicated that in certain instances or states nuclear power can be relied upon as a substitute fo r fossil fuel in order to restrict the release of greenhouse gases. Commenters opposed the use of nu clear reactors as a dangerous source of energy. Commenters said in western New York, as in many other parts of the United States, citizens are subject to unsafe and improper storage of radioactive material and waste; the mining or uranium itself subjects residents of all communi ties to the effects of radiation.

Commenters stated remove nuclear power from the lis t of options; nuclear power is not renewable. Commenters said it produces carcinogenic wastes that can be spilled or released into
the environment as we witnessed at Fukushima and atChernobyl and at Three Mile Island; and those wastes remain lethal to human beings essentia lly forever.

Commenters did not support nuclear energy as an opt ion to reduce carbon dioxide emissions. Commenters stated the risks to human health, to com munities, including the harmful extraction and abandoned uranium mines create negative impacts . Commenters said the inability to permanently disclose of high level radioactive wast e creates harmful sacrifice areas.

Commenters stated, the nation could most effectivel y cut our carbon dioxide emissions, and that is nuclear power.

Commenters supported for research of thorium power. Commenters said right we use uranium as the main fuel and we have to dig far for it; it's about as rare as platinum and thorium is like something like 100 or a thousand times more abundan t in the earth's crust; but there's nothing done in the United States about this technology.

Commenters supported rules that make it more favorable for nuclear because they asserted it is truly the most green, sustainable, reliable, and carbon free resource we currently have.

Commenters stated, third building block speaks to z ero carbon fuel sources, which includes renewable energies and nuclear generation, yet it c ompletely ignores the original emission free production of low cost hydroelectricity and hydroel ectric generation. Commenters said with many nuclear reactors facing relicense, combined wi th the low price of natural gas, choosing to611

close these emission free fuel sources would only i ncrease our reliance on fuel force and also fossil fuel based generation.

Commenters stated, with respect to nuclear energy, DES stresses the importance of setting standards that preserve nuclear and other options f or fuel diversity and maintain grid reliability; however, they are unclear as to what actions their state might be expected to undertake in response to the proposed six percent allowance for nuclear plants considered to be at risk nationally. Commenters added, even the nuclear plan ts that remain operating, preserve fuel diversity and maintain grid reliability and are notemitting.

Commenters stated the economic, ecological, and hea lth costs of nuclear energy from cradle to grave are too costly; one aspect not addressed in t he plan relates to the extraction of nuclear fuels. Commenters said some tribal nations have pai d a great price.

Commenters stated unfortunately, the draft rule als o declares for the first time that nuclear power is a core element of the nation's climate policy; i t pushes states to preserve old nuclear power plants, expand existing plants and subsidize nuclea r power. Commenters said these pro-nuclear provisions could undermine the growth of renewable energy in these states and help keep open old polluting coal-fired power plants.

Commenters stated the nuclear industry is looking t o gain carbon credits; these carbon credits are undeserved. Commenters said but in any case, the in dustry is asking for carbon credits for nuclear power; these very credits will allow the in dustry to burn more coal.

Commenters stated that nuclear power in general sho uld be excluded as a means of complying
with the Clean Power Plan.

Commenters expressed support for increasing the eff iciency of all forms of energy use, and reducing fossil fuel consumption by replacing it wi th "clean sustainable energy sources." Commenters then advocating excluding nuclear energy as an alternative to be encouraged, due to the problems of "nuclear waste storage, the polluti on from uranium mining, and the immense water usage of nuclear plants."

Commenters added the nuclear industry's inability t o operate without government subsidies has been a continuing issue. Commenters said fossil fue ls are finite and renewable energy is infinite; in fact, the International Energy Agency tells us t hat two-thirds of proven fossil fuel reserves must be kept in the ground to prevent potential cat astrophic consequences.

Commenters stated that Building Block 3 has questio nable assumptions: Building block three
assumes that no units in the entire fleet of nuclear plants will retire regardless of market conditions; as for renewables, EPA assumes their rapid growth despite their intermittency making it progressively hard to balance load and ru n base load plants effectively.

Commenters stated that the EPA's Clean Power Plan p ressures states to ensure that reactors now being built are completed, no matter what the cost, and by encouraging the states to subsidize existing reactors to prevent uncompetitive ones fro m closing. Commenters stated that EPA must abandon subsidies and incentives for nuclear power, and should instead require reactors that612

close are replaced with sustainable energy resource s including renewables, efficiency, and
energy storage.

Commenters stated, as proposed, the rule includes u nnecessary and counterproductive support for nuclear power for existing, aging, uneconomical reactors, as well as for construction of new reactors, which they oppose.

Commenters could not support development of more nu clear power plants due to the problem of
nuclear wastes.

Commenters stated that nuclear power may be low in carbon emissions, but it is not clean due to radiation and water consumption. Commenters recomme nded that the EPA abandon incentives and subsidies for nuclear power and focus on renewable energy.

Commenters stated that reduction targets should netbe met through increased dependency on natural gas or "other dangerous and costly sources like nuclear power." Commenters
recommended that the EPA should increase "its effic iency targets and renewable projections and urge states to prioritize these compliance methods. "

Commenters requested that support for nuclear energ y be deleted from the Clean Power Plan because the comment stated that nuclear power is un economic and that sufficient power is available through sunshine and wind. Commenters als o stated that the life cycle for both carbon
emissions and other toxic and radioactive substance s were significant. Commenters concluded by recommending that uranium should stay underground.

Commenters recommended that the EPA should not use nuclear energy as a strategy for reducing
use of fossil fuels.

Commenters recommended that nuclear power incentive s should be cut. Commenters stated that the rule pushes to preserve, expand and subsidize n uclear reactors, but there are safety risks with aging reactors. Commenters recommended that nuclear reactors should be phased out and replaced with renewable energy.

Commenters stated that Fukushima showed the risks o f nuclear generation facilities. Commenters also cited aging of nuclear facilities a nd long-term nuclear waste storage problems as arguments against encouraging nuclear facilities as backups for coal-powered electrical generation.

Commenters stated that the EPA considered nuclear p ower to be an acceptable alternative to fossil-fueled electrical generation, but the commen ters disagreed. Commenters stated that the EPA has not done a proper risk assessment in making the decision to promote nuclear power in implementation plans.

Commenters recommended removing all support for nuc lear power from the final version of the Clean Power Plan. Commenters stated that nuclear po wer is not clean, safe, or inexpensive. Commenters stated that significant amounts of radio active waste were generated from uranium mining, routine operations, and 80,000 tons of radi oactive waste that that no one knows how to613

safely store for the thousands of years it will rem ain dangerous to human health and the
environment.

Commenters stated that reactors were most dangerous at the beginning and end of their life cycles, which concerned people within the 10- and 1 5-mile radius of these sites. Commenters also expressed concern about cooling water for reac tors.

Commenters stated that support for nuclear power un dermines the growth of the renewable energy sector, including solar and wind energy. Com menters also stated that, if nuclear is a part of state cap-and-trade programs, then being able to sort of trade credits from nuclear power with coal-fired plants would also undermine the imminentclosure of coal-fired plants.

Commenters expressed concern about the effects of h eat discharged from reactors warming nearby waters, particularly the effect of Plant Vog tle on the Savannah River.

Comment 35: Public commenters opposed inclusion of nuclear pow er in the Clean Power Plan.

Response 35: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include the proposed provisions for n uclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER.

The following are summaries of the specific public comments under this comment:

Commenters suggested to remove nuclear power from c onsideration due to its environmental impacts and risks. Commenters recommended the EPA t o consider the impacts of preservation of old reactors, which were not addressed in the draft rule. Commenters also stated that incentivizing the preservation of a generic 5.8% of current U.S. nuclear capacity will result in a windfall profit for reactors not currently at risk for retirement.

Commenters opposed include nuclear energy in the en ergy plan, since it is expensive, dangerous
and not clean. Commenters also mentioned that we do not have appropriate plans for evacuation
of cities in the event of a serious accident.

Commenters opposed the use of nuclear energy, and a lso mentioned concerns about treatment of
nuclear wastes.

Commenters opposed the use of nuclear energy due to its risks.

Commenters opposed the use of nuclear energy due to the problems of disposing nuclear
materials.

Commenters opposed nuclear power due to safety and cost considerations.614

Commenters opposed the use of nuclear power based o n the past experiences and incidents in foreign countries like Germany and Japan. Commenter s suggested to invest in solar, wind and other genuinely clean energy sources.

Commenters opposed the use of nuclear energy as it is one of the most uneconomical energy

sources.

Commenters stated that, according to the draft rule , if the states follow the EPA's lead in dealing with nuclear compared to other non-carbon resources , they would unnecessarily raise the cost of carbon abatement. Commenters suggested that the EPA should correct these mistakes in promulgating the final rule, which would help the s tates avoid those same mistakes. Commenters stated that states can and should implement least c ost carbon reduction programs based on a more rigorous analysis of the evolving economics of low carbon resources and the emerging 21st century electricity system. Commenters also stated that the EPA can and should advance the Clean Power Rule toward this goal by making several changes in its analysis of the proposed standard, including correcting its analysis to rend er it internally consistent and reflective of current costs and cost trends, taking a technology neutral approach and expunging all reference to subsidization of nuclear power.

Commenters stated to avoid premature retirement of nuclear EGUs.

Commenters stated, in a discussion of environmental impact and sustainability that once one moves into the broader realm of non-economic goals of the electricity system nuclear power fares very poorly. Commenters remarked that nuclear power has significant disadvantages in terms of security, proliferation risks] and continu es to suffer from unique environmental problems.

Commenters contended that based on a non-commodity, local source of power, renewables have a large advantage in macroeconomic impacts. Comment ers stated that as a result, in multiattribute rankings and evaluations, the main renewables (wind, solar, hydro) and efficiency are much more highly rated and have consistently been s o for decades. Commenters provided the results of evaluations of energy resources that wer e plotted graphically as compared to coal.

One graph showed the average ranking of resources b ased on studies that generally took place before the focus on climate change became prominent , a second graph plotted those earlier results against a recent ranking, plus a plot of en ergy efficiency also using rankings from those
earlier studies.

Commenters stated that the summary of several evalu ations of energy resources showed a sharp and readily apparent break, with strong statistic c orrelation (r = 0.86), between ranking for efficiency and renewables (as attractive resources) and conventional (i.e., fossil fuels and nuclear) energy sources in both sets of rankings.

Commenters observed that evaluation of each technol ogy was based on the application of four primary criteria:

• Financial (FC): financial value of the technology a nd return on investment.615 • Technical (TC): characteristics of the technology a s a power source and its production capabilities.

• Environmental (EN): impact of power plant on local and regional environment, as
well as human health.

• Social/Economic/Political (SEP): impact on local ec onomy and communities, as well as congruence with over all national policies.

Commenters stated that the results indicate that wi nd, solar, hydropower and geothermal provide significantly more overall benefits than the rest e ven when the weights of the primary criteria clusters are adjusted during sensitivity analysis. Commenters observed that the only nonrenewable sources that appear in three of the 20 to p rank positions are gas and oil, while the rest are populated with renewable energy technologies. C ommenters remarked that these results have implications for policy development and for decisio n makers in the public and private sectors.
Commenters stated that one conclusion is that finan cial incentives for solar, wind, hydropower and geothermal are sound and should be expanded. Co nversely, commenters stated subsidies for
non-renewable sources could be diminished.

Commenters observed that an analysis of New England , in the examination of risk discussed above, showed that the resources mix was similar in the analysis of the base case and the zero
carbon case. Commenters stated this discussion of f actors other than the levelized cost suggests that on every dimension - risk related characterist ics, non-energy, economic impacts, and noncarbon environmental impacts - efficiency and renew able energy technologies are the preferred option.. Commenters added efficiency, wind and solar are the most attractive options by far relative to environmental and health impacts, and t hat fossil fuels become less attractive. Commenters also added nuclear power is barely compe titive with fossil fuels with carbon capture and storage. Commenters stated that, in add ition, the same point is made by showing the
correlation between resources costs and external co sts, and including all of the non-carbon
externalities associated with these resources stron gly reinforces the case for building a low carbon sector on the basis of efficiency and renewable energy technologies.

Commenters stated that the analysis externalities h as not only expanded in recent years to the broader issue of sustainability, but it has also be gun to look at important interactions between climate change and non-carbon externalities, like h eat waves and water use.

Commenters stated that the analysis of integrating much higher levels of wind and solar has progressed to utility sponsored detailed studies of the impact and necessary changes in the grid. Commenters referenced a study conducted for PJM mem bers, which included only one of the many measures identified above to improve grid mana gement - i.e. geographic diversity of renewables, which is a natural occurrence if high l evels of renewables are pursued, since the resource is generally dispersed - found that 30% pe netration of renewables is easily manageable.

Commenters stated that the analysis of the potentia l transformation has progressed to modeling how to build a sector that captures the synergies o f utilization of geographically diverse and widespread renewables, combined with key infrastruc ture components of transmission and the tradeoff with storage and demand response to lower cost and meet demand. Commenters stated616

further that, in fact, some have argued that the be nefits of stimulating innovation are so large that they can even offset the apparent "cost" of phasing out nuclear power altogether.

Commenters stated that their analysis results show that phasing out nuclear power would stimulate investment in R&D and deployment of infan t technologies with large learning potentials. Commenters contended that this could br ing about economic benefits, given the under provision of innovation due to market failures rela ted to both inter-temporal and international
externalities.

Commenters remarked that the evolution of the renew ables costs in the coming years will not be independent of the future of nuclear power, as well as of energy and climate policies.
Commenters stated that in this context of uncertain ty, policymakers need to understand the economic consequences of nuclear power scenarios wh en accounting for its interplay with
innovation and cost reduction in renewables.

Commenters stated that it is of utmost importance a t this moment that the legitimate challenges of building these institutions are not exacerbated by the opposition of powerful incumbents. Commenters remarked that the institutional changes are direct challenges to the structure on which nuclear power and other incumbents depend, an d open resources acquisition, economic dispatch and net metering dramatically reduce the r ents available to fund nuclear construction and sustain its high capital costs. Commenters stat ed that the two-way, information intensive system that allows integration and management of su pply-side and demand side resources involves an entirely different set of skills and as sets that are irrelevant, even, antithetical, to nuclear resources. Commenters concluded that, indee d, they replace central station generation.

Commenters stated further that the baseload dominat ed electricity system was created by policy support and subsidies for physical and institutiona l infrastructure that favored a specific type of technology. Commenters contended that the dominant incumbents will seek to slow or stop the spread of alternatives to defend what amounts to tr illions of dollars of investment and assets sunk
into fossil fuels.

Commenters stated that their diffusion can be slowe d by effects of path dependence and lock-in of earlier technology systems' high carbon technolo gies and supporting institutional rule systems have co-evolved, leading to the current state of "c arbon lock-in". Commenters also stated that, for example, reductions in cost and the spread of i nfra- structure supporting coal- and gas-fired electricity generation enabled the diffusion of ele ctricity-using devices and the creation of institutions, such as cost-plus regulation, which e ncouraged further investment in high carbon generation and networks. Commenters contended that this created systemic barriers to investment in low carbon energy technologies ... th e proposition that industries or technologies whose ascendancy is threatened by new competition t end to respond, carries some weight; and further it also suggests that actors, such as large energy companies, with substantial investments in the current system and its technologies, and rel atively strong political influence, are likely to act to frustrate the implementation of institutiona l changes that would support the implementation of low carbon technologies.

Commenters contended that the conflict between nucl ear technologies and the alternatives is inevitable and crucially important to determining t he future path of the electricity sector.617

Commenters stated that there are fundamental econom ic, technological, and institutional incompatibilities between the two approaches, which have given rise to a frontal assault by
nuclear advocates on the alternative resources and institutions that will support them.

Commenters stated that nuclear power is the least a ttractive asset, followed by the fossil fuels.
Commenters also stated that to defend itself from t he growth of superior alternatives, nuclear
utilities and advocates have launched an all-out at tack on policies that create opportunities for the
alternatives.

Commenters stated that UBS put it succinctly, "Larg e-scale power generation, however, will be the dinosaur of the future energy system: Too big, too inflexible, not even relevant for backup power in the long run." Lovins elaborates: "All of the above" scenarios are "undesirable for
several reasons"

1. Central thermal plants are too inflexible to play w ell with variable renewables, and their market prices and profits drop as renewables gain m arket share.

2. If resources can compete fairly at all scales, some and perhaps much, of the transmission built for a centralized vision of the future grid c ould quickly become superfluous.

3. Big, slow, lumpy costly investments can erode utili ties' and other provider's financial stability, while small, fast granular investments c an enhance it. Competition between those two kinds of investments can turn people tryi ng to recover the former investments into foes of the latter - and threaten big-plant ow ners' financial stability.

4. Renewable, and especially distributed renewable, fu tures require very different regulatory
structures and business models.

5. Supply costs aren't independent of the scale of dep loyment, so PV systems installed in Germany in 2010 cost about 56-67% less than comparable U.S. systems, despite access to the same modules and other technologies at the same global prices.

Commenters remarked that there is thus a fundamenta l choice to be made about the structure of the electricity sector in the 21st century. Comment ers stated that given the economic plight of nuclear power, the push to adopt policies that will force it into the low carbon resource portfolio is essentially an effort to resist the underlying e conomics and jerry-rig the outcome in favor of nuclear by negating or slowing the evolution toward more decentralized resources. Commenters contended that it is no longer a question of just s ubsidizing nuclear, although huge subsidies would be necessary to preserve it. Commenters state d that nuclear advocates have launched a frontal attack on the alternatives to slow or preve nt the installation of a new utility model.

Commenters stated that the potential contribution o f the non-nuclear low carbon alternatives, which are less costly and more environmentally beni gn, has only begun to be exploited and the prospects are quite good. Commenters contended thatthe prudent approach to resource acquisition is to build the institutional and physi cal infrastructure that achieves the maximum
contribution from the more attractive resources ava ilable in the near and mid-term.618

Commenters stated that dealing with a potentially f undamental change requires a broader perspective on potential benefits, as well as chall enges. Commenters suggested that the replacement of the incumbent fossil-fuel based regi me with the distributed approach constitutes a major change that challenges the incrementalist, marginal analysis of traditional cost-benefit analysis. Commenters concluded that a wide range of opportunities is opened that can change the game primarily by eliminating the wall between supp ly and demand behind which the 20th century baseload model was built including - the in terrelationship of battery powered vehicles and the electricity grid, the smart grid, the Inter net of things, and multiple roles for solar power.

Commenters stated that over the past 5 years their analysis has shown that even with massive
new subsidies in the first decade of the 21st centu ry, "nuclear renaissance" technology was an abysmal failure, unable to compete with the availab le alternatives. Commenters remarked that it is too big to properly meet demand, too expensive t o compete on cost, takes so long to build, it creates significant marketplace risk, and requires so much sunk capital that it causes severe financial risk. Commenters stated that, recognizing that the "renaissance" technology is uneconomic, over 90% of the projects that were cont emplated using the "nuclear renaissance" technology in the U.S. were cancelled or mothballed . Commenters observed that the projects that
have moved forward are behind schedule and over bud get.

Commenters stated that over the past 5 years their analysis has shown that even with massive
new subsidies in the first decade of the 21st centu ry "nuclear renaissance" technology was an abysmal failure, unable to compete with the availab le alternatives. Commenters remarked that it is too big to properly meet demand, too expensive t o compete on cost, takes so long to build it creates significant marketplace risk, and requires so much sunk capital that it causes severe financial risk. Commenters observed that recognizin g that the "renaissance" technology is uneconomic, over 90% of the projects that were cont emplated using the "nuclear renaissance" technology in the U.S. were cancelled or mothballed . Commenters stated that the projects that
have moved forward are behind schedule and over bud get.

Commenters remarked that faced with utter failure, the nuclear industry shifted its hope and hype to small modular reactor (SMR) technologies, but we have shown that this technology does not solve the fundamental economic problems of nuclear power. Commenters stated that SNR technologies remain much more costly than the alter natives and, while they are more attractive than large nuclear reactors on some of the other im portant economic characteristics, SNRs do not come close to being more attractive than the other alternatives available.

Commenters suggested that the rapid and stunning re versal of fortune suffered by SMR technology before it even got off of the drawing bo ard is emblematic of the 50 year history of commercial nuclear power in the U.S. and underscore s the folly of relying on nuclear power as one of the pillar on which the decarbonization of t he electricity sector stands. Commenters stated that historical experience and contemporary economi cs strongly support the conclusion that nuclear power will fail to deliver on its promises leaving a costly hole in the decarbonization undertaking.

Commenters stated that Babcock & Wilcox (B&W), one of the firms that had received a federal subsidy for SMR development, stepped back from the development of SMR technology because of the failure "to secure significant additional in vestors or customer engineering, procurement,619

and construction contracts to provide the financial support necessary to develop and deploy mPower reactors," and the company declared that it "still expects to license mPower reactor by
the mid-2020s."

Commenters stated that the issue, B&W insists, is t hat the market for small reactors is likely to be about three to five years further out than B&W a nticipated when it started the program in
2009.

Commenters stated that is because... the growth in demand for electricity remains weak, and may even flatten out over the next few years ...combine that fact with the low cost of natural gas plants in the current market, and he estimates the market for mPower has been pushed back three to five years. Commenters concluded that makes it h ard to justify significant investment now.

Commenters observed that now the company is looking at slowing investment and waiting until the market catches up with the technology.

Commenters stated that Westinghouse, another of the leading U.S. developers of small modular technology and the vendor supplying the design for the large nuclear projects under construction in the U.S., also announced it was stepping back fr om development of small modular nuclear technology. Commenters stated the reason for the de cision: Westinghouse could find no customers. Commenters observed that instead of push ing ahead to build SMRs, Westinghouse said it would focus on decommissioning of existing reactors. Commenters stated that the retreat came even though its utility partner, Ameren had co nvinced the state of Missouri to spend $40 million supporting the technology.

Commenters noted that Westinghouse used language th at is similar to the Babcock and Wilcox explanation, not only in blaming cheap gas, but als o in declaring that it did not want "to get
ahead of the market." Commenters remarked that in t he case of Westinghouse, their caution was tied to the failure to find orders for its AP600, a medium sized reactor that had been licensed fifteen years earlier and its claim that it needed a large book of orders, 30-50 reactors (7 to 10 GW given its design). Commenters observed that West inghouse had spent close to a decade propounding a theory of economic competitiveness th at had become gospel among nuclear advocates, yet, in stepping back it was clear that they "had no way to calculate the cost" and much larger subsidies would be necessary to move th e technology forward.

Commenters stated that the declarations of confiden ce in the technology could not hide the fact that in less than a decade its development was - gr inding to a halt. Commenters noted that the collapse of the SMR hype is extremely important in the policy context. Commenters contended that the failure of SMR technology makes it impossi ble to ignore the huge scale that nuclear power demands to succeed, and shifting that need up in the supply chain to a manufacturing facility does not eliminate its importance. Comment ers observed that the problem that utilities have in swinging the financing and development of l arge reactors is replaced by the even bigger problem that vendors have, but it is essentially th e same problem. Commenters stated that Westinghouse and B&W are big names in the nuclear s pace, had thrown a great deal of weight and money into advancing SMRs as the next big thing and the savior of the nuclear industry, but they failed.620

Commenters stated that the market recognizes what t he nuclear advocates and the EPA continue to ignore, and that is blaming cheap gas and a temp orary slump in demand ignores the fundamental changes in the electricity sector. Comm enters contended that a comprehensive view that includes all of the emerging alternatives and the history of nuclear technology and cost escalation explains why nuclear technology, large o r small, cannot find either customers or investors today and suggests that the market will n ot "catch up" any time soon. Commenters
concluded that the failure to find customers and in vestors is the ultimate rejection in a capitalist economy, and the only way to save the failed techno logy is to blame the market.

Commenters stated that ignoring the cost of constru cting new reactors (because the decision to build has been made), as suggested by the EPA is in correct because the costs have not yet been sunk, and the incremental or "to go" cost are subst antial. Commenters suggested that the "to go" costs of those nuclear reactors can be avoided; and moreover, all of the reactors under construction are well behind schedule and over budg et. Commenters also stated that further slippage and cost over runs are a distinct possibil ity.

Commenters stated that sound economic analysis and prudent resource acquisition require the responsible authorities to continuously evaluate on going projects. Commenters noted that in a competitive market economy, decisions to invest mus t be constantly revisited. Commenters also remarked that if the cost of the project rises or c osts for alternative projects fall sufficiently to make continuing on the chosen path uneconomic, the project should be abandoned.

Commenters stated that in South Carolina, their ana lysis showed that continuing to build the summer reactors would cost ratepayers $10 billion m ore than terminating the project, and in that analysis, the comparison was with natural gas becau se that was the referent that the utility had, incorrectly, selected. Commenters remarked that if the full range alternatives were considered in making the decision to continue construction, the w aste of resources would be even greater.

Commenters stated that, In fact, the initial decisi on to commence construction of the reactors was fundamentally flawed because it did not consider th e full range of alternatives. Commenters suggested that the EPA should not be rewarding such economically flawed analysis and decision making. Commenters stated that under the principle of allowing the states flexibility, it is their prerogative to impose uneconomic costs on their rat epayers, but the EPA should not be encouraging such behavior. Commenters suggested tha t, if anything, the EPA should state a strong preference for least cost solutions under th e proposition that the lower the cost of carbon abatement, the greater the reduction is likely to b e.

Commenters stated that given the high and uncertain cost of nuclear reactor construction, nuclear advocates who could not project what it would actua lly cost to build "renaissance" reactors, put forward "break even analyses; that is, they calcula ted how much nuclear reactors would have to cost to beat natural gas. Commenters stated, they h ave shown that those initial analyses were riddled with analytic flaws and erroneous assumptio ns, and the utility calculations continue to be plagues by flaws, as they showed in demonstrating t hat the "to go" costs in South Carolina are far higher than cancelling the reactor would be. Co mmenters stated that two recent studies of nuclear construction reaffirm that finding.621

Commenters cited the results of a generic study of U.S. nuclear costs compared to natural gas, prepared in 2013 by Hogue, that presents seven case s where he selects high and low values for the key variables from an underlying analysis of a wide range of possibilities. Commenters stated these involve the author's judgment about which sce narios are plausible from within a much wider array of possible outcomes, and involved a ra nge of assumptions on construction costs,
fuel costs and CO2 costs. Commenters also cited oth er outcomes for three other variables that Hogue analyzed - load factor, plant life and the co st of capital, but did not specify high and low cases. Commenters stated that gas is lower in cost in just under 90% of the scenarios, and its costs advantage in those scenarios is just over $38 /MWH. Commenters noted that in contrast, nuclear is less costly in just over 10% of the scen arios and its cost advantage is less than half that - just over $16/MWH. Commenters observed that natur al gas is a much more attractive option. Commenters concluded that since efficiency, wind an d solar with the cost trend have an advantage over gas that is larger than $16/MWH, it is safe to conclude that nuclear is never less costly.

Commenters stated that the results of an even more recent "break even" analysis support this conclusion, and the study used eight cost factors a nd two scenarios, one that was more favorable to nuclear (optimistic) and one that was less favor able (pessimistic) to create cost comparisons. Commenters stated that compared to Lazard's estimat e, nuclear is never preferred. Commenters explained that the study also uses Lazard costs to identify the break even against a portfolio made up of efficiency, wind and solar; and against that low carbon, non-fossil fuel portfolio, nuclear is two to three times as costly. Commenters concluded that with such a severe cost disadvantage, one can argue that new nuclear reacto rs do not belong in a Best System of
Emission Reductions.

Commenters stated that over the course of the past decade, as the "nuclear renaissance" was collapsing, aging nuclear reactors also began to en counter serious economic problems. Commenters remarked that operating costs were incre asing with age, while the construction and operating costs of the alternatives were declining rapidly. Commenters suggested that the abandonment of five aging nuclear reactors signaled another turning point in the industry.
Commenters concluded that wherever market forces ar e allowed to set the price of electricity, small, aging reactors cannot compete. Commenters fu rther stated that these reactors are losing money and their owners are contemplating shutting t hem down before their licenses expire.

Commenters, in text referred to as a discussion of unjustified and misguided subsidies, stated that nuclear power is the only technology that the EPA e xplicitly identifies as being in need of a subsidy and puts forward a concrete proposal. Comme nters stated that the EPA argues that a $6/MWH subsidy would keep aging nuclear reactors, w hich are not covering their costs, online as low carbon resources; however, the analysis is i ncorrect at a number of levels:

1. The operating costs of aging reactors are substanti al and growing rapidly. The shortfall is dependent on market conditions, which are moving in a direction that suggests the shortfall will continue to increase. If one compare s the full cost of keeping aging reactors online to the full cost of the alternatives, it is not at all clear that subsidizing nuclear is
cost effective.622

2. Even if subsidizing ageing reactors was a sound eco nomic recommendation, which it is not, the EPA's analysis makes no sense. Its proposa l is based on the assumption that the risk of closure is randomly distributed throughout the nuclear fleet. It is not; the risk is concentrated in specific types of reactors (small, single units) in specific markets (pure wholesale markets). As a result the vast majority o f the subsidy (94%) suggested by EPA is targeted at reactors that are not at risk.

3. The fact that EPA has singled out aging nuclear rea ctors as a potential target of additional subsidies not only violates the principle of techno logical neutrality, it also violates the principle of least cost in in several respects.

Commenters stated that the resource cost estimates for efficiency, wind and in the mid-term solar, suggest that these alternatives are lower in cost than operating reactors. Commenters further stated that, moreover, there is no doubt th at the potential contribution of these resources could easily offset the loss of low carbon output t hat might be lost as a result of the retirement of vulnerable aging reactors. Commenters contended tha t taking all costs into account, on a megawatt hour basis, the cost of keeping the at-ris k reactors online is much higher than $6/MWH. Commenters also suggested that the burden o f the subsidy would fall on the individual
states where the reactors are located and would be much heavier than suggested by EPA.
Commenters remarked that the social rate of return to subsidies has been much higher for renewables than for nuclear power both in terms of price, as shown above, and in terms of
innovation. Commenters concluded that if subsidies are necessary to improve prospects for carbon reduction, the last place they should go is to nuclear power.

Commenters stated that the EPA relied on the statem ent in the EIA annual outlook that reactors with 5.7 GW of capacity are at risk of closing, whi ch happens to equal 6% of current capacity. Commenters contended that the EIA was clearly refer ring to specific reactors, but the EIA assumed 6% of capacity is at risk in every state, w hich makes no sense. Commenters remarked that a part of a reactor cannot be at risk, and the risk factors attach to specific reactors in specif ic market conditions; the commenters provided a table showing retirement risk factors of the
nuclear fleet. Commenters further stated that the r eactors identified by utilities as at risk are
listed in the table but there are about two dozen m ore.

Commenters noted that, in fact, EIA has an accelera ted retirement scenario in which it not only assumes the 5.7 GW of at risk capacity is retired, but another 38GW of nuclear capacity is retired by 2040. Commenters stated that the list of reactor s compiled by the commenters covered just over 50GW of nuclear capacity that is vulnerable to early retirement based primarily on economic grounds, compared to the EIA total of 44GW by 2040. Commenters stated three factors that clearly establish the vulnerability to closure - merchant state (38GW), old (25GW) and standalone (24GW), and the reactors on the listwith two or more of these characteristics have 34GW of capacity.

Commenters stated that if the electricity sector "l ost" 34 GW of existing nuclear capacity and the reactors under construction were abandoned, as they should be on economic grounds, the reduction in low carbon resources would be easily r eplaced by efficiency and renewable energy
sources at a much lower cost.623

Commenters remarked that in the analysis of the pot ential impact of reduced nuclear output on carbon emissions modeled, it was assumed that all o f the at-risk reactor were retired and half of the additional capacity that was retired in the acc elerated nuclear strategy, which ran until 2040, was retired by 2030. Commenters concluded that ther e is four times as much potential carbon reduction from efficiency and renewable energy sour ces that is left on the table by the EPA standard than would be lost if this generation capa city were lost.

Commenters stated that the decision to begin the pr ocess of decarbonizing the electricity sector does not change the abysmal economics of aging nucl ear power one iota. Commenters stated that nuclear power cannot compete with a bevy of low car bon alternatives, especially in the time
frame in which the Clean Power Rule will be in effe ct. Commenters remarked that the internalization of the social cost of carbon improv es the prospect of all low cost alternatives as much as it helps nuclear power. Commenters contende d that EPA's mishandling of the nuclear analysis goes even farther. Commenters stated that even if EPA could show that a subsidy for aging nuclear power is necessary to achieve the car bon reduction goal, it has bungled the analysis of how big the subsidy should be and how i t should be distributed.

Therefore, the commenters concluded, EPA's suggesti on that nuclear power be singled out for a subsidy is fundamentally incorrect. Commenters stat ed that policies to accelerate the deployment of lower cost alternatives would be economically su perior, and only if EPA concluded that the abandonment of nuclear power would be so pervasive that the alternatives could not meet the goals set by EPA might there be a justification fora nuclear subsidy. Commenters contended that in fact, EPA has made no such showing and as they h ave shown in an analysis of efficiency and renewable energies, there is not one shred of evide nce presented to suggest that it could.

Commenters stated that rather than try to repair th e subsidy approach, the EPA should get out of the business of favoring specific technologies and be technology neutral, and if the EPA wants to get into the business of recommending subsidies for specific technologies, it should look at real world experience.

Commenters stated that with a clear path of more at tractive resources, we do not have to engage in the hundred year debate today, although there is growing evidence that prospects for high penetration renewable scenarios for the long terms are quite good. Commenters remarked that the available and emerging alternatives can certain ly carry the effort to meet the demand for electricity with low carbon resources a long way do wn the road, well beyond the time frame of the EPA Clean Power Rule and certainly long enough that the terrain of technologies available may be much broader before we have to settle for in ferior options like nuclear power.

Commenters stated that based on the history of perf ormance of the nuclear and the alternative industries, there are good reasons to expect the al ternatives will overcome their challenges more quickly and efficiently than nuclear technology. Co mmenters noted that in addition to the ongoing conceptual and design work, the nature of t he renewable technologies involved affords the opportunity for a great deal of real world deve lopment and demonstration work before it is deployed on a wide scale. Commenters described this as the antithesis of past nuclear development and the program that SMR advocates have proposed. Commenters stated that the alternatives are moving rapidly along their learnin g curves. Commenters remarked that the ability to move down the learning curves exhibited by renewables and alternative technologies624

can be explained by the fact that these technologie s actually possess the characteristics that allow for the capture of economies of mass production and stimulate innovation. Commenters stated that they involve the production of large numbers o f units under conditions of competition. Commenters suggested that nuclear power, even SMR t echnology, involves an extremely small number of units from a very small number of firms, with the monopoly model offered as the best approach. Commenters stated that, in short, the und erlying conditions and recent decades of experience suggest that the dramatic reversal of fo rtune nuclear advocates technology are hoping for is not likely, to say the least, while the cont inued, dramatic decline in the cost of renewables, is quite likely and the prospects for the developme nt of the building blocks of the 21st century electricity system are much better.

Commenters stated that the rule places too much emp hasis on burning natural gas, and "renewable" sources of electricity and too little e mphasis on nuclear power, which is a far better mitigation to world-wide CO2 pollution. Commenters pointed out that the proposed rule says that state plans can include measures and policies (e.g., demand-side energy efficiency programs and renewable portfolio standards) for which the st ate itself is responsible. Commenters asked why is there is no mention of nuclear power when ithas one of the lowest life-cycle CO2 emissions of any power source? Commenters also aske d why account for CO2 reduction from "renewable electricity" (RE) as being 100% when sub stantial amounts of CO2 (and other pollutants) are released into the atmosphere in the ir manufacture? Commenters stated that in these cases, the energy out is nearly carbon-free, but the life-cycle emissions of carbon, which is significant in terms of global climate, favors nucl ear by a large factor (>10). Commenters further stated that only about half of the CO2 savings ascr ibed to RE is applicable with respect to
climate. Commenters remarked that nuclear reactors have an Energy Return on Energy Invested (EROI) ratio on the order of 50, and thus much less CO2 is released per unit energy than for RE, and most of the carbon is generated during construc tion. Commenters stated that increasing the amount of nuclear capacity relative to the amount t hat would otherwise be available to operate is therefore a technically viable approach to support reducing CO2 emissions from affected fossil
fuel-fired EGUs. Commenters concluded that the rule should then strongly favor nuclear power plants over renewable, carbon-capture and storage ( CSS), or other technologies that begin with low EROI (e.g. PV) or that lower EROI (CSS). Commen ters stated that this is particularly true of a national policy and should give preference to the construction of new nuclear facilities.

