EPA Moderator: Scott Fraser 10

- 29

- 14/3:00 p.m . ET Confirmation # 27443703

Page 1

**EPA Moderator**  **: Scott Fraser**  **October 29, 2014 3:00 p.m. E**  **T**

Operator : Good afternoon. M y name is (Brand y) and I will be your conference operator

today . At this time I would like to welcome every one to the Clean Power Plan Notice of Data Availabili ty conference call. All lines have been placed on mute to prevent an y backgro und noise. After the speakers’ remarks there will be a question

- and

- answer session. If you would like to ask a question during this time simply press star then the number
one on y our telephone key pad. To withdraw y our question press the pound key

. Thank y ou.
Mr. Scott Fraser , you may begin your conference.
Scott Fraser : Thank you (Brand y). T hank you every body e lse for joining today . Yesterday , EPA issued two actions re lated to the proposed Clean Power Plan to cut carbon solutions from power plants and this today’s conversation here is about the additional information and ideas available for public comment in a Notice of Data Availability

or (NODA), if you love acrony ms as much as we do. My name is Scott Fraser. I’m with the EPA’s Office of Public Engagement. I’m going to introduce Janet McCabe, our Acting Assistant Administrator for EPA’s Office of Air and Radiation. She’s going to give a five minute intro on today ’ s topic and then we’re going to turn it over to our two presenters. Kevin Culligan is the Associate Division Director within the Office of Air Quality Planning and Standards and Reid Harvey who is Director of the Clean AirEPA Moderator: Scott Fraser 10

- 29

- 14/3:00 p.m . ET Confirmation # 27443703

Page 2 Markets Division and their prese ntation will take about 15 minutes and y ou heard the operator say

we’ll have some time for question and answer.
If you didn’t get time to ask your question I want to give you an e - mail to follow up and that’s publicengagement@epa.gov. With that I’m goin g to turn it over to Janet.
Janet McCabe : OK. Thanks Scott. Thanks every body for joining us. This is our second call of the day about (inaudible) call we had at noon today which about the other action we (inaudible) yes terday which was our supplemental proposals on (inaudible) territories. And for those of you that joined us on that call, you know, (inaudible). Hopefully , we got a good (inaudible) here and looking forward to getting some more information and then hearing y our questions. Since last y ear EPA has been following through on President Obama’s directive to extensively

engage with the broader possible (lengths) and perspectives as we work to develop a plan to cut energy waste, spend in the
econom y and leverage cleaner energy sources. Today we want to provide y ou with more details about the NODA that we issued y esterday

and I want to emphasize that NODA is a routine for the document that the agency , you know, can issue in the (inaudible) to make sure that information is broadly available to all stakeholders. We believe that public included one of the most important parts that (we’re making process) and the more we listen and engage the more perspective s we hear, the better the clean power plan and all of our work will be. At every stage of this process if y ou don’t have prioritize Ireach to the public, state, tribes, industries, non

- government organizations later in community groups, the many

meetings conference calls, public hearing and nearl y 1.5 million public comments that the agency h as already

received to identify

a wide range of ideas and information. Our actions yesterday ( looks like ) what we heard and we benefited greatl y from the high level of interest and engagement and this is exactly how the role making process is intended to work.EPA Moderator: Scott Fraser 10

- 29

- 14/3:00 p.m . ET Confirmation # 27443703

Page 3 ( Inaudible) show that we are listening and that we are committed to continuing the dialogue
. Let me fill you in on a few of the details before turning it over. EPA and other federal agencies regularl y and routinel y used NODAs to provide the publi c with an opportunity to consider and comment on ideas raised about our ongoing role making or other important environmental protection program. EPA has heard a wide range of ideas and issues from states, stakeholders in the public about the proposed clean power plant to cut carbon solution and (cyclonic) change. The NODA continues this important dialog. This NODA does not change the proposal and I want to emphasize that. We’ve discussed some key ideas we used to hearing consistentl y from a diverse set of stakeholders and the NODA gives us the chance to ensure that all stakeholders and the public are aware of these issues and can consider them in their comments. As you may know we’ve been hearing about the proposed approach to the building blocks, goal setting and compliance. This notice is not intended to be a summary of all the issues that have been raised but rather it points out ideas that stakeholders have raised about potential way s to address some of those issues, ideas that we want to make
sur e every one who is interested in its rule has an opportunity to think about and comment on, specially ideas that weren’t already in the June proposal. Specificall y the NODA discusses issues raised b y stakeholders about trajectory or glide path of emission reductions from 2020 to 2029. Aspects of the way s of building blocks are established and certain aspects of the way the stake goals are calculated. Reid Harvey and Kevin Culligan are going to walk you through more specifics about the NODA and those indi vidual issues. L et me just quickly mention in case you (inaudible) on earlier quickly

the supplemental proposal that we issued y esterday as well. The supplemental proposal addresses carbon pollution in Indian country and U.S. territories and when we prop osed the clean power plant back in June we know that that we will be doing this supplemental later this y ear. Like the clean power plant proposal for states, the supplemental proposal set areas specific goals for Indian country and for territories and pr ovide optionsEPA Moderator: Scott Fraser 10

