Comments ofthe Florida Municipal Electric Association (FMEA) EPA's Proposed ESPS Rule Atlanta GA July 29, 2014

I'm Robert Kappelmann, here onbehalfofthe FloridaMunicipal Electric Association (FMEA). FMEA represents 34 community-owned electric utilities servingthree million Floridians. Our utilities are almost entirely dependent on fossil fuel-based generation. It's critically important to our customers and our communitiesthat we are able to continue to deliverreasonably priced and reliable electric power to their homes and businesses. The flexibility provided withthe 4 building block approach is not sufficient to meet the mandatory emission limiting goals in a cost-effective manner that will assure electric reliability.

We have grave concerns that EPA has actually created de-facto "one size fits all" guidelines for the states that go far beyond traditional source-specific standards. The statute dictates that Section Ill (d) emissions standards be designed to be cost-effective and achievable at each specific source or electric generating unit (EGU) and not based on statewide emission limiting goals.

The majority ofFMEA's coal-fired electric generating units are the direct result ofFederallegislation. In response to the Arab oil embargo in the early 1970s, Congress passed the Electric PowerIndustrial Fuel Use Act of 1977, which disallowed the use ofnatural gas and oil for any new electric generating units. Many ofourutilities were forced by the Act to cancel planned gas-fired units and replace them with coalfired units. Fortunately t(Jr our customers these units have provided low cost reliable energy 

### ror Floridians.

FMEA members built over 2400MWofcoal-fired generation in response to the limitations ofthe Fuel Use Act. These coal units meet EPA's best available control technology requirements, which allowed Floridato maintain comnliance with National Amhient Air OualitvStandards. FMEA member utilities invested billions ofdollars in new coal-fired generation becausewe had no otherchoice for new generation. Itis importantto understand that many ofour utilities still carry considerabledebt on thesecoal-fired units. Creating standards that force them out ofserviceprematurelywill leave our ratepayers with lOOs of$ millions ofdollars in stranded costs.

Each Floridaelectric utility generating system is unique,just as each state's electric generating system is unique. We believe thatthe ESPS should allow each state to not only have a greaterrole in deciding how much emission reduction is technically possible, but also to be able to exempt certain facilities on a caseby case basis as provided by the statute.

The proposed ESPS emission reduction goals depend on 4 compliance buildingblocks (BBs) that were developed considering national and regional assumptions and costs that may not translate to a state and its utilities. This is especially the case regarding EPA's assumed 6% efficiency improvements (BB #1) for coal units, since Florida's relatively new coal-fired generating fleet already employs most ofthe available cost effective heat rate improvements.

Florida's ESPS depends primarily on load shifting from coal to gas-fired generation (BB#2) for compliance and most ofthe reductions are frontloaded. The shift to natural gas would result in the premature closing of many ofour coal-fired units. Recently, FMEA utilities added $2 billion of"state ofthe art" airpollution control systems to meet the emission I

imits of EPA's Interstate Transport and utility MATS rules. EPA's proposal does not take into account the additional $1OOs ofmillions in stranded costs for those units that will fall on ourratepayers. Itis ironic thattheFederalgovernment,which dictatedthat our utilities build coal-fired generating units is now proposing a regulation thatwill

assure their prematureshutdown.--------------------------

EPA's compliance BB#3 assumes that about 1 0% ofFlorida's generation could come from renewable energy by 2030. However, the most cost effective source ofrenewable energy, wind power, is not a feasible or cost effectiveresource in Florida.

EPA's compliance BB#4 assumes that demand side management can reduce electric demandby 1 0% by 2030. Florida continues to experience significantpopulation growth. EPA's ESPS does not take this into account for the state or a locality. This rule subjects states with high economic or population growthto disparatetreatment. Unfortunately, the ESPS tends to punish early C02 reductions by includingthem inthe calculation ofthe state emission limiting goals. EPA should allow states to adjust emissionreduction goals to reflect early action reductions made priorto the effectivebaseline of2012.
We have numerous concerns about EPA's decision to expandthe traditional BSER boundary beyond not only the electric generating units specifically cited in the Clean Air Act but also to generating sources and segments ofthe economy not specifically regulated under the Clean Air Act. Ourpreliminary analysis indicates that EPA has greatly overestimatedthe monetized benefits for the ESPS and underestimated the cost to the public. Also, EPA failed to incorporate fully the impact ofiPCC AR 5 findings ofreduced equilibrium climate sensitivity and moderated predictions ofsevere weather events. These concerns will be addressed in our formal comments on theproposed ESPS.

Thankyou.