Commenters stated that another way to increase the amount of available nuclear capacity is to preserve existing nuclear EGUs that might otherwise be retired. Commenters remarked that more significantly, existing nuclear power plants should receive policy preference to keep in operation for as long as the NRC deems safe, and since most o f the carbon intensity of nuclear power comes at its construction the existing nuclear plan ts are the lowest carbon footprint of any electrical generating source. Commenters proposed t he following recommended changes to the proposed rule:

1. CO2 saved should be calculated on life cycle emissi ons, taking into account the carbon intensity of the country of manufacture.

2. Nuclear power should be credited with greater life- cycle savings of CO2 than RE and savings should be accounted for when the plant prod uces electricity (and losses accounted for when the plant closes).625

3. Existing nuclear power plants which have already sp ent the vast majority of their CO2 emissions should be strongly favored by policy to r emain producing as long as the NRC

deems safe.

4. Low-carbon energy sources must be sustainable (hund reds of years) providing large energy return on energy invested and large carbon s avings compared to carbon emitted during manufacture. This favors nuclear over natura l gas.

Commenters also stated that the EPA needs to seriou sly consider the total lifecycle energy and pollution costs of the various technologies, partic ularly with respect to CO2 which is a global problem as it spreads through the atmosphere irresp ective of national or regional boundaries. Commenters concluded that the EPA needs to recogniz e nuclear power as the best path to a lowcarbon energy economy, providing the benefits of re duced PM2.5, NOX, SO2, and other pollutants.

Commenters advocated for avoiding premature retirem ent of nuclear EGUs and not building more. Commenters stated that a long data source-lin ked article, a tirade against the wasteful use of money and environment for nuclear energy, focuse d around Tritium, and radioactive water
contamination. Commenters remarked that the currentEPA Proposed Rule for existing power plants covers 30 nuclear facilities in the US, and 5 under construction. Commenters suggested that the economics don't pan out, the cost benefits to society are a burden of deceit and sickness. Commenters remarked don't let nuclear generation of electricity win over solar and wind! Commenters also stated that this is the final oppor tunity to affect change under the EPA Clean Power Plan, and that the final decision awaits; all three rulemaking documents are cross-linked
and related. Commenters contended that solar and wi nd have not been considered on their own
merits.

Commenters stated that reducing emissions from affe cted EGUs, in the amount that results from substituting generation at those EGUs with expanded low- or zero-carbon generation, right now spells n-u-c-l-e-a-r and natural gas. Commenters fu rther stated that expanding Nuclear Power Plant EGU's capacity for contamination IS NOT cost- effective, and using nuclear EGUs breeds

contamination.

Commenters requested that the EPA reconsider its de cision to include nuclear energy and natural gas as alternatives to be encouraged. Commenters re marked that the problems of nuclear waste storage, the pollution from uranium mining and the immense water usage of nuclear plants are all reasons to exclude it and focus on developing energ y efficiency measures on expanding wind, solar and geothermal electricity generation and sto rage.

Commenters stated that while natural gas may burn c leaner than other fossil fuels, the problem with methane leakage during fracking as well as pol lution of air and water make it highly problematic. Commenters stated that we should be fo cusing investment dollars on long term sustainability, that is, efficiency first, then sol ar, wind and geothermal power.

Comment 36: Commenters stated that uprates (and relicensing) s hould be counted as new generation.626

Response 36: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include the proposed provisions for n uclear units in the setting of state goals. Please see section V.A of the preamble for further discuss ion of the decision to exclude nuclear generation from BSER. Please see section V.A of the preamble for further discussion of the treatment of new and uprated nuclear plants.

The following are summaries of the specific public comments under this comment:

Commenters recommended that nuclear generation thathas had its licensing renewed for extension to an 80 year life should receive full CP P credit as new nuclear generation under the CPP compliance provisions.

Commenters stated that the Proposed Rule does not p rovide adequate incentives for states to support the continued operation of existing zero em ission resources, in particular nuclear generation. Commenters stated that the proposal sho uld be modified to provide these incentives through provisions that tighten standards if existi ng nuclear units close for certain (primarily economic) reasons, provide additional credit to sta tes in compliance demonstrations for nuclear unit performance, treat nuclear power uprates and l icense renewals as new generation, or all of
the above.

Commenters stated that the Grand Gulf Nuclear Stati on in Mississippi was uprated to get an additional 178 megawatts of electricity out of the plant, at a cost $250 million. Commenters stated that, under the present rules, this addition al electricity and investment are not credited.

Commenters stated that the EPA should allow 100% cr edit for uprates that have occurred at nuclear plants in a state, including those uprates that commenced prior to 2012. Commenters stated that the date of an uprate should be irrelev ant, and all uprates should be considered eligible action, with compliance credit allowed for these si gnificant CO 2 emission reductions.

Commenters also stated that utilities have used pow er uprates as a way to generate more electricity from their nuclear plants; prior to Apr il 2014, the US Nuclear Regulatory Commission approved 154 power uprates. Commenters said owners of these units completed all but 8 of these uprates prior to the end of 2012; these approved up rates resulted in a gain of approximately 7,035 MWe or about the equivalent of seven new reac tors.

Commenters recommended that an allowance for nuclear uprates should be available for use in a state's compliance plan. Commenters supported full crediting of post-proposal uprates in a state's compliance plan, but urged that the final rule mustallow for full crediting of nuclear uprates regardless of the timing of such uprates. Commenter s also urged that, in lieu of full crediting of uprates towards compliance demonstrations, EPA shou ld allow for the distribution of 'credits' to states/companies that undertook uprates as an early action program for addressing GHG emissions prior to 2014.

Commenters recommended that life extensions on exis ting units beyond the original Nuclear Regulatory Commission ('NRC') license of 40 years b e treated like 'new' units (i.e., given full credit in a state's compliance plan). Commenters re commended that the credit for these units should be applied each year after the initial 40-ye ar period (i.e., 41st year and beyond).627

Commenters noted that relicensing typically require s significant capital investment, and stated that application of compliance credit for those uni ts in operation beyond the 40-year period provides the proper incentives for companies and st ates to continue to invest in their nuclear
fleets.

Commenters stated that the EPA could provide incent ive to states to continue running their existing nuclear reactors by allowing states to cou nt generation from relicensed nuclear reactors toward compliance. Commenters stated that, without such an incentive, the high cost of the relicensing process could lead some marginal plants to shut down; however, if operators could receive compliance credit for the MWh produced by r elicensed reactors under a state plan, the owners and operators of those reactors would have a stronger incentive to pursue relicensing.

Commenters noted that the decision to relicense an existing facility is uncertain and can be expensive, but can also reduce the need for additio nal fossil generation, thus lowering emissions. Therefore, Commenters stated that it would be inapp ropriate to include assumptions about relicensed nuclear facilities in calculating state goals, but that the EPA should treat facilities tha t are able to successfully extend their licenses as i f they were 'new' facilities, by making new generation from those facilities eligible for use i n complying with a state emission goal.

Commenters stated that, for the purposes of state i mplementation and compliance plans, nuclear power plant uprate projects and nuclear plant licen se renewals should be treated as new nuclear capacity under Building Block #3.

Comment 37: Commenters stated that uprates should be credited at 100%, regardless of the date of the uprate.

Response 37: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include the proposed provisions for n uclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER. Please see section V. A of the preamble for further discussion of the treatment of new and uprated nuclear plants, an d section VIII.K of the preamble for further discussion of provisions in state plans of allowabl e actions that result in an adjusted CO 2 emission rate of an affected EGU.

The avoided emissions impact of existing nuclear capacity (inclusive of uprates prior to 2012) is already implicitly captured in the 2012 baseline da ta that represent existing EGU performance before the application of the BSER. As a result, i f the EPA were to allow compliance credit for generation from uprates performed prior to 2012, th at credit would effectively double-count the emissions impact of that generation and thus improp erly relieve existing EGUs of the intended emission reduction requirement incorporated in BSER

.

The following are summaries of the specific public comments under this comment:

Commenters recommended that EPA should allow 100% c redit for uprates that have occurred at nuclear plants in a state, including those uprates that commenced prior to 2012. Commenters628

suggested that the date of an uprate should be irre levant, and all uprates should be considered eligible action, with compliance credit allowed for these significant CO2 emission reductions.

Comment 38: Commenters asserted states do not have the power t o preserve nuclear plant operation.

Response 38: EPA acknowledges the comments and has determined th at the BSER for the final rule will not include the proposed provisions for n uclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER.

The following are summaries of the specific public comments under this comment:

Commenters stated that, by assuming no at-risk nucl ear power plants will be retired and all units currently under construction will come online, and by assuming 6% of the entire nuclear fleet is
at-risk and states can achieve additional emission reductions by keeping those units in operation, EPA fails to consider the possibility that an econo mic or other operational circumstance might exist by which the unit owner or the NRC might dete rmine that a facility has reached the end of its useful life. Commenters pointed out that the re cord related to nuclear units is insufficient to support EPA's assumptions in Building Block 3.

Commenters stated that the dispatch of nuclear gene ration in one state is the dispatch of nuclear generation in one state is often partly or totally dependent on the decisions of neighboring states. Commenters stated that in South Carolina, for examp le, the Robinson and Oconee nuclear facilities serve Duke Energy's customers in North C arolina almost exclusively. Commenters
stated that South Carolina cannot control whether D uke decides to retire those units in favor of other generating units that may be more economical, nor can South Carolina guarantee that the load that is currently being served by these units will continue to demand power at levels that would justify keeping these units online. Commenter s stated that, although South Carolina will be penalized under the Proposed Rule if Duke decide s (or is required) to retire one or more of these large nuclear units, South Carolina has no le gal authority or mechanism for ensuring that the units are preserved. Commenters concluded that even assuming that the EPA's novel interpretation of the term "system of emission redu ction" is correct, the ability to preserve existing nuclear capacity cannot be considered an " adequately demonstrated" method of reducing
emissions in situations where the states in which n uclear facilities are operating have no control over whether the facilities continue to operate.

Commenters stated that another flaw in EPA's propos al to penalize states that fail to "preserve" their nuclear capacity is that many states, includi ng South Carolina, have little control over whether nuclear capacity must be used or preserved. Commenters provided as an example, that states have no control over whether the NRC grants or denies an aging facility's application for a
license extension. Commenters stated that the NRC i s currently issuing 20-year license
extensions to facilities that have reached the end of their initial 40-year license, but has yet to determine whether it may issue longer extensions un der existing federal law. Commenters remarked that, moreover, the current impasse over h ow and where to permanently dispose of629

spent reactor fuel has led to significant uncertain ty over whether the NRC will be able to continue issuing and extending licenses under the A tomic Energy Act.

Comment 39: Commenters stated that credit should be allowed fo r carbon-free nuclear
investments.

Response 39: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include the proposed provisions for n uclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the treatment of new and uprated nuclear plants provisions for nuclear power

.

The following are summaries of the specific public comments under this comment:

Commenters contended that the proposal does not giv e enough credit for carbon-free nuclear investments that have already been made.

Comment 40: Commenters asserted that nuclear power should not be included in state goal
calculations.

Response 40: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include the proposed provisions for n uclear units in the setting of state goals.

The following are summaries of the specific public comments under this comment:

Commenters contended that final approval for commer cial operation of several nuclear power plants are out of the states' control and therefore should not be included in the state goal calculation. Commenters contended that expansion of nuclear energy is being penalized by EPA and given a lower emission guideline, resulting in additional compliance risk.

Comment 41: The proposed CO2 emisson target methodology for in corporating under construction nuclear plants is unfair to states whe re plants are under construction.

Response 41: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include the proposed provisions for n uclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER. Please see section V.A of the preamble for further discussion of the treatment of new and uprated nuclear plants, and se ction VIII.K of the preamble for further discussion of provisions in state plans of allowabl e actions that result in an adjusted CO2

emission rate of an affected EGU.

The following are summaries of the specific public comments under this comment:630

Commenters contended that EPAs methodology for inco rporating under construction nuclear plants into the rate-setting calculation significan tly increases the stringency of the CO2 emission targets for Georgia, South Carolina, and Tennessee- the only states where nuclear units are currently under construction. Commenters contended that this would constitute a substantial and unjustified inequity on these 3 states, and would c ontravene other overriding national energy policy objectives. Commenters added that including under construction nuclear assumes that future units will be constructed and always operate at 90 percent capacity factor no matter what actually occurs. Commenters stated that unforeseen circumstances could delay the completion of units under construction, and could cause extended outages that preclude achieving 90 percent capacity factor each and every year. Commenters con cluded that CPP should remove the nuclear generation from setting the state goals but allow b oth new nuclear generating units and uprating of existing nuclear generating units to be included as components of state plans and be factored into state compliance.

Commenters specifically noted the proposal was ineq uitable to customers in those states who are already paying for nuclear units under construction . Commenters contended that the customers would also need to pay to comply with the CPP. Comm enters estimated that the CPP could add as much as 20 percent to customer bills in 2030.

Comment 42: Commenters raised miscellaneous issues related to s tate plans that involve nuclear generation and the methodology for determining thata state is achieving its goal.

Response 42: EPA acknowledges the comments and has determined t hat the BSER for the final rule will not include the provisions we had propose d for under-construction units in the setting of state goals, and will allow incremental generation from new nuclear units to be applied towards compliance. Please see section V.A of the preambl e for further discussion of the treatment of new nuclear plants, and section VIII.K of the pream ble for further discussion of provisions in state plans of allowable actions that result in an adjusted CO2 emission rate of an affected EGU. Also, section VIII of the preamble for the final ru le identifies state plan designs that require projections for evaluating plan performance prior t o plan approval.

The following are summaries of the specific public comments under this comment:

Commenters stated that the EPA did not consider how nuclear preservation incentives would be
allocated. Commenters mentioned that if states woul d have to decide which reactors should receive subsidies and at what levels if they are to actually prevent closures, the industry could use such dynamics as additional leverage for progra ms covering the operating cost margin for all of a state's nuclear capacity, which the EPA would have to accept if the states show it is prudent for meeting the goals.

Commenters suggested that, in order to ensure that states have the information necessary to accurately evaluate proposals to include nuclear ge neration in their implementation plans, the EPA must include a thorough analysis of the economi c and technical feasibility of various nuclear generation resources. Specifically, the com menters suggested the EPA to provide631

credible and technically sound analyses of the foll owing: a. Completion of reactors in construction, with reference both to (1) current co st projections and project delays and (2) the historical record of reactor project delays and can cellations. b. The economic and technical feasibility of new reactor projects, including costoverrun trends, projected vs. actual completion times, and project cancellations (will overlap subs tantially with the above). c. The economics of existing reactors, including operating and maintena nce cost trends, plant characteristics, and merchant power market dynamics. d. The economic and technical feasibility of reactor power uprates, and the effect of extended power uprates o n overall plant economics and maintenance

costs.

Commenters stated that the EPA should clarify that that any state choosing to include construction of new nuclear projects in its state c ompliance plan should reasonably demonstrate the extent to which such nuclear generation would d isplace existing fossil-fired generation.

Commenters stated that the formula for setting goal s only includes 5.8% of nuclear and no hydroelectricity, and the formula for setting compl iance is not clearly stated. Commenters speculated that compliance might go in one of a few ways:

1. The EPA uses the same formula as they did for setti ng state targets (this would exclude all new hydroelectric, which goes against the impli cation that additional hydroelectric can be used to meet state goals),

2. The EPA calculates compliance emissions rates in a way that includes all generation (in which their original goals don't make much sense, s ince some states would already be in compliance), or

3. The EPA calculates compliance emissions rates with a new, yet-to-be-determined formula that may or may not include the low carbon generation from nuclear facilities.

3.3.9 CHP/cogeneration

This section discusses issues related to combined h eat and power (CHP) production, sometimes referred to as cogeneration, as related to Cleaner Generation Sources (Building Block 3).

Commenters had raised a number of issues related to this subsection which are organized by topics (comments) below. Responses are provided for these topics.

Comment 1: Comments regarding CHP units632

Response 1: See section V.A of the final rule preamble of the CPP for EPA’s response to this

comment

The following are summaries of the specific public comments under this comment:

Commenters discussed the benefits of CHP. Commenter s stated CHP is the simultaneous generation of electricity and useful thermal energy . Commenters stated these efficient systems make use of heat that normally would be wasted and save the fuel that would otherwise be used to produce heat or steam in a separate unit. Commen ters stated that as a result, CHP units are capable of reaching overall efficiencies of 60-80 p ercent and therefore of generating electricity at significantly lower emission rates than conventiona l electricity generating units. Commenters stated CHP technologies offer improved environmenta l quality, reduced energy consumption, and improved grid reliability. Commenters stated CH P reduces pollution by using the energy potential of fuel inputs twice or three times, yiel ding half to a third of the emissions that would result from separate applications.

Commenters stated that already harnessed by many ut ility, industrial, commercial, and institutional facilities, CHP is a proven and effec tive energy resource that can be immediately deployed to help address current and future global energy needs while reducing environmental impacts. Commenters stated there is approximately 8 2 GW of CHP installed in the United States, accounting for 12 percent of U.S. electricity gener ation. Commenters stated each year, this installed capacity decreases energy use by almost 1 .9 quadrillion Btu, and avoids the release of over 248 million metric tons of CO2 into the atmosp here. Commenters stated industry estimates indicate that existing sites could add another 132 GW of CHP. Commenters stated that installing just 40 GW of additional CHP would save energy user s $10 billion a year, 1 quadrillion Btu, and 150 million metric tons of CO2e annually. Commenter s stated this is why President Obama has called for 40 GW of new, cost effective CHP by 2020

.
Commenters stated that CHP is adequately demonstrat ed and that today there are more than 4,000 CHP installations throughout the United State s. (Figure 5 U.S. CHP Installations) Commenters stated CHP capacity outside the United S tates is even greater, as the U.S. is ranked only thirteenth in the world for the share CHP has of total power production. Likewise, commenters stated that WHP capacity in Asia far exc eeds U.S. capacity, and that CHP supplies less than 9 percent of U.S. electric capacity, well below the levels in other industrialized economies like Germany (13%), Russia (31%) or Denmark (53%). Commenters stated that CHP is "adequately demonstrated," but deployment needs to be expanded with favorable policies. Commenters said that State compliance plans under 1 11 (d) can stimulate further investment in the United States. Commenters continued stating tha t EPA has repeatedly recognized the value of CHP as a proven cost-effective technology to red uce greenhouse gas emissions. Commenters also stated EPA has incorporated CHP in its greenho use gas best available control technology (BACT) guidance and issued awards to various CHP En ergy Star projects in recognition of their emissions reductions. Commenters stated that many s tates have likewise recognized the emission benefits of CHP and WHP and presented that 18 state s recognize WHP as a renewable or efficiency resource in their state portfolio standards because WHP produces electricity with no incremental combustion or emissions. (see Appendix - "State WHP Catalogue")633

Comment 2: Commenters stated the EPA should clarify that CHP t hat combusts renewable fuels is considered renewable energy.

Response 2: See section VIII.K of the final rule preamble of t he CPP for EPA’s response to this comment. The following are summaries of the specifi c public comments under this comment:

Commenters stated that not all CHP facilities use f ossil fuels to generate heat and electricity. Commenters stated many use renewable fuel sources s uch as solar, geothermal, or biopower (including wood waste, crop residue, energy crops, landfill gas, and manure and wastewater biogas). Commenters stated the Clean Power Plan est ablishes applicability criteria such that a facility would generally not be considered an affec ted EGU if it burns primarily (over 90 percent) non-fossil fuels. Commenters stated these renewable CHP facilities should, therefore, not be considered affected EGUs, regardless of size or electricity sales to the grid. Commenters stated that like the non-affected CHP units, genera tion from new or expanded renewable CHP units displaces demand for generation from affected EGUs and, therefore, emissions from
affected EGUs. Commenters stated EPA should make cl ear that it will approve state plans that account for new and expanded renewable CHP as a com pliance tool in the same way that generation from other new and expanded non-affected CHP units can serve as a compliance tool.

Commenters stated, however, renewable CHP units nec essarily utilize renewable fuel resources and generation from these units should be considere d renewable energy generation. Commenters stated unlike for other compliance tools, the Clean Power Plan allows a state to incorporate generation during the compliance period from existi ng renewable facilities-that is, generation from facilities constructed before publication of t he Proposed Rule-when demonstrating compliance with that state's goal. Commenters state d that consistent with this approach, it urged EPA to clarify that generation from non-affected CH P units constructed before June 2014 that primarily utilize renewable fuels qualify as renewa ble energy generation and may, therefore, be considered an approvable compliance tool in state p lans.

Commenters asserted that EPA has already establishe d a broad set of criteria for including Combined Heat Power (CHP) biomass units as renewabl e by using U.S. EIA state level data and therefore should complete the Accounting Framework for Biogenic CO2 Emissions from Stationary Sources. Commenters stated, for example, Kentucky has three facilities that are
considered to be CHP facilities which were included in the 2012 baseline renewable data; two of
those are biomass waste CHP facilities with the thi rd being a CHP involving off-site steam
utilization.

Commenters noted that EPA has permitted limited bio mass resources for use in a large 31 MW California biomass CHP plant in recent regulatory rulings which reinforces the fact that there are
some biomass resources that can contribute to GHG r eduction goals when wisely used for biopower. Commenters urged EPA to incorporate bioma ss-fueled CHP in its IPM modeling.

Comment 3: Commenters addressed encouraging CHP as a componen t of State Clean Power
Plans.634

Response 3: See sections VIII.I and VIII.K of the final rule p reamble of the CPP for the EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:

Commenters stated that depending on the current sta tus and specific structure of the State's portfolio standards, modification of an existing RP S or implementation of a new RPS can be a useful vehicle for encouraging CHP as a component o f a State Clean Power Plan. Commenters
stated that EPA should make clear to the States tha t it would approve State compliance plans that encourage implementation of CHP through portfolio s tandards or other policies.

3.3.10 Hydropower

This section addresses comments on CPP provisions r elated to hydropower.

Commenters had raised a number of issues related to this subsection which are organized by topics (comments) below. Responses are provided for these topics.

Comment 1: Commenters stated that hydropower should be treate d equally with other RE sources in the proposed rule.

Response 1: The EPA generally agrees. In response to addition al analysis and many comments, the 111(d) final rule differs from the proposal – g eneration from incremental hydropower added after 2012 is considered, with other low- and zero- emitting sources, to displace existing fossil emissions and may be used by states to reduce a rat e. For the purpose of adjusting a rate generation during the compliance period from source s added since 2012 is eligible. See sections V.A, V.E, and VIII.K of the preamble of the final C PP. Regarding data year issues for hydrologic variability, see section VI.D of the pre amble to the final CPP for EPA’s response to
this comment.

The following are summaries of the specific public comments under this comment:

Commenters stated that the proposed rule should tre at all RE sources, including hydropower, equally. Commenters stated that the EPA must ensure that all non-emitting energy resources, including new hydroelectric generation, are treated equally as compliance options under the Clean Power Plan. Commenters explained that, althou gh states have discretion to count both new hydropower installations and incremental capacity i ncreases at existing dams, the rule does not ensure that states must treat this new hydropower t he same as other RE resources, such as wind and solar, regardless of the size of the facility o r incremental increase. Commenters added that treating hydropower differently places it at a cons iderable competitive disadvantage with other RE resources and ignores the significant carbon emi ssions savings that this resource has generated, and will continue to generate, over time , and that hydropower, as an RE resource is especially important because, unlike intermittent r esources such as wind and solar, hydro is635

capable of providing base load power and ancillary services which are essential to the stable operation of the grid.

Commenters stated that, in order to maximize the am ount of greenhouse gas emission reductions, the EPA will need to treat hydropower equitably und er the proposed rule, particularly in comparison to the treatment of other renewable and clean energy resources. Commenters also remarked that the Agency should amend the proposal to adopt hydropower-specific considerations and provisions to better account forand accommodate hydropower resources, such as: allowing states to utilize generation from hydropower assets as a compliance option, even if that generation is not used in establishing state goals; utilizing an averaging of years to set the baseline (as opposed to the single year of 2012); as well as a rolling compliance average or water availability compliance "safety valve."

Commenters stated that, in the proposed rule, there is disparate treatment of hydropower and biomass between the standard-setting methodology fo r a state and what counts toward compliance with that standard, and that the final r ule should resolve this mismatch.

Comment 2: Commenters stated that existing hydropower should count towards compliance.

Response 2: The EPA disagrees. In response to additional analy sis and many comments, the 111(d) final rule differs from the proposal – gener ation from incremental hydropower added after 2012 is considered, with other low- and zero-emitti ng sources, to displace existing fossil emissions and may be used by states to reduce a rat e. For the purpose of adjusting a rate generation during the compliance period from source s added since 2012 is eligible. Generation from existing hydropower, consistent with the treat ment of generation from other low- and zeroemitting sources, does not displace existing fossil emissions. Existing hydropower is not considered in the setting of a CO2 emission perform ance standard. See sections V.A, V.E, and VIII.K of the preamble of the final CPP. Regarding data year issues for hydrologic variability, see section VI.D of the preamble to the final CPP f or EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:

Several commenters stated that existing hydropower generation should be considered as a compliance option. Commenters stated that all types of hydropower should be recognized as compliance options, including conventional, increme ntal hydropower, retrofits, capacity additions, efficiency upgrades, pumped storage, mar ine and hydrokinetics, conduits, and new development. Commenters stated that a huge source o f our emission-free electricity available to cooperatives, the Federal Hydro Power, is ignored b y the CPP. Commenters also noted that hydropower currently accounts for 20 percent of the power supply for the commenters’ cooperative. Commenters stated that, if hydropower is not considered as a compliance option, it is not clear how states with significant hydropower will benefit from it. Commenters stated that, in its most basic definition, renewable energy is e nergy that comes from resources that are naturally replenished, and hydropower is just that; therefore, states should be afforded compliance credit for existing hydropower facilitie s, independent of incremental additions, to meet the renewable standards or achieve compliance with the emission rate goals set by the CPP.636

Commenters stated that it is critical that credit i s awarded for all renewable and energy efficiency investments under state plans in Building Blocks #3 and #4. Commenters explained that the commenters’ organization has undertaken responsible portfolio options in the past and should receive credit for those past good deeds, such as c redit for early action before 2012 and clear
benefit for resources that come on-line between 201 2 and 2017. Commenters also noted that hydropower investments, as well as those in wind, s olar, and landfill gas, were made knowing the likelihood of future carbon regulations and, as such, they should not be denied credit under any state plans simply because they are pre-existin g projects.

Commenters stated that the EPA's treatment of hydro power in the proposed rule fails to properly acknowledge the benefits of this resource, and plac es hydropower at a disadvantage with respect to other RE resources for purposes of counting towards states' compliance obligations. Commenters added that the EPA erred in not recogniz ing the full environmental benefits of hydroelectric generation in the Proposed Rule, and should explicitly allow for the use of hydropower resources for compliance purposes.

Commenters stated that, in order to account for the full potential of emissions reductions from clean energy sources, hydropower must be treated eq uitably compared to other forms of renewable energy and denoted as a compliance option for states. Commenters stated that, currently, hydropower is not included in Building B lock 3, and it is not clear whether states can use hydropower as a compliance option. Commenters n oted that hydropower is the largest source of renewable electricity in the U.S., and hydropowe r (and pumped storage) plays an important role in ensuring grid reliability. Commenters state d that, as a flexible base load source of power, hydropower generation is a critical integrator of i ntermittent renewable energy generation and also allows asset owners to utilize fossil fuel gen eration resources more efficiently, reducing
emissions even further. Commenters stated that meet ing EPA's targets will be significantly challenged without hydropower's current and future contributions to a clean energy future. Commenters stated that, for the CPP to be successfu l, ensuring the protection and preservation of generation from the nation's existing hydropower fa cilities, as well as promoting new development, is critical. Commenters stated that th e proposed rule appears to undervalue hydropower's clean air benefits and future growth p otential. Commenters noted that the DOE has identified significant opportunities for developmen t in the hydropower sector, referencing an April 2012 study, which estimated 12 GW of hydropow er potential at non-powered dams across the U.S., and an April 2014 study, which estimated over 65 GW of potential new stream-reach hydropower development. Commenters stated that, in response to these results, the DOE has launched a Hydropower Vision initiative to create a roadmap for realizing this growth. Commenters stated that, as the EPA moves forward on the rule, it should provide clear guidance and direction to the states on the value of hydropo wer to meeting the goals of the CPP. Commenters stated the EPA must also ensure that hyd ropower is treated equitably under the final rule and included as an eligible compliance option in state plans.

Commenters remarked that the use of hydro as a low carbon generation source has for decades helped cooperatives meet member loads in a cost eff ective and environmentally responsible manner, and utilities purchasing hydropower from th e federal government should be allowed to use the low carbon generation for calculating compl iance in a state or federal plan. Commenters added that the CPP should not justify limiting the use of existing hydro to show compliance637

simply because it was not included in the modeled r ate and doing so is inconsistent and arbitrary with other compliance options used by the CPP to es tablish state rates and compliance options.

Commenters stated that existing hydroelectric gener ation should receive full CPP credit as a renewable energy resource so that hydro generation has equivalent standing to other renewable energy resources for CPP compliance.

Commenters stated that the only rational method for setting a state RE target is to take into consideration existing capacity of all RE sources w ithin the state and RE potential specifically in each state for each resource, and that includes hyd ropower. Commenters also pointed out the EPA's rationale for excluding hydropower, that it c ould distort regional targets that are later applied to states lacking that existing hydropower capacity, is not valid because the EPA did not apply the same rationale to other types of RE, such as wind, where there may be a lack of capacity and/or potential.

Commenters disagreed with the EPA's reasoning for n ot including existing hydroelectric generation in the demonstration of compliance with the proposed targets. Commenters stated that all but two states have hydroelectric generation an d should be able to include this non-emitting generation in compliance demonstrations; however, u nder the proposed CPP, only new hydroelectric generation can be included in complia nce demonstrations. Commenters recommended that hydroelectric generation and all o ther non-emitting sources should be treated in the same manner; that is, exclude them from the goal calculation, but allow them in the demonstration of compliance at the discretion of th e affected source.

Commenters stated that the EPA should credit hydrop ower as a compliance option and thereby provide meaningful recognition of hydroelectric gen eration to encourage those states to continue
to use this low-cost renewable resource.

Commenters supported inclusion of existing hydropow er as a compliance option and stated that it is reasonably clear that, for the most part, opt imizing hydropower output and energy efficiency
investments are the least-cost alternatives in the electric sector and should receive priority in developing the methodology for implementing the 111 (d) rule.

Commenters stated that, despite the vast potential of water power at existing impoundments, and clear congressional policies favoring development o f that potential, the EPA's proposed rule largely ignores hydro and places hydro at a disadva ntage compared to other carbon abatement options under the proposed rule. Commenters describ ed the RC Thomas Project in southeastern Texas, which project takes advantage of one of the most promising untapped sources of renewable power potential in the nation by utilizin g the head and flow of an existing nonpowered dam at the largest water impoundment in Tex as that is currently devoted exclusively to water supply. Commenters stated that the RC Thomas hydroelectric project is precisely the type of renewable energy development that Congress and t he Executive Branch repeatedly have sought to promote over the past decade, beginning w ith the Energy Policy Act of 2005. Commenters concluded by stating that, besides exclu ding existing hydropower generation from the calculations, the proposed rule, and the EPA's underlying modeling, presumes zero future growth in hydropower generation and that, by exclud ing hydropower entirely from its modeling,638

the EPA unfairly and unwisely ignores hydroelectric ity's current and future contributions to reducing the energy sector's carbon footprint.

Commenters stated that hydropower should not be "in visible" as states make compliance choices. Commenters stated that if a state deems hy dropower generation either "essential" or "at risk" because it is nearing the end of its design l ife, facing potential limits on operational flexibility, or scheduled for relicensing before 20 30, the EPA should allow that state to add that hydro generation in units of estimated MWh into the denominator of its goal/target compliance calculation in the place of other RE/EE measures. C ommenters stated, where this is done, states should be able to adjust their hydro contribution y early based on updated weather information. At a minimum, commenters suggested, the rule should do more to ensure that these hydropower
resources are maintained and enhanced in order to c ontinue their contribution to a lower CO2
emission future. Commenters stated a bad result wou ld be for the proposed rule to lead to a lowcost, CO2 emission-free resource going offline due to being replaced by, or being bumped by, higher-cost CO2 emission-free resources or natural gas due to the incentive structures associated with the BSER. Commenters also stated that, in case s where a state RPS includes hydropower, it should be allowed to displace additional renewable requirements, as calculated under Building Block 3. Commenters stated that, for example, the 1 5 percent goal for renewable energy in South Dakota was based on its total 2012 generation of 12 ,034,206 MWh, which includes 5,980,965 MWh of hydropower, nearly half of the total state g eneration. Commenters stated because existing hydropower is used in making the calculati on of renewable energy targets, it should also be allowed in state plans as an eligible form of re newable energy under Building Block 3. Commenters stated that the EPA should expressly all ow state plans to designate all forms of new and incremental hydro for compliance, whether owned or contracted for. Commenters stated this should include clearly establishing both domestic a nd out-of-nation hydro (such as Canadian hydro) as eligible renewable resources.

Commenters stated that the provision to allow exist ing renewable energy should be extended to include existing hydroelectric power.

Commenters stated that the EPA's decision to exclud e existing hydropower facilities is directly contrary to policies in the Northeast, where existi ng hydropower is a major component of RPS compliance. Commenters added that failing to accoun t for the role of hydropower in the RPS requirements that form the EPA's regional renewable generation targets results in a substantial
overestimation of the amount of renewable resources that can be added in the Northeast, and particularly in New York.

Commenters remarked that excluding existing hydropo wer is inconsistent because hydroelectric generating resources produce zero-carbon electricit y, and that the EPA should count hydro generation as part of the RE resources.

Commenters stated that including existing hydropowe r would result in a balanced treatment of all RE generation that would reflect how these reso urces contribute to the CO2 emissions from covered plants.

Commenters stated that excluding nuclear and existi ng hydropower is a major flaw because these technologies are the two largest generators of very -low-carbon electricity in the U.S., and639

omitting most or all of the electricity generated b y the technologies that have already made the greatest contributions to accomplishing the stated goal of the CPP requires justification. Commenters added that, although the EPA has quite r easonably explained why they do not expect any new hydroelectric capacity to be built i n the foreseeable future, clear and compelling overall justification for omitting this generation from the state goal-setting formula is not present in the proposed rule.

Commenters stated that excluding hydroelectricity a s a renewable resource is counter-intuitive; Commenters noted that hydroelectric power does not result in carbon emissions, utilizes a replenished natural resource (water), and can provi de reliable and planned production of electricity.

Commenters stated that Arizona was built on hydropo wer and should get some credit for its hydroelectric investments, which have provided carb on-free energy reliably for many years.

Commenters stated that the EPA's decision to discou nt the value of domestic hydropower is completely puzzling because hydropower is a renewab le, efficient, and reliable source of energy that does not directly emit greenhouse gases or oth er air pollutants, and that can be scheduled to produce power as needed, depending on water availab ility. Commenters added that, if the EPA does not want energy costs to rise substantially, t he EPA needs to rethink the discount of domestic hydropower. Commenters also pointed out th at hydropower is essential to new
"intermittent" renewables such as wind and solar in that hydro output can be quickly and easily turned up or down to keep the electrical grid in ba lance.