- 29

- 14/3:00 p.m . ET Confirmation # 27443703

Page 4 for meeting those goals in a flexible manner that accommodates a diverse set of approaches. For Indian country EPA is proposing goals for four effected power plants, the Navajo Generating Station and the four corners power plants within the Navajo nation, the Bonanza Power Plant located in the new tribe of Uintah and area reservation and the Fort Mojave Tribe’s South Point Energy Center. The supplemental proposal also addresses six effective sources in Puerto Rico and two in Guam. EPA will accept comment on the supplemental proposal until December 19th and will hold a public hearing on November 19th in Phoenix, Arizona. We began our work on the clean power plant b y listening and we will continue to listen. As I said earlier for most of th e agency ’s work supplemental proposals and notices of data availability are fairl y routine and often pass without a mention. With respect to the clean power plan we know the extended interest among the stakeholders and we thought that it was important to have these opportunities to talk to you about these things specificall y. These are important tools that EPA can use to make sure that we’re getting it right which is exactly why our engagement process is so important. We’re confident that the end result s will be a final clean power plants that will help accomplishment the president’s goals to cut harmful carbon solution which is chilling climate change to build a resilient nation to deal with impacts today and in the future and to lead the world in our g lobal climate fight. And to do so in a way

that strengths the econom y creates new jobs and allows us all to invest in our communities. Climate actions (inaudible) innovation, encourages investment global industry and creates jobs and a strong world lead ing econom y depends on a health y environment and a stable climate who can’t have one without the other but open inclusive and transparent and extensive public involvement is critical to developing programs like this and that’s what we’re all about here. W e very much look forward to y our questions and your thoughts on this additional information that we’ve made available. And with that I will turn it over to Kevin and Reid to go into more detail about the NODA. Thanks Scott.EPA Moderator: Scott Fraser 10

- 29

- 14/3:00 p.m . ET Confirmation # 27443703

Page 5 Kevin Culligan : Thank y ou very much Janet and this is Kevin Culligan and I’m going to walk

through two of the issues that we discussed in the NODA. The first of those issues is as Janet mentioned the Glide Path. This is the Glide Path between 2020 and 2029 and hopefully as you recal l from the proposal, in the proposal we set in interim target that must be met on average between 2020 and 2029 and then a final target was to be met in 2030 and that we believe that one of the reall y important flexibilities of the original proposal is that there was timing flexibility

during that 2020 to 2029 to achieve reductions over the full time period so that some of the actions that occur earlier in the 2020 to 2029 time period while some of them could occur later. One thing, a number of commenter have suggested is that particularl y in states where the building blocks result in a great amount of reductions occurring in the interim targets, that may be there isn’t quite that much flexibility and that it would require choices to meet very earl y and pot entially

limit the choices that the states and/or sources might have and the stakeholders who suggested this suggested at least two mechanisms that could be used to address the concern that they identified.
The first of those mechanisms was that if it th ere was credit given for earl y reductions, in essence reductions that occurred prior to 2020 and that credit could be used in lieu of attaining some of the earlier reductions that could in fact provide some more flexibility and in the NODA we do note that commenter suggested, we also note that it’s actually is already

within the scope of (inaudible) proposal that we actually explicitly

took a comment on this idea and that would certainl y would welcome any more comment that stake owners have on that idea. The newer idea that some of the stakeholders should brought up and that we are explicitly

taking comment on in the NODA itself that we do not explicitly take a comment on in the original proposal is the idea that we might phase in more of the emission redu ctions between 2020 and 2029. So the original built in the original proposal we phased in emission reductions that could occur due to renewable and energy

efficiency

and this was under the assumption that it would take time for those for new energy effici ency

programs and/or new renewal to be put place and/or new renewable to be built.EPA Moderator: Scott Fraser 10