Commenters stated that it is unreasonable and discr iminatory to exclude existing hydro because it is a non-carbon emitting resource and has been p art of power supply for the North Iowa Municipal Electric Cooperative Association members, as well as others, for decades, and excluding existing hydro penalizes members for choo sing this non-carbon emitting power supply
resource over others. Commenters added that the exc lusion of the hydroelectric resources further exacerbates the stranded cost problem, as additiona l non-carbon emitting resources will need to
be added to lower carbon emissions from other sourc es.

Commenters stated that the proposed rule fails to a dequately recognize the actual carbon intensity of states, utilities and, most importantl y, customers, using this carbon-free source of electricity, and in fact, the EPA's methodology app ears to penalize states with existing hydropower by increasing renewable energy targets a nd has the potential to perversely create excess generation for a utility and therefore unnec essary higher costs for customers. Commenters provided a graph that compared the EPA's calculated baseline carbon intensity for Montana, the EPA's interim and final goal and the carbon intensi ty of the electricity supply before and after hydro was purchased by the commenter's organization ; commenters noted that the graph illustrates actual customer impacts resulting from ignoring existing hydropower in the proposed Clean Power Pan methodology of calculating and redu cing carbon intensity. Commenters explained that asking customers to acquire other fo rms of renewables or additional energy efficiency that is not cost effective to further de crease the already low carbon intensity of their energy supply will result in additional rate increa ses and will likely increase the overall mass of carbon dioxide associated with our portfolio. Comme nters concluded by requesting that the EPA recognize the importance of existing hydropower by supporting policies that recognize the many640

benefits of hydropower and promote its continued us e, enhancement and expansion; encouraging the relicensing of existing hydro facilities by all owing the carbon-free emissions from relicensed hydro plants to be used for compliance; allowing st ates to use existing hydropower for compliance; and, not penalizing states by using exi sting hydropower to increase renewable
energy targets.

Commenters stated that the CO2 reductions from hydr opower production benefit Minnesotans regardless of whether the generation is sourced fro m existing or new generation resources or
whether these resources are located within Minnesot a or elsewhere. Commenters requested that the EPA count all hydropower serving Minnesota reta il customers towards state CPP compliance goals.

Commenters stated that utilities and their ratepaye rs that have existing hydropower in their renewable energy portfolio should be given credit f or having a renewable, non-emitting resource that displaces fossil-fuel generation. Commenters e xplained that, for at least 10 states, hydropower makes up nearly half or more of the gene ration capacity and that these states have a legacy of clean, renewable and non-emitting energy, which has displaced CO2 emitting resources, and put them among some of the lowest CO 2 emitting states in the nation, and that without this hydropower, energy would have to be re placed likely by natural gas, which would increase CO2 output of these traditionally clean st ates. Commenters added that it would be consistent with the methodology that the EPA employ s in its calculation of renewable energy under Building Block 3 to include existing hydropow er.

Commenters stated that, as a critical non-emitting resource that has other positive attributes for grid reliability, hydropower should not be disadvan taged in any rules setting or implementing carbon reduction goals.

Commenters requested the EPA credit existing hydrop ower, including any upgrades taken at those existing resources and new technology deploym ent (e.g. run of the river technology, wave or tidal technology), in the same manner as wind an d solar technologies. Commenters stated that the proposed rule should be improved by correctly a ccounting for present hydropower generation and hydropower generation's projected growth. Comme nters added that hydropower supplies reliable, carbon-free electricity and states and markets must be encouraged to keep optimized hydropower capacity on-line into the future.

Commenters stated that the city of Fremont, Nebrask a purchases hydropower from the Department of Energy Western Area Power Administrat ion, but would not be able to offset any carbon emissions from coal with this power source.

Commenters stated that hydropower generation from b oth federal and non-federal hydropower
resources should receive emission credits towards t he state's compliance obligations under the proposed rule.

Commenters stated that, because the EPA unreasonabl y refuses to acknowledge existing hydropower as RE in the goal calculations, the prop osed rule would effectively displace Idaho hydroelectric generation instead of mitigating or r educing emission levels from affected unit fossil generation plants.641

Commenters stated that the EPA's treatment of hydro power is a disadvantage for regions of the country that rely on zero-emission hydropower resou rces as a significant proportion of their renewable generation. Commenters stated that the EP A should recognize the importance of the continued contribution of hydropower to the nation' s renewable energy resources, and the EPA should revise its approach to allow states to countexisting hydropower generation toward their renewable energy goals. Commenters stated that, for the purposes of calculating a baseline level of renewable generation in each state, the EPA incl uded only non-hydropower renewable energy in the target-setting calculations and in the renew able generation levels used to inform the state goals. Commenters stated that the EPA also assumed that state RPS policies often exclude existing hydroelectric facilities from RPS accounti ng, but, recognizing that there is potential for the development of new hydropower resources, the EP A proposed that a state may choose to include generation from new hydro facilities as a m ethod of compliance with a state's goal. Commenters stated that, in this approach to goal ra te-setting and compliance, the EPA has failed to recognize the details, limitations, and variatio ns in state RPS statutes. For example, Commenters stated, North Dakota only counts new hyd ropower generation for compliance with its RPS, but North Dakota recognizes the importance of existing hydropower in how it calculates the amount of electricity necessary to meet the RPS . Commenters stated that a utility may deduct the proportion of electricity obtained from hydroel ectric facilities from its baseline of total retail sales, lessening the burden. Commenters stated the National Hydropower Association supported a similar approach when Congress was discussing a n ational renewable standard, and other states, such as Kansas, include existing hydropower in their definition of renewable energy resources for compliance purposes under their RPS.

Comment 3: Commenters stated that hydropower capacity built a fter 1995 should count towards compliance.

Response 3: The EPA disagrees. In response to additional anal ysis and many comments, the 111(d) final rule differs from the proposal – gener ation from incremental hydropower added after 2012 is considered, with other low- and zero-emitti ng sources, to displace existing fossil emissions and may be used by states to reduce a rat e. For the purpose of adjusting a rate generation during the compliance period from source s added since 2012 is eligible. Generation from existing hydropower, added before 2012, consis tent with the treatment of generation from other low- and zero-emitting sources, does not disp lace existing fossil emissions. See sections V.A, V.E, and VIII.K of the preamble of the final C PP. Regarding data year issues for hydrologic variability, see section VI.D of the pre amble to the final CPP for EPA’s response to
this comment.

The following are summaries of the specific public comments under this comment:

Commenters stated that hydroelectric power plants b rought online since 1995 should be included as compliance options. Commenters stated that exist ing hydropower plants qualify as compliance opportunities because hydropower resources represen t an important source of emissions-free power and can play a pivotal role in reducing the c arbon-intensity of the power sector. Commenters explained that the current proposal prop erly excludes the vast majority of preexisting hydropower generation from the baseline of the target-setting framework; however,642

additional hydropower projects built after 1995 wer e determined to be cost-effective due in part to the climate change benefits of hydropower in man y states, including Oregon, and hydropower resources brought on-line beginning in 1995 should be eligible for compliance.

Comment 4: Commenters stated that large-scale hydropower plan ts should be considered as a compliance option.

Response 4: The EPA generally disagrees. In response to addit ional analysis and many comments, the 111(d) final rule differs from the pr oposal – generation from incremental hydropower added after 2012 is considered, with oth er low- and zero-emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance p eriod from sources added since 2012 is eligible. Generation from existing hydropower, cons istent with the treatment of generation from other low- and zero-emitting sources, does not disp lace existing fossil emissions. See sections V.A, V.E, and VIII.K of the preamble of the final C PP.

The following are summaries of the specific public comments under this comment:

Commenters stated that large hydropower should be c onsidered by the Federal government as an emission-free generating resource that is already i n place, but is not incorporated into the proposed plan. Commenters explained that the limit on large hydropower is artificial and only in place to increase market share for other renewables , and, at the very least, the Federal hydro system should get credit for the generation under t his plan.

Commenters remarked that Germany moved to renewable energy large-scale hydro as a part of their energy transition, but, in the U.S., the only hydro that counts is small-scale hydro. Commenters explained that Germany and many in the e nvironmental community understand that no matter the size of the dam, any electricity prod uction is hydropower.

Commenters stated that excluding existing large hyd ropower is significant for several reasons, including: it is capable of producing large amounts of electricity, it is capable of operating in a baseload capacity, some existing capacity is at ris k of retirement (mostly because of ecosystem restoration efforts), there is very low feasibility for capacity increases in the compliance period, and it has significant non-air quality impacts. Com menters added that hydro can also operate as a dispatchable resource, filling the same role as NGC C plants in following load and providing reserve and peaking capacity; and thus, the preserv ation of hydro capacity would directly displace reliance on fossil fuel resources that may otherwise be called upon. Commenters remarked that the EPA's reasons for not including l arge hydro resources in the BSER are sound,
but inclusion of nuclear is no more sensible than i nclusion of hydro would be, especially considering the unwarranted value placed on the at- risk nuclear capacity.

Comment 5: Commenters stated that small hydropower plants wit h capacity less than 10 MW should be included in the state goal calculation.643

Response 5: .The EPA agrees that incremental hydropower that m ay come on-line after 2012 may be used to establish a CO2 emission performance rate. In response to additional analysis and many comments, the 111(d) final rule differs from t he proposal – generation from incremental hydropower added after 2012 is considered, with oth er low- and zero-emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance p eriod from sources added since 2012 is eligible. Generation from existing hydropower, cons istent with the treatment of generation from other low- and zero-emitting sources, does not disp lace existing fossil emissions. See sections V.A, V.E, and VIII.K of the preamble of the final C PP.

The following are summaries of the specific public comments under this comment:

Commenters stated that small existing with capacityless than 10 MW should be included in the state goal calculation. Commenters did not provide an explanation for their request.

Comment 6 : Commenters expressed support for low-impact hydro power and commented on the potential negative impacts of hydroelectric dams.

Response 6 : The EPA agrees that incremental hydropower can be considered. In response to additional analysis and many comments, the 111(d) f inal rule differs from the proposal – generation from incremental hydropower added after 2012 is considered, with other low- and zero-emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generatio n during the compliance period from sources added since 2012 is eligible. Generation from exist ing hydropower, consistent with the treatment of generation from other low- and zero-emitting sou rces, does not displace existing fossil emissions, even if certified by a third party for o ther impact See sections V.A, V.E, and VIII.K of the preamble of the final CPP. Impact of hydropo wer not related to the Clean Air Act are beyond the scope of the CPP.

The following are summaries of the specific public comments under this comment:

Commenters expressed support for low-impact hydropo wer, and that independent 3rd party certification of hydroelectric projects by the Low Impact Hydroelectric Institute (LIHI) should be required for any hydroelectric project to qualify f or state or national renewable energy certificates or to qualify in renewable portfolio s tandards. Commenters added that, where minimal environmental or recreational impact is to occur, the EPA should also consider giving credit for upgrading existing turbine generating ca pacity and the powering of existing nonhydroelectric dams and water conduits. Commenters e xplained that hydroelectric dams can create relatively pollution-free energy, but can al so cause significant adverse impacts on fish and wildlife, water quality and quantity, recreation, a nd other resources and noted that multiple dams
within the same watershed can have both individual and cumulative impacts. Commenters stated that, therefore, it is important to have a more com prehensive basin-wide review and permitting approach, regardless of the fact that multiple land owners may be involved. Commenters added that, if existing LIHI hydro facilities are include d, the EPA should re-evaluate the renewable goals for each state and adjust them to ensure thatgrowth of new renewable energy sources are prioritized and facilitated under Building Block 3.644

Comment 7: Commenters stated that uprates at existing hydro p lants should count as RE.

Response 7: The EPA generally agrees. In response to addition al analysis and many comments, the 111(d) final rule differs from the proposal – g eneration from incremental hydropower added after 2012 is considered, with other low- and zero- emitting sources, to displace existing fossil emissions and may be used by states to reduce a rat e. For the purpose of adjusting a rate generation during the compliance period from source s added since 2012 is eligible. See sections V.A, V.E, and VIII.K of the preamble of the final C PP. Regarding data year issues for hydrologic variability, see section VI.D of the pre amble to the final CPP for EPA’s response to
this comment.

The following are summaries of the specific public comments under this comment:

Commenters stated that power uprates at existing hy dropower plants, including those undertaken since 2012, should be allowed as part of a state's compliance plan. Commenters stated that some of the 60 GW of potential new hydro would come from modernizing and uprating existing hydro facilities. Commenters stated that undertaking thes e or other changes could allow existing hydro facilities to be uprated to a higher capacity and t o produce more energy. Commenters provided additional information on the benefits of hydropowe r uprates and suggested that the final guidelines recognize the value of hydropower uprate s by allowing their use by states as a compliance tool.

Commenters encouraged the EPA to allow Michigan to include new hydropower plants or efficiency uprates at existing hydropower plants, i ncluding efficiency upgrades to the turbines at the Ludington pumped storage facility to be counted towards compliance in Michigan's 111(d) compliance plan.

Comment 8: Commenters stated that hydroelectric facilities un der construction and hydroelectric uprates that occurred after the basel ine year(s), but prior to the proposal, should count toward compliance.

Response 8: The EPA generally agrees. In response to additiona l analysis and many comments, the 111(d) final rule differs from the proposal – g eneration from incremental hydropower added after 2012 is considered, with other low- and zero- emitting sources, to displace existing fossil emissions and may be used by states to reduce a rat e. For the purpose of adjusting a rate generation during the compliance period from source s added since 2012 is eligible. See sections V.A, V.E, and VIII.K of the preamble of the final C PP. Regarding data year issues for hydrologic variability, see section VI.D of the pre amble to the final CPP for EPA’s response to
this comment.

The following are summaries of the specific public comments under this comment:

Commenters stated that the EPA should clarify that hydroelectric facilities under construction and hydroelectric uprates that occurred after the b aseline year(s), but prior to the proposal, count645

toward compliance. Commenters stated that the propo sed rule could be interpreted to prohibit states from counting this hydroelectric generation toward compliance. Commenters stated that the section of the preamble to the proposed rule th at explains that RE, regardless of its construction date, can count toward compliance expr essly excludes hydropower, and the preamble later states that emissions reductions ach ieved after the date of the proposal pursuant to existing state programs can count towards future co mpliance. Commenters stated that that section excludes RE from this limitation (the "RE e xception") such that all RE pursuant to an existing state program can count towards future com pliance. Commenters stated the justification for the exception is that existing RE was included in the BSER calculation as part of Building Block 3, but the EPA did not consider hydropower in the BSER calculation. Commenters stated this could be interpreted to mean that, since nothi ng expressly says that hydropower between 2012 and the date of the proposal can count towards compliance and the proposed rule is "forward looking" generally, hydropower generation that occurred between 2012 and the date of the proposal cannot count toward compliance. Commen ters stated, however, this hydropower should be counted toward compliance to eliminate th e disparate treatment of states that invested in hydroelectric power. Commenters stated that the EPA must clarify its treatment of hydropower generation and allow it to count towards compliance.

Comment 9: Commenters stated that new contracts for existing hydropower plants should count towards compliance.

Response 9: The EPA disagrees. Generation from existing hydrop ower, consistent with the treatment of generation from other low- and zero-em itting sources, does not displace existing fossil emissions. New contracts with existing gener ation do not displace overall existing generation, and relicensed facilities are considere d to be existing facilities. See sections V.A, V.E, and VIII.K of the preamble of the final CPP. R egarding data year issues for hydrologic variability, see section VI.D of the preamble to th e final CPP for EPA’s response to this

comment.

The following are summaries of the specific public comments under this comment:

Commenters stated that the EPA should make it unequ ivocally clear that states can include new contracts for existing hydroelectricity as eligible renewable resources available for compliance. Commenters explained that hydropower is non-emittin g and provides consistent, base load power and including existing hydro is also consiste nt with the formula by which renewable energy goals are established by the EPA, which incl udes all energy generated in a state, including hydropower. Commenters explained that, wh ile existing hydro admittedly does not add new resources to the nation's fleet, its wide use e liminates the need to rely on fossil fuels for base load needs. Commenters added that, if existing hydr oelectric dams are not relicensed or are otherwise required to be decommissioned, it will cr eate new demand for base load resources which most likely will be provided by natural gas a nd will increase CO2 emissions. Commenters also stated that, hydro facilities not only provide renewable energy, but also provide muchneeded system reliability, voltage regulation, freq uency response, spinning reserves, and other essential ancillary services (services that wind an d solar cannot provide) that make it among the most important of renewables to meet the nation's g reenhouse gas policies.646

Comment 10: Commenters stated that the EPA should allow creditfor existing hydropower with a baseline production rate to limit the amount of e xisting capacity that will count towards compliance.

Response 10: The EPA disagrees. In response to additional anal ysis and many comments, the 111(d) final rule differs from the proposal. Genera tion from existing hydropower, consistent with the treatment of generation from other low- and zer o-emitting sources, does not displace existing fossil emissions. See sections V.A, V.E, and VIII.K of the preamble of the final CPP. Regarding data year issues for hydrologic variability, see se ction VI.D of the preamble to the final CPP for EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:

Commenters suggested that the EPA allow credit for existing hydropower, but develop a baseline, similar to the baseline developed for the PSD Program, to account for the variability in hydropower generation. Commenters explained that th e baseline could be based on production over the previous 10 years. Commenters stated that the EPA should not penalize states with hydropower by not allowing it to be used for compli ance. Commenters noted that the 24-month average hydropower production selected by South Dak ota for the last 10 years occurred in 2007 and 2008 and results in a baseline of 2,995,195 meg awatt-hours. Commenters added that any hydropower electric production above the baseline s hould be eligible for demonstrating compliance with the state's goal, and if hydropower production is below the baseline, it should not count against a state; there would just be no c redit for hydropower production during a drought year.

Comment 11: Several commenters stated that existing hydropower should not be used in the calculation of any state's renewable generation req uirement.

Response 11: The EPA generally agrees. In response to additiona l analysis and many comments, the 111(d) final rule differs from the proposal. Ge neration from existing hydropower, consistent with the treatment of generation from other low- an d zero-emitting sources, does not displace existing fossil emissions, but incremental uprates to existing facilities may be used to establish a CO2 emission performance rate. See sections V.A, V .E, and VIII.K of the preamble of the final CPP. Regarding data year issues for hydrologic vari ability, see section VI.D of the preamble to the final CPP for EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:

Commenters recommended that the EPA exclude hydropo wer in state RE goal-setting methodology due to its high variability and depende ncy on precipitation and runoff, factors outside of the control of the state. Commenters poi nted out that, if existing hydropower were excluded from Tennessee's RE target generation unde r the Alternative RE approach, RE target generation required would decline significantly.647

Commenters stated that hydropower is highly variabl e, as it depends significantly on seasonal and annual precipitation, as well as usage allocati ons, and that the ongoing drought due to climate change puts reliance on hydropower at risk in many states, including New Mexico.

Commenters stated that inclusion of hydropower in t he goal calculation assumes that hydropower is kept constant and therefore, does notimpact calculation of the state goal. Commenters added that existing hydro will impact ac hieving the goal if hydroelectric generation drops below the 2012 baseline value due to weather conditions. Commenters stated that keeping existing hydropower out of the state goal calculati on does not penalize states in the event of an
extreme weather event.

Commenters commented that existing hydropower shoul d not be included in Building Block 3 and factored into state goal calculations because t here is little that can be done to expand electricity production from hydroelectric sources, and, as the EPA observes, existing hydropower facilities are geographically limited. Commenters a dded that the inclusion of existing hydropower in state goal calculations would introdu ce additional compliance risk for states with hydropower because the amount of generation from hy dropower facilities is subject to year-toyear variability based on, among other things, the amount of precipitation a watershed receives. Commenters explained that drought can limit the amo unt of generation a hydropower facility can produce, which would make compliance more difficultif existing hydropower were included in state goal calculations, and, as a practical matter , the ability to comply with a section 111(d) standard of performance should not be influenced by the amount of rain that falls. Commenters added that there are also regulatory requirements p laced on hydropower facilities as part of a
FERC license that can reduce the amount of electric ity hydropower facilities can generate.

Commenters supported the omission of existing hydro power resources from the 2012 renewable energy baseline due to the distortions that it woul d cause in the Northwest region's renewable energy baseline. Commenters added that, as neither Washington nor Oregon allow most existing hydropower to be counted towards compliance with th e state's RPS, it would be somewhat contradictory for the EPA to include hydropower in those states' renewable energy baselines; also, omitting hydropower from the baseline avoids creating further incentive for these states to retain unnecessary and ecologically disruptive dams

.

Comment 12: Commenters stated that the EPA incorrectly assumes that existing capacities of hydropower will always be available in the future.

Response 12: The EPA disagrees. In response to additional anal ysis and many comments, the 111(d) final rule differs from the proposal – the approach to setting a CO2 emission performance rate is different. Generation from existing hydrop ower, consistent with the treatment of generation from other low- and zero-emitting source s, does not displace existing fossil emissions, but uprates to existing capacity may be used in establishing a CO2 emission performance rate. Generation from incremental hydro power added after 2012 is considered, with other low- and zero-emitting sources, to displace e xisting fossil emissions and may be used by states to reduce a rate. For the purpose of adjusti ng a rate generation during the compliance period from sources added since 2012 is eligible. T he 111(d) final rule requires that states648

develop plans that establish emission standards foraffected EGUs. We are providing states with substantial flexibility as to how they structure th ose plans to achieve the 111(d) requirements. The flexibility includes, for example, the choice o f approaches, trading, time to develop plans,
additional time before the start of the interim com pliance period, and the ability to shift emission rate achievement between compliance periods. See s ections V.A, V.E, and VIII.K of the preamble of the final CPP. Regarding data year issu es for hydrologic variability, see section VI.D of the preamble to the final CPP for EPA’s res ponse to this comment.

The following are summaries of the specific public comments under this comment:

Commenters stated the EPA does not include hydropow er in calculating state goals, but it arbitrarily assumes that existing capacities of hyd ropower will always be available in future years. Commenters stated that many regions of the c ountry rely heavily on this generation, but the proposal fails to account for natural circumsta nces that lead to reduced capacity on a yearly and sometimes multi-year basis. For example, commen ters stated that the proposal fails to address how to supplement, or who will be responsib le for supplementing, existing hydro when the presumed generation levels are diminished based on drought, reduced capacity due to new environmental mandates, or reductions based on othe r competing interests, such as drinking
water reserves or even beach creation. Commenters s tated that, under the proposal, the state's overarching goal would remain unchanged, posing add itional burdens on other resources to make up the difference due the reduced hydropower availability. Commenters stated, for example, that in North Dakota, thermal generation supplements pow er from dams in low water years, but in high water years such as 2012, state emissions are lower. Commenters explained that the Pacific Northwest is heavily dependent on hydropower and wo uld encounter the same problem as North Dakota when hydropower generation power is curtaile d. Commenters stated many states will and can use natural gas EGUs to make up for the lost hy dropower generation. However, commenters stated, due to the stringency of state goals and th e proposal's heavy reliance on this gas generation for meeting the state goals, there may n ot be available natural gas generation to replace the lost hydropower; moreover, the required natural gas use may cause the state to exceed its SIP due to unanticipated usage. Commente rs stated by 2030, the application of these risk factors will likely lead to permanent reductio ns in the nation's hydropower generation. Commenters stated the EPA capriciously ignores the impacts of this likely reality, and as a result, many states will be forced to rely on addit ional natural gas generation not accounted for by the EPA in the state goal calculation. Commenter s stated that this additional CO2-based natural gas generation could well make it impossibl e for many states to achieve the proposal's goals. Commenters included a table that summarized the at-risk hydropower capacity
nationwide.

Comment 13 : Several commenters stated that the EPA should rec ognize new and incremental hydro as compliance options.

Response 13: The EPA generally agrees. In response to addition al analysis and many comments, the 111(d) final rule differs from the pr oposal – generation from incremental hydropower added after 2012 is considered, with oth er low- and zero-emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of649

adjusting a rate generation during the compliance p eriod from sources added since 2012 is eligible. Generation from existing hydropower, cons istent with the treatment of generation from other low- and zero-emitting sources, does not disp lace existing fossil emissions. See sections V.A, V.E, and VIII.K of the preamble of the final C PP.

The following are summaries of the specific public comments under this comment:

Commenters stated support for the EPA allowing incr emental hydroelectric power projects to provide compliance credit, as these types of upgrad es extend the hydroelectric power system and provide for real emission reductions. Commenters st ated that the estimates and accounting for this technology can vary widely among operators; th e EPA should, therefore, consider best practices in the states when it develops the method ology for these calculations. Additionally, commenters stated that incremental hydropower is an efficiency improvement, and the EPA should consider providing states guidance on the ap propriate measure life for such an upgrade.

Commenters stated agreement with excluding existing hydropower from establishing a state's existing RE capacity and fully supported the use of incremental hydropower from existing facilities or new facilities as a compliance option

.
Commenters stated that the EPA should clarify in th e final rule that new or incremental hydro is eligible for inclusion in a state's 111(d) plan, ev en if large hydro is not defined as an eligible energy resource in the state's RPS. Commenters adde d that a state need not be asked to alter what is eligible for RPS compliance; any measure that re duces emissions from the affected EGUs should be eligible in 111(d) plans, regardless of w hether or not it is eligible for RPS compliance.
Commenters clarified that the EPA should credit suc h measures after 2005, or at minimum after the 2012 base year, rather than after the date of t he proposal. Commenters also requested that the EPA clarify in the final rule that any qualifying h ydro measure (incremental or new capacity) is eligible for compliance credit, whether the dam in question is in or outside the United States.

Commenters stated that, regardless of whether the b aseline methodology is revised to include hydro, the final rule should provide more definitiv e and clear direction and guidance to the states that the EPA supports new hydropower generation as a compliance option. Commenters stated that the states should be given not only an "option ," but at least a rebuttable directive that any new or incremental hydropower deployed at existing dams shall be credited toward the state (or region) interim and long-term compliance targets in the event a rate-based methodology is imposed. Commenters added that, in this regard, clarification is also needed as to the deployment time frame in which new capacity will be given comp liance credit, particularly for new and incremental hydropower generation brought online pr ior to 2020. Commenters stated that the final rule should make clear that projects deployed after the baseline year of 2012 will count fully towards the interim and long-term emissions g oals.

Commenters stated that hydropower is one of the bes t tools available in achieving greenhouse gas reductions and urged the EPA to value it as suc h in the rule wherever possible. Commenters added that, while it is understandable that the EPA excluded hydropower from the existing 2012 generation for the purposes of setting state goals, they appreciated that the EPA has identified incremental hydropower and hydropower efficiencies as compliance options with state goals and strongly urged the EPA to clearly maintain that dis tinction.650

Commenters stated that the proposed rule, at a mini mum, should continue to recognize new and incremental hydroelectric power as a compliance too l in meeting greenhouse gas emission reduction goals. Commenters noted that hydroelectri c power is a significant part of a low-cost, reliable and non-emitting resource mix and urged th e EPA to consider additional ways to recognize the value of hydropower as an invaluable tool to reducing greenhouse gas emissions.

Commenters expressed strong support for the EPA's p osition that incremental hydropower and hydropower from facilities built or uprated after D ecember 31, 2012 (including small hydroelectric facilities) be allowed to be counted toward compliance in state plans, and noted that incremental hydropower from turbine additions or replacements at existing dams, as well as new hydropower from small dams and in-river hydroel ectric facilities would displace fossil-fuel generation in the same way as other forms of zero-c arbon generation, and that the proposed rule should treat all such incremental, zero-carbon reso urces equally.

Commenters said that states should be allowed to co nsider incremental improvements in nuclear and hydropower generation from existing facilities as an option for compliance with state goals. Commenters stated that new hydroelectric power shou ld be allowed to be included for compliance crediting in a state's plan. Commenters stated that Minnesota utilities have entered into agreements to deliver Canadian hydroelectric p ower as a significant part of their resource mix, and they expected that the EPA's final rule wi ll allow states to include expanded hydroelectric power in the compliance calculations. Commenters stated that expanded power could be achieved with additional capacity obtained through the development of new power at existing power facilities, or the purchase of previ ously unused Canadian power. Commenters agreed with the EPA that hydroelectric power genera tion should be available for use in compliance determinations as a zero emissions energ y source. Commenters stated that hydro is also able to quickly respond to changing wind and s olar generation, and is a reliable source of power. Commenters stated that the DOE is suggesting that the U.S. could increase hydroelectric power capacity by 15 percent by retrofitting existi ng dams with power generation; by allowing "new" hydroelectric power - that is, the expanded u se of hydroelectric power in a state's compliance plan, the EPA will also provide incentiv es for developing these small hydro generation projects. Commenters stated that, accord ing to the 2012 Oak Ridge National Laboratory study conducted for the DOE, Minnesota h as the potential of 186 MW of generation at existing dams that are currently without power.

Commenters stated that it is important that the EPA clarifies that Building Block 3 requires that new hydroelectricity resources qualify as RE under any state plan. Commenters stated that the EPA should make it unequivocally clear that states are required to include as eligible resources new hydroelectricity that has been constructed afte r the publication of the proposal or becomes commercially available after the publication date w ithout regard to the size of the facility, date of installation, or increase in capacity. Commenters a dded that, because the construction and commercial operation of these new resources cannot be precisely timed to coincide with the beginning of the compliance obligations, new hydro should be allowed to bank credits for generation produced from its commercial operation u p to the date the compliance obligation goes
into effect.

Commenters agreed with the decision and rationale f or excluding existing hydro and agreed with allowing incremental hydro to count towards complia nce with state goals.651

Commenters stated that, while agreeing with the EPA 's decision not to include existing hydropower in Building Block 3, since opportunities for increased generation from this resource are very limited in comparison to other renewable t echnologies, they supported including new or incremental hydropower. Commenters stated that ther e are promising opportunities to increase electricity generation at existing facilities, unpo wered dams, and run-of-river projects.

Commenters stated that existing hydroelectric capac ity should remain excluded from the goalsetting calculation, but any incremental hydropower capacity at an existing facility or a new facility should be included in the compliance calcu lation. Commenters stated that clarification is needed in regards to the EPA's treatment of hydropo wer.

Commenters stated that new and incremental hydropow er should be considered as building blocks in meeting state GHG reduction targets. Comm enters explained that hydropower makes up over half of the portfolio of Northwest generati on resources, and is a major piece of the Northwest's low-cost, reliable and non-emitting res ource mix. Commenters added that many public and investor-owned utilities in the Northwes t have invested in additional renewable resources and will continue to achieve even higher renewable electricity production from wind and solar because of the firming support provided b y the Northwest hydropower system.

Comment 14: Several commenters commented about the allocation of hydropower among

states.

Response 14: The EPA generally agrees that RE potential is regi onal. In response to additional analysis and many comments, the 111(d) final rule d iffers from the proposal – a regional approach is used to establish CO2 emission performa nce rates. Generation from incremental hydropower added after 2012 is considered, with oth er low- and zero-emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance p eriod from sources added since 2012 is eligible. Generation from existing hydropower, cons istent with the treatment of generation from other low- and zero-emitting sources, does not disp lace existing fossil emissions. Incremental generation from another state may, if eligible, be used to adjust a CO2 emissions rate. See sections V.A, V.E, and VIII.K of the preamble of th e final CPP.

The following are summaries of the specific public comments under this comment:

Commenters asked the EPA for clarification on which state can claim credit for the renewable energy if a hydro generator contracts to sell powergenerated, as a result of increased production at an existing facility, to a distribution entity i n a state other than the one where the power is generated. Commenters also asked how a state could prevent the loss of this type of compliance
mechanism. Commenters also asked if it is correct i n interpreting that, under the proposed rule, "existing" hydropower generation (i.e., the generat ion that occurred at the 2012 baseline level) does not benefit the state in its future obligation s to meet the requirements of 111(d). Commenters questioned if a distribution entity in a nother state could purchase that "existing" electricity and help the other state meet its compl iance obligation.652

Commenters stated that the proposed rule states tha t renewable energy credits (RECs) and renewables purchased from out-of-state can be used in a state's compliance plan, but provides little guidance as to how states can account for an d use out-of-state RECs and renewable energy.
Commenters added that the rule needs clarification on how out-of-state resources will be used in the implementation of the rule.

Commenters expressed concern that the proposed rule does not include provisions to allow for the interstate use of renewable energy for complian ce with the CO2 reduction requirements, and that the non-emitting benefits of the Red Rock Hydr oelectric Project which is under construction in Iowa may be limited to the state of Iowa only.

Commenters stated that the hydropower output genera ted from facilities which straddle more than one state should be allocated based upon the s tate in which a contract right holder to the hydropower generation is located. Commenters noted that this approach would properly allocate the resource for the EPA's purposes regardless of w hether a state-by-state or regional approach is used to consider allocating renewable energy targetlevels.

Comment 15: Commenters stated that the EPA should expand the d efinition of new hydropower units and allow new hydropower to count towards com pliance.

Response 15: The EPA agrees. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal – gener ation from incremental hydropower added after 2012 is considered, with other low- and zero-emitti ng sources, to displace existing fossil emissions and may be used by states to reduce a rat e. For the purpose of adjusting a rate generation during the compliance period from source s added since 2012 is eligible. Generation from existing hydropower, consistent with the treat ment of generation from other low- and zeroemitting sources, does not displace existing fossil emissions. See sections V.A, V.E, and VIII.K of the preamble of the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that the final guidelines should expand the definition of new hydropower units and allow states to include generation from " new" hydropower generating capacity in a state's compliance plan. Commenters referenced two studies, noting that the U.S. has the potential to add 60 GW of new hydro capacity by 202 5, with estimates that there are more than 84 GW of total technical potential hydropower in th e U.S. Commenters stated that tapping this potential will require the use of a number of diffe rent technologies, including pumped storage, small hydro, converting non-powered dams, and moder nizing existing sites. Commenters stated the final guidelines should incent the development of these new hydropower resources by allowing states to include them in their compliance plans. Commenters stated that the final guidelines also should define "new" hydropower broa dly to include: new hydropower plants that become operational after 2012; power uprates at exi sting hydropower plants, including those undertaken during or after 2012 or a modified basel ine period; and any hydropower facilities that are relicensed during or after 2012 or a modified b aseline period.653

Comment 16: Commenters stated that relicensed hydro facilities should count towards compliance goals.

Response 16: The EPA disagrees. In response to additional analy sis and many comments, the 111(d) final rule differs from the proposal – gener ation from incremental hydropower added after 2012 is considered, with other low- and zero-emitti ng sources, to displace existing fossil emissions and may be used by states to reduce a rat e. For the purpose of adjusting a rate generation during the compliance period from source s added since 2012 is eligible. Generation from existing hydropower, consistent with the treat ment of generation from other low- and zeroemitting sources, does not displace existing fossil emissions. Consistent with the treatment of relicensing nuclear units, a relicensed hydro facil ity is not considered a new facility. However, any generation from capacity uprates conducted at t he time of relicensing may be eligible to offset an emission rate. See sections V.E, and VII I.K of the preamble of the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that relicensed hydropower facili ties should be treated as new units, and should be allowed as part of a state's compliance p lan. Commenters stated that, in accordance with the FPA, FERC issues hydropower licenses for a period between 30 and 50 years, and when a license expires, the applicant may apply to FERC for a new long-term operating license. Commenters stated that, although the hydropower rel icensing process is a lengthy and resourceintensive commitment for electric utilities, hydro relicensing does present opportunities to retain or expand zero-emissions generation. Commenters pro vided additional information on the relicensing of hydropower, noting that approximately 7,420 MW of hydropower came up for licensing in 2007, and the top five states for expi ring licenses are California, New York, Oregon, Washington, and North Carolina, though re-license o pportunities exist in many other states as well. Commenters also stated that projects undergoi ng relicensing (and not new projects) make up the majority of the proposals being evaluated by the hydropower licensing staff of FERC's Office of Energy Projects.

Commenters stated that the final guidelines should recognize the considerable commitment associated with the FERC relicensing process and th e significant contribution existing hydropower facilities make toward reducing total U. S. carbon emissions. Commenters stated that, as currently proposed, the guidelines may neg atively affect an electric utility's decision on whether or not to embark on the complicated, length y and resource-intensive commitment required to relicense an existing hydro plant. Comm enters added that the final guidelines should recognize the value of hydropower relicensing by al lowing generation from relicensed facilities to be used by states as a compliance tool.

Commenters stated that the final rule should incent ivize keeping, as well as growing, hydro generation by crediting, as new hydro, all hydro ge neration that was relicensed subsequent to 2005, the starting point for carbon emissions reduc tions for the proposed rule. Commenters stated that hydro relicensing is an expensive and t ime-consuming process, but one that reconciles future operations with the wide range of laws and r egulations currently in place. Commenters suggested that the final guidelines recognize the v alue of hydropower relicensing by allowing654

generation from relicensed facilities to be used by states as a compliance tool. Commenters added that this is particularly important if the EP A decides to retain the inclusion of hydroelectric generation in its calculation of RE p otential.

Comment 17: Several commenters commented on the timeframe for new hydropower that can be credited towards compliance with state goals.

Response 17: The EPA generally agrees. In response to addition al analysis and many comments, the 111(d) final rule differs from the pr oposal – generation from incremental hydropower added after 2012 is considered, with oth er low- and zero-emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. Specifically, generation during the compliance period from a sour ce added after 2012 is eligible to adjust a CO2 emission rate. See sections V.A, V.E, and VIII. K of the preamble of the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated new hydropower coming on-line bet ween 2012 and 2017 needs to be recognized for compliance. Commenters stated that A MP has new run-of-the-river hydropower
assets under construction on the Ohio River in Kent ucky and West Virginia, which will come online over the next few years and will provide app roximately 300 MW of new clean energy and capacity to participating AMP members in multiple s tates. Commenters stated that it is absolutely essential that the financial investment that AMP and its participating members have made to develop these carbon-free generating assets is recognized by both the U.S. and the EPA and that states have the opportunity provide with a ppropriate credit under state plans in Building
Block 3. Commenters added that these assets were de veloped with recognition of the contribution that they could make to a carbon-free energy portfolio, and this foresight should not be discounted in this regard.

Commenters stated that the EPA's approach to allowi ng new hydroelectric energy generation after 2017 to be included in a state's compliance d emonstration creates a disincentive for utilities to proactively invest in and develop non-carbon emi tting energy sources. Commenters stated that the EPA should allow any hydroelectric energy gener ation after 2012 to be included in the compliance calculation to avoid any disincentives.

Commenters stated that, if the EPA decided to limithydropower used for compliance to generation from incremental or later-built faciliti es, an early eligibility date should be chosen so as to not adversely impact existing transmission in vestments and power planning efforts at the state and regional level.

Commenters stated that the proposed approach sugges ts that if a utility adds incremental capacity to an existing dam, builds a new dam, or signs a ne w Power Purchase Agreement (PPA) for generation from a dam built after June 2014, those MWh could be included in the denominator of the state's compliance demonstration. Commenters suggested that the EPA credit such measures after 2005, or at minimum after the 2012 b ase year, rather than after the date of the proposal. Commenters expressed support for the alte rnative in which any such measure655

undertaken after the base year of 2012, or after 20 05, should be eligible, and the emissions impacts of any such measure could be counted and ba nked prior to 2020, e.g., beginning in 2017.

Commenters stated that, while the proposal allows s tates to count incremental hydropower generation towards meeting a state's emission rate goal, the proposal does not specify the date on which new or incremental hydroelectric generation m ust have been built or upgraded to count toward compliance. Commenters explained that, as a result, it is unclear whether generation from new or additional hydropower capacity built or upra ted after 2012, 2014, 2017, or some other date would count. Commenters stated that to avoid p enalizing early actions, the most reasonable approach would be to allow states to receive and cl aim emission credit for generation from any uprate initiated after the rule's baseline year (i. e., after 2012, if EPA retains the 2012 as the baseline year, or perhaps some earlier year, if EPA elects to use an earlier baseline year). Commenters added that such an approach would ensure that any uprate was in fact a reflection of new, additional generation that was not included in the baseline used for setting state targets.

Commenters stated that the EPA should clarify that hydroelectric facilities under construction and hydroelectric uprates that occurred after the b aseline period can count toward compliance. Commenters explained that the proposed rule could b e interpreted to prohibit states from counting this hydroelectric generation toward compl iance since nothing expressly says that hydropower generation investments that were made be tween the baseline and the date of the proposal can count towards compliance. Commenters a dded that this hydropower generation should be counted toward compliance to eliminate th e disparate treatment of states and companies that invested in hydroelectric power.

Comment 18: Commenters stated that the potential for new hydrop ower is site specific.

Response 18: The EPA agrees that the potential for new hydropow er is site specific. In response to additional analysis and many comments, the 111(d ) final rule differs from the proposal, and different data sets were used to set CO2 emission p erformance rates. See section V.E of the preamble of the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that the potential for new hydrop ower development is very site specific. Commenters suggested that the EPA use updated suppl y curves for new hydropower from NREL's ReEDs model that reflect site specific costs and resource potential.

Comment 19: Several commenters stated that hydropower importe d from Canada should
receive full credit as a source of RE.

Response 19: The EPA agrees that generation from incremental capacity from Canada may be used to adjust a rate, In response to additional an alysis and many comments, the 111(d) final rule differs from the proposal – generation from increme ntal hydropower added after 2012 is considered, with other low- and zero-emitting sourc es, to displace existing fossil emissions and656

may be used by states to reduce a rate. For the pur pose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. Generation from existing hydropower, consistent with the treatment of genera tion from other low- and zero-emitting sources, does not displace existing fossil emission s. Generation from outside of the U.S. may be eligible to adjust a CO2 emission rate if the capac ity was added after 2012. Generation from existing capacity is not eligible. See sections V.A , V.E, and VIII.K of the preamble of the final
CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that imported Canadian hydroelect ricity should be fully credited towards achieving CPP compliance when it can be demonstrate d that the environmental attributes of the hydroelectricity is not being double-counted. Comme nters referenced a letter from the Canadian Ambassador to the EPA Administrator indicating thatseven ongoing transmission development projects were being planned to establish infrastruc ture for transferring electricity generated from Canada to the U.S., with timing that would help sup port state compliance with the EPA's CPP proposed 2030 targets.

Commenters requested that the EPA clarify in the fi nal rule that any qualifying hydro measure (incremental or new capacity) is eligible for compl iance credit, whether the dam in question is in or outside the U.S. Commenters referenced a plan to contract with Manitoba Hydro to reduce emissions from affected EGUs in the U.S., and that, provided there is no double-counting, hydro from Canada should be eligible for compliance.

Commenters stated that both new and existing hydrop ower, including Canadian hydropower, can assist U.S. states and regions in cost-effectively meeting their carbon reduction targets, but states and utilities need certainty that this resource can be used for compliance in state and regional implementation plans. Commenters explained that exi sting and new hydropower from Canada
continues to contribute real emission reductions to the U.S. grid, and that many current state policies seeking to reduce emissions in the power s ector recognize the benefits of both existing and new hydropower. Commenters commented that, alth ough there is no language that explicitly excludes Canadian hydropower as a compliance option under the CPP, some confusion remains
as to whether states can use this resource. Comment ers added that, given the short timelines for states to develop SIPs, a clear statement that Cana dian renewables can be used for compliance is necessary. Commenters concluded by stating that the CPP should recognize the important role that Canada's current and future hydropower resourc es can play in providing cost-competitive, clean and renewable electricity and energy storage, enabling the increased development of wind and solar generation in the U.S., and contributing to the stability, reliability and flexibility of North America's electricity system. Commenters adde d that failure to allow states the flexibility to use Canadian hydropower imports could undermine the EPA's objective of cost-effectively achieving CO2 emissions reductions in the power sec tor. Commenters also stated that excluding Canadian hydropower would penalize U.S. regions and utilities that have arranged for purchases of Canadian hydropower and made significant transmi ssion investments as part of their strategies to pursue cost-effective emission reductions.

Commenters stated that there are significant transm ission interfaces between the RGGI region and Canada, and the number of such connections is l ikely to increase in the future. Commenters657

explained that electrical imports are typically pow er purchase agreements that are based on surplus hydropower in Canada, and, inasmuch as such power transfers can be key components of reliability in New York State, the proposed rule sh ould not restrict the continued use of these important emission-free generation resources.

Commenters stated that the proposed guidelines fail to recognize the value of new and imported hydropower in providing affordable, zero-emissions power and do not incent their continued operation and development. Commenters stated that t he EPA has failed to recognize the value of new and imported hydropower, both interstate import s and international imports and particularly hydropower imported from Canada, in providing affor dable, zero-emissions power in certain regions of the country. Commenters stated that the EPA does not propose to allow states to include existing hydropower in state compliance pla ns. Commenters stated that if the EPA does determine to allow states to include existing hydro power for compliance, states should also be able to use imported hydropower. Commenters stated that the EPA registers legitimate concerns about the annual variability of hydropower generati on, and that using existing hydropower to set state emission rate goals would create significant compliance risks for many states by making goals very stringent. However, commenters stated, t hat if the final guidelines allow states to use existing hydropower, states should be allowed to us e both interstate and internationally imported hydropower. Commenters noted that many states alrea dy recognize the value of imported hydropower in helping meet their energy demand and clean energy goals. Commenters stated, for example, that Connecticut passed a law in June of 2013 that would allow for large-scale hydropower from outside the region to count toward the state's RPS requirement in certain
circumstances. Commenters also stated that a 2008 a greement between Manitoba Hydro and the Wisconsin Public Service Corporation allows the lat ter to import 500 MW of power from two Nelson River projects. Commenters also stated that NU Transmission Ventures Inc. is developing a $1.4 billion Northern Pass transmissio n line project that would allow for the transmission of 1,200 MW of hydroelectricity from H ydro-Quebec into New England's energy system. Commenters stated that these example clearl y, demonstrate that states see a value in imported hydropower. Commenters also stated that al lowing the use of imported hydropower could help states expand their use of other forms o f renewable generation, helping to meet the EPA's goals of both reducing CO2 emissions and incr easing the use of renewable energy and other zero-emitting sources. Commenters stated that , in some circumstances, hydropower can play the same role as natural gas-based units by pr oviding backup for variable RE generation. Commenters stated that the benefits of such an appr oach are exemplified in the partnership between Minnesota Power and Manitoba Hydro under wh ich, beginning in 2020, Minnesota Power will use 250 MW of electricity supplied by Ma nitoba Hydro's Keeyask hydro plant to help
balance a wind farm in North Dakota. Commenters als o stated that, if states are permitted to include international hydropower in compliance plan s, the EPA should address concerns about potential double-counting of generation or emission s reductions from this resource. Commenters stated, for example, that states could be required to demonstrate that the emission benefits of the hydropower are not being used by other entities, ei ther in the U.S. or in Canada.

Commenters stated that the trade in electricity acr oss the U.S. and Canada border is longstanding and significant, and the U.S. and Canada effectivel y share a single North American grid totaling 200,000 miles of high-voltage transmission lines; i n 2012, the total amount of electricity that
flowed across the border from Canada to the U.S. an d vice versa exceeded 70,000,000 MWh. Commenters stated that, as a result, millions of Am ericans and Canadians depend on the reliable658

operation of this integrated grid every second of e very day. Commenters also noted that several states have acted to diversify their energy portfol ios through the recognition of Canadian hydropower, and, in the process, have been able to reduce their carbon emissions and also have planned to further increase the role of Canadian hy dropower in their future energy mix to achieve additional emissions reductions, enhanced g rid reliability, and support intermittent renewable generation, such as wind and solar. Comme nters explained that that imports of Canadian hydropower often displace forms of electri city generation with higher greenhouse gas emissions and can, therefore, play a significant ro le in lowering carbon emissions from other sources of energy in the U.S. Commenters also state d that Canadian hydropower is highly responsive, meaning that power from Canadian hydroe lectric reservoirs can be "saved" for when other, intermittent sources of energy, such as wind and solar are online, and used later when these sources are unavailable, thus ensuring that p ower is available when it is needed. Commenters explained that Canada has significant po tential hydropower resources that could be developed in the future, and by allowing Canadian h ydropower to be credited in state plans, more of this available capacity may be tapped in th e future, replacing carbon-intensive generation as increasing amounts of hydropower come online.

Commenters stated that, while the provisions of the final rule remain uncertain, they asserted that the EPA's original proposal is reasonable and achie vable for Minnesota, provided the EPA ensures that new, imported hydroelectric power can be fully counted for compliance purposes. Commenters stated that, within the compliance perio d of this rule, Minnesota will also begin the planning process for replacing up to 900 MW of nucl ear generation, and therefore, it is important to allow states to consider expanded contracts of h ydroelectric power from Canada as a means of replacing one zero-emitting generation technology w ith another. Commenters stated that, if the EPA adopts its proposed alternative approach for re newable energy targets as described in the proposed rule, Minnesota will have even more zero-e mitting generation to secure. Commenters recommended that the EPA affirmatively state that h ydroelectric power installed nationally and internationally post-2012 may be included in a stat e's plan.

Commenters stated that the proposed rule is unclear whether the credit for new/incremental hydro applies regardless of whether the dam is in o r outside of the U.S. Commenters remarked that any incremental or new capacity should be elig ible for compliance credit, even if the dam in question is in or outside the United States, as lon g as the hydro MWh are not counted in another state's 111(d) plan.

Comment 20: Commenters stated that hydropower imported from ou tside the US should count towards compliance.

Response 20: See the response to Comment 19

.

The following are summaries of the specific public comments under this comment:

Commenters stated that the CCP should give credit f or hydropower that is imported from Canada. Commenters explained that North America's h ydropower resources provide multiple benefits at a time when the need for reliable, clea n and economically competitive resources is critical, and, for these benefits to continue, it i s important that policies not create any artificial659

barriers to electricity trade and that they facilit ate access to all clean energy resources. Commenters remarked that not allowing states the fl exibility to use Manitoba Hydro's hydropower exports could undermine the EPA's object ive of cost-effectively reducing CO2 emissions from the power sector and penalize U.S. r egions and utilities that have arranged for purchases of Canadian hydropower and made significa nt transmission investments as part of their strategies to pursue cost-effective emission management. Commenters noted that the 2013 MISO 'Manitoba Hydro Wind Synergy Study' concluded that wind synergy benefits from the expanded use of hydro generators in Manitoba produc ed a weighted average load cost savings in the U.S. Midwest of $430 million annually. Commente rs added that failure to recognize Canadian hydropower under the CPP could also resultin perverse incentives for U.S. utilities that would undermine the Agency's goals. In conclus ion, commenters stated that, in order to build upon this ongoing relationship between Manito ba Hydro and its U.S. customers, the final rule should clearly specify that Canadian hydropowe r can serve as a compliance option under state implementation plans and that the definition of "later-built" facilities not adversely impact existing transmission investments and power plannin g efforts at the state level. Commenters also specifically requested that the EPA clarify if stat es can use incremental hydropower from Canada as a compliance option under the CPP. Commenters no ted that, given the short timelines for states to develop SIPs, it is important for the EPA to provide a clear statement indicating that Canadian renewables will be eligible compliance opt ions for states, enabling their role as costeffective, low-carbon resources.

Comment 21: Commenters asked for clarification regarding the e ligibility of new and incremental hydropower.

Response 21: The EPA agrees with need to clarify the date after which incremental capacity may be added and its generation during the complian ce period be eligible to adjust a rate. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal – generation from incremental hydropower a dded after 2012 is considered, with other low- and zero-emitting sources, to displace existin g fossil emissions and may be used by states to reduce a rate. Incremental hydro includes generatio n from outside of the U.S. Generation from existing hydropower, consistent with the treatment of generation from other low- and zeroemitting sources, does not displace existing fossil emissions. For the purpose of adjusting a rate generation during the compliance period from source s added since 2012 is eligible. See sections V.A, V.E, and VIII.K of the preamble of the final C PP.

The following are summaries of the specific public comments under this comment:

Commenters stated that the proposed rule is unclear whether the provision to give credit for new or incremental hydro applies regardless whether the new/incremental hydro is in or outside of the
U.S.

Commenters stated that the proposed rule is vague r egarding the earliest date an incremental dam upgrade project that increases the electricity gene rating capacity of a dam could be completed and still have the incremental capacity portion of the dam considered a renewable electricity facility eligible to be used for compliance with th e 111(d) targets. Commenters added that the EPA should be clear that incremental nameplate capa city increases at existing hydroelectric660

dams completed after December 31, 2012 are eligible to be used for compliance with 111(d)
targets.

Commenters requested that the EPA clarify the line between new and existing resources and suggested that any hydropower assets coming on line after the 2012 baseline year in the proposal
should be defined as new and be available to receiv e credit for use by states in their compliance plans. Commenters referred to new hydropower assets that will be coming online in 2015 to 2016 that should be available for state compliance planning and explained that these zeroemission projects involve a long development time f or initial design, permitting and construction and substantial upfront costs. Commenters added tha t, in addition to the long development time, these projects have a long lifespan and are finance d for 35 years with an expected operational period of greater than 60 years and should receive appropriate accounting within the Section 111(d) structure.

Commenters stated that clear guidance on the defini tion of eligible hydropower is needed, explaining that both existing and new hydropower fr om Canada continue to contribute real emission reductions to the U.S. grid. Commenters ad ded that, if only new and incremental hydropower is allowed as a compliance option, then the earliest possible eligibility date should
be considered.

Comment 22: Commenters stated that the proposed rule should su pport hydropower and could have adverse impacts on its use and development.

Response 22: The EPA agrees to clarify the treatment of hydropo wer. In response to additional analysis and many comments, the 111(d) final rule d iffers from the proposal – generation from incremental hydropower added after 2012 is consider ed, with other low- and zero-emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. The approach to establishing CO2 emission performance r ates has changed, and hydropower is treated consistently with other low- and zero-emitt ing sources. For the purpose of adjusting a rate generation during the compliance period from source s added since 2012 is eligible. See sections V.A, V.E, and VIII.K of the preamble of the final C PP. Regarding data year and use of 2012, see section VI.D of the preamble to the final CPP f or EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:

Several commenters commented on the general treatme nt of hydropower in the proposed rule and potential adverse effects on the future of hydr opower. Commenters expressed concern that the proposed rule could have adverse impacts on the use and development of hydropower resources. Commenters stated that hydropower, as a resource, could be put at a disadvantage if it is treated differently from other non-emitting rene wable resources due to its exclusion from the denominator of the BSER calculation. Commenters exp lained that the discriminatory treatment of hydropower could lead to less hydropower product ion and the lack of incentives to maximize utility investment in least-cost energy efficiency measures. Commenters also stated that hydropower's absence may lead to hydropower being l argely "invisible" as states make compliance choices, which, commenters stated would be particularly disturbing in the event proposals are made to degrade hydropower capability or even retire hydropower units.661

Commenters stated that there is no good public poli cy interest served by creating a policy environment that may create a preference for other generating resources over hydropower. Commenters stated that the EPA should clarify that states can and should use hydropower as a compliance option, and it would be unfortunate if a carbon reduction rule inadvertently resulted in the premier renewable non-GHG emission resource being sub-optimized or replaced with higher- cost resources (that may even emit GHGs) du e to the potential incentive structures
derived from the BSER calculation. Commenters concl uded by stating that hydropower should not be forgotten as an important part of the soluti on, particularly in the Northwest, where states are starting their emission-reduction journey from a position of GHG-emissions strength that
should not be discounted.

Commenters stated that the EPA must provide more de finitive and clear direction and guidance to the states that the Agency supports existing, in cremental and new hydropower generation as a compliance option under the rule and that states sh ould be encouraged to examine ways to incorporate new hydropower generation into their pl anning.

Commenters stated that hydropower is the nation's l argest source of renewable electricity, and the EPA should support policies that recognize the many benefits of hydropower and promote hydropower's continued use, enhancement and expansi on. Commenters provided an extensive list of the benefits of hydropower. Commenters stat ed that, by ignoring the contribution from hydropower in reducing the nation's carbon intensit y, the EPA falsely inflates the U.S. contribution to global carbon emissions.

Commenters stated that the EPA must alter its negat ive stance toward hydropower, as evidenced by comments in its TSD, which presumes there will b e no development of new hydro. Commenters remarked that, in President Obama' clima te speeches in both 2013 and 2014, he spoke about the vast untapped potential that exists at non-powered federal dams, and encouraged the electric industry to take advantage of this cle an, non-emitting and renewable resource.

Comment 23: Commenters stated that the final rule should stimu late re-investment in the federal hydropower system.

Response 23: The EPA agrees that incremental hydropower can be used to adjust a rate. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal – generation from incremental hydropower a dded after 2012 is considered, with other low- and zero-emitting sources, to displace existin g fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. Generation fr om existing hydropower, consistent with the treatment of generation from other low- and zero-em itting sources, does not displace existing fossil emissions. See sections V.A, V.E, and VIII.K of the preamble of the final CPP. Regarding data year issues for hydrologic variability, see se ction VI.D of the preamble to the final CPP for EPA’s response to this comment. .

The following are summaries of the specific public comments under this comment:

Commenters stated the final rule should stimulate a re-investment in the federal hydropower system, noting that, for many years, billions of do llars of general hydropower operations and maintenance work, as well as additional upgrades atthese federal facilities have not been662

budgeted or appropriated, particularly in this time of fiscal constraint. Commenters stated that the final rule should credit cooperatives and other federal power customers for any incremental hydro capacity and energy added to federal projects after 2012. Commenters added that the EPA should factor into its interim and long-term compli ance targets the role that existing federal hydropower generation plays in reducing the baselin e CO2 emissions. Commenters concluded by stating that the uncertain treatment of existing hy dropower generally under the rule begs the question of how hydroelectric generation from the e xisting federal system will be recognized and accounted for, and whether and/or how this generati on is treated could have significant impacts on both state goals and compliance plans.

Comment 24: Commenters expressed support for the alternative ap proach and stated that the EPA should clarify the role of hydropower in the al ternative approach.

Response 24: The EPA agrees to clarify the treatment of hydropo wer. In response to additional analysis and many comments, the 111(d) final rule d iffers from the proposal – generation from incremental hydropower added after 2012 is consider ed, with other low- and zero-emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the c ompliance period from sources added since 2012 is eligible. Generation from existing hydropow er, consistent with the treatment of generation from other low- and zero-emitting source s, does not displace existing fossil emissions. See sections V.A, V.E, and VIII.K of th e preamble of the final CPP. Regarding data year issues for hydrologic variability, see section VI.D of the preamble to the final CPP for EPA’s response to this comment. .

The following are summaries of the specific public comments under this comment:

Commenters expressed support for the alternative ap proach to quantifying renewable generation based on a state-by-state assessment of RE technica l and market potential and commented on the relationship between the approach used and the incl usion of hydropower. Commenters stated that, in adopting the alternative approach, it is i mportant that the role of hydroelectric generation and nuclear be made clear, as well as, leveraged. C ommenters added that the impact of including hydroelectric resources as part of the target-setti ng methodology creates a differential between Northeast states' existing renewable generation and their derived 2030 proposed renewable energy targets that is unrivaled in its stringency and may not be technically achievable without the inclusion of existing hydroelectric resources a s a compliance option.

Commenters stated that the alternative approach is more appropriate, as it uses a more precise analysis of the technical and economic potential fo r the development of additional renewable generation in each state. Commenters stated that, i f the regional RPS-based estimates method is adopted instead, then the EPA must acknowledge the fact that New York's RPS recognizes existing hydropower resources.

Comment 25: Commenters did not agree with the alternative appr oach.663

Response 25: The EPA agrees to clarify the approach to hydropow er. In response to additional analysis and many comments, the 111(d) final rule d iffers from the proposal – The approach to establishing CO2 emission performance rates has cha nged, and hydropower is treated consistently with other low- and zero-emitting sour ces. Generation from existing hydropower, consistent with the treatment of generation from ot her low- and zero-emitting sources, does not displace existing fossil emissions, while generatio n from new or uprated capacity does. For the purpose of adjusting a rate generation during the c ompliance period from sources added since 2012 is eligible. See sections V.A, V.E, and VIII.K of the preamble of the final CPP. Regarding data year and use of 2012 data, see section VI.D of the preamble to the final CPP for EPA’s response to this comment. .

The following are summaries of the specific public comments under this comment:

Commenters did not agree with the alternative appro ach to quantifying renewable generation. Commenters stated that the EPA's alternative approa ch begins with a state's 2012 hydropower production percentage then adds in the renewable go al percentage. Commenters explained that the alternative approach presumes a state's hydropo wer production remains constant at 2012 levels, which is not a realistic presumption.

Comment 26: Commenters stated that the EPA should clarify why hydropower is excluded from the proposed approach.

Response 26: The EPA agrees to clarify the treatment of hydropo wer. In response to additional analysis and many comments, the 111(d) final rule d iffers from the proposal – generation from incremental hydropower added after 2012 is consider ed, with other low- and zero-emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the c ompliance period from sources added since 2012 is eligible. Generation from existing hydropow er, consistent with the treatment of generation from other low- and zero-emitting source s, does not displace existing fossil emissions. See sections V.A, V.E, and VIII.K of th e preamble of the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters asked the EPA to discuss in more detail the reasons for excluding hydropower from the proposed approach, including barriers to hydrop ower expansion (environmental and navigation effects of dams). Commenters also asked the EPA to discuss why the proposed Building Block 3 approach excludes hydropower, but the alternate renewables approach (as described in the "Alternate RE Approach" TSD) seems to favor inclusion of hydropower, although numbers are given for a scenario where hyd ropower is excluded.

Comment 27: Several commenters commented on the inclusion of h ydropower in state RPS goals and how that should be handled.664

Response 27: The EPA agrees to clarify the approach to hydropow er. In response to additional analysis and many comments, the 111(d) final rule d iffers from the proposal – generation from incremental hydropower added after 2012 is consider ed, with other low- and zero-emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the c ompliance period from sources added since 2012 is eligible. Generation from existing hydropow er, consistent with the treatment of generation from other low- and zero-emitting source s, does not displace existing fossil emissions, but potential uprates to existing hydrop ower facilities may be included in the establishment of CO2 emission performance standard. See sections V.A, V.E, and VIII.K of the preamble of the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters questioned how the EPA accounted for the fact that many of these state RPS goals include existing hydropower and credit for energy e fficiency measures, yet existing hydropower does not appear to count toward compliance with sta te goals, and energy efficiency is already accounted for in Building Block 4.

Commenters stated that some state RPS include hydro as an allowable resource, and therefore, the historic renewable energy in those states that the EPA used to determine RE requirements in Building Block 4 are artificially high.

Commenters stated that the EPA should remove hydroe lectric power from the goal computation methodology both from the state baseline of existin g renewable generation and the portion of a state's RPS that is expected to be met from existin g hydropower. Commenters added that, if the EPA is unable to calculate the amount of existing h ydro included in individual state RPS, states with RPS requirements that are clearly distorted by inclusion of existing hydro be removed from the Northeast average. Commenters provided a figure showing the 2012 distribution of RE in the Northeast states. Commenters stated that, alternati vely, the EPA could adopt a uniform 20 percent target for the nation because regional targ ets bear no relationship to the techno-economic ability of states to meet the regional targets and therefore are arbitrary. Commenters explained that a uniform 20 percent target, however, is consi stent with the BSER by requiring all regions to meet the standards set by the leading states/region s.

Commenters stated that existing RPS-eligible hydrop ower should count towards compliance with state goals, in order to maintain consistency with the goal-setting process and state RPS programs. Commenters explained that the EPA's propo sed RE approach to establishing Building Block 3 targets is based on an average of the RPS g oals of the states within a region that have RPS goals, and, although state RPS goals vary, they were established for the most part with the inclusion of certain hydropower resources as RPS-el igible resources. Commenters added that California entities' procurement decisions and comp liance planning are long-term processes that include contracting with projects under long-term p ower purchase agreements based on current state law. Commenters further explained that Califo rnia's RPS allows certain types of hydroelectric resources (mostly small hydroelectric generation), and hence, the Building Block 3 target is partially set based upon existing RPS-eli gible hydroelectric resources. Commenters stated that, therefore, any existing RPS-eligible h ydroelectric generation should count towards compliance.665

Commenters also expressed opposition to including h ydropower when setting state targets. Commenters acknowledged the zero-carbon emissions f rom hydro generation, but do not believe that compliance targets should be decremented by su btracting that generation, which would relieve Idaho from its obligation to reduce its por tion of coal plant emissions. Commenters added that most hydropower is generally not considered a "renewable" energy resource in calculations for utility compliance with state renewable portfol io standards.

Commenters stated the EPA must adjust regional RE g oals to reflect the fact that generation from domestic and international existing hydropower resources may not be used for compliance. Commenters stated that hydropower generation is an essential zero-carbon emitting resource and
reduces the overall mass emissions of the U.S. ener gy sector. Commenters noted that, in 2012, 6.8 percent of electricity generation came from hyd ropower, making it the largest RE resource. Commenters also stated that nearly every state allo ws generation from certain existing hydropower facilities, including in-state, out-of-s tate, and international facilities, to be used for RPS compliance, and hydropower generation is used t o satisfy a large portion of many state RPS requirements. Commenters noted that, when determini ng the regional RE targets, however, the EPA does not appear to have adjusted state RPS targ ets to exclude existing hydropower. Commenters stated this approach is inconsistent wit h the EPA's stated approach to hydropower in setting state goals. Commenters stated, moreover , that the proposed guidelines do not allow the use of these resources for compliance with the proposed state-specific goals. Commenters stated that, if the EPA restricts the resources ava ilable for compliance, despite their role in states ' existing RPS programs, the Agency must also reduce the state RE goals to account for this limitation. Commenters stated it is arbitrary for t he EPA to use state RPS mandates that explicitly contemplate the use of certain hydropowe r resources to set regional or state RE goals for 111(d) purposes, but not allow these resources to be used for compliance, as it increases state goal stringency while simultaneously depriving stat es of an important compliance tool.
Commenters stated that the same issue arises when c onsidering pumped hydro storage facilities; the EPA's proposed formula penalizes states that ha ve prudently constructed pumped hydro facilities because the emissions and MWh from plant s used to charge the storage system are included in the RE goal setting equation, yet the m egawatt hours discharged from the storage resources to provide emissions-free electricity are not. Commenters added that, consequently, states with large pumped hydro facilities, such as Michigan, have more stringent emissions reduction goals than is warranted. Commenters concl uded by stating that the EPA's assumptions and methodology for calculating RE goals should be consistent with state RPS rules and include all RPS-eligible generation in states' compliance c alculation, including RPS-eligible hydropower and pumped storage. Commenters stated if the EPA is not going to allow existing hydropower as a compliance tool, the state goals cannot be based on RPS requirements that include hydropower or in-state deployment of hydropower to date.

Commenters pointed out that certain hydroelectric p ower can be used by an electric power supplier to comply with the requirements of the RPS and stated that, for example, an IOU can use small scale hydroelectric power (<10MW) to comp ly with its RPS requirements. Commenters added that North Carolina RPS imposes no limit to the amount that can be used for compliance, and theoretically, an IOU could satisfy its entire requirement by purchasing small scale hydroelectric power. Commenters provided a table that shows the estimated amount of small scale hydro used by IOUs for compliance with the RPS based on historical data used for compliance to date. Commenters also stated that, fo r EMCs and municipalities, 30 percent of666

their total RPS requirement can be fulfilled with c ertain hydroelectric purchases, which include allocation from SEPA comprised of 23 water projects operated by the U.S. Army Corps of Engineers. Commenters stated that North Carolina's RPS imposes no requirement that a SEPA allocation originate from electricity generated in the state and, if sufficient hydro generation is not available to satisfy annual SEPA allocations, S EPA may utilize replacement power from any available source of generation, including non-renew able generation. Commenters provided a table that shows the estimated amount of hydro used by EMCs and municipalities for compliance with the RPS, based on historical data used for com pliance to date, and noted that the estimate is very conservative in that it projects that the EMCs and municipalities will only comply with 9.5 percent of their obligation through hydro, even tho ugh they are authorized to use up to 30
percent.

Commenters stated that the Agency should resolve th e inconsistency between including existing hydroelectric generation in developing the target f or New York and the other states in the Northeast region and disallowing the use of existin g hydropower in complying with that target. Commenters explained that, in order to take into ac count the varied availability of different renewable resources across regions of the U.S., the EPA used the state-level effective renewable energy levels derived from RPS requirements to quan tify regional targets consistent with states' reasonable level of RPS development. Commenters sta ted that, in doing this for the Northeast region, the EPA inadvertently included existing hyd roelectric generating facilities when establishing the region's RPS goals, because those resources are included as available resources in each state's RPS target, but for other states wi th relatively large amounts of existing hydroelectric generation, the EPA based the states' target on RPS levels that do not include hydroelectricity. As an example, commenters stated that the EPA used 15 percent as the RPS for the state of Washington, but if existing hydropower was included in Washington's RPS, the renewable target for Washington would be in excess of 75 percent. Commenters concluded by stating that, since existing hydroelectric generati ng sources are not eligible for compliance purposes, the calculation of the renewable energy p ortion of Building Block 3 for the Northeast is technically incorrect. Commenters explained thatthe EPA can correct this by reducing each state's effective renewable energy target level to subtract out the amount of existing hydro that is accounted for in each state's RPS goal. Commenters added that the appropriate RE level for each state in the Northeast region would then be 22 perc ent for Connecticut, 18 percent for Maine, 19 percent for Massachusetts, 23 percent for New Hamps hire, 10.7 percent for New York, and 13 percent for Rhode Island. Commenters added that, if the EPA makes these adjustments, the renewable target for the states in the Northeast re gion would decrease from 25 percent to 18 percent, and New York's renewable energy building b lock target would decrease from 24,262 GWh to 17,043 GWh. As an alternative, commenters st ated that the EPA could also correct its apparent error by allowing existing hydroelectric r esources to be used for compliance purposes, rather than removing such resources from a state's goal computation. Commenters explained that, for states that have RPS programs that were u sed to set state targets, any non-emitting renewable energy eligible to comply with the releva nt RPS regulations could be counted toward compliance, including generation from currently-eli gible existing hydroelectric generation, and this would be consistent with the concept that stat e RPS targets are reflective of state expectations for future generation from technologie s included in the programs.

Commenters stated that renewable technologies consi dered in the computation of state goals in Building Block 3 should also be available to states as a compliance option. Commenters667

explained that if a state's RPS included hydroelect ric power and the renewable generation potential applied to each region is based on the RP S of states within that region, then the qualifying hydroelectric power should be considered as a compliance mechanism. Commenters suggested that the EPA provide more clarification o n qualifying renewable energy in the final rule and ensure that renewable generation used in t he calculation of targets can also be used in the determination of compliance.

Commenters stated that nearly every state RPS allow s generation from existing hydropower facilities to be used for compliance and accounts f or a large portion of many state RPS requirements. Commenters noted that the EPA states in the Abatement Measures TSD at 4-5 that the EPA adopted a broad interpretation of RE genera tion to include any non-fossil renewable fuel type, with the exception of generation from ex isting hydroelectric power facilities when calculating baseline levels. Commenters added that, when determining the regional renewable targets based on the RPS requirements, the EPA does not appear to have adjusted the targets to exclude existing hydro. Commenters stated that this is inconsistent, and if the EPA restricts hydropower as a resource for compliance, the EPA mu st also reduce the state goal to account for that treatment. Commenters stated that it clearly r ecognizes the value of hydropower in a clean energy portfolio, providing additional information on TVA, and noting that TVA maintains 29 conventional hydroelectric dams throughout the Tenn essee River system and one pumpedstorage facility for the production of electricity. Commenters stated that the variability of hydroelectric generation is due to the weather-rela ted variance in rainfall and runoff from year to year, along with other commitments listed previousl y. Commenters stated that this makes it challenging to set firm target levels for hydroelec tric generation because the amount of rainfall and runoff is out of its control, and including som e average amount of hydroelectric generation would only increase the compliance risk for the sta tes that are served by TVA.