- 29

- 14/3:00 p.m . ET Confirmation # 27443703

Page 6 We did not have that a similar phase in for either of the emission reductions that we assumed could be achieved through the use of efficiency improvement and existing plan s or as many commenters noted more importantly through the movement of generation from higher emitting fossil fuel (third) units to existing lower emitting fossil fuel (third) units and ty picall y natural gas combine cy cle units. Our feeling was and we ela borate in the proposal that those units alread y existed. There is no construction needed and therefore that we could prett y quickl y move to shipping generation to those ty pes of units. Some commenter suggested that there are in fact operational challen ges associated with that economic considerations and considerations related to moving away from some of the existing generation moving more to a different form of generation and what they ’ve suggested as I’ve said is that we could phase in overtime, in tho se two requirements just like we did (EE and RE). So in this supplemental, notice of data availability we exclusively take a comment on that idea. The second topic that I wanted to talk through was related to one of

-- one of the topic or way s related s pecificall y to the way the building block themselves were developed. And the second building block focuses primarily

on or actually

entirel y on emission reductions that could be achieved b y shifting generation from those higher meeting fossil fuel third
units to lower emitting fossil fuel third units and it was solely focused on existing natural gas combined cycle units.
We did take a comments on whether we should consider other uses of natural gas, either coal firing, and (existing) coal fire (blowers) and/or the use of new natural gas combined cycle units but we did not specificall y proposed during that or put out methodologies for doing it. One thing a number of commenter suggested is that that tends to mean that states that have alread y invested sign ificantl y in natural gas infrastructure and natural gas generation end up having being asked do more in that building block whereas states that have not y et significantl y invested in natural gas generation that may have similar opportunities to do so are n ot in fact asked very much.EPA Moderator: Scott Fraser 10

- 29

- 14/3:00 p.m . ET Confirmation # 27443703

Page 7 So this commenter suggested that it might make sense to look at things that could be done in those t ypes of situations like Isaid that could be new natural gas combined cycle units or it could be the use of natural gas coal f ire and existing coal units. One of the important points we do make and I think that commenter should consider as they comment on this issue is how overall the use of natural gas in all of the building blocks relate. In the original building block to we thought about and use cost and we’re required to under the act in setting what we thought was the appropriate amount of shifting to natural gas combined cycle that represented the (inaudible) sy stem emission reduction reductions. We think it would be imp ortant to consider that holistically and in the accumulative amount of natural gas that might be used under all three potential strategies for use of natural gas, using more existing natural gas combine cy cle, building new combined cycle and a coal firing (inaudible). With that I’m going to hand it over to Reid to talk about a couple other topics there. Reid Harvey : Thanks Kevin. I’m going to deal with the remaining three topics in the

NODA dealing with renewables, dealing with the goal setting equation and with multi

- year data. So first on renewable as you all know in the June proposal we identified a proposed approach with the renewal energy component of state goals that involve examining existing state renewable policies and then looking at regional averages to sort of sort that out into state goals. We also identified a second option that we requested comment on which was look more at the state b y state technical and economic potential for development of renewable and start comment on that as well. So in the NODA based on feedback we’ve gotten over the summer since released at the June proposal or providing a third option or conceptual discussion of the third option that evolves from the first two where we would look at in more regionalized approach at the technical and economic potential. So rather than looking within each state to be looking more at the renewable energy potential available across a multi state region in which each state is located. So under that approach we would look across that region and we’re asking for feedback about how to

-- how to define those regions who will lookEPA Moderator: Scott Fraser 10

- 29

- 14/3:00 p.m . ET Confirmation # 27443703

Page 8 at the extensive which renewable resources were potentially available and then our thinking would be that that would might better align the approach.
We’re co mpliance with the approach for goal setting in the proposal where I think for some specific feedback in the NODA related to how we draw those regions and then also how we would assign shares if we did this more regionalize approach, how we would assign shares back to individual states based on the region wide potential and we listed a couple of potential way s doing that for example by electricit y sales or b y electricity generation. So that’s the third item on our list of (inaudible). The fourth has to do with the goal setting equation and you know our, in our June proposal our approach for building block two involved reducing existing fossil generation in the equation such that one megawatt hours a plant one megawatt hours of existing fossil generation an d emission but as we

-- as we were engaged in conversations with people we heard that building blocks (inaudible) don’t

-- don’t change the equation the same way that building block two does. Instead it just adds generation and doesn’t reduce fossil gene ration. And so some folks have noted that this is inconsistent. So in the NODA we’ve raised this issue and we’ve identified if we were to do this a couple of different ways of doing this consistently the question is how y ou would replace historical gener ation from existing sources y ou could do it for example of a pro rata basis across all generation ty pes, you know, fossils (steam), (gas servants), reflecting the mix or the second option would be to prioritize and first replacement for example fossil (ste am) and then (gas servant) generation. So that’s the fourth of the five topics but this is that our goal setting was based on data that we developed from the year 2012 and as we started talking to folks we heard concerns about use of 2012 or concerns abo ut anomalies in 2012. And so we are now providing similar data as we provided for 2010 and 2011 in addition to the 2012 data and we’re seeking feedback in the NODA on that data specifically

on questions about the attitude of data in those two data ye ars a s well as asking about whether there are