Commenters stated that there is inconsistency in th e inclusion of existing hydroelectric generation in the "total generation" for a state an d in developing the goals, but disallowing existing hydroelectric generation when determining compliance. Commenters stated that to correct this inconsistency, the EPA should exclude existing hydroelectric generation from any determination of North Dakota's "total generation."

Comment 28: Commenters commented on the implications of a regi onalized approach for reallocating hydropower across states.

Response 28: The EPA agrees. In response to additional analysi s and many comments, the 111(d) final rule differs from the proposal – the approach to establishing CO2 emission performance rates has changed. See sections V.A and V.E of the preamble of the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters commented on the implications of a regio nalized approach for reallocating hydropower across states. Commenters stated that th e Agency's request for comment on a regionalized approach for hydropower allocation is a tacit recognition that existing hydropower is a significant resource, but it is unclear what e ffect this change would have on specific state goals since the EPA provides no specific informatio n on the recalculation of the RE building668

block under this approach. Commenters remarked thatit seems likely that this approach has the potential to create dramatic shifts, and some state s with vast hydro resources are adjacent to many states with few hydro resources. Commenters ad ded that this has the potential to cause such significant shifts in state goals that it woul d require a wholesale revision of the manner in which the state goal targets are calculated.

Comment 29: Several commenters discussed the need for consiste ncy in the goal computation process and compliance options, specifically for hy dropower.

Response 29: The EPA agrees. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal – the approach to establishing CO2 emission performance rates has changed, and hydropower is tr eated consistently with other low- and zeroemitting sources. See sections V.A, and V.E, of the preamble of the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters noted that this consistency between rene wable technologies used in the goal computation process and available to states as comp liance options is especially critical should the EPA choose not to adopt their recommendation of fered with respect to the alternative methodology for Building Block 3. Commenters stated , specifically, if the EPA chooses to maintain the current methodology, it must address t he issue created for early actor states that include hydroelectric power as a qualifying resourc e in their RPS portfolios. Commenters recommended that the EPA either: (1) include hydroe lectric resources in the goal computation procedure, and permit all existing and future hydro electric resources to qualify for compliance purposes; or, (2) remove hydroelectric power from t he goal computation methodology and permit only new or incremental hydroelectric renewable resources to qualify as compliance measures. Commenters stated that it respectfully em phasizes that a decision by the EPA to retain the current Building Block 3 methodology, coupled w ith a decision not to adopt one of the above proposals with respect to hydroelectric resources, would artificially distort the objective of certain early actors' existing RPS state policies. Commenters stated that state RPS targets are reflective of state expectations for future generat ion from technologies included in the RPS portfolio, and the RPS targets set by the Northeastregional states are dependent to varying degrees on the inclusion of hydroelectric resources for RPS compliance purposes. Commenters provided a graph showing the impact of including hy droelectric resources as part of the targetsetting methodology creates a differential between the Northeast states' existing renewable generation and their derived 2030 proposed renewabl e energy targets that is unrivaled in its stringency and may not be technically achievable wi thout the inclusion of existing hydroelectric resources as a compliance option.

Commenters stated that, if the EPA were to finalize the proposed RPS-based approach to the renewable energy component of Building Block 3, the Agency should review its methodology to ensure that the measures used to develop the state targets are consistent with the measures allowed for compliance. Commenters stated that some existing hydropower resources, which the EPA proposes to exclude from its assessment of 2012 renewable generation and from use in compliance plans, are eligible for compliance with renewable standards. Commenters stated that,669

if the EPA retains its treatment of existing hydrop ower, the EPA should adjust the RPS levels to exclude the associated generation from hydropower.

Commenters stated that, when determining the region al RE targets, the EPA does not appear to have adjusted state RES targets to exclude existing hydropower, which is inconsistent with the EPA's stated approach to hydropower in setting stat e goals. Commenters added that the proposed guidelines do not allow the use of these resources for compliance with the proposed statespecific goals. Commenters stated that, if the EPA restricts the resources available for compliance, despite their role in states' existing RES programs, the Agency must also reduce the state RE goals to account for this limitation. Comm enters added that it is arbitrary for the EPA to use state RES mandates that explicitly contemplate the use of certain hydropower resources to set regional or state RE goals for 111(d) purposes, but not allow these resources to be used for compliance as it increases state goal stringency wh ile simultaneously depriving states of an important compliance tool. Commenters stated that t he same issue arises when considering pumped hydro storage facilities in that the EPA's p roposed formula penalizes states that have prudently constructed pumped hydro facilities becau se the emissions and MWh from plants used to charge the storage system are included in the RE goal setting equation, yet the megawatt hours discharged from the storage resources to provide em issions-free electricity are not. Commenters stated that, as a result, states with large pumped hydro facilities, such as Michigan, have more stringent emissions reduction goals than is warrant ed.

Commenters stated that there are inconsistencies in how the Agency has considered existing hydropower in state goal determinations, and these inconsistencies result in quantifiable repercussions that lead to inaccuracies in the stat ed results of the EPA's proposed plan. Commenters explained that the inaccuracies are the consequences of the CPP's disregard for 25.8 percent of domestic production, specifically the su bset that is responsible for 80.5 percent of carbon-free generation as stated above. Commenters stated that, as a result of the exclusion of hydroelectric and nuclear power contributions, any claims of carbon intensity are inaccurate and these generation inconsistencies must be addressed as they significantly alter the stated results of enacting the CPP. Commenters stated that, in the ca se of hydroelectric power production, the EIA confirms that non-hydroelectric based electrica l production routinely out-produces hydroelectric generation and non-hydroelectric powe r is anticipated to permanently outpace hydroelectric production in the coming years. Comme nters stated that, while hydroelectric power currently represents 52 percent of the domestic ren ewable portfolio, wind-based production accounts for 32 percent, and the EPA's depiction of hydroelectric production dwarfing less developed sources of renewable energy is inaccurate

.
Commenters stated that excluding existing hydropowe r in state goal calculations yields strange results for states that rely heavily on hydropower. As an example, commenters explained that conventional hydropower constituted about 70 percen t of Idaho's total generation in 2012 and Idaho's actual CO2 emission rate in 2012 was only 9 4 lb/MWh,, but by excluding hydropower, the EPA came up with a target rate of 228 lb/MWh fo r the year 2030, which is 140 percent larger
than Idaho's 2012 CO2 emission rate. Commenters sta ted that the proper way to calculate CO2
emission rates is to include all CO2 emissions from affected generation units and divide that by all generation in a particular state in any year, a nd doing this consistently for each year going forward can create a technology neutral rule that i s consistently based on a well-defined best670

system of emission reduction, which must include te chnical feasibility, economics, and non-air quality considerations.

Commenters questioned why the EPA used all generati on, including existing hydropower, to calculate the renewable energy cap, while, at the s ame time, excluding existing hydropower from the 2012 existing renewable baseline amount. Commen ters also noted that, according to the proposal, the production of electricity from hydro generation was not considered in calculating the baseline and thus, was not projected out in cal culating state goals, and that incremental generation from existing or later built facilities could be used for compliance. Commenters continued with the following questions to the EPA: a. How is "incremental hydropower generation from existing facilities" calculated? i. Is it the total amount of hydro generation actually produced over the 2012 baseline? ii. Is itthe increase in capacity resulting from upgrades to facilities that could potentially boostproduction depending on demand and dispatching decisions?"

Comment 30: Commenters discussed a calculation error in the al ternate RE approach.

Response 30 : The EPA acknowledges the comment. Please see V.E .6 for a discussion of the quantification of renewable energy generation poten tial.

The following are summaries of the specific public comments under this comment:

Commenters stated that there is an error in the cal culations for the Alternate RE Approach, Option 1, in the spreadsheet accompanying the techn ical support document. Commenters explained that hydropower potential used for the ca lculation was intended to use the greater of the feasibility determination or 2012 generation, b ut the spreadsheet used the full technical potential. Commenters concluded by stating that the alternative approach should not be finalized, but in the event that it is, this error should be a ddressed.

Comment 31: Commenters stated that the EPA should clarify thatstates need not alter their definitions of RPS-eligible resources in order for new or incremental hydro to be eligible for inclusion in a state's 111(d) plan.

Response 31: The EPA agrees to clarify the treatment of hydropo wer. In response to additional analysis and many comments, the 111(d) final rule d iffers from the proposal – the approach to establishing CO2 emission performance rates has cha nged, and hydropower is treated consistently with other low- and zero-emitting sour ces. Generation from incremental hydropower added after 2012 is considered, with other low- and zero-emitting sources, to displace existing fossil emissions and may be used by states to reduc e a rate. For the purpose of adjusting a rate generation during the compliance period from source s added since 2012 is eligible. Generation from existing hydropower, consistent with the treat ment of generation from other low- and zeroemitting sources, does not displace existing fossil emissions, regardless of its location. See sections V.A, V.E, and VIII.K of the preamble of th e final CPP.671

The following are summaries of the specific public comments under this comment:

Commenters stated that the EPA should clarify in th e final rule that states need not alter their definitions of RPS-eligible resources in order for new or incremental hydro to be eligible for inclusion in a state's 111(d) plan. Commenters poin ted out that some states' RPS rules do not consider large hydro to be a qualifying resource, a nd the commenters gave examples, explaining that hydro larger than 100 MW is excluded from Minn esota's RPS, and hydro larger than 60 MW is excluded in from Wisconsin's RPS. Commenters poi nted out that facilities in Canada, many of which exceed the thresholds above, would nonetheles s reduce emissions from affected EGUs in the United States, and any measure that reduces emi ssions from affected EGUs should be eligible in 111(d) plans.

Comment 32: Commenters stated that the EPA cannot impose limit s on which hydropower resources should be available for compliance.

Response 32: The EPA agrees to clarify the treatment of hydropo wer. In response to additional analysis and many comments, the 111(d) final rule d iffers from the proposal – generation from incremental hydropower added after 2012 is consider ed, with other low- and zero-emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the c ompliance period from sources added since 2012 is eligible. Generation from existing hydropow er, consistent with the treatment of generation from other low- and zero-emitting source s, does not displace existing fossil emissions. See sections V.A, V.E, and VIII.K of the preamble of the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that it is not within the scope o f the proposed rule for the EPA to impose limits on which hydropower resources should be avai lable for compliance, other than excluding existing hydropower as it has proposed.

Comment 33: Commenters stated that the rule should treat at ri sk hydro in the same way that at risk nuclear power is handled.

Response 33: The EPA agrees to the extent that nuclear and hydro are treated similarly. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal – generation from existing hydropower, con sistent with the treatment of generation from other low- and zero-emitting sources, includin g nuclear, does not displace existing fossil emissions. Generation from incremental hydropower a dded after 2012 is considered, with other low- and zero-emitting sources, to displace existin g fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. See sections V.A, V.E, and VIII.K of the preamble of the

final CPP.

The following are summaries of the specific public comments under this comment:672

Commenters stated that the BSER includes some "at-r isk" nuclear generation but not "at-risk" hydropower generation, even though some hydropower generation may be nearing the end of its design life, facing potential limits on operational flexibility, or scheduled for relicensing before 2030. Commenters stated the "at risk" hydropower sh ould also be included.

Commenters noted that the EPA provided incentives f or preserving existing nuclear generation and stated that similar incentives would be appropr iate for preserving existing hydroelectric generation. Commenters added that like nuclear, hyd ropower is a non-emitting resource with great reliability.

Comment 34: Commenters provided suggestions on how to handle the year-to-year variability of hydropower.

Response 34: The EPA agrees with the need to address the year-t o-year variability. In response to additional analysis and many comments, the 111(d ) final rule differs from the proposal – generation from incremental hydropower added after 2012 is considered, with other low- and zero-emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generatio n during the compliance period from sources added since 2012 is eligible. Regarding data year i ssues for hydrologic variability, see section VI.D of the preamble to the final CPP for EPA’s res ponse to this comment. See sections V.A, V.E, and VIII.K of the preamble of the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that, regarding year-to-year vari ability in hydropower generation, the CPP should recognize the variable nature of hydropower and allow state plans to designate a mean hydropower production figure for use in energy mix assumptions contained in the state plan.

Commenters stated that, if hydro is factored into t he baseline, the EPA should use an average production level over a minimum of 5 years, rather than a snapshot using only 2012 generation. Commenters explained that there can be a significan t year-to-year variability in the amount of hydropower generation due to the availability and t iming of water based on precipitation levels and other hydrological factors. Commenters noted th at 2012 was a high hydropower year in many regions of the country and concluded by statin g that using a 5-year average would smooth out the individual year distortions on the baseline calculations.

Commenters stated that the conservative capacity fa ctor listed for hydro-electric power production is the limiting factor and could be used to determine the floor to account for year-toyear variability.

Commenters stated that, to address year-to-year var iability, the EPA should allow SIP provisions that would permit the states to compensate for weat her-related compliance shortfalls in a particular year with excess compliance in earlier a nd later years. Commenters added that the 3- year averaging allowed by the rule would address th is concern to some extent, but may be inadequate under drought conditions.673

Commenters stated that, as Western states and compa nies make plans to meet future demand for electricity, they are dealing with substantial vari ation in the availability of hydropower, including variability caused by changes in snowpack, shifts i n rain fall, changes in the timing of peak river flows, and ongoing drought. Commenters stated that this variation also presents a variety of challenges for states when it comes to 111(d) becau se it impacts both the EPA's baseline assumptions and the future generation mix that will determine compliance in 2020 and beyond.

Comment 35: Commenters expressed support for hydropower at the Glen Canyon Dam

Response 35: The EPA disagrees. In response to additional anal ysis and many comments, the 111(d) final rule differs from the proposal – gener ation from incremental hydropower added after 2012 is considered, with other low- and zero-emitti ng sources, to displace existing fossil emissions and may be used by states to reduce a rat e. Generation from existing hydropower, consistent with the treatment of generation from ot her low- and zero-emitting sources, does not displace existing fossil emissions. See sections V. A, V.E, and VIII.K of the preamble of the final CPP. The reference to the endangered humpback chub and the activity of other agencies is out of the scope the final CPP and no response to this por tion of the comment is provided.

The following are summaries of the specific public comments under this comment:

Commenters stated that the Bureau of Reclamation (B OR) and National Park Service (NPS) are conducting an Environmental Impact Study (EIS) usin g data from the Long-Term Experimental and Management Plan (LTEMP) for the Glen Canyon Dam and Hydroelectric Operation. Commenters stated that many utilities believe that these agencies are developing operating alternatives that will significantly impact the end angered Humpback Chub and reduce the hydroelectric output. Commenters stated that these agencies appear to ignore the science and not
value the benefits of this renewable resource. Comm enters stated that reducing the renewable hydroelectric production will increase greenhouse g as emissions by replacing the electrical generation with a natural gas source, which is in c onflict with CPP. Commenters stated that these experimental operating restrictions should be re-ev aluated, and the hydroelectric resource should be restored to the pre-1996 operating standards, wh ich will result in the ongoing protection of the endangered species, an increase in hydroelectric pr oduction, and a reduction of greenhouse gas emissions. Commenters requested that the EPA and th ese other federal agencies resolve these environmental conflicts and seek a balanced approac h for the renewable hydrogenation from Glen Canyon Dam.

Comment 36: Commenters commented on the RE calculations for So uth Dakota related to hydropower.

Response 36: The EPA agrees to clarify the treatment of hydropo wer. In response to additional analysis and many comments, the 111(d) final rule d iffers from the proposal – the approach to establishing CO2 emission performance rates has cha nged, and hydropower is treated consistently with other low- and zero-emitting sour ces. Generation from incremental hydropower added after 2012 is considered, with other low- and zero-emitting sources, to displace existing674

fossil emissions and may be used by states to reduc e a rate. For the purpose of adjusting a rate generation during the compliance period from source s added since 2012 is eligible. Generation from existing hydropower, consistent with the treat ment of generation from other low- and zeroemitting sources, does not displace existing fossil emissions. See sections V.A, V.E, and VIII.K of the preamble of the final CPP. Regarding data y ear issues for hydrologic variability, see section VI.D of the preamble to the final CPP for E PA’s response to this comment.

The following are summaries of the specific public comments under this comment:

Commenters commented on the RE calculations for Sou th Dakota related to hydropower. Commenters stated that the EPA considered hydropowe r in calculating South Dakota's goal of 741 pounds of CO2 per MWh, and explained that the 1 5 percent goal for RE in 2030 was based on South Dakota's total generation in 2012 of 12,03 4,206 MWh, which includes 5,980,965 MWh of hydropower. Commenters stated that, if the EPA h ad excluded hydropower production in 2012, South Dakota's goal would increase from 741 t o 877 pounds of CO2 per MWh. Commenters added that the energy efficiency goal is based on retail sales, which, for South Dakota, also includes hydropower, and, if the EPA e xcluded hydropower, South Dakota's energy efficiency goal for Building Block 4 would be lower ed from 1,029,169 to 617,502 MWh, which would increase South Dakota's goal from 741 to 917 pounds of CO2 per MWh. Commenters stated that, if EPA elects to not include existing hydropower in demonstrating compliance with state goals, it should not include hydropower in it s calculations that establish the state's goals. Commenters also stated that the EPA based the 15 pe rcent RE requirement in Building Block 3

on the RPS for five out of the nine states in the N orth Central Region, and the hydropower generation in these five states account for no more than 2 percent of their total electrical generation. Commenters stated that including hydrop ower in determining state goals and yet disallowing use of existing hydropower to demonstra te compliance, when hydropower represents approximately 50 percent of South Dakota's producti on and 40 percent of its state sales, is not rational. Regarding the alternative approach, the c ommenters stated that the EPA took South Dakota's percentage of hydropower production in 201 2 (i.e., 50 percent) and added it to the 15 percent renewable goal, which established South Dak ota's renewable goal at 65 percent. Commenters stated that the EPA's alternative goal a ssumes South Dakota's hydropower can produce 2012 levels every year, and this is not con sistently achievable. Commenters provided a figure that shows that annual hydropower production in South Dakota is dependent on the annual Missouri River runoff above Sioux City, Iowa. Comme nters concluded by stating that the EPA's alternative approach in using hydropower to set a s tate's goal is not realistic or workable.

Comment 37: Commenters commented on Arkansas’ hydropower goals

.
Response 37: The EPA agrees to clarify the treatment to hydropo wer. In response to additional analysis and many comments, the 111(d) final rule d iffers from the proposal – generation from incremental hydropower added after 2012 is consider ed, with other low- and zero-emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the c ompliance period from sources added since 2012 is eligible. See sections V.A, V.E, and VIII.K of the preamble of the final CPP.675

The following are summaries of the specific public comments under this comment:

Commenters commented on the goals for hydropower in Arkansas. Commenters stated that a 2014 study by DOE found that Arkansas has 1,108 MW and 5,964 GWh of additional potential capacity along stream reaches that do not currently have dams or other infrastructure, and a 2012 study by NREL found adding generation to currently non-powered dams could produce 1,136 MW in Arkansas. Commenters stated that, assuming capacity factors similar to those in the DOE study, these plants would produce about 6,000 GWh. Commenters explained that the capacity at the existing dams could be developed more quickly a nd would have less environmental impacts than the capacity that would require impoundments. Commenters stated that the renewableenergy targets used in the EPA's determination of A rkansas's goals could be met with about 6 percent of the potential at existing dams in 2020 a nd 80 percent in 2029.

Comment 38: Commenters commented on West Virginia’s hydropower goals.

Response 38: The EPA agrees to clarify the treatment of hydropo wer. In response to additional analysis and many comments, the 111(d) final rule d iffers from the proposal – the approach to establishing CO2 emission performance rates has cha nged, and hydropower is treated consistently with other low- and zero-emitting sour ces. Generation from incremental hydropower added after 2012 is considered, with other low- and zero-emitting sources, to displace existing fossil emissions and may be used by states to reduc e a rate. For the purpose of adjusting a rate generation during the compliance period from source s added since 2012 is eligible. The Building Blocks are not prescriptive. States have flexibilit y to develop plans that consider local circumstances. See sections V.A, V.E, VIII.A and VI II.K of the preamble of the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that historically, hydropower has been West Virginia's primary renewable resource for electricity generation. Commenters sta ted that West Virginia has utilized hydropower to generate electricity since the early 1900s and that wind and hydro account for nearly 4 percent of West Virginia's total electrici ty production. Commenters stated that West Virginia has hydroelectric generation capacity of 2 86.7 MW, located at 11 dams ranging in capacity from 1.9 MW on the Potomac to 102 MW on th e New River. Commenters provided additional information on West Virginia's hydro cap acity and discussed hydro permit applications under review by FERC. Commenters state d that, while several hydro applications have been under review for years, the circumstances support a prediction that the additional available hydro potential is only 125.6 MW; this eq uates, at a capacity factor of 40 percent, to roughly 4.3 percent of the EPA's RE goal for West V irginia. Commenters stated that the EPA determined that it is feasible for West Virginia to produce 4,408,000 MWh of electric generation from hydropower by 2025. Commenters stated this fig ure should be compared to 2012, when West Virginia only produced 1,431,440 MWh of electr ic generation from hydropower. Commenters stated that assuming the CPP would take effect in 2017, West Virginia would have only 10 years from now to more than triple its hydr opower capacity, and the development time allotted is unrealistic. Commenters stated that, in view of the prediction that only 125.6 MWh of additional hydropower is available in West Virginia , the EPA's estimate of untapped hydro resources is wholly without merit.676

Comment 39: Commenters commented on the feasibility of expandi ng hydropower in Florida.

Response 39: The EPA agrees to clarify the treatment of hydropo wer. In response to additional analysis and many comments, the 111(d) final rule d iffers from the proposal – the approach to establishing CO 2 emission performance rates has changed, and hydrop ower is treated consistently with other low- and zero-emitting sour ces. Generation from incremental hydropower added after 2012 is considered, with other low- and zero-emitting sources, to displace existing fossil emissions and may be used by states to reduc e a rate. For the purpose of adjusting a rate generation during the compliance period from source s added since 2012 is eligible. The Building Blocks are not prescriptive. States have flexibilit y to develop plans that consider local circumstances. See sections V.A, V.E, VIII.A and VI II.K of the preamble of the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters commented on the feasibility of expandin g hydropower in Florida. Commenters stated that the EPA's assumed growth projections un der Building Block 3 for the increase in RE generation within Florida may not be technically fe asible. Commenters explained that RE accounts for only 2 percent of the state's total ge neration mix and noted that the City of Tallahassee has direct experience in this regard, a s it operates one of only two hydroelectric power facilities in the state. Commenters explained that, historically, hydroelectric facilities in Florida operate at a low capacity factor, citing da ta from 2012 that indicates capacity factors between zero to less than 40 percent. Commenters st ated that, although hydroelectric power plants do have definite benefits with respect to ai r quality, there is very limited ability to expand the use of hydroelectric facilities in Florida. Com menters also stated that the C. H. Corn Hydroelectric Facility operated by the City of Tall ahassee is a run-of-river facility, and the power generation opportunities from this facility are limited. Commenters noted that, during the last 10 years, the facility has averaged 0.58 perce nt of the Tallahassee's load requirement.

Comment 40: Commenters stated that there is an inconsistent tr eatment of existing hydroelectricity in the proposed approach to set Ma ine’s renewable energy goals and then disallow the same hydroelectricity for compliance.

Response 40: The EPA generally agrees. In response to additiona l analysis and many comments, the 111(d) final rule differs from the proposal – t he approach to setting CO2 emission performance rates has changed, and hydropower is tr eated consistently with other low- and zeroemitting sources. Generation from incremental hydro power added after 2012 is considered, with other low- and zero-emitting sources, to displace e xisting fossil emissions and may be used by states to reduce a rate. For the purpose of adjusti ng a rate generation during the compliance period from sources added since 2012 is eligible. G eneration from existing hydropower, consistent with the treatment of generation from ot her low- and zero-emitting sources, does not displace existing fossil emissions, See sections V. A, V.E, and VIII.K of the preamble of the final
CPP.

The following are summaries of the specific public comments under this comment:677

Commenters stated that there is an inconsistent tre atment of existing hydroelectricity in the proposed approach to set Maine's state renewable en ergy goals and then disallow the very same hydroelectricity for compliance with the goal. Comm enters stated that, when it established the renewable generation goals for each state, the EPA considered all forms of renewable energy addressed by any state RPS. Commenters stated that, for Maine, the EPA attributed the total RPS standard of 40 percent, which includes existing hyd ro generation as well as wind, biomass, and all other renewables, as defined in Maine statutes. Commenters stated the EPA has not, however, carried the same inclusive approach through to comp liance with the target emissions rate, as calculated. Commenters stated specifically that, al though existing biomass and hydropower resources are included in establishing the regional RPS, average against which each state will be measured, the states may not count the MWh generate d from existing hydropower in the compliance determination, nor all biomass. Commente rs stated that the EPA appears to be allowing a portion of biomass used to generate elec tricity to qualify, consistent with electricity derived from waste biomass and sustainably harveste d biomass. Commenters stated, nonetheless, that Maine allows electricity generated from non-wa ste and other biomass to qualify, and thus, this presents another mismatch to a lesser degree t han hydro-generated electricity. Commenters stated the only Maine biomass-generated electricity that appears to qualify is that generated from waste biomass or sustainably harvested biomass, whe reas Maine's full RPS compliant biomass generation is used to set Maine's Building Block 3 goal, creating a similar, though less exacerbated, inconsistency for biomass. Commenters stated that this disparate treatment of existing hydropower and biomass plainly results in a mismatch between the state goal-setting methodology and what is allowed for compliance. Com menters remarked that states, such as Maine with an RPS based on investments in significa nt biomass and hydropower resources, should be allowed to use all state RPS-compliant re sources to avoid this mismatch. Commenters recommended that the EPA correct this error by incl uding existing hydropower and biomass in countable state compliance generation, or by elimin ating existing hydropower (and nonqualifying biomass) from states' RPS standards when establishing the regional average under Building Block 3. Commenters stated that eliminatin g existing hydropower from Maine's RPS standard would reduce Maine's RPS percentage from 4 0 percent to approximately 18 percent, likewise eliminating biomass from Maine's RPS would reduce Maine's RPS percentage from 40 percent to approximately 29 percent, and eliminatin g both biomass and hydropower, as was used to comply with Maine's RPS in 2012, would reduce Ma ine's RPS goal from 40 percent to approximately 7 percent. Commenters stated that, si nce Maine's RPS is one of the highest in the U.S. and plainly pulls up the Northeastern RPS aver age calculated by EPA (along with New York's RPS, which also uses a majority of hydropowe r), the entire regional average estimate for renewables is set too high to allow for compliance without existing hydropower and biomass resources recognized in the Maine RPS. Commenters s tated that, with either correction, the RPSbased approach to standard-setting would provide a more accurate indicator of the ability of states to develop renewable energy as a means of re ducing CO2 emissions during the compliance period. Commenters recommended that this RPS-region al average approach be corrected as the preferable technical methodology for setting a repr esentative renewable goal for Building Block 3 purposes because it recognizes the regional natur e of the electricity grid serving New England and New York. In the alternative, the commenters su pported the NODA approach to regionalizing the NREL renewable potential calculat ions. Commenters stated that it is essential that the EPA regionalize the renewable goals in Bui lding Block 3 in order to maintain the technical legitimacy of the Building Block 3 renewable component. Commenters explained that678

electricity is generated, consumed, and transmitted on a regional basis and not within state borders. Moreover, commenters stated, the renewable energy credit markets are regional markets within the Northeast (New England and New York). Co mmenters stated both the RPS approach and the NODA regionalization approach recognize thi s fundamental attribute of electricity generation that usage and transmission within regio ns satisfies various state RPS laws.

Comment 41: Commenters provided a detailed description of the Federal Columbia River Power system and how efficiency upgrades are handle d.

Response 41: The EPA agrees to clarify the treatment of hydropow er. In response to additional analysis and many comments, the 111(d) final rule d iffers from the proposal – the approach to setting CO2 emission performance rates has changed, and hydropower is treated consistently with other low- and zero-emitting sources. Generati on from incremental hydropower added after 2012 is considered, with other low- and zero-emitti ng sources, to displace existing fossil emissions and may be used by states to reduce a rat e. For the purpose of adjusting a rate generation during the compliance period from source s added since 2012 is eligible. Generation from existing hydropower, consistent with the treat ment of generation from other low- and zeroemitting sources, does not displace existing fossil emissions. See sections V.A, V.E, and VIII.K of the preamble of the final CPP. The preamble addr esses potential multistate plans in section
VIII.C.

The following are summaries of the specific public comments under this comment:

Commenters provided a detailed description of the F ederal Columbia River Power System and how efficiency upgrades are handled. Commenters exp lained that the Columbia River Basin drains 219,000 square miles in seven western states : Washington, Oregon, Idaho, Montana, Wyoming, Nevada, and Utah. Commenters stated that t he system of federal dams on this basin is known as the Federal Columbia River Power System (F CRPS), and the dams of the FCRPS are owned and operated by either the U.S. Army Corps of Engineers (the Corps) or the U.S. Bureau of Reclamation (Reclamation). Commenters stated tha t these dams, along with one nuclear plant and Bonneville Power Administration's (BPA's) acqui sition of power produced by some nonfederal resources, are coordinated and operated as a system from which BPA meets its power sales obligations to its various customers througho ut the Pacific Northwest. Commenters stated that, operationally, the dams cannot be run indepen dently of each other for the purpose of conducting individualized sales from particular pro jects, and BPA does not market power from any individual dam to any single state. Commenters stated that the FCRPS is operated collaboratively by BPA, the Corps, and Reclamation, and the dams are multi-purpose projects, meaning the three agencies operate the dams in a wa y that promotes multiple objectives including flood control, meeting Endangered Species Act and other environmental requirements for fish and wildlife, providing irrigation and nav igation, and generating power. Commenters explained that, of these purposes, flood control is paramount because of public health and safety concerns, but, since 1995, fish and wildlife object ives have also become primary considerations for system planning and river operations due to thr eatened and endangered salmon and the need to comply with the Endangered Species Act. Commente rs explained that meeting these multiple and often conflicting objectives is extraordinarily complex and requires the FCRPS be operated679

as a coordinated system. Commenters stated that mai ntenance and upgrades are prioritized for the FCRPS as a whole; the state that the projects are located within is not a factor. Commenters explained that, in accordance with BPA's long-term power sales contracts, BPA transfers the Renewable Energy Credits (RECs) associated with eff iciency upgrades to the FCRPS on a pro rata basis to BPA's customers, and currently, RECs associated with efficiency upgrades at federal dams are not common. Commenters stated that Oregon and Montana are the only two states in BPA's service territory that currently count effici ency upgrades at existing federal hydroelectric projects as an eligible renewable resource for purp oses of state RPS. Commenters stated that, under Oregon's RPS, if an efficiency upgrade is mad e to a FCRPS hydropower project, a utility may only use that portion of the electricity genera tion attributable to "Oregon's share" of the project to comply with the RPS. Commenters explaine d that, while not binding on BPA, the Oregon Department of Energy implemented rules that apply to utilities that operate in the State of Oregon to define Oregon's share of eligible gene ration attributed to upgrades at federal hydropower facilities. Commenters added that each p roject requires its own application and is subject to review and approval from the Oregon Department of Energy. BPA transfers the RECs associated with "Oregon's share" of this incrementa l generation to all of its preference and investor-owned utility customers (whether in Oregon or not); however, only those RECs going to customers with Oregon load are eligible for Oregon' s RPS. Commenters stated that the RECs are transferred by BPA to its customers through an annu al process defined in the power sales
contract between BPA and its customers. Commenters explained that, generally speaking, BPA allocates these RECs to preference customers on a p ro rata basis commensurate with the amount of power they purchase from BPA, and to investor-ow ned utility customers based on statutory benefits that they receive from the FCRPS. Commente rs stated that future efficiency upgrades on the FCRPS will likewise be eligible for RECs under Oregon's RPS.

Comment 42: Commenters stated that pumped storage should countas RE.

Response 42: The EPA disagrees. Pumped storage provides ancillary services, but does not reduce emissions from existing generation. EPA agr ees that storage may facilitate increased integration of incremental RE, and any generation f rom incremental RE may be eligible to reduce a CO2 emission rate. See sections V.A, V.E, and VIII.K of the preamble of the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that pumped storage should count as RE. Commenters stated that pumped storage produces 2.5 percent of U.S. electricity an d should eligible for consideration as an RE

source.

Commenters stated that Michigan relies often on the Ludington Pumped Storage (LPS) facility due to the flexibility of operating the system and, in particular, its ability to ramp up quickly. Commenters stated that, in addition to being a back stop to RE sources such as wind, LPS is also used during peak demand periods as an economic hedg e to running more expensive generation (coal and gas units) or procuring spot market energ y at a premium. In that instance, commenters stated, LPS acts as an energy storage system. Comme nters also stated that it is important to note that the LPS facility is currently undergoing a 6-y ear life extension and uprating project, which,680

when completed in 2019, will result in an additiona l 420 MW of capacity. Commenters stated that the additional capacity should count toward Mi chigan's target.

Comment 43: Commenters submitted comments on new or emerging h ydropower technologies.

Response 43: The EPA generally agrees. In response to additiona l analysis and many comments, the 111(d) final rule differs from the proposal – g eneration from incremental hydropower added after 2012 is considered, with other low- and zero- emitting sources, to displace existing fossil emissions and may be used by states to reduce a rat e. For the purpose of adjusting a rate generation during the compliance period from source s added since 2012 is eligible. See sections V.A, V.E, and VIII.K of the preamble of the final C PP.

The following are summaries of the specific public comments under this comment:

Commenters described their company's micro hydropow er system, explaining that the system is portable, not harmful to nature, also does not requ ire any construction by the river. Commenters added that the system "has no changes around flow" and requires workers, so it helps employment. Commenters requested that the EPA consi der such designs that generate clean energy and employment for more people. Commenters i ncluded an attachment that provides more details on the system design.

Commenters stated that the proposed rule does not a ddress the development, availability, and use of innovative state-of-the-art hydroelectric genera tion technologies within state plans. As an example, Commenters explained that micro-hydroelect ric generation technology has matured to the point where Portland, Oregon is installing in-p ipe turbines capable of producing 1,100 megawatt hours of electricity a year - enough to po wer up to 150 homes. Commenters stated that the proposed rule provides no incentive for the dev elopment of this environmentally safe, effective, and efficient technology which could be deployed within every municipality in the U.S. that operates a water utility. Commenters adde d that, by creating this type of incentive, a deployment of this type of technology on a large sc ale would create significant economic initiatives, while upgrading water supply systems a nd providing incentives for academia and industry R&D efforts to develop even more efficientand effective micro-hydroelectric generation systems.

3.3.11 Other

This subsection addresses comments related to Clean er Generation Sources (Building Block 3) that do not readily fit into the other subsections of section 3.3 of this document.

Commenters raised a number of issues related to thi s subsection which are organized by topics (comments) below. Responses are provided for these topics.681

Comment 1: Commenters spoke on the constraints of wind energy as a renewable energy

resource.

Response 1: The EPA addresses considerations related to the tec hnical feasibility and associated grid integration costs of significant RE penetratio n in both the preamble (section V.E) and GHG Mitigation Measures TSD. The EPA provides guidance to states on the interstate effects of incremental RE in section VIII.J of the preamble.

The following are summaries of the specific public comments under this comment:

Commenters stated there are numerous local constrai nts on wind development that were ignored in EPA's building block 3 assumptions. Commenters s tated there are feasibility limitations to locating wind to utilize optimal wind currents and there are also often local limitations on wind generation. Commenters provided the example that ac cording to the Birmingham News, on August 20, 2014, a wind farm developer dropped plan s for two Alabama wind farms after the state passed a wind energy bill that limited the no ise that wind farms can produce. Commenters stated the state law also requires wind projects to have a larger setback from nearby properties.

Commenters raised concerns over the development of interstate wind energy. They stated that one of the greatest opportunities for wind energy e xpansion is supporting the development of multi-state or regional transmission planning thoug h such mechanisms as FERC Order 1000. The best results of these complex processes - access to new power markets and expanded wind generation - should be recognized in potential state 111(d) plans. Commenters also stated that EPA should provide significant guidance and as sistance to states in how to best utilize and account for multi-state cooperation on long-term tr ansmission planning as a compliance option under a final 111(d) rule.

Commenters noted that wind resources in the west an d upper-Midwest are located largely on federal lands, which creates regulatory and permitt ing obstacles. Commenters stated that the American Wind Association reported that only 1.4% o f the United States' wind energy capacity had been installed on public land through 2012. Com menters noted that the US Forest Service is responsible for the management of 193 million acres of National Forests and Grasslands, commonly found throughout Wyoming and the commenter s’ service territory, yet only 30 MW of wind has been approved for development on USFS m anaged land. Commenters added that the Bureau of Land Management has also proposed a compe titive bidding process for wind development on land they manage, which has the pote ntial to increase the cost of wind development on public lands.

Commenters stated that EPA did not account for the fact that integrating large amounts of renewable resources into the bulk power system requ ires significant changes to power planning and operations to maintain an adequate level of sys tem reliability, or the need for operational
reserves. Commenters stated that in the absence of developing resources to exclusively provide synchronous inertia, large legacy units would have to be maintained online, potentially at minimum output, to provide sufficient inertia to th e system which would preserve the need for many units operating at their least efficient, high est emitting level of production. Commenters stated that wind resources produce their greatest a mounts of energy when the energy is needed the least. Commenters stated that during times of h igh wind production and low load, concerns682

regarding frequency response can be heightened beca use of less synchronously rotating mass
online. Commenters also noted that with the volatil ity of wind, there are times when the wind generation either increase or decreases dramaticall y in a very short period of time.

Commenters requested that the EPA not adopt the "al ternative approach" for determining renewable energy, as this approach overstates wind development potential. Commenters stated that the alternative approach increases disparity a mong states and heightens burdens on states with renewable energy potential. Commenters also no ted that some states are creating pushback against the implementation of wind power, and Oklah oma has considered a ban on new wind in
half the state.

Comment 2: Commenters supported wind energy as an appropriate compliance option under the Proposed Rule and urged EPA to support states' acti ons to expand the use of wind energy and to accelerate access to new wind energy resources.

Response 2: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated the Clean Power Plan correctly co ncludes that wind energy is an appropriate outside of the fence line compliance option that sa tisfies the best system of emission reduction requirements and should be factored into determinin g state emission targets. Commenters stated as the Clean Power Plan recognizes, wind energy is an achievable and adequately demonstrated source of carbon reductions under a system-based ap proach. Commenters referred EPA to AWEA's U.S. Wind Industry Annual Market Report for the Year Ending 2013, which provides a comprehensive look at the U.S. wind energy industry , including a large body of data that demonstrate that wind energy is an achievable, adeq uately demonstrated, and affordable technology. Commenters also stated that additional data can be found in the U.S. Department of Energy's 2013 Wind Technologies Market Report (DOE Market Report).

Commenters stated that as recognized in the Clean P ower Plan, wind energy is an outside of the fence line compliance option that satisfies the BSE R and, therefore, is available to states in achieving the emission guidelines set by EPA in the Clean Power Plan. Commenters stated the language of Section 111(d), which directs EPA to id entify the system of emission reduction best able to secure rigorous carbon emission reductions while considering cost and impacts on energy use and other environmental considerations, require s that a system-based approach be permitted to satisfy the statutory requirements of the Act. C ommenters stated failure to incorporate systembased emission reductions, including wind energy, w ould not be the most cost-effective and therefore not the best system of emissions reductio ns. Given this, commenters stated EPA's standard of performance in the Clean Power Plan correctly takes wind energy into account in setting performance standards for states; indeed, t he Clean Power Plan would fall far short of delivering the maximum emission reductions existing plants can achieve at a reasonable cost, as required by the statute, if it did not include wind energy in that calculation.683

Commenters provided additional information that EPA acted consistently with the statutory requirements of Section 111(d) by factoring wind en ergy into setting targets and allowing it to be used as a cost-effective compliance option.

Comment 3: Commenters stated wind energy is an achievable and adequately demonstrated means to comply with emissions standards under a sy stem-based approach.

Response 3 : The resources and data provided in this comment w ere valuable in finalizing the building block 3 methodology, which is described in section V.E. of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters provided data that demonstrate how wind energy has proven to be an achievable and adequately demonstrated option to reliably and verifiably reduce carbon emissions at a reasonable cost and in an environmentally friendly way, consistent with the requirements laid out in the definition of a standard of performance in t he CAA. Commenters stated these attributes of wind energy will likely lead many stakeholders to u se it as a compliance method for meeting carbon pollution standards under Section 111(d), ju st as EPA, in the Clean Power Plan,
accounted for achievable emission reductions from w ind energy programs in setting the stringency of its emission guidelines for existing power plants.

Commenters stated wind energy is adequately demonst rated because it is currently a significant source of electric energy capacity and is growing r apidly. Commenters provided detailed information on wind energy capacity and power purch ase contracts in the U.S. Commenters stated wind energy technology is rapidly improving, mostly through taller towers that allow access to higher wind speeds and longer blades thatmake lower wind speed sites more economic, and as a result, wind companies are now s howing interest in developing projects in states where wind energy was not previously viable, such as much of the Southeast. Commenters stated wind energy is one of the most geographicall y dispersed energy sources available and discussed the economic impact of the industry, incl uding current and estimated employment numbers associated with the industry.

Commenters also stated wind energy is adequately de monstrated because affected entities have already directly invested in wind energy, and there is even a greater potential for them to do so to meet emission target levels for purposes of Section 111(d) compliance. Commenters stated affected entities have already directly invested in wind energy, and there is even a greater potential to do so to meet emission target levels f or purposes of Section 111(d) compliance. Commenters provided detailed information on long-te rm power purchase agreements for wind capacity and listed numerous investor-owned utiliti es that currently own or purchase wind power. Commenters also provided information on muni cipal utilities, rural cooperatives, joint action agencies, political subdivisions, and federa l power marketing agencies.

Commenters also stated wind energy is adequately de monstrated because its emission reductions are quantifiable and verifiable. Commenters stated all utility-scale wind projects have revenuegrade metering equipment that measures the amount o f wind energy production. Commenters684

also stated that among other reasons, such equipmen t and verification is necessary to ensure compliance with power purchase contract requirement s and for purposes of claiming the federal production tax credit (PTC), which is based on elec tricity generated. Commenters stated in addition, rigorous accounting mechanisms for Renewable Energy Credits (RECs) are used for RPS compliance in 29 states and the District of Col umbia, and accounting mechanisms are in place nationwide for verifying renewable energy pro duction to satisfy voluntary REC purchases.

Commenters stated wind energy is achievable because it is a cost-effective means to reduce carbon emissions. Commenters stated wind energy dir ectly offsets fossil fuel use and emissions at other power plants on a 1:1 basis. Commenters st ated because power plants are interconnected on an electrical grid that operates based on market principles, electricity produced by wind yields an equivalent decrease in electricity production atthe most expensive power plant operating at the time, which is typically the least efficient op erating fossil-fired power plant for the fuel type that is on the margin. Commenters provided addition al discussion on the cost effectiveness of wind energy, including results from EPA's AVERT mod eling, DOE estimates of the net present value of wind's carbon emission reductions, the res ults of a PJM study on renewable integration, and international experience in the increased use o f wind energy. Commenters also provided information on the affordability of wind energy, re ferenced analysis quantifying the production cost and consumer benefits provided by wind energy in certain areas, and discussed wind energy impacts on electricity prices.

Commenters also stated wind energy is an adequately demonstrated resource, and large deployments are achievable because large quantities of wind energy can be reliably integrated. Commenters provided additional information on wind energy capacity in the U.S. and provided further information regarding the reliability of th e technology.

Comment 4: Commenters urged that EPA strongly encourage or, p referably, require States, either individually or as part of a multi-state pla n, to set aside specific targets for distributed generation and distributed wind where appropriate.

Response 4: The EPA disagrees with this comment. While recogn izing the value of distributed generation resources, the EPA does not include thes e resources in building block 3; consequently, it would be inappropriate to require a target related to a non-BSER measure. Distributed technologies, as a demand-side resource , present unique data and technical challenges (such as the role of evaluation, measure ment and verification (EM&V) procedures in verifying their production, the diverse economic in centives of different parties involved in their deployment, and the variety of grid integration pol icies and conditions across potential deployment sites) that complicate identifying a tec hnically feasible and cost-effective level of generation. Consequently, the EPA is, at this time, choosing not to include distributed technologies as part of the BSER (although, as expl ained in section VIII.K of the preamble, distributed RE technologies that meets eligibility criteria may be used for compliance).

The following are summaries of the specific public comments under this comment:

Commenters noted that distributed wind ("DW") is no t yet recognized as fully as it should be as a "go to" renewable energy source, despite its vastbenefits and potential. Commenters stated that685

it is clear that that without proper encouragement or specific requirements set in State laws that DW will not grow as rapidly as possible, and provid e zero carbon electricity both on and off the grid, in the timeframe that would be optimal based on EPA's emissions reductions goals. Commenters noted that the current energy infrastruc ture, and tendencies of many utilities, is too often promote central load fossil fuels, energy eff iciency and very large renewable projects rather
than DG and DW.

Commenters additionally noted that DG and DW help a id in emissions reductions with little to no impacts on grid reliability because this technol ogy is often placed "behind the meter." Commenters stated that it is easy to integrate sing le or a handful of wind turbines in rural and suburban areas alike, at low cost to the customer a nd/or local utility.

Comment 5: Commenters stated the resource potential for offsh ore wind in the United States is vast, and adjacent to many metropolitan areas with high electricity demand.

Response 5: The final methodology for building block 3 is prem ised on historical deployment of RE technologies. Therefore, any RE technology thathas not been deployed in the United States, including demonstrated RE technologies for which th ere is clear evidence of technical feasibility and cost-effectiveness (e.g., offshore wind), contr ibutes no generation to building block 3. These RE technologies are consequently reserved for compl iance, which offers affected EGUs additional flexibility and will reduce their need t o rely on other emission reduction measures or building blocks.

The following are summaries of the specific public comments under this comment:

Commenters stated that according to the Bureau of O cean Energy Management, over 1,000 GWs are available in 0-30 foot depth waters, 628 GW in 30-60 feet, and over 2,400 GW over 60 feet deep. Commenters stated that as a less mature techn ology and industry, offshore wind is at a higher cost point on the development and deploymentcurve; however, if it follows the historical trajectories of onshore wind and solar power, incre asingly higher deployment levels will likely bring substantial cost and performance improvements . Commenters stated these gains come about from a number of factors, including economy o f scale; learning by doing; development of needed supply chains; development of transportation infrastructure; streamlining of permitting, financing, and other soft costs; and continued rese arch, development, and innovation. Commenters stated several studies suggest costs cou ld even fall more quickly than they did for onshore wind energy. Commenters provided informatio n on current commercial scale projects in advanced development. Commenters stated the potenti al to capture the nation's large off-shore
wind resources is further evidence of the conservat ive nature of EPA's assessment of renewable energy potential. Commenters stated that regardless of whether this resource is considered in assessing state emission reduction potential in the current proposal, EPA should revise its best system of emission reduction analysis and state tar gets as the availability of such resources is
demonstrated.

Comment 6: Omit wind generation from model686

Response 6: The EPA disagrees with this comment. Building blo ck 3 is based on generation levels form utility-scale resource, the measurementof which is standard to the power sector.

The following are summaries of the specific public comments under this comment:

Commenters noted that the production, transmission, and final use of wind generation is often difficult to track and measure by state and the Cle an Power Plan omitted hydropower from its modeling due to the same complexities. Commenters t herefore recommended that the Clean Power Plan should omit wind generation from its mod el to establish emission rates based on the lack of granular analysis to the state specific gen eration and usage of renewable wind generation.

Comment 7: Commenters stated that distributed PV is a unique resource which may be difficult to represent in a wholesale power model such as IPM , and instead it is more accurate to rely on separate modeling that fully accounts for market dy namics at the customer level.

Response 7: Distributed technologies, as a demand-side resourc e, present unique data and technical challenges (such as the role of evaluatio n, measurement and verification (EM&V) procedures in verifying their production, the diver se economic incentives of different parties involved in their deployment, and the variety of gr id integration policies and conditions across potential deployment sites) that complicate identif ying a technically feasible and cost-effective level of generation. Consequently, the EPA is, at t his time, choosing not to include distributed technologies as part of the BSER (although, as expl ained in section VIII.K of the preamble, distributed RE technologies that meets eligibility criteria may be used for compliance).

The following are summaries of the specific public comments under this comment:

Commenters noted that NREL has developed the Solar Deployment System model (solarDS), a modeling complement to ReEDS which projects distrib uted PV installations by state based on system prices, retail sales, and consumer economics . Commenters noted that NRDC utilized the DOE Sunshot distributed solar projections from thei r -62.5% price scenario for input into the SolarDS model in their Clean Power Plan analysis an d that the output of their solarDS model
was hard-wired into IPM to ensure that the effects on the grid and other generation options are captured.

Comment 8: Commenters urged that geothermal, or ground source heat pumps (GSHPs), be allowed as solutions under Building Blocks 3 and 4 of the Proposed Rule.

Response 8: See section V.E of the final rule preamble of the CPP for the RE technologies included in building block 3 and section VIII.J fora description of non-BSER measures that may be used to achieve the standards of performance.

The following are summaries of the specific public comments under this comment:

Commenters noted that geothermal or GHSPs are widel y available and are proven efficient in all 50 states for commercial, institutional, industrial , and residential buildings. Commenters stated687

that because GSHPs can move energy in larger quanti ties than the input energy to the device or system (coefficient of performance, or COP, greater than 1) they can reduce power consumption and efficiently be used to recover normally unused or waste energy. Commenters also stated that a GSHP harvests various renewable energy resources and turns them into useable energy and can displace a significant amount of electricity by improving cooling efficiency (and heating efficiency, vs. electric resistance) as well as rec overing waste heat. Commenters then noted that GSHPs recover heat energy that would otherwise be w asted and use it to displace conventional heating and in any of these cases, this energy save d, recovered, or gathered can be quantified in BTUs, watts, or other standard measurement of energ y and classified as avoided generation or site generation. Commenters referenced an Oak Ridge National Laboratory Report to DOE on GHSPs to further their point. Commenters noted thatthe combination of Waste Energy Recovery (WER), ultra-high-efficiency equipment, and efficie nt system configuration lead to GHSPs operating at much higher efficiencies than conventi onal heating and cooling systems and that the WER process may involve recovery of renewable and s ustainable resources. Commenters also noted that adding a geothermal closed loop heat exc hanger (GLHE) to a fluid loops in WER with heat pump systems can enable energy to be stored an d used at a later time and therefore can permit load shifting which further reduces the load on the generating infrastructure.

Commenters included potential sources of Geothermal energy, and notes locations where it is the
most cost effective renewable resource. Commenters referenced Alaska, Hawaii, The U.S. Virgin islands, Guam, and the Northern Mariana Isla nds as places where geothermal energy
would be a cost-effective renewable resource. Comme nters also stated that EPA should support the implementation of geothermal energy in these st ates/territories.

Comment 9 : Commenters stated that the EPA should fully integ rate distributed solar into Building Block 3 of the Clean Power Plan.

Response 9: Distributed technologies, as a demand-side resourc e, present unique data and technical challenges (such as the role of evaluatio n, measurement and verification (EM&V) procedures in verifying their production, the diver se economic incentives of different parties involved in their deployment, and the variety of gr id integration policies and conditions across potential deployment sites) that complicate identif ying a technically feasible and cost-effective level of generation. Consequently, the EPA is, at t his time, choosing not to include distributed technologies as part of the BSER (although, as expl ained in section VIII.K of the preamble, distributed RE technologies that meets eligibility criteria may be used for compliance).

The following are summaries of the specific public comments under this comment:

Commenters stated that distributed PV is one of the largest and fastest growing segments of the renewable energy market, and is currently procured by entities that own and operate affected EGUs; therefore "under EPA's system wide approach, distributed PV is necessarily part of the
BSER and failure to include it in EPA's final rule would be arbitrary and capricious." Commenters stated that distributed PV can provide w holesale ancillary services in the same fashion as utility-scale assets and can also provid e local ancillary services beyond what utilityscale assets are capable of providing. Commenters n oted that these services include but are not limited to frequency regulation, frequency response , spinning and non-spinning reserves, voltage688

and reactive power support. Commenters stated that "distributed PV can also provide incremental ancillary services on the local or dist ribution level. Local voltage support is critical to operating the distribution system within system constraints, and distribution system operators rely on a distributed set of voltage regulating equ ipment to provide that support. Distributed PV can augment and sometimes replace this equipment, p roviding real and reactive power support as identified by the distribution operator."

Commenters provided a chart which depicted distribu ted PV growing rapidly year over year, which commenters used to justify that distributed P V is technically feasible. Commenters noted that the usage of distributed PV can be divided int o residential and non-residential sectors. Commenters noted that the energy produced by homeow ners in the residential sector is often used to offset the need for generation from affecte d EGUs or is counted towards clean energy requirements such as renewable portfolio standards. Commenters also noted that solar energy
from non-residential units also reduced the need fo r generation from affected EGUs and is often counted towards clean energy requirements or used t o make green claims by the companies that invest in the systems. Commenters stated that most of the most well-run and efficient companies (e.g. Wal-Mart, Costco, Kohl's, Apple, IKEA, and Ma cy's) are turning to solar energy to reduce their carbon footprint and hedge against risks asso ciated with energy prices and climate change. Commenters also pointed out that at least 40% or mo re of the total installed solar each year
comes from the distributed PV sector. Commenters ad ditionally urged EPA to encourage states to use off-grid distributed PV systems for complian ce, and not as a component of the BSER, as these technologies avoid the need for electricity f rom the grid.

Commenters stated distributed solar is a system of emissions reduction that is technically feasible, is implemented at reasonable cost, is dri ving solar innovation, and does not negatively impact the electric system. Further, commenters sta ted, distributed solar energy is adequately
demonstrated to reduce emissions from covered sourc es. Commenters stated utilities are already either directly owning distributed solar or purchas ing the renewable energy credits from distributed solar systems. Commenters also stated t here are a number of ways to verify emissions reductions from distributed solar as well; once the MWh of distributed solar generation are known, either through direct metering and renewable energy credits or the use of a performance estimate tool, the fossil fuel energy that is being displaced by the solar energy can be determined by using either capacity factor emission rates or s ystem average emission rates. Commenters stated for compliance planning, in addition to util ity-scale solar PV and Concentrated Solar Power (CSP), the EPA should allow for distributed s olar technologies, along with solar heating and cooling, to count as measures a state can inclu de within a state compliance plan. Commenters also stated EPA should also recognize th e ability of solar heating and cooling measures to displace the electricity that covered s ources may use for heating and cooling.

Commenters noted that distributed solar and other f orms of distributed generation are unique in their ownership, operation, siting, and relationshi p to the existing grid and that these systems provide quantifiable benefits, including grid suppo rt, lower transmission losses, and reduced need for additional capacity, as well as less monet ized benefits such as hedging against fuel prices. Commenters stated that solar PV costs have declined rapidly in the past several years, and as PV module costs continue to drop, rooftop solar is becoming and will continue to become an economic option for an increasing number of residen tial and commercial customers. Commenters stated that omitting distributed PV from the BSER "paints an unrealistic picture of689

the current and future RE generation mix." Commente rs additionally noted that while there are methods in which distributed PV can be implemented into IPM as a resource available to utilities, it may be more accurate to rely on separ ate modeling that fully accounts for market dynamics at the customer level.

Commenters additionally stated that EPA should clar ify that load-serving utilities should not
receive credit for all DG interconnected with its s ystem, but rather must have in place a policy that incentivizes DG, such as rebates or a favorabl e tariff structure, to take credit for that DG. Commenters also suggested that EPA offer guidance o n how DG can meet the requirements of an emission standard by being quantifiable, verifiable, non-duplicative, and enforceable.

Comment 10 : Commenters stated that the EPA should explicitly list fuel cells as a compliance option under the proposed rule.

Response 10: The EPA agrees with this comment and fuel cells are explicitly included as a nonBSER measure available for compliance.

The following are summaries of the specific public comments under this comment:

Commenters stated that as a carbon reduction techno logy, fuel cells provide low- or no-carbon baseload generation from natural gas or biogas thro ugh an efficiency non-combustion process. Commenters stated fuel cells typically reach fuel-t o-electricity efficiency of 60 percent; nearly double that of today's electric grid. Commenters al so stated fuel cells not only allow for reduced carbon emissions, they also virtually eliminate cri teria air pollutants. Commenters stated furthermore, since fuel cells typically operate nea r the point of use, they bypass transmission systems, reducing or eliminating transmission losse s, which currently average 6 percent in the US. Commenters stated that as the EPA recognizes, s ome fuel cells also generate excess heat, which, if captured, can increase overall energy eff iciency to more than 80 percent. Commenters stated should the EPA list fuel cells as a complia nce option it would follow the precedent set by the California Air Resources Board (CARB) in 2007, which qualified fuel cells as an ultra-clean technology under their existing standard. Commenter s stated it would also follow guidelines set by the New York Public Service Commission, which qu alified fuel cells as a compliance option
under the state's Renewable Portfolio Standard. Com menters stated currently, twenty-two states, two territories, and the District of Columbia have recognized the role fuel cells can play in creating a more sustainable energy infrastructure. Therefore, commenters stated the final EPA rule should explicitly highlight all fuel cells as a compliance option as a way to 1) reduce GHG emissions and other pollutants, 2) improve resilien cy, and 3) utilize domestic energy supplies.

Comment 11: Commenters stated that utility scale PV should be included in Building Block 3 of the Clean Power Plan because it is technically feas ible.

Response 11: Utility-scale solar PV continues to be a technology that directly contributes to building block 3 generation levels.690

The following are summaries of the specific public comments under this comment:

Commenters noted that the defining features of util ity-scale PV is that it is constructed as a centralized power plant, it is larger in size than distributed PV (generally larger than 10 MW), it is not generally located near the source of consump tion, and the electricity generated by utilityscale PV is usually sold to wholesale utility buyer s rather than retail consumers. Commenters
stated that there are a number of characteristics u nique to large-scale installations that make them attractive to utilities, including advanced operati onal characteristics, low cost, and long-term fixed pricing. Commenters noted that utility-scale PV can also provide a variety of ancillary
services associated with traditional fossil sources including frequency regulation, dynamic voltage and power factor regulation, and ramp rate controls; thus, when included as part of a balanced energy portfolio, utility-scale PV contrib utes to the stability and reliability of the grid. Commenters further stated that utility scale PV red uces carbon emissions from fossil units by reducing the amount of conventional generation thatmust be dispatched to meet electricity
demand.

Comment 12 : Commenters stated that Concentrating Solar Power (CSP) should be included as a compliance option in Building Block 3.

Response 12: CSP continues to be a technology that directly con tributes to building block 3 generation levels.

The following are summaries of the specific public comments under this comment:

Commenters urged EPA to include CSP in Building Blo ck 3 of the Clean Power Plan because it technically feasible and is being installed through out the country today. Commenters explained
that CSP uses mirrors to concentrate the sun's ther mal energy to produce steam and drive a conventional steam turbine to produce electricity a nd that this solar generated electricity is then sold to wholesale utility buyers. Commenters noted that CSP can be integrated with thermal energy storage, which allows energy to be stored fo r later use and, in this way, CSP with thermal energy storage provides flexibility to grid operato rs, offering power that can be dispatched as needed, day or night. Commenters reasoned that thes e large-scale installations are attractive to utilities because they include advanced operational characteristics, delivering large quantities of solar power at a low cost and long-term fixed prici ng that provides a hedge against fuel volatility. Commenters noted that at low penetratio ns of solar power to the grid, solar correlates well with daily peak demands and even as increasing penetration shifts peak demand to evening hours, CSP with storage allows for shifting energy into periods of highest demand or value. Commenters further stated that CSP plants utilize c onventional steam turbine generators, like those of conventional plants, but use the sun as th e source of heat instead of fossil fuels which allows CSP plants to provide the ancillary se rvices historically offered by conventional plants such as frequency response, load following, spinning and non-spinning reserves as well as ramping. Commenters noted that CSP reduces carbon e missions from affected EGUs by reducing the amount of conventional generation thatmust be dispatched to meet electricity demand and provide the aforementioned ancillary ser vices.691

Commenters additionally stated that technologies us ed for CSP also promote technological development. Commenters noted that the first commer cial utility-scale CSP projects in the U.S., built in the late 1980s and totaling 354 MWs, are s till in operation today. Commenters stated that the technology used in these first projects, parabo lic trough technology, has continued to improve since the 1980s and have substantially incr eased receiver efficiency, reduced cost and weight of the reflector structures, and updated con trol. Commenters noted that CSP has often incorporated thermal energy storage in commercial o perations; for example, the Solana 250 MW solar trough plant in Arizona can incorporate 6 hou rs of thermal energy storage which allows the utility dispatch solar power to meet peak system lo ads and reliability needs in the summer and
winter.

Commenters noted that CSP with thermal energy stora ge can offer all the services provided by fossil fuel plants without carbon emissions, can pr ovide operational attributes and other good services that can assist utilities and grid operato rs in maintaining grid reliability, and can be combined with conventional power plants to form hyb rid plants with a lower CO2 output. Commenters also noted that CSP can also diversify t he energy mix and hedge against the volatility of natural gas and that this technology is available today.

Commenters noted that the proposed 30 percent reduc tion in GHG emissions cannot stop climate change and proposed that a 90 percent reduction wou ld be required to do so, which they stated is impossible with existing renewable technology. Comm enters stated that they have patented a cheaper way to use CSP that would produce twice as much mirror power and increase the precision of focusing sunlight. Commenters describe d their system as follows: "Sunlight is focused with mirrors on a receiver on a tower, but instead of being attached to stationary heliostats, the mirrors move on concentric tracks a round the tower synchronized with the sun's movement across the sky to keep the mirrors on the opposite side of the tower from the sun. Each morning, the mirrors face the rising sun in th e East, and by sunset they are facing west, having rotated 180 degrees about a vertical axis, u sing the radar of the tracks for leverage. Because of this extreme leverage, the focusing is p recise. As the sun's altitude changes, the mirrors must tilt and yaw to keep sunlight focused on the receiver. The formulas for tilting and yawing reveal that this can be done collectively to eliminate most of the motors and gearboxes required on heliostats. Guidelines stabilize the mi rrors against wind and also tilt and yaw the mirrors collectively. The details of this are expla ined in our US patent 7380549."

Comment 13: Commenters urged EPA to consider their algae techn ology as a solution under Building Block 3.

Response 13: Refer to section VIII discussion of non-BSER measu res.

The following are summaries of the specific public comments under this comment:

Commenters stated that they are currently capturing emissions from power plants, as they work with three different utility companies, using their 3-dimensional algae growth tank or "AGTS"
that enables them to control all variables includin g replicating ideal sunlight. Commenters noted that they are able to produce a highly desirable oi l at below petroleum prices (Less than $1/refined gallon of diesel) today as a result of t his system. Commenters also noted that their692

algae produces a 50/50 oil to biomass ratio and is 15-20 times bigger than anyone else's in the world with an oil profile of 85% C-16 and C18 (45% of oil is oleic acid - highly desirable in the chemical industry). Commenters further stated that this system and costs of goods sold only work if they are near a "host" power plant as they get free CO2, and utilize the flue gas to raise and lower their ballast tank and grate system that mixes the CO2 and nutrients (growth enhancer). Commenters noted that with LED's coverin g the entire 3-dimensional AGTS (25' - 50' deep) the algae can grow and not use energy working to get light, nutrients or moving which utilizes the benefits of a closed-loop system that provides "the most optimal conditions for the algae to exceed far beyond what anyone else is able to do in the world."

Comment 14: Commenters noted that energy storage allows for fu el and resource diversity and enhances the integration of renewable resources by supporting renewable energy during periods
when variable resources like wind and solar are notavailable and urged that EPA explicitly authorize states to include energy storage technolo gies in their compliance plans.

Response 14: Refer to section VIII discussion of non-BSER measu res.

The following are summaries of the specific public comments under this comment:

Commenters stated that while generating resources c an only inject power into the grid, energy storage provides the ability to either inject or ab sorb power, allowing variable resources to be used more efficiently and effectively. Commenters a dded that energy storage technologies are resource-neutral, taking a charge from any resource on the grid and releasing the charge to offset the units with less efficiency, providing doubl e the nameplate capacity as traditional grid resources as they can absorb and release power. Com menters noted that in "Compensating for Wind Variability Using Co-Located Natural Gas Gener ation and Energy Storage", Hittinger, Whitacre and Apt find that "the use of energy stora ge to smooth the sharpest fluctuations, allowing a gas turbine to provide the remaining fil l-in energy, is a cost-effective application" and that a separate report by DOE and EPRI from 2013 su pported the concept of using storage to balance fluctuations in RE generation output.

Commenters stated that the exclusion of clean energ y storage is contrary to EPA's goals given
that the Clean Power Plan desires to increase the u tilization of NGCC units as baseload, and to continue to expand renewable energy generation. Com menters noted that energy storage helped
smooth out the intermittent nature of renewable ene rgy sources while allowing those resources to be used at peak times, providing higher reliability . Commenters also noted that energy storage provides valuable margin, ramping, and load followi ng resources that that historically have been provided by natural gas units operating as peak to intermediate load units.

Commenters noted a specific company, Solar Grid Sto rage, which develops battery energy storage systems co-located with PV systems that eli minates the need for PV developers to purchase a solar inverter, reducing installation co sts and offering new benefits to the host.

Commenters stated that pumped storage should be inc luded in the Clean Power Plan. The FERC has issued a preliminary permit to study a pumped s torage project along the Missouri River, which would provide the necessary control to suppor t a significant amount of intermittent wind693

generation in the region. Commenters stated that as written, the Clean Power Plan does not make clear that pumped storage projects are included in the list of energy storage technologies eligible for inclusion in state plan. Commenters requested t hat states be allowed to meet their respective state goals by relying on any technology that has t he potential to enhance emission performance by reducing the need for generation from fossil-fue led EGUs.

Comment 15: Commenters urged the EPA to clearly state in the f inal rule which renewable energy projects and technologies will be eligible a s compliance measures. Commenters provided a multi-point argument in support of incorporating solar energy measures as part of the BSER because they represent a system for reducing emissi ons from affected EGUs that is: (1) technically feasible, (2) done at a reasonable cost , (3) promoting technological development, and (4) not negatively impacting the electric system.

Response 15: The EPA provides detailed guidance on the RE techn ologies available for compliance in the final rule, including solar techn ologies. Refer to section VIII of the preamble for a description of how RE technologies may be use d to adjust the CO 2 emission rate of affected
EGUs.

The following are summaries of the specific public comments under this comment:

Commenters specifically encouraged EPA to state tha t energy generated from distributed PV, CSP, utility PV, and SHC projects be specifically n amed as eligible technologies. Commenters stated that a variety of solar technologies have be en successfully deployed in the U.S. and around the world, with rapidly-increasing growth since the 1980s. Commenters provided a multi-point argument in support of incorporating solar energy m easures as part of the BSER because they represent a system for reducing emissions from affe cted EGUs that is: (1) technically feasible, (2) done at a reasonable cost, (3) promoting techno logical development, and (4) not negatively impacting the electric system.

(1) Technical feasibility: Commenters noted that so lar energy systems in the U.S. are expected to generate more than 20,000 gigawatt hours (GWh) i n 2014 and with one GWh of solar generation eliminating 690 metric tons of CO2 emiss ions, solar generation can be expected to
avoid 13.8 million metric tons of CO2 emissions in 2014. Commenters stated that in 2013 alone, the solar industry grew 53 percent over 2012, insta lling 5.2 GW of solar generating capacity with solar energy accounting for 29 percent of new elect ric generation capacity installed. Commenters stated that solar can potentially replace polluting sources on a 1:1 basis, depending on the combination of solar and other technologies deploye d on the complex grid but noted that when solar is placed on the grid, it generally displaces electricity production from a source that emits carbon pollution--often at a high rate--such as a s imple-cycle natural gas generator. Commenters pointed to three studies which they felt demonstrat ed the benefit and feasibility of utilizing solar capacity: the Western Wind and Solar Integration St udy performed by NREL which evaluated the impacts of operating the Western Interconnect w ith high penetrations of wind and solar, the PJM study analyzing a high penetration of renewable generation on the PJM grid, and the U.S. DOE's SunShot Vision Study which examined the poten tial for and barriers to solar PV and CSP in the US while attempting to reduce costs. Comment ers noted that the Western Wind and Solar694

Integration study found that CO2 emissions could be reduced by 29-34 percent when the Western Interconnect obtains 33 percent of electric ity from wind and solar. Commenters then noted that the PJM study considered renewable penet ration of up to 30 percent and found no significant operating issues while reducing CO2 emi ssions by 28 percent in the "High Solar Best Onshore" scenario compared to a BAU target in the y ear 2026. Commenters also noted the results of the SunShot Vision Study which estimated a CO2 reduction of 8 percent (181 MMT) by 2030 and 28 percent (760 MMT) by 2050 compared t o the reference scenario.

Commenters noted that the SunShot Vision Study show s that solar energy can meet roughly 14 percent of U.S. electricity demand by 2030 based on anticipated cost reductions with a projected
installation of 302 GW of PV and 28 GW of concentra ted solar power (CSP) by 2030. Commenters noted that the SunShot study's predictio ns are more than 7,000 percent more than what EPA has estimated for solar, even when the stu dy found no adverse effects on grid reliability with the projected amount of solar gene ration on the grid in 2030. Commenters also cited the RE Futures study by NREL which showed a m odelling scenario with renewables achieving between 30-90 percent of generation level s in 2030 and that the cost assumptions used to arrive at these levels are higher than current i ndustry projections (http://www.nrel.gov/analysis/re_futures/).

(2) Reasonable cost: Commenters stated that EPA's f indings that renewables cost $10-$40/ton under the RPS approach and $30/MWh under the Altern ative RE approach are a reasonable cost under both approaches. Commenters noted that EPA sh ould recognize that solar costs are even lower than projected by the EPA and distributed PV must be included in Building Block 3
because it is a reasonable cost emission reduction technology. Commenters also provided data showing solar costs falling in relation to other so urces of energy, reinforcing EPA's position that solar energy measures are reasonable cost.