-- there is a utility and EPA using a different single data year or average or a combination of years orEPA Moderator: Scott Fraser 10

- 29

- 14/3:00 p.m . ET Confirmation # 27443703

Page 9 whether there might be circumstances that might justify using different data ye ars individuals states and oppo se using the same data ye ar for all states. So that’s a quick run through of the five topics areas. At this point Ithink we’ll turn it back and open it up for questions. Operator : Thank y ou. At this time to ask an audio question please press star one on your

telephone key

pad. Again that’s star one to ask an audio question. We’ll pause for a moment to compile the Q&A roster. And your first question comes from the line of Bill O’Sullivan of New Jersey

. Bill O’Sullivan : Hi gu ys . I had quick fingers there. M y question is to y our Reid for goal

--

item four on goal setting equation and expanding the concept of goal two, goals three and four, it’s just a concern I have that my staff has pointed out to me in reviewing the proposal. Under their current p roposal you would eliminate coal and oil burning in New Jersey . If we did goal three and four for renewals and energy

e fficiency

the same way

we did goal two you would eliminate all my

combined cy cle natural gas and I don’t think that can be the intent. So my question is, y ou know, have y ou looked into that? I s that a possible consequence? My

staff correct in telling me that we would lose all our fossil fuel if we now implemented goals three and four like goal two. Reid Harvey : I’m going to

-- I’m goi ng to let Kevin actuall y take this one. Kevin Culligan : Hey

Bill. This is Kevin Culligan and there actually is discussion of this in NODA itself. I think we realized that this change does in fact on it’s own, you know, lead to tighter targets that would have impact that you mentioned. However, we explicitly

said that we would have to think about all of these things holistically

and that that is not

-- the intent is not just to do that. You have to think about all of the things that we thought about whe n we did the original proposal in terms of the impact on cost, the impact on reliability , the impact on fuel diversit y. So there’s sort of some feedback. As you look at what the equation does and then y ou look at each of the individual building blocks o f how much youEPA Moderator: Scott Fraser 10

- 29

- 14/3:00 p.m . ET Confirmation # 27443703

Page 10 might asked for under each building blocks. So, I think it implies a little more of a holistic look than just looking at the single

-- this single change alone. Operator : Your next question comes from the line of Nicholas Markin of Xcel En ergy
. Nicholas Markin : Hi. This one I guess is for Reid as well. You mentioned just now and also in

the NODA that this alternative treatment regionalized approach for renewable energy in y our view better aligns the issue of renewable being (fitted) as i nstinct for goal setting but credited differentl y for compliance and I wonder if yo u could just say

a little bit more about that. I’m not immediately understanding how that

-- how the new approach addresses that issue. Reid Harvey : I think there’s some d iscussion about that in the NODA that talks about that

topic. Idon’t know the page number in front of me but Ithink the idea was we’ve heard feedback and we listed in the original part of the NODA from folks that there was this concern that the goal setting we looked at the existence of renewable within each states but then in the compliance side that we were looking to allow use of (inaudible) for use of real (inaudible) out of state. And so we heard from folks that there was misalignment between the way that we set the goals and the way that we allowed for compliance. Operator : Your next question comes from the line of (Curwin Filton) of the New

Mexico Environment. (Curwin Filton ): (I had a) question. When y ou talk about the phase in building bloc k two, one

of the things that the NODAs talked about is determining to what extent any additional infrastructure improvements are needed. Iguess I have a question is to where would that infrastructure data come from? Who would be supplying that data or i s it alread y publicly available? Kevin Culligan : Thank y ou and this is Kevin Culligan. And I guess I’d respond in two ways.

One; certainly

one of the reasons that we put out the NODA is to share the ideas that commenter have shared with us and to get co mment on them. So I think we would welcome to comment on

-- from anyone on what y ou think, yo u know, might be appropriate for us to consider. The second is that, y ouEPA Moderator: Scott Fraser 10

- 29

- 14/3:00 p.m . ET Confirmation # 27443703

Page 11 know, we did in the original proposal and certainly would in an y work moving forward the modeling, yo u know, the potential impact of the proposal or an eventual final role. And in the modeling we do

-- we do see the changes in natural gas usage, you know, which gives you the ability to think about what that might require in terms of infrastructure. So much of that data is already out there in terms of changes in natural gas use at a fairl y, at a regionalize level that would help commenter look at under the original proposal and then, y ou know, think about potential changes about what that m eans in terms of needs to increase infrastructure for delivering gas. Operator : Again to ask an audio question please press star one on y our telephone keypad.