(3) Promotion of technological development: Comment ers noted that new solar technologies and efficiencies of solar panels are continually being developed, and that technological advances that reduce the costs of renewable energy generation wil l be important enablers of adoption. Commenters stated that during the past two decades, the efficiency of solar panels (solar energy converted into electricity) has risen to 15 percent , and have achieved as much as 44 percent in laboratory tests. Commenters also stated that the c ost of solar cells has already dropped from $8 per watt of capacity in 1990 to less than 80 cents today. Commenters noted that further advances are underway, such as thin films (made from compoun ds like cadmium telluride, copper indium gallium arsenide, or amorphous silicon) for PV use which reduce the amount of material used in creating solar cells and can be "printed" on flexib le surfaces. Commenters also noted that researchers are working with nanomaterials to creat e polymer films less than 100 nm thick that can replace bulky silicon cells and nanomaterial-ba sed coatings which repel water and prevent dust and debris from settling onto the solar panels

.
(4) Impacts on electric system: Commenters noted th at utilities and policymakers are already addressing the changes to grid operations presented by increased renewable penetration, but stated that this can be done economically, if suppo rted through appropriate policies, pricing options, and program offerings. Commenters recommen ded EPA review the paper 'Teaching the Duck to Fly' published by the Regulatory Assistance Project for a discussion of strategies to address the changes to grid operations presented by renewables. Commenters also noted that695

some stakeholders have expressed concerns that solar and wind energy can increase costs and energy system emissions due to an increased need to cycle conventional power plants in response to variable renewable output but that such claims h ave been proven to be overstated, and could largely be avoided through a balanced portfolio of complementary solar, wind and other clean energy resources. Commenters stated that the SunSho t Vision Study, the Renewable Energy Futures Study, the Western Wind and Solar Integrati on Study, the forthcoming Wind Vision Study (all NREL), the Minnesota Renewable Energy In tegration and Transmission Study, and the PJM Renewable Integration Study (GE) show that renewables, including solar, can be integrated at high levels without significant issue . Commenters additionally noted that targeted deployment of solar generation in congested areas c an provide relief to transmission and distribution systems, defer costly transmission upg rades, and help maintain grid reliability since solar installed on-site does not experience transmi ssion and distribution system losses, which can be as high as 7 percent on a utility distribution s ystem and up to 20 percent at the time of system peak.

Comment 16: Commenters noted that solar energy has many merits and should be included as a compliance option in Building Block 3.

Response 16: See sections V.A and V.E of the final rule preamble of the CPP for the EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:

Commenters noted that solar energy systems in the U .S. are expected to generate more than 20,000 gigawatt hours (GWh) in 2014 and with one GW h of solar generation eliminating 690 metric tons of CO2 emissions, solar generation can be expected to avoid 13.8 million metric tons
of CO2 emissions in 2014. Commenters noted that the se emission reductions from solar deployment are expected to grow as evidenced in 6.8 GW of new solar capacity coming online in
2014.

Commenters noted that after 30 years of energy tech nology innovation in the PV components sector the price has gone down 99 percent and more recently, solar PV systems went down by almost 15% just from 2012 to 2013. Commenters state d that these price drops in solar components have led to a dramatic growth in the sec tor.

Commenters noted that solar energy can provide bene fits to states by creating jobs, increasing the state's economic output, increasing the state's tax revenues, improving environmental benefits, and saving millions of gallons of water.

Commenters stated that solar energy emits zero poun ds of greenhouse gas (GHG) emissions while generating affordable and reliable energy, av oids a number of costs associated with fossil fuel resources, and enjoys widespread bi-partisan s upport from policymakers and the general public throughout the United States.

Commenters stated that solar energy costs are getti ng to the point where potentially by the end of this decade solar PV could be competitive with gas- fired generation on a total present value of696

revenue requirements basis at their facility and th at adding a moderate quantity of large-scale solar PV generation to their system in the near fut ure is likely going to be a viable and costeffective resource option that also contributes to lower state-wide emissions.

Commenters noted that solar, when installed on roof tops, has no land use impacts and reduces water consumption from the electricity generation i s displaces.

Commenters stated that eligible programs should inc lude local and municipal programs to incentivize the generation and use of clean energy, such as solar.

Commenters stated that Solar power has grown very q uickly in recent years, and solar capacity will continue to increase in coming years. Commente rs also noted that even though solar does not replace fossil-fuel generation at a 1:1 ratio, it does strongly contribute to a decrease in use
of fossil-fuels. Commenters asserted that solar mea sures promote technological development, as new solar technologies and efficiencies of solar pa nels are being continually developed. Commenters explained photovoltaic device s and how they generate electricity directly from sunlight. Commenters also described t heir application, distribution, and utility of photovoltaic technology.

Comment 17: Commenters noted multiple constraints to implement ing solar energy as a renewable energy resource.

Response 17: See sections V.A and V.E of the final rule preambl e of the CPP for the EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:

Commenters noted that solar power has two inherent, uncontrollable attributes: variability in output and uncertainty regarding the magnitude and timing of output. Commenters argued that as a result of this variability and uncertainty, solar cannot provide a continuous level of output on demand, it cannot be depended upon as firm capacity for the purposes of resource adequacy assessments, providing operating reserves and respo nding to local and regional contingency events and therefore will still require back up cap acity at the power plant level. Commenters noted that demand for electricity does not always c oincide with times when the sun is shining and that solar generation will be far off its peak production during peak demand in instances of thunderstorms during summer and winter months.

Commenters also noted that demand for generation wi ll become highly variable and unpredictable when solar generation becomes suc h a large component of the total mix. Commenters stated that the power demand will have w ild fluctuations, adding giant stress to the electrical grid, and requiring rapid response from conventional generators as solar PV power can swing by up to 50% in as little as 30 seconds, and up to 70% in 2 minutes, continuously throughout a day. Commenters concluded that solar p ower may be beneficial on a small, residential scale, but widespread reliance on solar generation will have unintended consequences.
Commenters noted that EPA did not model this resultfrom wide-scale reliance on solar generation, and must take into account the efficien cy penalties, and large increase in emissions697

resulting from frequent load swings as well as the large increase in maintenance expenses of conventional plants to operate in such an unintende d, high degrading state.

Comment 18: Commenters agreed with the EPA that solar energy m easures are part of the BSER, but stated concern that Building Block 3 as i t is currently calculated is incomplete
because it does not contain current solar market da ta on cost and penetration rates.

Response 18: See section V.E of the final rule preamble of the CPP for the EPA’s response to
this comment.

The following are summaries of the specific public comments under this comment:

Commenters noted that EPA's analysis also does not include distributed PV, which represents
about 50% of the total U.S. solar market and theref ore, as it is currently written, EPA's proposal does not accurately reflect the emissions reduction s achievable through application of the BSER.

Commenters noted that current solar capacity today is already far exceeding the estimates that EPA has used for 2030 state projections and encoura ged EPA to recognize this tremendous growth in solar and to use an updated baseline year relative to when the final rule will be
released.

Comment 19: Commenters urged the EPA to consider the full pote ntial of the wide variety of renewable resources including and especially offsho re wind and distributed solar.

Response 19: See sections V.A and V.E of the final rule preambl e of the CPP for the EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:

Commenters stated that utilizing solar, wind, and g eothermal generation would outweigh the potential of fossil coal, oil, and natural gas with out resorting to polluting forms of power such as
biomass or nuclear.

Commenters provided examples of wind and solar reso urces in Hawaii and Utah being successfully integrated into the grid to state thatthese resources can improve grid reliability and provide benefits to the existing system. Commenters noted that transmission infrastructure has been built over the years across the U.S. to move c oal power to demand centers, and that if coal usage declines due to economics and the Clean Power Plan in such regions, this existing transmission capacity would be expected to become a vailable for clean power resources.

Comment 20 : Commenters stated that EPA should clearly indicat e that RE projects completed by organizations other than electric utilities shou ld be able to qualify towards the requirements of698

the CPP to encourage the creation of incentive prog rams and accelerate the installation of these technologies as long as the reductions from such pr ojects are verifiable and measurable.

Response 20: See section V.E of the final rule preamble of the CPP for the EPA’s response to
this comment.

The following are summaries of the specific public comments under this comment:

Commenters noted that the water sector has a growin g portfolio of RE options available to it (e.g. solar, wind, and micro-hydro) and that wastew ater utilities have multiple methods of recapturing the embedded energy in wastewater. Comm enters stated that the biosolids and biogas produced through the wastewater treatment process c an be used as renewable substitutes for fossil fuels and converted to electricity, and the heat from wastewater and the treatment processes may also be used to reduce dependence on fossil fuels. Commenters also stated that new methods of capturing the energy in wastewater c ontinue to be explored and developed, including use of wastewater fuel cells to capture e lectricity created when microbes convert compounds of carbon and nitrogen.

Comment 21: Commenters noted that Idaho's land mass is 63% con trolled by U.S. federal agencies and that the federal government has been v ery difficult to support projects such as wind and solar on federally controlled lands as RE power generating efforts have been proposed. Commenters asked the EPA to work closely with feder al partners to support opportunities for such project development on properties that have be en proven compatible and strategically
located.

Response 21: The final building block 3 methodology does not re ly on state-specific deployment estimates, but rather cost-effective RE at an inter connection level. The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (se ction V.E) and GHG Mitigation Measures
TSD.

Comment 22: Commenters noted that the EPA's Building Block 3 d id not analyze the impacts the Waters of the U.S. ("WOTUS") rule could have on deployment and cost of renewable technologies.

Response 22: The EPA addresses considerations related to the te chnical feasibility of significant RE penetration, including making appropriate land e xclusion determinations, in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated that one of their subsidiaries co nducted a siting evaluation for a new renewable energy facility that revealed significantimpacts from the proposed WOTUS rule on the areas that would be considered jurisdictional d ue to the sweeping "neighboring" definition.
Commenters noted that "the site contains 14 wetland s, seven of which were determined699

jurisdictional under existing regulations by the U. S. Army Corps of Engineers ("USACE"). USACE asserted jurisdiction over those seven "adjac ent" wetlands because they are hydrologically connected to relatively permanent wa ter downstream of the site. The remaining wetlands were not jurisdictional because they were classified as isolated, with no hydrologic connection or significant nexus to relatively perma nent water or traditional navigable waters." Commenters noted that if the proposed WOTUS rule wa s applied to the project site, all of the wetland areas would be jurisdictional and that if a ll 14 wetland areas were deemed jurisdictional, the site would not be a viable option for a new fac ility due to the significant challenges of obtaining a permit, site layout constraints, the co sts of preparing a permit application, and mitigation costs. Commenters urged EPA to evaluate the impact of its other proposed and final regulatory actions on the deployment and cost of si ting renewable technologies.

Comment 23: Commenters stated that the EPA's rule should bette r evaluate the issues associated with managing the increased volume of waste generat ed from the increased use of renewable

energy sources.

Response 23: The EPA disagrees with this comment. It is not ap propriate for the EPA to issue guidance on waste management issues for any technol ogy as part of the final CPP.

The following are summaries of the specific public comments under this comment:

Commenters provided a detailed discussion of such w astes which included silicon, PVC, and cadmium telluride toxicity risks in disposing of so lar PV panels.

Commenters noted that the Proposal relies heavily o n increasing renewable sources of energy in lieu of fossil fuel-based sources, but fails to rec ognize the associated solid and hazardous waste management implications. Commenters noted that the Proposal contains some evaluations of these issues, but contains no analyses of the econo mic or legal implications of disposal issues associated with increased generation from renewable energy sources. Commenters stated that the Proposal fails to account for the costs to utilitie s specifically, and to society generally, of managing the increased volume of waste attributable to renewables as a result of this rule. Commenters stated that the Proposal fails to provid e the right signals to the market that will encourage the mitigation of disposal issues associa ted with increased renewable resource use and that these failures threaten to induce a repeat of the experience the electronics industry faced with respect to the global e-waste disposal crisis.

Commenters stated that EPA, at a minimum, should pr ovide guidance to states on these future waste management issues, as well as to utilities an d others, who in their efforts to meet the Proposal's carbon reduction requirements, will be e ntering into long-term contracts for the purchase and/or use of renewables and should make c lear that the Proposal's assumption that compliance with the proposed goals can be met throu gh implementation of beyond-the-fenceline
measures does not render utilities liable for waste disposal issues associated with such measures.700

Comment 24: Commenters stated that the EPA did not consider di fficulties states and utilities may face during the permitting process of renewable resources in the Proposed Rule.

Response 24: The EPA addresses considerations related to the te chnical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated that EPA has ignored the time nee ded to bring renewable energy
facilities online and cited several hurdles that mu st be overcome such as: finding and negotiating the purchase of a suitable site, determining what i f any transmission interconnection upgrades must be made, performing due diligence for environm ental factors (e.g., wetlands, threatened or endangered species, and archaeological and cultural resources), and obtaining all required environmental and construction permits. Commenters noted wind and solar resources necessitate an additional comprehensive energy reso urce analysis which requires separate permitting of meteorological towers and a solar res ource assessment or wind resource study to ensure that a viable energy resource exists. Commen ters noted that such an analysis often requires years of wind and solar data and analyses to ensure proper valuation and seasonal differences will not affect contractual obligations , and that once established, land purchases and/or leases with surrounding landowners must be c ompleted prior to the first wind turbine or solar array being constructed. Commenters stated th at this timeline conflicts with EPA's claim that states can seamlessly escalate renewable gener ation only one and a half years after EPA finalizes its guidelines and likely prior to EPA's approval of state plans.

Commenters stated that RE project development is no t automatic and noted that they previously had local zoning issues when attempting to build a landfill methane to energy project which prevented them from building under their received a ir permit. Commenters noted that when they attempted to modify their air permit due to design changes required by local zoning, new air regulations triggered a lengthy modification proces s. Commenters stated that the increased time and costs on this project led to its cancellation t hree years later. Commenters noted that renewables are heavily dependent on resource locati on and that restricting the ability to develop renewable projects through zoning and environmental studies in areas with high wind force or sun hours significantly limits the overall amount o f available RE and forces projects to areas which may not have the same resources. Commenters s tated that placing the same capital into areas with fewer resources raises the average cost per MWh and overall cost of compliance with the CPP. Additionally, Commenters noted that any ne w renewable projects will not be able to move forward until interconnection approval occurs. Commenters stated that under a five year interconnection window, existing rules and regulati ons can change significantly which places additional uncertainty in the development process f or renewables.

Comment 25: Commenters stated that the EPA's use of renewable energy in Building Block 3 is highly problematic because renewable energy is not a dispatchable resource.701

Response 25: The EPA addresses considerations related to the te chnical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters further stated that renewable generation cannot be substituted for traditional dispatchable resources on a MW for MW basis and EPA 's renewable generation in Building Block 3 effectively substitutes nondispatchable ren ewable resources for baseload coal units.

Commenters stated that EPA is requiring states to s ignificantly alter their respective generation mixes by incorporating substantial non-dispatchable resources, which creates significant concerns regarding the reliability of the electrica l system. Commenters noted that EPA's faulty assumption that different generation resources can be substituted for each other will have perverse effects on states. Commenters noted that E PA's estimates for Texas would exceed Texas' total demand for electricity in the e arly morning in the spring and fall. Commenters noted that during these periods, the wea ther is cool and therefore electric load is low but wind generation is high which would force T exas to face the choice of shutting off new wind generators that were built to comply with EPA' s proposal, which would be inefficient and uneconomic, or curtailing nuclear generation. Comme nters noted that nuclear units were not designed to be curtailed and once shut down, can take 12 hours to ramp back up. Commenters stated that forcing nuclear units to reduce generat ion to accommodate all the wind that would be built under EPA's "best" system thus would create e lectricity shortages as the day warms and electric demand increases and wind power decreases, yet nuclear units would not be able to ramp up quickly enough to meet the increasing load.

Commenters noted that while some level of renewable resource utilization is appropriate, renewable resources cannot provide baseload generat ion or reliability to the grid and cannot be
the sole substitute for coal-fired units.

Comment 26: Commenters had concerns with how the EPA has integ rated and projected the displacement of fossil-fuel generation with increme ntal energy efficiency and renewable energy measures in Building Block 3.

Response 26: The EPA addresses considerations related to the te chnical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated that the inclusion of RE in state goals also is unreasonable because EPA incorrectly assumes that RE displaces all affected fossil generation in proportion to that generation's relative emission contribution and tha t RE typically primarily displaces gas, as many coal plants do not provide load-following support. Commenters urged EPA to recognize that RE megawatts will not proportionally displace coal-fir ed generation since a megawatt of RE does702

not equal a megawatt of replaced coal because RE ha s a much lower, and more variable, capacity
factor.

Commenters also stated that EPA mistakenly assumes that renewables and EE acquired in a state will directly reduce emissions from coal-fired EGUs in that state and noted that this assumption is unrealistic. Commenters provided an example as t o how this assumption does not correlate to a real-life scenario: "adding renewable generation in one state in the WECC will impact markets across the entire region, from British Columbia to Arizona. Adding new renewable generation will, all else being equal, result in less generati on dispatched somewhere in the WECC, which may or may not involve EGUs in the same state where the renewable generation was added. Exactly which units will be offset by the additiona l generation is extremely complicated. Factors affecting which units would be dispatched different ly include hydro conditions and hydro flexibility, gas prices, planned and forced outages for generation and transmission, loads/temperatures across the entire region, transm ission constraints, etc. Depending on seasons, the renewable generation may not affect any EGU in any state--at times, the additional renewable generation may end up displacing hydro ge neration rather than thermal generation."

Commenters stated that this approach would further exacerbate issues that stakeholders have raised concerning stranded assets, remaining useful life, and grid reliability. Commenters noted that EPA has observed similar issues with the imple mentation of Building Block 2 as "states with large NGCC capacity and lower NGCC utilization mustreduce the use of coal, oil, and gas steam EGUs to a significantly greater extent than states with lower NGCC capacity and/or higher
NGCC utilization."

Commenters noted that in the Proposed Rule, complia nce actions taken under Building Block 3 (and 4) did not displace fossil steam generation in determining a state's emission reduction goals.
Commenters noted that this treatment would allow a state's utility to utilize existing generating resources to accommodate energy demand growth. Comm enters stated that many smaller utilities, primarily munis and co-ops, ofte n grow into generating assets, which results in increased utilization of the unit through the initi al phase of its useful life. Commenters stated that the proposal to treat emission reductions would notonly increase the stringency of the BSER state emission reduction goals but also diminish th e economic value of existing generating resources which the commenters strongly opposed.

Comment 27: Commenters noted that the level of pipeline and tr ansmission infrastructure required to be built to meet the EPA's goals in the Proposed Rule can present numerous challenges to states.

Response 27: See sections V.A, V.D and V.E of the final rule pr eamble of the CPP for the EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:

Commenters stated that the Proposal fails to acknow ledge the political challenges associated with adding or modifying transmission infrastructur e to support the needed increase in renewables generation. Commenters noted that the ac t of modifying or adding transmission703

infrastructure is carried out in the market place, not by RTOs, States, or FERC. Commenters also noted that States have authority over siting and pe rmitting of generation and transmission facilities while State and regional institutions de termine how to allocate costs, subject to FERC orders, which affects the market risks for a range of stakeholders, including project developers. Commenters stated that the result is a complex mix of legal issues and political dynamics that impact plans to deploy renewable electricity techno logies.

Commenters noted that right of way and easement pro cesses are a significant variable in transmission infrastructure upgrades and are highly dependent on landowners and can also be influenced by public opinion. Commenters noted thatjust as permitting of renewable facilities encounters an increasing number of permits and appr ovals with long study periods, so too does the construction of power lines to move energy from renewable facilities to load centers. Commenters estimated a 10-15 year timeline for tran smission construction and iterated that this country has never built this expected level of tran smission and pipeline expansion and generation.

Comment 28: Commenters noted that recent development in transmi ssion line construction and best practices in renewable energy dispatch are hel ping to address any reliability concerns with respect to wind energy.

Response 28: See sections V.D and V.E of the final rule preamble of the CPP for the EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:

Commenters stated that although inadequate transmis sion capacity can hinder both new and existing wind projects, recent developments in tran smission line expansion mitigate these concerns. Commenters noted that over 3,500 miles of transmission lines came online in 2013 alone, with investor-owned utilities making transmi ssion investments of $17.5 billion, and that there are currently 15,000 miles of transmission li nes and over 170 projects in various stages of development in the U.S. worth more than $60 billion in potential investments. Commenters noted that EEI has estimated that 76 percent of thi s new transmission capacity "would--at least in part--support the integration of renewable energy."

Comment 29: Commenters stated that the EPA's assumptions regar ding the amount of renewable generation that can feasibly and at reaso nable cost be added to Alabama's grid are not unreasonable, and given technological advances and price declines, EPA's assumptions are overly conservative.

Response 29: See section V.E of the final rule preamble of the CPP for the EPA’s response to
this comment.

The following are summaries of the specific public comments under this comment:704

Commenters noted that while Alabama may be behind o ther states when it comes to renewable penetration, its significant potential remains, and recent trends will allow it to capitalize on that potential going forward with substantial benefits t o the state.

Commenters noted the benefits of future wind deals for Alabama and stated that they will be even greater as a result of additional technologica l advances and continuing price declines. Commenters cited a report from the Lawrence Berkele y National Laboratory which stated that wind energy pricing is at an all-time low and comme nters proceeded to detail the capital cost and installation cost declines for wind energy in recen t years. Commenters also noted that transmission constraints that might have served as barriers to additional cost-effective wind deals are quickly being resolved, and provided details ab out the Plains & Eastern Clean Line Transmission Project which will have the capacity t o deliver approximately 3,500 megawatts (MW) primarily from renewable energy generation fac ilities from the Oklahoma Panhandle region to load-serving entities in the Mid-South an d Southeast.

Commenters also noted that Alabama's technical pote ntial for renewable generation greatly exceeds the state's total 2012 generation and its u tility-scale solar potential alone is over 25 times greater than current state generation. Commenters n oted a study by Arizona State University which ranked Alabama 8th among states in terms of s olar potential, while the DOE's SunShot
Initiative assumes Alabama will have a cumulative i nstalled solar PV capacity of 2.3 gigawatts (GW) by 2030. Commenters stated that the cost of bu ilding in-state solar generation will be lower than EPA's assumptions and that this pricing will make it more economical for Alabama's utilities to buy solar energy generated by independ ent producer rather than engage in self-build projects.

Commenters stated that with benefits of this kind a nd degree, EPA is right to assume that
Alabama's utilities will continue to invest in cost -effective renewable generation both within and outside of the state. However, commenters stated th at Alabama would do well to remove legal and policy barriers that have prevented independentactors from contributing to the state's progress on the policy front.

Comment 30: Commenters expressed contrasting views on the pote ntial for implementing RE
measures in Arkansas

Response 30 : Biomass is not considered part of BSER in this ru le and therefore it is not included in goal setting or compliance evaluations. However, similar to other technologies outside of BSER, biomass may be considered as a part of a stat e’s plan to meet the emission guidelines.
The EPA addresses considerations related to the tec hnical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated that companies such as Clean Line Energy are preparing to deliver thousands of MW of wind energy from the Great Plains across t he Midwest to the eastern states and that705

Arkansas could be a significant recipient of this e nergy source if a planned 500 MW converter
station is built in Central Arkansas.

In contrast, commenters stated that Arkansas does n ot have the wind resource potential of the overwhelming majority of the five other states in t he South Central region. Commenters stated that Arkansas does not have appreciable amount of s olar resources using current technology, but does have the potential for developing great biomas s resources although it is currently unclear whether an EGU firing biomass will be considered by the final rule to be CO2 neutral. Commenters noted that Arkansas does have existing h ydropower facilities and some developable hydropower potential as well.

Comment 31: Commenters noted that there are several options av ailable to them in terms of purchasing renewable energy sources, which include installing PV or solar thermal facilities or wind energy.

Response 31: See sections V.A and V.E of the final rule preambl e of the CPP for the EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:

Commenters noted that solar is most likely the lowe st cost alternative for Arizona, as it has an approximate cost of $2000/kW and a capacity factor of 0.25. Commenters stated that the challenge with incorporating these renewable source s lies in their uncertain reliability. Commenters noted that they cannot count on renewabl es to "meet load" and must maintain sufficient backup power generation capacity to meetload should the renewables be off-line due to lack of sunlight, wind, or other reasons.

Comment 32: Commenters noted that solar energy is the only ren ewable energy option for Florida, but reminded the EPA of the existing issue s with solar implementation in the state.

Response 32 : The final building block 3 methodology does not r ely on state-specific deployment estimates, but rather cost-effective RE at an inter connection level. The EPA addresses considerations related to the technical feasibility and availability of regional RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters noted that NREL has determined that ther e is no reliable on-shore wind in Florida and that the only source of renewable energy that i s feasible in Florida is solar. Commenters noted the ways which they have promoted the additio n of solar generation in their city, but noted that there are inherent challenges with solar gener ation that make a one to one replacement of fossil fuel generation problematic. Commenters note d that solar energy requires large amounts of land. Commenters stated that assuming 7.4 acres are needed for 1 MW of PV solar panels and an average PV capacity of factor of 20%, the required land use for Florida to meet its renewable706

energy goal of 22,109,614 MWh would be approximatel y 93,385 acres. Commenters stated that EPA must consider the environmental impacts for cle aring such a significant amount of land to meet the required level of renewable energy. Commen ters stated that even if roof-top solar were installed to meet the goal in place of solar farms, the 500MW total capacity is infeasible.

Commenters stated that because the potential for wi nd power in Florida is very limited, most of the remaining potential renewable energy studied wa s from solar power - much of that solar PV power. However, commenters stated that the still-co nsiderable cost of solar PV compared with fossil-fueled electricity - particularly with the c urrent low price and abundance of natural gas - limits the expansion of solar PV to levels that are much lower than those EPA is contemplating in the proposed guidelines. Commenters also noted t hat the capacity factor of solar PV is only 15 to 20 percent, making it necessary to backup solar power with conventional generation resources for 80 to 85 percent of the time.

Comment 33: Commenters stated that not only does the EPA fail to consider the age of Louisiana's non-hydro RE fleet, but it also fails t o conduct any analysis of the economic viability of this type of generation.

Response 33: See section V.E of the final rule preamble of the CPP for the EPA’s response to
this comment.

The following are summaries of the specific public comments under this comment:

Commenters noted that the majority of generation pr oduced by Louisiana's biomass fleet comes from the burning of black liquor, a byproduct of pu lp and paper mills, and that over 60 percent of Louisiana's biomass capacity is fueled by black liq uor. Commenters noted that another 36 percent is wood and waste wood and less than four p ercent comes from agricultural byproduct (such as bagasse from sugar cane production and ric e hulls). Commenters stated that continued generation at these types biomass facilities is nota function of an RPS, but rather the economic viability of these industries and that as with othe r limited resources, increased generation will increase costs of the commodity in manufacturing an d other processes. Commenters noted that even if Louisiana adopted an RPS, it is highly unli kely that these existing non-hydro RE generation facilities would see "new life" through re-powering or other marginal investments given their age, and the nature of the industries t o which they are tied. Commenters concluded that any RE target developed for Louisiana needs to factor these unique agricultural sector factors, as well as the age of the existing base of RE generation in the state and that EPA's proposed targets do neither.

Comment 34: Commenters stated that South Carolina has tremendo us untapped cost-effective renewable capacity that can be tapped to help achie ve the state emissions rate target and the state's renewable potential greatly exceeds the pot ential represented in Building Block 3.

Response 34: See section V.E of the final rule preamble of the CPP for the EPA’s response to
this comment.707

The following are summaries of the specific public comments under this comment:

Commenters noted, specifically, that the state's ut ility-scale solar potential is 19 GW for urban solar systems and 1,555 GW for rural solar farms wh ile the state's rooftop solar technical potential is 12 GW. Commenters noted that under the se potential estimates published by NREL, the rooftop solar alone could generate around 19 million MWh, or more than twice the new renewable generation envisioned in Building Blo ck 3.

Commenters stated that South Carolina's in-state po tential is not limited to solar and noted that increased hub heights and other technological advan ces in wind turbines have helped increase South Carolina's inshore wind potential to over 5,0 00 MW. Commenters noted that the state's offshore wind potential at a 90 meter hub height is even greater at 130,244 MW, and coupled with solar, the state could far surpass the 9.6 mil lion MWh included in Building Block 3 even if only a small fraction of the available renewable re source is developed.

Commenters further noted that South Carolina could add significant levels of renewable energy without impacting grid reliability. Commenters cite d a study by the Pacific Northwest National Laboratory noted that the electric system is ready to accommodate 6,800 MW of installed PV capacity when integrating up to 20% of total load f rom solar generation onto Duke Energy
Carolinas.

Comment 35: Commenters asserted that their investments into la ndfill gas and coal bed methane should be counted towards their renewable energy targets. Commenters said the state in which they operate has a Renewable Portfolio Standard and considers these two sources of energy to be renewable, however under the CPP these renewable sources are not allowed to be considered as helping their facilities reach targetgoals, both because most of the resources are
located in other states and because of the EPA's de termination that wind and solar would be the only renewables counted towards renewable energy be fore the CPP.

Response 35: A description of the RE technologies that are not part of building block 3 but may be relied upon for compliance is available in secti on VIII discussion of non-BSER measures.

A discussion regarding the use of some biomass feed stocks, including waste-to-energy, for compliance purposes can be found in VIII.I and Sect ion VIII.K of the preamble.

The following are summaries of the specific public comments under this comment:

Commenters noted that there are differences as to w hat constitutes RE between states and the government; for example, the state of Indiana class ifies biogenic methane as a renewable resource, but this resource is not specifically cit ed in the Clean Power Plan even though the EPA's own Landfill Methane Outreach Program assigns methane a global warming potential (GWP) factor of 25 compared to carbon dioxide.708

Comment 36: Commenters stated that the Appalachian Hardwood Ce nter at West Virginia University determined that remaining pulpwood from West Virginia timber harvesting could potentially support the hardwood needs of four 50 M W wood-fired power plants and at a 34 percent capacity factor, these four plants would co llectively generate on an annual basis 595,680 MWh, or 5.8 percent of West Virginia's RE goal unde r the proposed regulation.

Response 36: Biomass is not considered part of the best system of emission reduction in this rule. However, similar to other technologies outsid e of BSER, biomass may be considered as a part of a state’s plan to meet the emission guideli nes.

Not all forms of biomass are expected to be approvable. A state would propose qualifying biomass feedstocks or categories of biomass feedsto cks in its plan and the proposed treatment of biogenic CO2 emissions, including measures to ensur e emission reduction benefits. State plans must include analysis supporting how proposed quali fying feedstocks or feedstock categories are considered appropriate as a CO2 emission mitigation approach as well as the proposed treatment of biogenic CO2 emissions (i.e., the proposed level of biogenic CO2 emissions from use of the
biomass feedstock that would not be counted when de monstrating compliance with an emission standard, or when demonstrating achievement of the CO2 emission performance rates or a state rate-based or mass-based CO2 emission goal) and qua lity control measures. The EPA would review the appropriateness and basis for such deter minations and accounting measures in the course of its review of a state plan.

For more detail on BSER, refer to section V of the preamble. For more detail on biomass, refer to section VIII.G of the preamble.

The following are summaries of the specific public comments under this comment:

Commenters noted that the serious obstacles to deve lopment of West Virginia's first wood-fired power plants are their ability to produce competiti ve electric rates and the identification of combined heat and power (CHP) opportunities.

Comment 37 : Commenters submitted pricing data for 5 differentforms of biopower, including Levelized Cost of Energy.

Response 37: Biomass is not considered part of the best system of emission reduction in this rule. However, similar to other technologies outsid e of BSER, biomass may be considered as a part of a state’s plan to meet the emission guideli nes.

Not all forms of biomass are expected to be approvable. A state would propose qualifying biomass feedstocks or categories of biomass feedsto cks in its plan and the proposed treatment of biogenic CO2 emissions, including measures to ensur e emission reduction benefits. State plans must include analysis supporting how proposed quali fying feedstocks or feedstock categories are considered appropriate as a CO2 emission mitigation approach as well as the proposed treatment of biogenic CO2 emissions (i.e., the proposed level of biogenic CO2 emissions from use of the
biomass feedstock that would not be counted when de monstrating compliance with an emission standard, or when demonstrating achievement of the CO2 emission performance rates or a state709

rate-based or mass-based CO2 emission goal) and qua lity control measures. The EPA would review the appropriateness and basis for such deter minations and accounting measures in the course of its review of a state plan.

For more detail on BSER, refer to section V of the preamble. For more detail on biomass, refer to section VIII.G of the preamble.

The following are summaries of the specific public comments under this comment:

Commenters noted that from their data it is clear t hat diverse forms of biomass electricity are technically available at price ranges that includes most Avoided Costs. However, commenters also stated that they agree with the EPA that bioma ss should be evaluated against other
alternative fuels. Commenters asserted that a side- by-side comparison shows that biomass power is on par in terms of cost, reliability, and dispat chability with natural gas fuel.

Comment 38: Commenters stated that the EPA should include proj ections for new biomass electricity in the IPM, especially landfill gas, an aerobic digestion, and CHP.

Response 38: These resources are not included in building block3, but may qualify as nonBSER measures. Refer to section VIII for further d etail.

Comment 39: Commenters generally supported the inclusion of re newable energy as a "building block" to be used in the setting of each state's em ission rate standard as part of the final rule for Section 111(d) and urged the EPA to strengthen its targets for reducing emissions.

Response 39: See sections V.A and V.E of the final rule preambl e of the CPP for the EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:

Commenters stated that EPA should factor in a great er potential for even greater renewable energy development in the west to develop targets t hat will achieve significantly greater reductions, as the west has "tremendous renewable e nergy potential, vast quantities of onshore wind exist across the west, particularly in the pla ins where onshore wind potential is unmatched in the nation." Commenters additionally stated thatColorado can outpace the assumed growth in RE generation EPA relied on to set its target and u rged EPA to strengthen the standard for
Colorado to reflect this.

Commenters added that distributed generation, regar dless of type, helps reduce emissions by bringing electricity on-site or near to demand, red ucing transmission losses, as well as wear-andtear on utility equipment by mitigating peak demand . Commenters stated that, with emerging technologies, distributed generation can be coupled with storage, frequency response, and voltage support equipment to help meet peak evening demand, provide ancillary services, and allow even higher levels of renewable energy integr ation.710

Commenters stated that Colorado's continuing progre ss since in incorporating renewables since 2010 proves that it is entirely feasible for the co untry to meet the new clean power plan goals and that Colorado is a model to hold up to other states

.
Commenters urged EPA to adopt a better approach to estimating the growth potential for RE and adopt stronger benchmarks that more accurately refl ect that potential.

Commenters were encouraged by the flexibility offer ed in the proposal to ensure that renewable energy can and will be a significant component of t he compliance strategy that states use to meet
the standard.

Commenters stated that the U.S. has the potential f or replacing coal plant energy completely by 2050. Commenters cited a Stanford study, which i s a state-by-state blueprint that would show how to both replace fossil fuel generation and impr ove the health and economic position of
citizens.

Comment 40: Support for development of RE on tribal lands.

Response 40: The information provided in this comment was valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

In comments on the Tribal & Territories Supplementa l Proposal, commenters stated support for the development of sustainable, renewable energy (R E) development on Tribal lands both for its benefits to the environment and human health, and a s a means of creating desirable jobs in Indian country. Commenters acknowledged the EPA's s tated limitations of building blocks 1, 2, and 4, and was supportive of the proposal for the application of BB3 in Indian country.

Comment 41: Commenters opposed including renewable energy in t he BSER under Building
Block 3.

Response 41: Affected EGUS may procure qualifying incremental RE independent of a state plan for compliance. Refer to section VIII of the final preamble in support of the CPP for
additional detail.

The following are summaries of the specific public comments under this comment:

Commenters stated that unless EPA excludes "Buildin g Block 3" from the goal-setting methodology or explicitly permits states to use ren ewable energy developed independent of a state plan for compliance, the Proposed Rule will d elay of the construction of new renewable generation, which is contrary to EPA's stated goal of reducing CO2 emissions. Commenters noted that this delay is likely to increase the cos ts of undertaking renewable projects, and thus the overall cost of achieving compliance with the P roposed Rule, because companies will be711

forced to compete for vendors in the few years betw een when a plan is approved and the compliance period. Commenters stated that EPA could have implemented an effective and far more cost-effective emission reduction program by s etting goals based on controls at affected sources and allowing states to meet those goals thr ough alternative means, like renewable energy

resources.

Commenters stated that even if permissible, it is n ot at all clear that it is feasible for states to meet the proposed required emissions reductions. Co mmenters stated that the other building blocks seem equally ambitious and fraught with unce rtainty. Commenters further stated that Building Block 3 assumes, among other things, a sig nificant acceleration in the growth of renewables despite their intermittency.