Your next question comes from the line of (Dave Coup) of (Minnesota). (Dave Coup ): Yes. There is something in the NODA that talks about earl y reductions. I

know there is language in the original proposal. Can y ou provide any clarity on how earl y is earl y, as that when that rule is proposed in June, is it 2012 any clarity on that? Kevin Culligan : I believe that in the original proposal we took a comment on a range of

options. Ithink you actually mentioned two of them, one going back to 2012, a y ear we used largel y for starting point one going to the original proposal and I believe a third optio n that was 2017, 2018 which I think is the line with sort of the last submittal date for a state plan. So really a prett y wide range between 2012 and 2020. Operator : And there are no other audio questions at this time.
Scott Fraser : Operator, could you just quick re

- prompt folks in case there is a last question

before we close? Operator : Certainly , again to ask an audio question please press star one on your

telephone key

pad. You do have a question from the line of (John Unangst) of American Electric P ower.EPA Moderator: Scott Fraser 10

- 29

- 14/3:00 p.m . ET Confirmation # 27443703

Page 12 (John Unangst ): Afternoon. This is going to change topic because it seems like we’re running

out of questions. Ihad seen indication that the agency may provide some additional discussion information on the rate to mass conversion process. Are yo u still intending to provide that? (Joe Gagmen ): Hi John and every body . This is (Joe Gagmen). The answer of your question is y es and that document will be posted fairl y soon. (John Unangst ): OK. Thanks. Operator : Your next question comes from the lin e of (Hang Yang) of Resources for the

Future. (Hang Yang ): Hello. Thank you for the presentation. M y question would be while reading

this is CPP preamble it seems like EPA going to provide assistance to some of the state who don’t really have the capaci ty or don’t have the capacity to, you know, form their own renewable energy or energy

efficiency

reduction plan. So if there is going to be an assistant what

-- is it just sort of proposal or the EPA claim that it will help if so in what kind of approach? Thank you. Reid Harvey : Thank y ou. This is Reid. EPA provided on our Web site in June a list of

federal resources in what we call a toolbox that enable to help space look at these questions. We’ve also been working with many of the state associations , some of whom are likely

on the call today

to work with them to develop information on available options that states can comply . So we have extensive process underway with states to work with them to identify their needs and to identify

resources that we and the federal government or other parties can provide to help them move forward with their plans. Operator : Your next question comes from the line of (Marc Lapp) of Natural Resources.

(Mark) your line is open. (Marc Lapp ): Yes. Thanks gu ys . I think my questions for Reid, it’s in regards to the alternative renewable energy goal setting approach. Have y ou guy s looked at what the total amount of renewable energies target levels would be like for the country ? Would it increase some quite a bit or woul d it be close to what’sEPA Moderator: Scott Fraser 10

- 29

- 14/3:00 p.m . ET Confirmation # 27443703

Page 13 included in the proposal just kind of read a portion to the states based on whichever criteria you guys would elect. Reid Harvey : That’s a good question. Let me

-- let me turn to (Jeff Benhouse) in my group to answer that question

. (Jeff Benhouse ): This is (Jeff). Yes. Just to clarify , it is a good question. It’s the latter of what

yo u just described. It is much as the NODA is really trying to explain and by comment on that methodology of how we attach RE potential and the (be st sy stem) individuals states recognizing that there are regional or multi state dy namics in play

as Reid have covered earlier on the call and how, you know, RE generation is actually claimed and practice and that’s something we want to make sure what we’r e doing and setting the date goals where, you know, we’re positioning that the sy stem for that is successful as we can. The NODA was not speaking to the level of RE generation that would be in the best sy stem because we felt we had put out enough informat ion on that in the June proposal, so. (Marc Lapp ): Thank y ou. Operator : Again to ask an audio question please press star one. And there are no other

audio questions at this time.
Scott Fraser : OK. Great. This is Scott Fraser just closing this call. If your question comes

to mind and you didn’t get a chance to ask it, you can send that into public engagement at epa.gov. A quick turn over to Kevin and Reid, any closing remarks? Reid Harvey : No. Thanks for the opportunity to walk you gu ys through.
K evin Culligan : Yes. We appreciate this. Thank you.
Scott Fraser : Great. Thanks every body for joining. Operator : Thank y ou. That does conclude today ’s conference, y ou may now disconnect.

END