Commenters stated that while increasing use of zero -emitting generation is a significant component our strategy to reduce the CO 2 intensity of our energy production, it should not factor into the BSER determination for existing EGUs. Comm enters noted that the BSER determination
should be based on measures that can be achieved atthe source--in this case, fossil-fired EGUs.

Commenters stated that RE is only rarely achievable with a state-only implementation, and must be balanced over a regional plan, making it impossi ble to establish goals within the allotted timeframe imposed by the rule.

Comment 42: Commenters asked how the EPA came up with the meth odology for Building Block 3's approach and wanted to know what the meth odology was for ensuring compliance with the Data Quality Act.

Response 42: See section V.E of the final rule preamble of the CPP for a detailed description of the final building block 3 methodology. Compliance considerations related to incremental RE are described in section VIII of the final rule pre amble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that the reasonableness of EPA's assumptions underlying Building Block 3 depend on: 1) the renewables market potential in ea ch region; and 2) the ability of the state and the key participants in each state to realize this potential in a reasonable period of time.

Commenters stated that the information needed to ad dress the first issue includes: the availability of zero-carbon resource potential defined as renewables in a distinct region; the portion of zerocarbon resources defined as renewables that are inc luded in setting the goal for each state; the portion of zero carbon resources defined as ren ewables that can be used for compliance (for example, biomass may be an issue); and the ability to convert this resource potential to electricity at a reasonable cost. To address the second issue, the commenters stated that EPA needs to address: the ability to build any new transmission to bring these qualifying renewables to market - in a timely way and at reasonable cost; the need for and ability to integrate this generally intermittent generation into a reliable electric sy stem, particularly as the renewables percentage increases; the speed with which the state, the stat e's suppliers (primarily merchants and utilities), and the state's purchasers (primarily utilities) in stitute a procurement process that meets the712

requirements of this building block; the relative c onsistency between the definition of qualifying renewables for states that have a renewable portfol io standard and the definition of renewable energy for this building block, and the ability to reconcile the two; and the need for enabling state legislation, and to work out whether this bui lding block is enforceable at the federal or state
level.

Comment 43: Commenters requested comment as to which emission reduction measures not included in the four building blocks can be used to meet state targets. Commenters also wanted
clarification as to which resources will be conside red renewable.

Response 43: See section VIII of the final rule preamble of the CPP for a description of the nonBSER measures available to affected EGUS in demonst rating emission performance standards.

Comment 44: Commenters requested that all forms of zero-emitti ng generation, including baseload nuclear and hydropower generation receive equal credit in reaching state emissions targets, and should not be included in standard-set ting.

Response 44: Incremental hydropower and nuclear are available to be credited in an identical manner as zero-emitting RE technologies in the fina l rule.

The following are summaries of the specific public comments under this comment:

Commenters stated that EPA's proposal should be structured around the following two principles with respect to zero-emitting generation:

1. Avoided emissions from nuclear, renewables or hydro should have the same compliance value as emission reductions;

2. All zero-emission generation (nuclear, renewables, and hydro) should receive comparable treatment in that none of them should be included in the standardsetting process but can all be used to demonstrate compliance with the standard.

In particular, commenters stated that nuclear power is presented with a major challenge as the proposal does not provide incentive for the preserv ation of a state's existing nuclear fleet, as EPA intended, because it has included a portion of thatfleet in the state's reduction target.

Comment 45: Commenters noted that the decline in U.S. reliance on its coal generation has coincided with rapid domestic expansion of zero- an d lower-carbon generating unit development and electricity generation. Commenters then went on to give figures from the wind and solar industries, and also talked about increases in ener gy efficiency.713

Response 45: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.

Comment 46 : Issues related to rapid construction of RE

Response 46: The final building block 3 methodology does not re ly on state-specific deployment estimates, but rather cost-effective RE at an inter connection level. The EPA addresses considerations related to the technical feasibility and availability of regional RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated that the EPA Clean Power Plan see ms to force them to construct renewable capacity within their current state, because of the difficulties of coordinating credit for intra-stat e transmission. Commenters stated this could require the construction of capacity in locations that
are not ideal either for financial reasons or for e nvironmental reasons. Commenters worried that
the construction of transmission lines from these n ew plants can cause non-air quality destruction to the local environment and harm ecosystems in way s that could be avoided if allowed to construct capacity in a better location.

Comment 47: Commenters requested that Power Purchase Agreement s be allowed to count towards renewable generating targets. Commenters cl aimed that even though they do not own the resources, they are purchasing, and therefore c ontributing, to the renewable capacity that resource provides.

Response 47: The EPA agrees that ownership is not a necessary c ondition to procuring credit for
incremental RE. See sections V.A and V.E of the fi nal rule preamble of the CPP for the EPA’s response to this comment.

Comment 48: Commenters stated they would like the EPA to credi t them for their two hydroelectric plants which produce in total 12 MW o f energy, offsetting 795,250 tons of CO2. Commenters felt that their company is being punishe d for their early action to generate renewable energy.

Response 48: The BSER is forward-looking in identifying cost-ef fective opportunities for emission reductions from 2012; however, the cost an d availability of these emission reduction opportunities is the result of many factors, includ ing previous actions. The final building block 3 methodology is described in detail in V.E.6 of the preamble and in the GHG Mitigation
Measures TSD.714

Comment 49: Commenters stated that the EPA's Proposed RPS Appr oach underestimates the amount of electricity than can be cost-effectively generated by renewables over the 2020-2030 compliance period.

Response 49: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E.6 of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated that expected increases in fuel p rices, such as those forecast in DOE's Annual Energy Outlook, should also be accounted for in EPA 's analysis of the economics of renewable energy additions as well as the expected retirementof large amounts of inflexible generation and the addition of new flexible resources, such as new gas generation, demand response, and energy efficiency. Commenters asserted that it is unreason able for EPA to estimate future renewable energy deployment patterns through the year 2030 ba sed on the generation mix and power system that existed in 2012.

Commenters stated that EPA's modeling approach shou ld account for the changes in generation and capacity mix that are a likely outcome of the R ule and urged EPA to include an iterative modeling approach that includes the impac t of increased renewable generation on decisions about generator additions, retirements, c ommitment, and dispatch. Commenters noted that if such analysis is beyond the scope of IPM's capabilities, EPA should rely on the results of similar analysis described above that has been cond ucted by DOE, NREL, and grid operators, and use those results as inputs into EPA's modeling

.

Comment 50: Commenters noted that IPM assumes a wind plant ava ilability factor of 95%, though more recent data indicate that current wind plant availability is significantly higher.

Response 50: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, particularly in the r eevaluation of onshore wind cost and performance assumptions. The EPA updated performan ce assumptions to reflect the latest NREL mid-case estimates from the Annual Technology Baseline.

The following are summaries of the specific public comments under this comment:

Commenters stated that a report by Sandia National Laboratory finds that a large sample of existing wind projects has an average availability factor of 97.6% and that others report that the availability for newly installed turbines is even h igher and that improvements in availability are expected to continue. Commenters stated that EPA sh ould use this value to best account for the expected availability of turbines that will be adde d in the future. Commenters added that when assessing the impact of the availability factor on wind plant generation, EPA should take into account that planned outages are typically schedule d for low wind periods to minimize the loss of generation and so that, if needed, cranes can be safely operated at the wind plant site.715

Comment 51: Commenters asserted that IPM's modeling assumption of perfect foresight biases generation investment decisions against stably-pric ed renewable energy, as it fails to account for the uncertainty associated with other energy source s, particularly fuel prices.

Response 51: The EPA disagrees with this comment and believes t hat IPM is an appropriate tool to evaluate the technical feasibility and cost-effe ctiveness of RE. For additional discussion on the role of IPM in building block 3, refer to the G HG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters noted that fossil generation in particul ar faces significant uncertainty about future fuel prices, as well as uncertainty about pending a nd future environmental regulations. Commenters added that many utilities and state regu lators have publicly noted wind energy's value for reducing fuel price risk in explaining th eir reasons for investing in wind energy. Commenters stated that Lawrence Berkeley National L aboratory researchers were able to analyze market price signals to quantify the cost o f gas fuel price risk at "$0.4-$0.8/MMBtu ($0.6/MMBtu on average) [in 2003 dollars] for terms ranging from 2-10 years. At an aggressive heat rate of 7,000 Btu/kWh, this "premium" translat es into 0.3-0.6/kWh (0.4/kWh on average) [in 2003 dollars]." Commenters noted the researcher 's conclusion that "utilities and others that have relied on EIA reference case gas price forecas ts in resource acquisition, modeling, and planning exercises over the past three years have l ikely produced results that are biased in favor of gas-fired generation relative to fixed-price ren ewable generation (again, presuming that longterm price stability is an important consideration) ". Commenters stated that EPA should make a similar adjustment to the IPM resource cost calcula tions to appropriately account for the cost of fuel price risk and appropriately value wind genera tion's lack of fuel price risk.

Commenters stated that EPA should ensure that the I PM turn-down limit assumptions properly account for the evolving capabilities of convention al generators to cycle and provide power system flexibility and ensure that the modeling cap tures solutions, like transmission upgrades or the conversion of conventional generators to synchr onous condensers, that can be used to meet Area Protection Constraints. Commenters noted, for the turn-down limit assumptions, that new gas generators are demonstrating significantly enha nced flexibility, and future gas generators are expected to continue this trend. In addition, Comme nters stated that many coal generators demonstrated their ability to move to a more flexib le operating profile during 2012 when gas prices were anomalously low, causing some gas gener ators to be dispatched as baseload while coal generators were dispatched as mid-merit cyclin g units. Commenters noted, for the area protection constraints, that based on the demonstra ted experience of successfully building transmission, adding Static VAR Compensators (SVCs) , or converting existing conventional generators to synchronous condensers to provide loc al voltage support, allowing local reliability concerns to be met while allowing uneconomic genera ting resources to retire, EPA should also ensure that the modeling captures solutions that ca n be used to meet Area Protection Constraints, including the conversion of conventional generators to synchronous condensers as well as transmission upgrades and the addition of devices s uch as SVCs.

Comment 52: New transmission construction in IPM models716

Response 52: Total transfer capabilities between regions in IPM remain constant over time except to reflect transmission projects that are in advanced stages of development. The deployment of RE has associated transmission costs reflected in the steps to which the resource is assigned, where the cost reflects several consid erations related to transmission, including distance to existing transmission and population de nsity that would increase the cost of procuring transmission rights of way. The appropriateness ofrelying on IPM to evaluate the costeffectiveness and technical feasibility of incremen tal RE is discussed in detail in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:

Commenters noted that, while the IPM documentation appeared to indicate that new
transmission construction is not factored into the IPM model runs, the impact of future transmission additions could be modeled by at leastassuming that the rate of transmission build over the last several years persists, and that a be tter option would be to use the projections made in reports such as NERC's Long-Term Reliability Ass essment, the Department of Energy's National Electric Transmission Congestion Study, an d the Edison Electric Institute's (EEI) Transmission Projects: At a Glance.

Commenters noted that the impact of future transmis sion additions could be modeled by at least assuming that the rate of transmission build over t he last several years persists and that a better option would be to use the projections made in repo rts such as NERC's Long-Term Reliability Assessment, which found transmission additions duri ng the next 10 years are expected to include 7,400 circuit miles of lines currently under constr uction, 20,622 circuit miles of planned lines, and 7,360 miles of conceptual lines; the Departmentof Energy's National Electric Transmission Congestion Study, to be finalized in 2015; and the Edison Electric Institute's (EEI) Transmission Projects: At a Glance, which found EEI's members (i nvestor-owned utilities) alone plan to spend $60 billion on new transmission infrastructure over the next ten years. Commenters stated that the IPM documentation appeared to indicate that new transmission construction is not factored into the IPM model runs, noting that "[d]ue to unce rtainty surrounding the building of new transmission lines in the U.S., EPA Base Case v5.13 does not exercise IPM's capability to model the building of new transmission lines." Commenters stated that if new transmission build is allowed in the IPM modeling, the assumed cost of bu ilding new transmission should be validated against recent transmission cost data.

Comment 53 : Commenters stated that the reserve margin contrib ution of wind energy in ERCOT in the EPA's IPM modeling should be updated t o account for updates ERCOT has made
to its reserve calculation based on new data.

Response 53: The EPA periodically conducts a comprehensive revi ew of wind reserve margin contribution on a national basis. The recent updat es that ERCOT adopted are noted but any updates to assumptions will be reserved for a futur e version of IPM to allow for a comprehensive, national-level review of reserve cal culations.

The following are summaries of the specific public comments under this comment:717

Commenters noted that ERCOT has recently updated it s wind reserve margin contribution from 8.7% for all wind generation to a summer value of 1 2% for non-coastal wind resources, a winter value of 19% for non-coastal wind resources, a summ er value of 56% for coastal (land-based but near the coast) wind resources, and a winter value of 36% for coastal resources.

Comment 54 : Commenters stated that EPA should review the whee ling charges described in Table 3.4 on pages xvii.6-12 of Chapter 3 of the IP M documentation, as many appear to be higher than current and future wheeling charges and that EPA should account for the fact that these charges are likely to significantly decrease in the future as inter-regional coordination on grid operations improve and new transmission infras tructure is completed.

Response 54: The EPA periodically conducts a comprehensive revi ew of interregional transmission assumptions in IPM. The EPA determine d the current representation of wheeling charges to be reasonable but will further review th ose assumptions for the next version of IPM.

The following are summaries of the specific public comments under this comment:

Commenters specifically noted the following charges that they appear to be particularly high relative to current wheeling costs:

1. The $6/MWh wheeling charge between both MIS_MAPP an d MAP_WAUE and other parts of MISO. Commenters stated that the vast majo rity of these two areas, and the vast majority of the wind resources that have been or ar e under development in those areas, are in the MISO footprint and therefore are not sub ject to any wheeling charges. Commenters stated that the extent to which the ongo ing integration of some of WAPA's Balancing Authorities into SPP will reduce wheeling charges and improve transfer limits into with SPP should also be evaluated and incorpor ated into the IPM modeling assumptions.

2. $8/MWh between LADWP (WEC_LADW) and the Imperial Ir rigation District (WECC_IID), and another $8/MWh between these two ar eas and Southern California Edison (WECC_SCE) and San Diego Gas and Electric (W EC_SDGE). Combined with the $8/MWh wheeling charge from WECC_AZ to WECC_IID , a total pancaked wheeling charge of $16/MWh could exist for paths mo ving electricity across the Imperial Irrigation District between Arizona and San Diego G as and Electric, which appears to be excessive relative to current practice.

3. Commenters stated that the assumed $8/MWh wheeling charges among most Western states are very high relative to reality. For examp le, the WECC_WY-WECC_UT wheeling charge of $8/MWh should be $0/MWh to refle ct that most of both areas are within the footprint of PacifiCorp. Commenters stat ed that the same is true for the $8/MWh wheeling charge between WECC_NNV and WECC_PN W, and the charge between WECC_SNV and WECC_UT, as a large share of a ll of those areas fall within service territories that are now owned by PacifiCor p718

4. Also of concern to Commenters were the total pancak ed rates of $14/MWh for two wheeling charges moving electricity across S_D_REST between SPP and the TVA (S_C_TVA) and Southern Company (S_SOU) IPM regions. These costs seem higher than those that are imposed on existing transaction s of wind generation between those regions.

5. Commenters stated that EPA should account for how t he $3/MWh wheeling charge across the MISO-PJM seam, and among the other RTOs, will be reduced due to increased inter-regional coordination in transmission schedul ing over time.

Comment 55: Commenters noted that the EIA data that the IPM do cumentation references as support for the 2.8% figure for transmission line l osses appears to include lower-voltage distribution system losses, which account for the v ast majority of total power system losses and should not be included in calculating the transmiss ion losses between regions.

Response 55: The EPA periodically conducts a comprehensive revi ew of interregional transmission assumptions in IPM. The EPA determine d the current representation to be
reasonable but will review transmission line loss a ssumptions for the next version of IPM.

The following are summaries of the specific public comments under this comment:

Commenters noted, in contrast, PJM's data are based only on losses on the high-voltage transmission system, which are significantly less t han 1% of total generation on average which is consistent with other report of transmission-system losses. Commenters stated that because interregional power transfers will typically occur on hi gh-voltage transmission lines, this is a more appropriate loss factor for this calculation and, i f possible, IPM's modeling of transmission losses
should also be indexed for transmission line loadin g level and for winter and summer periods, to account for the fact that losses tend to be higher when transmission lines are heavily loaded and when ambient temperatures are higher.

Comment 56: Commenters advocated for allowing privately-owned s olar generation to be credited toward a utility’s or state’s compliance o bligations and described the need for a methodology to quantify credits for solar generatio n.

Response 56: Distributed solar technologies may be eligible for compliance as a non-BSER
measure. Refer to Section VIII for additional deta ils.

The following are summaries of the specific public comments under this comment:

Commenters noted that Michigan may experience rapid growth in the number of small solar projects where the generation is used by the custom er behind the meter. Commenters said that the rule should include a methodology for counting behind-the-meter distributed generation if metering and monthly reporting requirements are one rous. Commenters said that Michigan's REC tracking and certification system, MIRECS, prov ides for aggregation of similar generators719

into a single account to reduce administrative cost s. Commenters stated annual generation is calculated using a formula and MIRECS includes both monthly generation and RE credits
awarded.

Commenters stated that distributed solar generation has the potential to be a significant source of renewable energy in Georgia by 2030, but given the time constraints of the CPP rule development, they have not had sufficient time to d evelop a methodology for tracking these projects and calculating carbon emission reductions associated with them. However, commenters thought that a suitable method can developed that w ould not only allow a state to take credit for emission reductions associated with these projects but also have the effect of promoting further development of distributed solar. Commenters stated that the final CPP rule should allow for development of a methodology for quantifying carbon reduction credits associated with distributed solar and incorporating those credits i nto the state plan at any time during the interim compliance period.

Commenters said that the final rule should clarify that privately-owned, grid-connected solar will count towards a utility's or state's obligations, p rovided that it displaces CO2 emissions.
Commenters stated that it should not matter whether the utility owns the units. Commenters concluded that customer-owned and third-party-owned solar should be strongly encouraged because experience to date indicates that privately -owned solar will spread fast if there are
incentives to build it.

Comment 57: The following comment refers to the EPA's push for wind and solar over other renewable energies.

Response 57: The RE technologies that contribute to building bl ock 3 are utility-scale, zeroemitting RE technologies with significant commercia l deployment over the past five years. Other RE technologies, including certain types of b iomass, may be procured as non-BSER measures by affected EGUs in demonstrating complian ce with the relevant emission performance standards. There is no mismatch betwee n building block 3 and compliance because all of the RE technologies that constitute the buil ding block 3 generation level are fully creditable for compliance. Refer to section VIII f or additional information on the role of RE in state plans.

The following are summaries of the specific public comments under this comment:

Commenters stated that EPA's proposal also arbitrar ily prefers solar and wind generating sources
over biomass. Commenters said EPA treats biomass as zero-carbon in setting states' goals but suggests it will not count as zero-carbon in compli ance, and that this mismatch occurs as a result of EPA's method of calculating each state's renewab le energy potential. Commenters said because EPA bases the level of renewable potential in each state on regional renewable energy standard policies, which at times include biomass, the calculation of state targets assumes biomass will count as zero-carbon renewable energy; however, EPA indicates that the Agency is preparing an updated accounting framework that it e xpects states to use when determining the extent to which biomass contributes to compliance, suggesting that not all biomass generation
will be considered zero-carbon. Commenters said thi s would cause EPA to treat biomass720

emissions differently when calculating a state's go al and when calculating state compliance with the goal. Commenters concluded that EPA has not jus tified such a distinction and, therefore, has acted in an arbitrary manner.

Comment 58 : Solar Energy Measures are Adequately Demonstrated Because They are Currently Being Used by Utilities and Other Owners of Affecte d EGUs.

Response 58: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD. Utility-scale solar P V and CSP directly contribute to building block 3 generation levels, while other solar techno logies are available to affected EGUs as nonBSER measures in demonstrating compliance with the relevant emission performance standards.

Distributed technologies, as a demand-side resource , present unique data and technical challenges (such as the role of evaluation, measure ment and verification (EM&V) procedures in verifying their production, the diverse economic in centives of different parties involved in their deployment, and the variety of grid integration pol icies and conditions across potential deployment sites) that complicate identifying a tec hnically feasible and cost-effective level of generation. Consequently, the EPA is, at this time, choosing not to include distributed technologies as part of the BSER (although, as expl ained in section VIII.K of the preamble, distributed RE technologies that meets eligibility criteria may be used for compliance).

The following are summaries of the specific public comments under this comment:

Commenters stated, renewable energy is an emerging alternative to traditional electrical generation but it has reliability issues. Commenter s said, another shortcoming of renewables is that it is unable to generate large amounts of base load energy as those produced by traditional units. Commenters said, renewables can only functio n as a supplement when natural resources, such as wind and solar, are available to supply pow er.

Commenters stated, solar energy measures have been adequately demonstrated because they are currently being used by owners of affected EGUs, in cluding utilities and independent power producers, to shift generation away from fossil res ources and diversify their energy mix with cleaner resources. Commenters said, for example, NR G, Inc., which owns a significant energy portfolio comprised of both fossil and renewable en ergy assets, recently announced that it intends to reduce its carbon emissions by 2050 thro ugh divestment of dirty fossil resources and
investment in renewable resources such as wind and solar.

Commenters stated, in many states some solar and wi nd technologies have already reached grid parity, making the utilities' choice to install or purchase renewable energy over fossil resources a decision based solely on price. Commenters said, as previously noted, utilities can now sign solar power purchase agreements for $50-$60/MWh.

Commenters stated, further, in some cases solar is even competitive with base load generation. Commenters said, for example, a new conventional na tural gas combined cycle power plant costs $66/MWh while a new conventional coal fired power p lant costs $96/MWh. Commenters said,721

in some cases the interest in solar generation has created a backlog of applications for interconnection; in others, utilities have combined solar procurement with their long term resource planning and procurement due to the compet itive price and hedge value of solar relative to natural gas and other generation.

Commenters stated, further, utilities have become h eavily involved in the valuation and procurement of distributed PV through RPS policies, value of solar dockets, and direct ownership as the price of distributed PV drops and the benefits to both the grid and ratepayers is being realized.

Commenters provided a discussion of solar procureme nt by entities that own or operate affected EGUs. Commenters said, each of the models discussed below shows that utility scale and distributed PV, as well as CSP and SHC, can be proc ured by utilities to reduce generation (and emissions) from affected units.

1. Distributed PV is Adequately Demonstrated and Sh ould be Included in Building Block 3
Because Utilities and Other Owners of Affected EGUs Currently Procure Distributed PV

Commenters stated, utilities and other entities tha t own affected EGUs are procuring distributed PV on an increasing basis. Commenters said, some of the most common examples are residential systems, commercial systems, community solar, and d istributed solar RECs. Commenters discussed examples of utility solar procurement pro grams and activities. Commenters also provided URLs to many of the solar procurement prog rams and activities within the tables followed by another table showing solar on the grid within the service territory of each utility, as well as a table that shows current CSP projects. Fi nally, the commenters provided details on specific utility solar procurement programs.

2. Solar Procurement Methods

a. Solar Purchases

Commenters stated, purchases of solar energy outputcan take on a number of different forms, but predominately are comprised of power purchase a greements (PPAs), feed-in tariffs (FITs), value of solar rates, and excess generation net met ering contracts. Commenters said, all can be constructed to various contract lengths and amounts . Commenters listed examples, and provided a list of further examples and program descriptions

.
b. Solar Ownership

Commenters stated, this refers to ownership and ope ration of solar electricity resources as enterprise assets by entities that own or operate a ffected EGUs. Commenters said, the most common evidentiary benefits of the ownership model are the ability to provide stable prices, large-scale market activity, and/or procurement ris k mitigation. Commenters listed examples, and provided a list of further examples and program descriptions.

c. Unregulated Activities722

Commenters stated, this refers to business models a dopted by unregulated entities, such as holding companies or unregulated subsidiaries of IO Us. Commenters said, these unregulated bodies principally participate in the solar markets either by developing and owning solar installations, by selling solar power output to loa d-serving utilities, or by making financial investments in the solar industry. Commenters liste d examples, and provided a list of further examples and program descriptions.

d. Community Solar

Commenters stated, in its most basic form, a utilit y community solar program consists of one or more larger utility-managed photovoltaic projects f rom which customers can purchase a fractional share of the electricity output to virtu ally offset their electric bill as if the solar sys tem were on their property, i.e. net metered. Commenter s listed examples, and provided a list of further examples and program descriptions.

e. Property Leasing

Commenters stated, this topic captures programs whe re utilities or other entities have leased customer property for the installation of one or mo re solar projects. Commenters said, under this model, customers are typically compensated with a n ominal annual lease payment in exchange for access to the property over a set contract term . Commenters listed examples, and provided a list of further examples and program descriptions.

f. Requests for Proposals

Commenters stated, utilities often issue requests f or proposals as part of their efforts to increase solar or renewable energy more broadly within their service territories. Commenters said, a utility-issued RFP may either seek a specific singl e partner, or just as likely announce that a variety of projects are being sought such that, whe n combined, allow for a target amount of solar/renewable energy generation to be reached. Co mmenters listed examples, and provided a list of further examples and program descriptions.

g. Merchant Solar Plants

Commenters stated, a merchant plant is a power plan t built for the purpose of selling directly to the wholesale electricity market, rather than undercontract. Commenters said, while merchant plants are traditionally fossil plants, solar compa nies are now constructing merchant plants that will sell solar energy directly in wholesale spot m arkets. Commenters said, the off takers in these markets are generally utilities that may choose to purchase from a solar plant rather than a fossil plant, which allows utilities to reduce emissions f rom their overall energy mix.

Commenters provided an example:

First Solar Barilla PV Plant: Commenters said, Firs t Solar has recently completed the initial 18MW phase of the Barilla PV plant in Texas, the fi rst plant in the state to operate without a power purchase agreement. Commenters said, this mer chant solar plant, located in West Texas, will instead sell electricity on Texas' ERCOT grid spot market.723

h. Solar REC Purchases

Commenters stated, utilities around the country pur chase solar RECs and distributed generation renewable energy credits (RECs) from solar systems to comply with state renewable portfolio standards. Commenters said, one of the primary moti vations of such standards is to shift generation away from affected EGUs and towards lowe r emitting renewable energy resources. Commenters said, currently, 23 states and the Distr ict of Columbia have renewable portfolio
standards that include solar and distributed solar carve-outs. Commenters said, under these requirements, utilities are required to purchase so lar renewable energy credits (SRECs) from distributed solar systems that are then used to red uce the utility's overall reliance on carbon emitting resources. Commenters said, a utility will generally issue an RFP to purchase RECs when purchased in large quantities. Commenters said , the primary goals of state solar requirements are to reduce emissions, stimulate eco nomic activity, hedge against fossil fuel prices, and improve grid resiliency and reliability through increased solar deployment. Commenters said, these goals are clearly aligned wi th the requirements for establishing the BSER as set forth under 111(d). Commenters said, fo r a full list of solar RPS requirements, see DSIRE Solar Policy Guide.

Commenters provided examples:

Nevada Energy Integrated Resource Plan: Commenters said, Nevada Energy IRP counts distributed PV towards the NV RPS, so distributed P V penetration is tracked closely and is included as part of the utilities' overall resource plan.

New Jersey RPS section 14:8-2.1 Purpose and scope:

Commenters said, the purpose and scope of the NJ RP S states: "(a) Each supplier/provider, as defined at N.J.A.C. 14:8-1.2, that sells electricit y to retail customers in New Jersey, shall include in its electric energy portfolio electricity genera ted from renewable energy sources. This subchapter is designed to encourage the developmentof renewable sources of electricity and new, cleaner generation technology; minimize the en vironmental impact of air pollutant emissions from electric generation; reduce possible transport of emissions and minimize any adverse environmental impact from deregulation of e nergy generation; and support the reliability of the supply of electricity in New Jersey."

New York RPS Objectives (Case 03-E-0188):

Commenters said, the objective of the NY RPS states : "New York's Environment: improve New York's environment by reducing air emissions, inclu ding greenhouse gas emissions, and other adverse environmental impacts on New York State, in cluding upon underserved communities, of electricity generation..."

i. Utility Engagement in the Valuation of Distribut ed PV

Commenters stated, as distributed PV generation bec omes a larger portion of the energy mix, many utilities are working to properly value distri buted PV generation. Commenters said, currently, there have been 15 value of solar studie s or proceedings undertaken by states. Commenters said, these proceedings involve dozens o f stakeholders engaging in a robust724

analysis of the benefits and costs of solar to the utility, ratepayers, and the grid. Commenters said, in addition, there are active dockets in Loui siana, South Carolina, and New York evaluating
the benefits and costs of distributed PV.

Commenters stated, finally, the graph below shows m ethods that utilities have used to procure solar energy outside RPS requirements in the past 1 2 months (Nov. 2013-Nov. 2014). Commenters provided a map showing utility procureme nt outside the RPS: 3 GW in 12 months.

Commenters stated, each of the models discussed abo ve shows that utility scale and distributed PV, as well as CSP and SHC, can be procured to redu ce generation (and emissions) from
affected EGUs.

Comment 59: Commenters stated that solar energy measures are a dequately demonstrated

Response 59: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD. Utility-scale solar P V and CSP directly contribute to building block 3 generation levels, while other solar techno logies are available to affected EGUs as nonBSER measures in demonstrating compliance with the relevant emission performance standards.

The following are summaries of the specific public comments under this comment:

Commenters stated, the utilities that own the cover ed sources affected by the EPA proposed rule are already including solar measures as a way to co mply with RPS policies, which are intended to diversify state energy portfolios and reduce car bon emissions. Commenters said, in many states solar technologies have reached grid parity, making the utilities choice to install or purchase solar energy rather than conventional gene ration resources based solely on price. Commenters said, in some cases the interest in solar generation has created a backlog of applications for interconnection; in others, utilit ies have combined solar procurement with their long term resource planning and procurement due to the competitive nature of solar relative to natural gas and other generation.

Commenters stated, utilities are including solar me asures through various approaches. Commenters said, for example, Colorado's largest ut ility, Xcel Energy, has installed 87 MW of utility-scale solar with an additional 170 MW plann ed. Commenters said, this includes solar projects which are being purchased for 25-year Powe r Purchase Agreements at rates competitive with the long-term forecast for natural gas-fired g eneration. Commenters said, through the Solar*Rewards program, more than 19,800 Colorado cu stomers have installed PV systems, leading to more than 200 MW of distributed solar ge neration.

Commenters stated, Clean Energy Collective, one of the pioneering solar garden developers based in Colorado, recently opened the 8th and 9th arrays in Colorado as part of Xcel Energy's Solar*Rewards Communities program. Commenters said, combined, CEC's power contribution to the Xcel Energy grid is over 4 megawatts. Commen ters said, CEC now operates 16 community solar projects in Colorado.725

Commenters stated, other utilities also have ambiti ous solar energy programs. Commenters said, the city of Fort Collins municipal utility, for exa mple, chose 20 projects totally 4.3 MW last winter as part of its Fort Collins Solar Power Purc hase Program (SP3). Commenters said, the objective of the SP3 is to procure new locally inst alled solar capacity to help meet the community's renewable energy commitments under the Colorado Renewable Energy Standard (RES). Commenters said, these projects will be loca ted on a commercial customer's property with Utilities purchasing the electric output of th e project under an extended contract. Commenters said, Fort Collins also has a small PV R ebate program which is so popular that the 2014 program "sold out'' in the spring when all 201 4 rebate funds were reserved for 72 residential rebate requests. The utility is also se lling shares in a Community Solar Garden.

Commenters stated, Colorado Springs Utilities, anot her large municipal utility, has also found solar gardens popular. Commenters said, before cons truction began this year, SunShare LLC sold all of the power that will be generated by a 2 MW solar garden. Commenters said, the Pikes Peak Library District, Security Water Distric t and the University of Colorado at Colorado Springs joined the city of Manitou Springs and hund reds of individual consumers bought the

power.

Commenters stated, numerous Rural Electric Associat ions (REAS) in Colorado also have solar programs. Commenters said, several offer rebates fo r rooftop systems. Commenters said, others have found success with community solar projects, i ncluding Holy Cross Energy, San Miguel
Power Association and United Power.

Commenters stated, these examples of utility owners hip of solar highlight the fact that solar is adequately demonstrated, and that utilities conside r solar projects to be, not only a part of the best system of emission reduction, but part of prud ent resource planning.

Comment 60: Solar Energy Measures are Adequately Demonstrated

Response 60: The resources and data provided in this comment we re valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD. Utility-scale solar P V and CSP directly contribute to building block 3 generation levels, while other solar techno logies are available to affected EGUs as nonBSER measures in demonstrating compliance with the relevant emission performance standards.

The following are summaries of the specific public comments under this comment:

Commenters stated, the EPA must include all forms o f solar, including distributed solar, in its final determination of the BSER. Commenters said, d istributed solar, utility solar and CSP are all a system of emissions reduction that is technically feasible, is implemented at reasonable cost, is driving solar innovation, and does not negatively i mpact the electric system. Commenters said, further, these forms of solar energy are adequately demonstrated to reduce emissions from covered sources. Commenters said, for these reasons , EPA must include solar as part of building block 3 in its determination of the best system of emissions reduction.726

Commenters stated, the utilities that own the cover ed sources affected by the EPA proposed rule are already including solar measures as a way to co mply with RPS policies, which are intended to diversify state energy portfolios and reduce car bon emissions. Commenters said, in many states solar technologies have reached grid parity, making the utilities' choice to install or purchase solar energy rather than conventional gene ration resources based solely on price.
Commenters stated that in some cases the interest i n solar generation has created a backlog of applications for interconnection; in others, utilit ies have combined solar procurement with their long term resource planning and procurement due to the competitive nature of solar relative to natural gas and other generation.

Commenters stated, utilities are including solar me asures through various approaches [and provided two examples, SMECO Solar, and Constellati on Energy Group]. Commenters said, these examples of utility ownership of solar highli ght the fact that solar is adequately demonstrated, and that utilities consider solar pro jects to be a part of the best system of emission
reduction.

Comment 61 : Commenters stated that EPA's preamble and its int erpretation of "affected entity" in the preamble to the Rule is invalid, explaining that the proposed Rule instructs that state plans must achieve the "identified performance level . . . in Table I . . . for affected entities in [each] state." 79 Fed. Reg. at 34951 (emphasis added). Com menters noted, "Affected entities," in turn, is defined as "[a]n affected EGU, or another entity with obligations under this subpart for the purpose of meeting the emissions performance goal r equirements in these emission guidelines." Commenters said nuclear plants play a critical role in displacing carbon-intensive energy sources, thereby assisting states in "meeting the[i r] emissions performance goal." Therefore, commenters noted that nuclear plants fit squarely w ithin the definition of "affected entity." Commenters said, as an "affected entity," by the te rms of the Rule, states can rely on nuclear plants to achieve their "identified performance lev el . . . in Table I." However, commenters believed EPA's preamble attempts to re-interpret th e proposed Rule in a manner inconsistent with the clear text of the proposed Rule, which is impermissible. See Christensen v. Harris Cnty., 529 U.S. 576, 588 (2000). Specifically, commenters stated that the preamble attempts to artificially limit the definition of "affected enti ty" from an "entity with obligations . . . for . .

. meeting the emissions performance goal requirements [,]" to one in which EPA limits what entities states can use to meet their emission guid elines, such as only allowing 6% of generation from nuclear plants to be included. Commenters stat ed that this limiting construction is contrary to the broad definition of "affected entity" in the proposed Rule and is therefore impermissible.

Response 61 : EPA has decided not to include this provision in the final CPP. New, existing and under-construction nuclear are not affected EGUs, n or are they included in the BSER. Generation from new or uprated nuclear capacity maybe used to adjust the rate of an affected
EGU.